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State Income Tax Return

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State Income Tax Return

State income tax return 3. State income tax return   Ordinary or Capital Gain or Loss for Business Property Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Section 1231 Gains and LossesNonrecaptured section 1231 losses. State income tax return Depreciation RecaptureSection 1245 Property Section 1250 Property Installment Sales Gifts Transfers at Death Like-Kind Exchanges and Involuntary Conversions Multiple Properties Introduction When you dispose of business property, your taxable gain or loss is usually a section 1231 gain or loss. State income tax return Its treatment as ordinary or capital is determined under rules for section 1231 transactions. State income tax return When you dispose of depreciable property (section 1245 property or section 1250 property) at a gain, you may have to recognize all or part of the gain as ordinary income under the depreciation recapture rules. State income tax return Any remaining gain is a section 1231 gain. State income tax return Topics - This chapter discusses: Section 1231 gains and losses Depreciation recapture Useful Items - You may want to see: Publication 534 Depreciating Property Placed in Service Before 1987 537 Installment Sales 547 Casualties, Disasters and Thefts 551 Basis of Assets 946 How To Depreciate Property Form (and Instructions) 4797 Sales of Business Property See chapter 5 for information about getting publications and forms. State income tax return Section 1231 Gains and Losses Section 1231 gains and losses are the taxable gains and losses from section 1231 transactions (discussed below). State income tax return Their treatment as ordinary or capital depends on whether you have a net gain or a net loss from all your section 1231 transactions. State income tax return If you have a gain from a section 1231 transaction, first determine whether any of the gain is ordinary income under the depreciation recapture rules (explained later). State income tax return Do not take that gain into account as section 1231 gain. State income tax return Section 1231 transactions. State income tax return   The following transactions result in gain or loss subject to section 1231 treatment. State income tax return Sales or exchanges of real property or depreciable personal property. State income tax return This property must be used in a trade or business and held longer than 1 year. State income tax return Generally, property held for the production of rents or royalties is considered to be used in a trade or business. State income tax return Depreciable personal property includes amortizable section 197 intangibles (described in chapter 2 under Other Dispositions). State income tax return Sales or exchanges of leaseholds. State income tax return The leasehold must be used in a trade or business and held longer than 1 year. State income tax return Sales or exchanges of cattle and horses. State income tax return The cattle and horses must be held for draft, breeding, dairy, or sporting purposes and held for 2 years or longer. State income tax return Sales or exchanges of other livestock. State income tax return This livestock does not include poultry. State income tax return It must be held for draft, breeding, dairy, or sporting purposes and held for 1 year or longer. State income tax return Sales or exchanges of unharvested crops. State income tax return The crop and land must be sold, exchanged, or involuntarily converted at the same time and to the same person and the land must be held longer than 1 year. State income tax return You cannot keep any right or option to directly or indirectly reacquire the land (other than a right customarily incident to a mortgage or other security transaction). State income tax return Growing crops sold with a lease on the land, though sold to the same person in the same transaction, are not included. State income tax return Cutting of timber or disposal of timber, coal, or iron ore. State income tax return The cutting or disposal must be treated as a sale, as described in chapter 2 under Timber and Coal and Iron Ore. State income tax return Condemnations. State income tax return The condemned property must have been held longer than 1 year. State income tax return It must be business property or a capital asset held in connection with a trade or business or a transaction entered into for profit, such as investment property. State income tax return It cannot be property held for personal use. State income tax return Casualties and thefts. State income tax return The casualty or theft must have affected business property, property held for the production of rents and royalties, or investment property (such as notes and bonds). State income tax return You must have held the property longer than 1 year. State income tax return However, if your casualty or theft losses are more than your casualty or theft gains, neither the gains nor the losses are taken into account in the section 1231 computation. State income tax return For more information on casualties and thefts, see Publication 547. State income tax return Property for sale to customers. State income tax return   A sale, exchange, or involuntary conversion of property held mainly for sale to customers is not a section 1231 transaction. State income tax return If you will get back all, or nearly all, of your investment in the property by selling it rather than by using it up in your business, it is property held mainly for sale to customers. State income tax return Example. State income tax return You manufacture and sell steel cable, which you deliver on returnable reels that are depreciable property. State income tax return Customers make deposits on the reels, which you refund if the reels are returned within a year. State income tax return If they are not returned, you keep each deposit as the agreed-upon sales price. State income tax return Most reels are returned within the 1-year period. State income tax return You keep adequate records showing depreciation and other charges to the capitalized cost of the reels. State income tax return Under these conditions, the reels are not property held for sale to customers in the ordinary course of your business. State income tax return Any gain or loss resulting from their not being returned may be capital or ordinary, depending on your section 1231 transactions. State income tax return Copyrights. State income tax return    The sale of a copyright, a literary, musical, or artistic composition, or similar property is not a section 1231 transaction if your personal efforts created the property, or if you acquired the property in a way that entitled you to the basis of the previous owner whose personal efforts created it (for example, if you receive the property as a gift). State income tax return The sale of such property results in ordinary income and generally is reported in Part II of Form 4797. State income tax return Treatment as ordinary or capital. State income tax return   To determine the treatment of section 1231 gains and losses, combine all your section 1231 gains and losses for the year. State income tax return If you have a net section 1231 loss, it is ordinary loss. State income tax return If you have a net section 1231 gain, it is ordinary income up to the amount of your nonrecaptured section 1231 losses from previous years. State income tax return The rest, if any, is long-term capital gain. State income tax return Nonrecaptured section 1231 losses. State income tax return   Your nonrecaptured section 1231 losses are your net section 1231 losses for the previous 5 years that have not been applied against a net section 1231 gain. State income tax return Therefore, if in any of your five preceding tax years you had section 1231 losses, a net gain for the current year from the sale of section 1231 assets is ordinary gain to the extent of your prior losses. State income tax return These losses are applied against your net section 1231 gain beginning with the earliest loss in the 5-year period. State income tax return Example. State income tax return In 2013, Ben has a $2,000 net section 1231 gain. State income tax return To figure how much he has to report as ordinary income and long-term capital gain, he must first determine his section 1231 gains and losses from the previous 5-year period. State income tax return From 2008 through 2012 he had the following section 1231 gains and losses. State income tax return Year Amount 2008 -0- 2009 -0- 2010 ($2,500) 2011 -0- 2012 $1,800 Ben uses this information to figure how to report his net section 1231 gain for 2013 as shown below. State income tax return 1) Net section 1231 gain (2013) $2,000 2) Net section 1231 loss (2010) ($2,500)   3) Net section 1231 gain (2012) 1,800   4) Remaining net section 1231 loss from prior 5 years ($700)   5) Gain treated as  ordinary income $700 6) Gain treated as long-term  capital gain $1,300 Depreciation Recapture If you dispose of depreciable or amortizable property at a gain, you may have to treat all or part of the gain (even if otherwise nontaxable) as ordinary income. State income tax return To figure any gain that must be reported as ordinary income, you must keep permanent records of the facts necessary to figure the depreciation or amortization allowed or allowable on your property. State income tax return This includes the date and manner of acquisition, cost or other basis, depreciation or amortization, and all other adjustments that affect basis. State income tax return On property you acquired in a nontaxable exchange or as a gift, your records also must indicate the following information. State income tax return Whether the adjusted basis was figured using depreciation or amortization you claimed on other property. State income tax return Whether the adjusted basis was figured using depreciation or amortization another person claimed. State income tax return Corporate distributions. State income tax return   For information on property distributed by corporations, see Distributions to Shareholders in Publication 542, Corporations. State income tax return General asset accounts. State income tax return   Different rules apply to dispositions of property you depreciated using a general asset account. State income tax return For information on these rules, see Publication 946. State income tax return Section 1245 Property A gain on the disposition of section 1245 property is treated as ordinary income to the extent of depreciation allowed or allowable on the property. State income tax return See Gain Treated as Ordinary Income, later. State income tax return Any gain recognized that is more than the part that is ordinary income from depreciation is a section 1231 gain. State income tax return See Treatment as ordinary or capital under Section 1231 Gains and Losses, earlier. State income tax return Section 1245 property defined. State income tax return   Section 1245 property includes any property that is or has been subject to an allowance for depreciation or amortization and that is any of the following types of property. State income tax return Personal property (either tangible or intangible). State income tax return Other tangible property (except buildings and their structural components) used as any of the following. State income tax return See Buildings and structural components below. State income tax return An integral part of manufacturing, production, or extraction, or of furnishing transportation, communications, electricity, gas, water, or sewage disposal services. State income tax return A research facility in any of the activities in (a). State income tax return A facility in any of the activities in (a) for the bulk storage of fungible commodities (discussed on the next page). State income tax return That part of real property (not included in (2)) with an adjusted basis reduced by (but not limited to) the following. State income tax return Amortization of certified pollution control facilities. State income tax return The section 179 expense deduction. State income tax return Deduction for clean-fuel vehicles and certain refueling property. State income tax return Deduction for capital costs incurred in complying with Environmental Protection Agency sulfur regulations. State income tax return Deduction for certain qualified refinery property. State income tax return Deduction for qualified energy efficient commercial building property. State income tax return Amortization of railroad grading and tunnel bores, if in effect before the repeal by the Revenue Reconciliation Act of 1990. State income tax return (Repealed by Public Law 99-514, Tax Reform Act of 1986, section 242(a). State income tax return ) Certain expenditures for child care facilities if in effect before repeal by Public Law 101-58, Omnibus Budget Reconciliation Act of 1990, section 11801(a)(13) (except with regards to deductions made prior to November 5, 1990). State income tax return Expenditures to remove architectural and transportation barriers to the handicapped and elderly. State income tax return Deduction for qualified tertiary injectant expenses. State income tax return Certain reforestation expenditures. State income tax return Deduction for election to expense qualified advanced mine safety equipment property. State income tax return Single purpose agricultural (livestock) or horticultural structures. State income tax return Storage facilities (except buildings and their structural components) used in distributing petroleum or any primary product of petroleum. State income tax return Any railroad grading or tunnel bore. State income tax return Buildings and structural components. State income tax return   Section 1245 property does not include buildings and structural components. State income tax return The term building includes a house, barn, warehouse, or garage. State income tax return The term structural component includes walls, floors, windows, doors, central air conditioning systems, light fixtures, etc. State income tax return   Do not treat a structure that is essentially machinery or equipment as a building or structural component. State income tax return Also, do not treat a structure that houses property used as an integral part of an activity as a building or structural component if the structure's use is so closely related to the property's use that the structure can be expected to be replaced when the property it initially houses is replaced. State income tax return   The fact that the structure is specially designed to withstand the stress and other demands of the property and cannot be used economically for other purposes indicates it is closely related to the use of the property it houses. State income tax return Structures such as oil and gas storage tanks, grain storage bins, silos, fractionating towers, blast furnaces, basic oxygen furnaces, coke ovens, brick kilns, and coal tipples are not treated as buildings, but as section 1245 property. State income tax return Facility for bulk storage of fungible commodities. State income tax return   This term includes oil or gas storage tanks and grain storage bins. State income tax return Bulk storage means the storage of a commodity in a large mass before it is used. State income tax return For example, if a facility is used to store oranges that have been sorted and boxed, it is not used for bulk storage. State income tax return To be fungible, a commodity must be such that one part may be used in place of another. State income tax return   Stored materials that vary in composition, size, and weight are not fungible. State income tax return Materials are not fungible if one part cannot be used in place of another part and the materials cannot be estimated and replaced by simple reference to weight, measure, and number. State income tax return For example, the storage of different grades and forms of aluminum scrap is not storage of fungible commodities. State income tax return Gain Treated as Ordinary Income The gain treated as ordinary income on the sale, exchange, or involuntary conversion of section 1245 property, including a sale and leaseback transaction, is the lesser of the following amounts. State income tax return The depreciation and amortization allowed or allowable on the property. State income tax return The gain realized on the disposition (the amount realized from the disposition minus the adjusted basis of the property). State income tax return A limit on this amount for gain on like-kind exchanges and involuntary conversions is explained later. State income tax return For any other disposition of section 1245 property, ordinary income is the lesser of (1) earlier or the amount by which its fair market value is more than its adjusted basis. State income tax return See Gifts and Transfers at Death, later. State income tax return Use Part III of Form 4797 to figure the ordinary income part of the gain. State income tax return Depreciation taken on other property or taken by other taxpayers. State income tax return   Depreciation and amortization include the amounts you claimed on the section 1245 property as well as the following depreciation and amortization amounts. State income tax return Amounts you claimed on property you exchanged for, or converted to, your section 1245 property in a like-kind exchange or involuntary conversion. State income tax return Amounts a previous owner of the section 1245 property claimed if your basis is determined with reference to that person's adjusted basis (for example, the donor's depreciation deductions on property you received as a gift). State income tax return Depreciation and amortization. State income tax return   Depreciation and amortization that must be recaptured as ordinary income include (but are not limited to) the following items. State income tax return Ordinary depreciation deductions. State income tax return Any special depreciation allowance you claimed. State income tax return Amortization deductions for all the following costs. State income tax return Acquiring a lease. State income tax return Lessee improvements. State income tax return Certified pollution control facilities. State income tax return Certain reforestation expenses. State income tax return Section 197 intangibles. State income tax return Childcare facility expenses made before 1982, if in effect before the repeal of IRC 188. State income tax return Franchises, trademarks, and trade names acquired before August 11, 1993. State income tax return The section 179 deduction. State income tax return Deductions for all the following costs. State income tax return Removing barriers to the disabled and the elderly. State income tax return Tertiary injectant expenses. State income tax return Depreciable clean-fuel vehicles and refueling property (minus the amount of any recaptured deduction). State income tax return Environmental cleanup costs. State income tax return Certain reforestation expenses. State income tax return Qualified disaster expenses. State income tax return Any basis reduction for the investment credit (minus any basis increase for credit recapture). State income tax return Any basis reduction for the qualified electric vehicle credit (minus any basis increase for credit recapture). State income tax return Example. State income tax return You file your returns on a calendar year basis. State income tax return In February 2011, you bought and placed in service for 100% use in your business a light-duty truck (5-year property) that cost $10,000. State income tax return You used the half-year convention and your MACRS deductions for the truck were $2,000 in 2011 and $3,200 in 2012. State income tax return You did not take the section 179 deduction. State income tax return You sold the truck in May 2013 for $7,000. State income tax return The MACRS deduction in 2013, the year of sale, is $960 (½ of $1,920). State income tax return Figure the gain treated as ordinary income as follows. State income tax return 1) Amount realized $7,000 2) Cost (February 2011) $10,000   3) Depreciation allowed or allowable (MACRS deductions: $2,000 + $3,200 + $960) 6,160   4) Adjusted basis (subtract line 3 from line 2) $3,840 5) Gain realized (subtract line 4 from line 1) $3,160 6) Gain treated as ordinary income (lesser of line 3 or line 5) $3,160 Depreciation on other tangible property. State income tax return   You must take into account depreciation during periods when the property was not used as an integral part of an activity or did not constitute a research or storage facility, as described earlier under Section 1245 property. State income tax return   For example, if depreciation deductions taken on certain storage facilities amounted to $10,000, of which $6,000 is from the periods before their use in a prescribed business activity, you must use the entire $10,000 in determining ordinary income from depreciation. State income tax return Depreciation allowed or allowable. State income tax return   The greater of the depreciation allowed or allowable is generally the amount to use in figuring the part of gain to report as ordinary income. State income tax return However, if in prior years, you have consistently taken proper deductions under one method, the amount allowed for your prior years will not be increased even though a greater amount would have been allowed under another proper method. State income tax return If you did not take any deduction at all for depreciation, your adjustments to basis for depreciation allowable are figured by using the straight line method. State income tax return   This treatment applies only when figuring what part of gain is treated as ordinary income under the rules for section 1245 depreciation recapture. State income tax return Multiple asset accounts. State income tax return   In figuring ordinary income from depreciation, you can treat any number of units of section 1245 property in a single depreciation account as one item if the total ordinary income from depreciation figured by using this method is not less than it would be if depreciation on each unit were figured separately. State income tax return Example. State income tax return In one transaction you sold 50 machines, 25 trucks, and certain other property that is not section 1245 property. State income tax return All of the depreciation was recorded in a single depreciation account. State income tax return After dividing the total received among the various assets sold, you figured that each unit of section 1245 property was sold at a gain. State income tax return You can figure the ordinary income from depreciation as if the 50 machines and 25 trucks were one item. State income tax return However, if five of the trucks had been sold at a loss, only the 50 machines and 20 of the trucks could be treated as one item in determining the ordinary income from depreciation. State income tax return Normal retirement. State income tax return   The normal retirement of section 1245 property in multiple asset accounts does not require recognition of gain as ordinary income from depreciation if your method of accounting for asset retirements does not require recognition of that gain. State income tax return Section 1250 Property Gain on the disposition of section 1250 property is treated as ordinary income to the extent of additional depreciation allowed or allowable on the property. State income tax return To determine the additional depreciation on section 1250 property, see Additional Depreciation, below. State income tax return Section 1250 property defined. State income tax return   This includes all real property that is subject to an allowance for depreciation and that is not and never has been section 1245 property. State income tax return It includes a leasehold of land or section 1250 property subject to an allowance for depreciation. State income tax return A fee simple interest in land is not included because it is not depreciable. State income tax return   If your section 1250 property becomes section 1245 property because you change its use, you can never again treat it as section 1250 property. State income tax return Additional Depreciation If you hold section 1250 property longer than 1 year, the additional depreciation is the actual depreciation adjustments that are more than the depreciation figured using the straight line method. State income tax return For a list of items treated as depreciation adjustments, see Depreciation and amortization under Gain Treated as Ordinary Income, earlier. State income tax return For the treatment of unrecaptured section 1250 gain, see Capital Gains Tax Rate, later. State income tax return If you hold section 1250 property for 1 year or less, all the depreciation is additional depreciation. State income tax return You will not have additional depreciation if any of the following conditions apply to the property disposed of. State income tax return You figured depreciation for the property using the straight line method or any other method that does not result in depreciation that is more than the amount figured by the straight line method; you held the property longer than 1 year; and, if the property was qualified property, you made a timely election not to claim any special depreciation allowance. State income tax return In addition, if the property was in a renewal community, you must not have elected to claim a commercial revitalization deduction for property placed in service before January 1, 2010. State income tax return The property was residential low-income rental property you held for 162/3 years or longer. State income tax return For low-income rental housing on which the special 60-month depreciation for rehabilitation expenses was allowed, the 162/3 years start when the rehabilitated property is placed in service. State income tax return You chose the alternate ACRS method for the property, which was a type of 15-, 18-, or 19-year real property covered by the section 1250 rules. State income tax return The property was residential rental property or nonresidential real property placed in service after 1986 (or after July 31, 1986, if the choice to use MACRS was made); you held it longer than 1 year; and, if the property was qualified property, you made a timely election not to claim any special depreciation allowance. State income tax return These properties are depreciated using the straight line method. State income tax return In addition, if the property was in a renewal community, you must not have elected to claim a commercial revitalization deduction. State income tax return Depreciation taken by other taxpayers or on other property. State income tax return   Additional depreciation includes all depreciation adjustments to the basis of section 1250 property whether allowed to you or another person (as carryover basis property). State income tax return Example. State income tax return Larry Johnson gives his son section 1250 property on which he took $2,000 in depreciation deductions, of which $500 is additional depreciation. State income tax return Immediately after the gift, the son's adjusted basis in the property is the same as his father's and reflects the $500 additional depreciation. State income tax return On January 1 of the next year, after taking depreciation deductions of $1,000 on the property, of which $200 is additional depreciation, the son sells the property. State income tax return At the time of sale, the additional depreciation is $700 ($500 allowed the father plus $200 allowed the son). State income tax return Depreciation allowed or allowable. State income tax return   The greater of depreciation allowed or allowable (to any person who held the property if the depreciation was used in figuring its adjusted basis in your hands) generally is the amount to use in figuring the part of the gain to be reported as ordinary income. State income tax return If you can show that the deduction allowed for any tax year was less than the amount allowable, the lesser figure will be the depreciation adjustment for figuring additional depreciation. State income tax return Retired or demolished property. State income tax return   The adjustments reflected in adjusted basis generally do not include deductions for depreciation on retired or demolished parts of section 1250 property unless these deductions are reflected in the basis of replacement property that is section 1250 property. State income tax return Example. State income tax return A wing of your building is totally destroyed by fire. State income tax return The depreciation adjustments figured in the adjusted basis of the building after the wing is destroyed do not include any deductions for depreciation on the destroyed wing unless it is replaced and the adjustments for depreciation on it are reflected in the basis of the replacement property. State income tax return Figuring straight line depreciation. State income tax return   The useful life and salvage value you would have used to figure straight line depreciation are the same as those used under the depreciation method you actually used. State income tax return If you did not use a useful life under the depreciation method actually used (such as with the units-of-production method) or if you did not take salvage value into account (such as with the declining balance method), the useful life or salvage value for figuring what would have been the straight line depreciation is the useful life and salvage value you would have used under the straight line method. State income tax return   Salvage value and useful life are not used for the ACRS method of depreciation. State income tax return Figure straight line depreciation for ACRS real property by using its 15-, 18-, or 19-year recovery period as the property's useful life. State income tax return   The straight line method is applied without any basis reduction for the investment credit. State income tax return Property held by lessee. State income tax return   If a lessee makes a leasehold improvement, the lease period for figuring what would have been the straight line depreciation adjustments includes all renewal periods. State income tax return This inclusion of the renewal periods cannot extend the lease period taken into account to a period that is longer than the remaining useful life of the improvement. State income tax return The same rule applies to the cost of acquiring a lease. State income tax return   The term renewal period means any period for which the lease may be renewed, extended, or continued under an option exercisable by the lessee. State income tax return However, the inclusion of renewal periods cannot extend the lease by more than two-thirds of the period that was the basis on which the actual depreciation adjustments were allowed. State income tax return Applicable Percentage The applicable percentage used to figure the ordinary income because of additional depreciation depends on whether the real property you disposed of is nonresidential real property, residential rental property, or low-income housing. State income tax return The percentages for these types of real property are as follows. State income tax return Nonresidential real property. State income tax return   For real property that is not residential rental property, the applicable percentage for periods after 1969 is 100%. State income tax return For periods before 1970, the percentage is zero and no ordinary income because of additional depreciation before 1970 will result from its disposition. State income tax return Residential rental property. State income tax return   For residential rental property (80% or more of the gross income is from dwelling units) other than low-income housing, the applicable percentage for periods after 1975 is 100%. State income tax return The percentage for periods before 1976 is zero. State income tax return Therefore, no ordinary income because of additional depreciation before 1976 will result from a disposition of residential rental property. State income tax return Low-income housing. State income tax return    Low-income housing includes all the following types of residential rental property. State income tax return Federally assisted housing projects if the mortgage is insured under section 221(d)(3) or 236 of the National Housing Act or housing financed or assisted by direct loan or tax abatement under similar provisions of state or local laws. State income tax return Low-income rental housing for which a depreciation deduction for rehabilitation expenses was allowed. State income tax return Low-income rental housing held for occupancy by families or individuals eligible to receive subsidies under section 8 of the United States Housing Act of 1937, as amended, or under provisions of state or local laws that authorize similar subsidies for low-income families. State income tax return Housing financed or assisted by direct loan or insured under Title V of the Housing Act of 1949. State income tax return   The applicable percentage for low-income housing is 100% minus 1% for each full month the property was held over 100 full months. State income tax return If you have held low-income housing at least 16 years and 8 months, the percentage is zero and no ordinary income will result from its disposition. State income tax return Foreclosure. State income tax return   If low-income housing is disposed of because of foreclosure or similar proceedings, the monthly applicable percentage reduction is figured as if you disposed of the property on the starting date of the proceedings. State income tax return Example. State income tax return On June 1, 2001, you acquired low-income housing property. State income tax return On April 3, 2012 (130 months after the property was acquired), foreclosure proceedings were started on the property and on December 3, 2013 (150 months after the property was acquired), the property was disposed of as a result of the foreclosure proceedings. State income tax return The property qualifies for a reduced applicable percentage because it was held more than 100 full months. State income tax return The applicable percentage reduction is 30% (130 months minus 100 months) rather than 50% (150 months minus 100 months) because it does not apply after April 3, 2012, the starting date of the foreclosure proceedings. State income tax return Therefore, 70% of the additional depreciation is treated as ordinary income. State income tax return Holding period. State income tax return   The holding period used to figure the applicable percentage for low-income housing generally starts on the day after you acquired it. State income tax return For example, if you bought low-income housing on January 1, 1997, the holding period starts on January 2, 1997. State income tax return If you sold it on January 2, 2013, the holding period is exactly 192 full months. State income tax return The applicable percentage for additional depreciation is 8%, or 100% minus 1% for each full month the property was held over 100 full months. State income tax return Holding period for constructed, reconstructed, or erected property. State income tax return   The holding period used to figure the applicable percentage for low-income housing you constructed, reconstructed, or erected starts on the first day of the month it is placed in service in a trade or business, in an activity for the production of income, or in a personal activity. State income tax return Property acquired by gift or received in a tax-free transfer. State income tax return   For low-income housing you acquired by gift or in a tax-free transfer the basis of which is figured by reference to the basis in the hands of the transferor, the holding period for the applicable percentage includes the holding period of the transferor. State income tax return   If the adjusted basis of the property in your hands just after acquiring it is more than its adjusted basis to the transferor just before transferring it, the holding period of the difference is figured as if it were a separate improvement. State income tax return See Low-Income Housing With Two or More Elements, next. State income tax return Low-Income Housing With Two or More Elements If you dispose of low-income housing property that has two or more separate elements, the applicable percentage used to figure ordinary income because of additional depreciation may be different for each element. State income tax return The gain to be reported as ordinary income is the sum of the ordinary income figured for each element. State income tax return The following are the types of separate elements. State income tax return A separate improvement (defined below). State income tax return The basic section 1250 property plus improvements not qualifying as separate improvements. State income tax return The units placed in service at different times before all the section 1250 property is finished. State income tax return For example, this happens when a taxpayer builds an apartment building of 100 units and places 30 units in service (available for renting) on January 4, 2011, 50 on July 18, 2011, and the remaining 20 on January 18, 2012. State income tax return As a result, the apartment house consists of three separate elements. State income tax return The 36-month test for separate improvements. State income tax return   A separate improvement is any improvement (qualifying under The 1-year test, below) added to the capital account of the property, but only if the total of the improvements during the 36-month period ending on the last day of any tax year is more than the greatest of the following amounts. State income tax return Twenty-five percent of the adjusted basis of the property at the start of the first day of the 36-month period, or the first day of the holding period of the property, whichever is later. State income tax return Ten percent of the unadjusted basis (adjusted basis plus depreciation and amortization adjustments) of the property at the start of the period determined in (1). State income tax return $5,000. State income tax return The 1-year test. State income tax return   An addition to the capital account for any tax year (including a short tax year) is treated as an improvement only if the sum of all additions for the year is more than the greater of $2,000 or 1% of the unadjusted basis of the property. State income tax return The unadjusted basis is figured as of the start of that tax year or the holding period of the property, whichever is later. State income tax return In applying the 36-month test, improvements in any one of the 3 years are omitted entirely if the total improvements in that year do not qualify under the 1-year test. State income tax return Example. State income tax return The unadjusted basis of a calendar year taxpayer's property was $300,000 on January 1 of this year. State income tax return During the year, the taxpayer made improvements A, B, and C, which cost $1,000, $600, and $700, respectively. State income tax return The sum of the improvements, $2,300, is less than 1% of the unadjusted basis ($3,000), so the improvements do not satisfy the 1-year test and are not treated as improvements for the 36-month test. State income tax return However, if improvement C had cost $1,500, the sum of these improvements would have been $3,100. State income tax return Then, it would be necessary to apply the 36-month test to figure if the improvements must be treated as separate improvements. State income tax return Addition to the capital account. State income tax return   Any addition to the capital account made after the initial acquisition or completion of the property by you or any person who held the property during a period included in your holding period is to be considered when figuring the total amount of separate improvements. State income tax return   The addition to the capital account of depreciable real property is the gross addition not reduced by amounts attributable to replaced property. State income tax return For example, if a roof with an adjusted basis of $20,000 is replaced by a new roof costing $50,000, the improvement is the gross addition to the account, $50,000, and not the net addition of $30,000. State income tax return The $20,000 adjusted basis of the old roof is no longer reflected in the basis of the property. State income tax return The status of an addition to the capital account is not affected by whether it is treated as a separate property for determining depreciation deductions. State income tax return   Whether an expense is treated as an addition to the capital account may depend on the final disposition of the entire property. State income tax return If the expense item property and the basic property are sold in two separate transactions, the entire section 1250 property is treated as consisting of two distinct properties. State income tax return Unadjusted basis. State income tax return   In figuring the unadjusted basis as of a certain date, include the actual cost of all previous additions to the capital account plus those that did not qualify as separate improvements. State income tax return However, the cost of components retired before that date is not included in the unadjusted basis. State income tax return Holding period. State income tax return   Use the following guidelines for figuring the applicable percentage for property with two or more elements. State income tax return The holding period of a separate element placed in service before the entire section 1250 property is finished starts on the first day of the month that the separate element is placed in service. State income tax return The holding period for each separate improvement qualifying as a separate element starts on the day after the improvement is acquired or, for improvements constructed, reconstructed, or erected, the first day of the month that the improvement is placed in service. State income tax return The holding period for each improvement not qualifying as a separate element takes the holding period of the basic property. State income tax return   If an improvement by itself does not meet the 1-year test (greater of $2,000 or 1% of the unadjusted basis), but it does qualify as a separate improvement that is a separate element (when grouped with other improvements made during the tax year), determine the start of its holding period as follows. State income tax return Use the first day of a calendar month that is closest to the middle of the tax year. State income tax return If there are two first days of a month that are equally close to the middle of the year, use the earlier date. State income tax return Figuring ordinary income attributable to each separate element. State income tax return   Figure ordinary income attributable to each separate element as follows. State income tax return   Step 1. State income tax return Divide the element's additional depreciation after 1975 by the sum of all the elements' additional depreciation after 1975 to determine the percentage used in Step 2. State income tax return   Step 2. State income tax return Multiply the percentage figured in Step 1 by the lesser of the additional depreciation after 1975 for the entire property or the gain from disposition of the entire property (the difference between the fair market value or amount realized and the adjusted basis). State income tax return   Step 3. State income tax return Multiply the result in Step 2 by the applicable percentage for the element. State income tax return Example. State income tax return You sold at a gain of $25,000 low-income housing property subject to the ordinary income rules of section 1250. State income tax return The property consisted of four elements (W, X, Y, and Z). State income tax return Step 1. State income tax return The additional depreciation for each element is: W-$12,000; X-None; Y-$6,000; and Z-$6,000. State income tax return The sum of the additional depreciation for all the elements is $24,000. State income tax return Step 2. State income tax return The depreciation deducted on element X was $4,000 less than it would have been under the straight line method. State income tax return Additional depreciation on the property as a whole is $20,000 ($24,000 − $4,000). State income tax return $20,000 is lower than the $25,000 gain on the sale, so $20,000 is used in Step 2. State income tax return Step 3. State income tax return The applicable percentages to be used in Step 3 for the elements are: W-68%; X-85%; Y-92%; and Z-100%. State income tax return From these facts, the sum of the ordinary income for each element is figured as follows. State income tax return   Step 1 Step 2 Step 3 Ordinary Income W . State income tax return 50 $10,000 68% $ 6,800 X -0- -0- 85% -0- Y . State income tax return 25 5,000 92% 4,600 Z . State income tax return 25 5,000 100% 5,000 Sum of ordinary income of separate elements $16,400 Gain Treated as Ordinary Income To find what part of the gain from the disposition of section 1250 property is treated as ordinary income, follow these steps. State income tax return In a sale, exchange, or involuntary conversion of the property, figure the amount realized that is more than the adjusted basis of the property. State income tax return In any other disposition of the property, figure the fair market value that is more than the adjusted basis. State income tax return Figure the additional depreciation for the periods after 1975. State income tax return Multiply the lesser of (1) or (2) by the applicable percentage, discussed earlier under Applicable Percentage. State income tax return Stop here if this is residential rental property or if (2) is equal to or more than (1). State income tax return This is the gain treated as ordinary income because of additional depreciation. State income tax return Subtract (2) from (1). State income tax return Figure the additional depreciation for periods after 1969 but before 1976. State income tax return Add the lesser of (4) or (5) to the result in (3). State income tax return This is the gain treated as ordinary income because of additional depreciation. State income tax return A limit on the amount treated as ordinary income for gain on like-kind exchanges and involuntary conversions is explained later. State income tax return Use Form 4797, Part III, to figure the ordinary income part of the gain. State income tax return Corporations. State income tax return   Corporations, other than S corporations, must recognize an additional amount as ordinary income on the sale or other disposition of section 1250 property. State income tax return The additional amount treated as ordinary income is 20% of the excess of the amount that would have been ordinary income if the property were section 1245 property over the amount treated as ordinary income under section 1250. State income tax return Report this additional ordinary income on Form 4797, Part III, line 26 (f). State income tax return Installment Sales If you report the sale of property under the installment method, any depreciation recapture under section 1245 or 1250 is taxable as ordinary income in the year of sale. State income tax return This applies even if no payments are received in that year. State income tax return If the gain is more than the depreciation recapture income, report the rest of the gain using the rules of the installment method. State income tax return For this purpose, include the recapture income in your installment sale basis to determine your gross profit on the installment sale. State income tax return If you dispose of more than one asset in a single transaction, you must figure the gain on each asset separately so that it may be properly reported. State income tax return To do this, allocate the selling price and the payments you receive in the year of sale to each asset. State income tax return Report any depreciation recapture income in the year of sale before using the installment method for any remaining gain. State income tax return For a detailed discussion of installment sales, see Publication 537. State income tax return Gifts If you make a gift of depreciable personal property or real property, you do not have to report income on the transaction. State income tax return However, if the person who receives it (donee) sells or otherwise disposes of the property in a disposition subject to recapture, the donee must take into account the depreciation you deducted in figuring the gain to be reported as ordinary income. State income tax return For low-income housing, the donee must take into account the donor's holding period to figure the applicable percentage. State income tax return See Applicable Percentage and its discussion Holding period under Section 1250 Property, earlier. State income tax return Part gift and part sale or exchange. State income tax return   If you transfer depreciable personal property or real property for less than its fair market value in a transaction considered to be partly a gift and partly a sale or exchange and you have a gain because the amount realized is more than your adjusted basis, you must report ordinary income (up to the amount of gain) to recapture depreciation. State income tax return If the depreciation (additional depreciation, if section 1250 property) is more than the gain, the balance is carried over to the transferee to be taken into account on any later disposition of the property. State income tax return However, see Bargain sale to charity, later. State income tax return Example. State income tax return You transferred depreciable personal property to your son for $20,000. State income tax return When transferred, the property had an adjusted basis to you of $10,000 and a fair market value of $40,000. State income tax return You took depreciation of $30,000. State income tax return You are considered to have made a gift of $20,000, the difference between the $40,000 fair market value and the $20,000 sale price to your son. State income tax return You have a taxable gain on the transfer of $10,000 ($20,000 sale price minus $10,000 adjusted basis) that must be reported as ordinary income from depreciation. State income tax return You report $10,000 of your $30,000 depreciation as ordinary income on the transfer of the property, so the remaining $20,000 depreciation is carried over to your son for him to take into account on any later disposition of the property. State income tax return Gift to charitable organization. State income tax return   If you give property to a charitable organization, you figure your deduction for your charitable contribution by reducing the fair market value of the property by the ordinary income and short-term capital gain that would have resulted had you sold the property at its fair market value at the time of the contribution. State income tax return Thus, your deduction for depreciable real or personal property given to a charitable organization does not include the potential ordinary gain from depreciation. State income tax return   You also may have to reduce the fair market value of the contributed property by the long-term capital gain (including any section 1231 gain) that would have resulted had the property been sold. State income tax return For more information, see Giving Property That Has Increased in Value in Publication 526. State income tax return Bargain sale to charity. State income tax return   If you transfer section 1245 or section 1250 property to a charitable organization for less than its fair market value and a deduction for the contribution part of the transfer is allowable, your ordinary income from depreciation is figured under different rules. State income tax return First, figure the ordinary income as if you had sold the property at its fair market value. State income tax return Then, allocate that amount between the sale and the contribution parts of the transfer in the same proportion that you allocated your adjusted basis in the property to figure your gain. State income tax return See Bargain Sale under Gain or Loss From Sales and Exchanges in chapter 1. State income tax return Report as ordinary income the lesser of the ordinary income allocated to the sale or your gain from the sale. State income tax return Example. State income tax return You sold section 1245 property in a bargain sale to a charitable organization and are allowed a deduction for your contribution. State income tax return Your gain on the sale was $1,200, figured by allocating 20% of your adjusted basis in the property to the part sold. State income tax return If you had sold the property at its fair market value, your ordinary income would have been $5,000. State income tax return Your ordinary income is $1,000 ($5,000 × 20%) and your section 1231 gain is $200 ($1,200 – $1,000). State income tax return Transfers at Death When a taxpayer dies, no gain is reported on depreciable personal property or real property transferred to his or her estate or beneficiary. State income tax return For information on the tax liability of a decedent, see Publication 559, Survivors, Executors, and Administrators. State income tax return However, if the decedent disposed of the property while alive and, because of his or her method of accounting or for any other reason, the gain from the disposition is reportable by the estate or beneficiary, it must be reported in the same way the decedent would have had to report it if he or she were still alive. State income tax return Ordinary income due to depreciation must be reported on a transfer from an executor, administrator, or trustee to an heir, beneficiary, or other individual if the transfer is a sale or exchange on which gain is realized. State income tax return Example 1. State income tax return Janet Smith owned depreciable property that, upon her death, was inherited by her son. State income tax return No ordinary income from depreciation is reportable on the transfer, even though the value used for estate tax purposes is more than the adjusted basis of the property to Janet when she died. State income tax return However, if she sold the property before her death and realized a gain and if, because of her method of accounting, the proceeds from the sale are income in respect of a decedent reportable by her son, he must report ordinary income from depreciation. State income tax return Example 2. State income tax return The trustee of a trust created by a will transfers depreciable property to a beneficiary in satisfaction of a specific bequest of $10,000. State income tax return If the property had a value of $9,000 at the date used for estate tax valuation purposes, the $1,000 increase in value to the date of distribution is a gain realized by the trust. State income tax return Ordinary income from depreciation must be reported by the trust on the transfer. State income tax return Like-Kind Exchanges and Involuntary Conversions A like-kind exchange of your depreciable property or an involuntary conversion of the property into similar or related property will not result in your having to report ordinary income from depreciation unless money or property other than like-kind, similar, or related property is also received in the transaction. State income tax return For information on like-kind exchanges and involuntary conversions, see chapter 1. State income tax return Depreciable personal property. State income tax return   If you have a gain from either a like-kind exchange or an involuntary conversion of your depreciable personal property, the amount to be reported as ordinary income from depreciation is the amount figured under the rules explained earlier (see Section 1245 Property), limited to the sum of the following amounts. State income tax return The gain that must be included in income under the rules for like-kind exchanges or involuntary conversions. State income tax return The fair market value of the like-kind, similar, or related property other than depreciable personal property acquired in the transaction. State income tax return Example 1. State income tax return You bought a new machine for $4,300 cash plus your old machine for which you were allowed a $1,360 trade-in. State income tax return The old machine cost you $5,000 two years ago. State income tax return You took depreciation deductions of $3,950. State income tax return Even though you deducted depreciation of $3,950, the $310 gain ($1,360 trade-in allowance minus $1,050 adjusted basis) is not reported because it is postponed under the rules for like-kind exchanges and you received only depreciable personal property in the exchange. State income tax return Example 2. State income tax return You bought office machinery for $1,500 two years ago and deducted $780 depreciation. State income tax return This year a fire destroyed the machinery and you received $1,200 from your fire insurance, realizing a gain of $480 ($1,200 − $720 adjusted basis). State income tax return You choose to postpone reporting gain, but replacement machinery cost you only $1,000. State income tax return Your taxable gain under the rules for involuntary conversions is limited to the remaining $200 insurance payment. State income tax return All your replacement property is depreciable personal property, so your ordinary income from depreciation is limited to $200. State income tax return Example 3. State income tax return A fire destroyed office machinery you bought for $116,000. State income tax return The depreciation deductions were $91,640 and the machinery had an adjusted basis of $24,360. State income tax return You received a $117,000 insurance payment, realizing a gain of $92,640. State income tax return You immediately spent $105,000 of the insurance payment for replacement machinery and $9,000 for stock that qualifies as replacement property and you choose to postpone reporting the gain. State income tax return $114,000 of the $117,000 insurance payment was used to buy replacement property, so the gain that must be included in income under the rules for involuntary conversions is the part not spent, or $3,000. State income tax return The part of the insurance payment ($9,000) used to buy the nondepreciable property (the stock) also must be included in figuring the gain from depreciation. State income tax return The amount you must report as ordinary income on the transaction is $12,000, figured as follows. State income tax return 1) Gain realized on the transaction ($92,640) limited to depreciation ($91,640) $91,640 2) Gain includible in income (amount not spent) 3,000     Plus: fair market value of property other than depreciable personal property (the stock) 9,000 12,000 Amount reportable as ordinary income (lesser of (1) or (2)) $12,000   If, instead of buying $9,000 in stock, you bought $9,000 worth of depreciable personal property similar or related in use to the destroyed property, you would only report $3,000 as ordinary income. State income tax return Depreciable real property. State income tax return   If you have a gain from either a like-kind exchange or involuntary conversion of your depreciable real property, ordinary income from additional depreciation is figured under the rules explained earlier (see Section 1250 Property), limited to the greater of the following amounts. State income tax return The gain that must be reported under the rules for like-kind exchanges or involuntary conversions plus the fair market value of stock bought as replacement property in acquiring control of a corporation. State income tax return The gain you would have had to report as ordinary income from additional depreciation had the transaction been a cash sale minus the cost (or fair market value in an exchange) of the depreciable real property acquired. State income tax return   The ordinary income not reported for the year of the disposition is carried over to the depreciable real property acquired in the like-kind exchange or involuntary conversion as additional depreciation from the property disposed of. State income tax return Further, to figure the applicable percentage of additional depreciation to be treated as ordinary income, the holding period starts over for the new property. State income tax return Example. State income tax return The state paid you $116,000 when it condemned your depreciable real property for public use. State income tax return You bought other real property similar in use to the property condemned for $110,000 ($15,000 for depreciable real property and $95,000 for land). State income tax return You also bought stock for $5,000 to get control of a corporation owning property similar in use to the property condemned. State income tax return You choose to postpone reporting the gain. State income tax return If the transaction had been a sale for cash only, under the rules described earlier, $20,000 would have been reportable as ordinary income because of additional depreciation. State income tax return The ordinary income to be reported is $6,000, which is the greater of the following amounts. State income tax return The gain that must be reported under the rules for involuntary conversions, $1,000 ($116,000 − $115,000) plus the fair market value of stock bought as qualified replacement property, $5,000, for a total of $6,000. State income tax return The gain you would have had to report as ordinary income from additional depreciation ($20,000) had this transaction been a cash sale minus the cost of the depreciable real property bought ($15,000), or $5,000. State income tax return   The ordinary income not reported, $14,000 ($20,000 − $6,000), is carried over to the depreciable real property you bought as additional depreciation. State income tax return Basis of property acquired. State income tax return   If the ordinary income you have to report because of additional depreciation is limited, the total basis of the property you acquired is its fair market value (its cost, if bought to replace property involuntarily converted into money) minus the gain postponed. State income tax return   If you acquired more than one item of property, allocate the total basis among the properties in proportion to their fair market value (their cost, in an involuntary conversion into money). State income tax return However, if you acquired both depreciable real property and other property, allocate the total basis as follows. State income tax return Subtract the ordinary income because of additional depreciation that you do not have to report from the fair market value (or cost) of the depreciable real property acquired. State income tax return Add the fair market value (or cost) of the other property acquired to the result in (1). State income tax return Divide the result in (1) by the result in (2). State income tax return Multiply the total basis by the result in (3). State income tax return This is the basis of the depreciable real property acquired. State income tax return If you acquired more than one item of depreciable real property, allocate this basis amount among the properties in proportion to their fair market value (or cost). State income tax return Subtract the result in (4) from the total basis. State income tax return This is the basis of the other property acquired. State income tax return If you acquired more than one item of other property, allocate this basis amount among the properties in proportion to their fair market value (or cost). State income tax return Example 1. State income tax return In 1988, low-income housing property that you acquired and placed in service in 1983 was destroyed by fire and you received a $90,000 insurance payment. State income tax return The property's adjusted basis was $38,400, with additional depreciation of $14,932. State income tax return On December 1, 1988, you used the insurance payment to acquire and place in service replacement low-income housing property. State income tax return Your realized gain from the involuntary conversion was $51,600 ($90,000 − $38,400). State income tax return You chose to postpone reporting the gain under the involuntary conversion rules. State income tax return Under the rules for depreciation recapture on real property, the ordinary gain was $14,932, but you did not have to report any of it because of the limit for involuntary conversions. State income tax return The basis of the replacement low-income housing property was its $90,000 cost minus the $51,600 gain you postponed, or $38,400. State income tax return The $14,932 ordinary gain you did not report is treated as additional depreciation on the replacement property. State income tax return If you sold the property in 2013, your holding period for figuring the applicable percentage of additional depreciation to report as ordinary income will have begun December 2, 1988, the day after you acquired the property. State income tax return Example 2. State income tax return John Adams received a $90,000 fire insurance payment for depreciable real property (office building) with an adjusted basis of $30,000. State income tax return He uses the whole payment to buy property similar in use, spending $42,000 for depreciable real property and $48,000 for land. State income tax return He chooses to postpone reporting the $60,000 gain realized on the involuntary conversion. State income tax return Of this gain, $10,000 is ordinary income from additional depreciation but is not reported because of the limit for involuntary conversions of depreciable real property. State income tax return The basis of the property bought is $30,000 ($90,000 − $60,000), allocated as follows. State income tax return The $42,000 cost of depreciable real property minus $10,000 ordinary income not reported is $32,000. State income tax return The $48,000 cost of other property (land) plus the $32,000 figured in (1) is $80,000. State income tax return The $32,000 figured in (1) divided by the $80,000 figured in (2) is 0. State income tax return 4. State income tax return The basis of the depreciable real property is $12,000. State income tax return This is the $30,000 total basis multiplied by the 0. State income tax return 4 figured in (3). State income tax return The basis of the other property (land) is $18,000. State income tax return This is the $30,000 total basis minus the $12,000 figured in (4). State income tax return The ordinary income that is not reported ($10,000) is carried over as additional depreciation to the depreciable real property that was bought and may be taxed as ordinary income on a later disposition. State income tax return Multiple Properties If you dispose of depreciable property and other property in one transaction and realize a gain, you must allocate the amount realized between the two types of property in proportion to their respective fair market values to figure the part of your gain to be reported as ordinary income from depreciation. State income tax return Different rules may apply to the allocation of the amount realized on the sale of a business that includes a group of assets. State income tax return See chapter 2. State income tax return In general, if a buyer and seller have adverse interests as to the allocation of the amount realized between the depreciable property and other property, any arm's length agreement between them will establish the allocation. State income tax return In the absence of an agreement, the allocation should be made by taking into account the appropriate facts and circumstances. State income tax return These include, but are not limited to, a comparison between the depreciable property and all the other property being disposed of in the transaction. State income tax return The comparison should take into account all the following facts and circumstances. State income tax return The original cost and reproduction cost of construction, erection, or production. State income tax return The remaining economic useful life. State income tax return The state of obsolescence. State income tax return The anticipated expenditures required to maintain, renovate, or modernize the properties. State income tax return Like-kind exchanges and involuntary conversions. State income tax return   If you dispose of and acquire depreciable personal property and other property (other than depreciable real property) in a like-kind exchange or involuntary conversion, the amount realized is allocated in the following way. State income tax return The amount allocated to the depreciable personal property disposed of is treated as consisting of, first, the fair market value of the depreciable personal property acquired and, second (to the extent of any remaining balance), the fair market value of the other property acquired. State income tax return The amount allocated to the other property disposed of is treated as consisting of the fair market value of all property acquired that has not already been taken into account. State income tax return   If you dispose of and acquire depreciable real property and other property in a like-kind exchange or involuntary conversion, the amount realized is allocated in the following way. State income tax return The amount allocated to each of the three types of property (depreciable real property, depreciable personal property, or other property) disposed of is treated as consisting of, first, the fair market value of that type of property acquired and, second (to the extent of any remaining balance), any excess fair market value of the other types of property acquired. State income tax return If the excess fair market value is more than the remaining balance of the amount realized and is from both of the other two types of property, you can apply the unallocated amount in any manner you choose. State income tax return Example. State income tax return A fire destroyed your property with a total fair market value of $50,000. State income tax return It consisted of machinery worth $30,000 and nondepreciable property worth $20,000. State income tax return You received an insurance payment of $40,000 and immediately used it with $10,000 of your own funds (for a total of $50,000) to buy machinery with a fair market value of $15,000 and nondepreciable property with a fair market value of $35,000. State income tax return The adjusted basis of the destroyed machinery was $5,000 and your depreciation on it was $35,000. State income tax return You choose to postpone reporting your gain from the involuntary conversion. State income tax return You must report $9,000 as ordinary income from depreciation arising from this transaction, figured as follows. State income tax return The $40,000 insurance payment must be allocated between the machinery and the other property destroyed in proportion to the fair market value of each. State income tax return The amount allocated to the machinery is 30,000/50,000 × $40,000, or $24,000. State income tax return The amount allocated to the other property is 20,000/50,000 × $40,000, or $16,000. State income tax return Your gain on the involuntary conversion of the machinery is $24,000 minus $5,000 adjusted basis, or $19,000. State income tax return The $24,000 allocated to the machinery disposed of is treated as consisting of the $15,000 fair market value of the replacement machinery bought and $9,000 of the fair market value of other property bought in the transaction. State income tax return All $16,000 allocated to the other property disposed of is treated as consisting of the fair market value of the other property that was bought. State income tax return Your potential ordinary income from depreciation is $19,000, the gain on the machinery, because it is less than the $35,000 depreciation. State income tax return However, the amount you must report as ordinary income is limited to the $9,000 included in the amount realized for the machinery that represents the fair market value of property other than the depreciable property you bought. State income tax return Prev  Up  Next   Home   More Online Publications
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Understanding your CP49 Notice

We sent you this notice to tell you we used all or part of your refund to pay a tax debt.


What you need to do

  • Read your notice carefully — it'll explain how we used your refund.
  • Contact us if you disagree.

You may want to...


Answers to Common Questions

What should I do if I disagree with the notice?
Call us at the toll free number on the top right corner of your notice. Please have your paperwork (such as cancelled checks, amended return, etc.) ready when you call.

Part of the refund you used is mine. You used it to pay taxes my spouse owes. I don't owe any taxes. What can I do?
You can file a Form 8379, Injured Spouse Allocation to claim your share of the refund.

You only used part of my refund. What happens to the part you didn't use?
You'll receive a refund check for any part we didn't use.

What happens when the refund you used didn't pay the full amount I owe and I can't pay the rest?
You can make a payment plan with us when you can't pay the full amount you owe.

How can I make a payment plan?
Call us at the toll free number on the top right corner of your notice to talk about payment plans or learn more about them.


Tips for next year

Consider filing your taxes electronically. Filing online can help you avoid mistakes and find credits and deductions that you may qualify for. In many cases you can file for free. Learn more about e-file.

Printable samples of this notice (PDF)

Tax publications you may find useful

How to get help

Calling the 1-800 number listed on the top right corner of your notice is the fastest way to get your questions answered.

You can also authorize someone (such as an accountant) to contact the IRS on your behalf using this Power of Attorney and Declaration of Representative (Form 2848).

Or you may qualify for help from a Low Income Taxpayer Clinic.
 

Page Last Reviewed or Updated: 04-Mar-2014

The State Income Tax Return

State income tax return Index A Additional Medicare Tax, Step 5. State income tax return , Line 18. State income tax return Address change, Change of address. State income tax return Adjustments to income Estimated tax, Adjustments to income. State income tax return Withholding allowances, Adjustments to income (worksheet line 4). State income tax return Worksheet instructions, Deductions and Adjustments Worksheet, Net deductions and adjustments (worksheet line 8). State income tax return AGI, AGI. State income tax return Expected AGI, Expected AGI—Line 1 Aliens Nonresident aliens, Aliens Amended returns, Form Received After Filing, Amended returns. State income tax return Annualized estimated tax worksheets, Worksheet 2-9. State income tax return 2014 Annualized Estimated Tax Worksheet, Worksheet 2-9. State income tax return 2014 Annualized Estimated Tax Worksheet(Continued) Annualized - Capital gains, Worksheet 2-12. State income tax return 2014 Annualized Estimated Tax Worksheet—Line 12 Qualified Dividends and Capital Gain Tax Worksheet Annualized - Foreign Earned Income, Worksheet 2-13. State income tax return 2014 Annualized Estimated Tax Worksheet—Line 12 Foreign Earned Income Tax Worksheet Annualized - Phaseout of itemized deductions, Worksheet 2-10. State income tax return 2014 Annualized Estimated Tax Worksheet—Line 6 Phaseout of Itemized Deductions Annualized - Qualified dividends, Worksheet 2-12. State income tax return 2014 Annualized Estimated Tax Worksheet—Line 12 Qualified Dividends and Capital Gain Tax Worksheet Annualized - Reduction of exemption amount, Worksheet 2-11. State income tax return 2014 Annualized Estimated Tax Worksheet—Line 10 Reduction of Exemption Amount Annualized income installment method, Annualized Income Installment Method Capital gains worksheet, underpayment penalty, Worksheet 4-1. State income tax return 2013 Form 2210, Schedule AI—Line 12 Qualified Dividends and Capital Gain Tax Worksheet Form 2210, Schedule AI, Annualized Income Installment Method (Schedule AI) Qualified dividends worksheet, underpayment penalty, Worksheet 4-1. State income tax return 2013 Form 2210, Schedule AI—Line 12 Qualified Dividends and Capital Gain Tax Worksheet Underpayment penalty, (Schedule AI), Annualized Income Installment Method (Schedule AI) Annuities, Pensions and Annuities Assistance (see Tax help) B Backup withholding, Backup Withholding, Penalties. State income tax return Credit against income tax, Backup withholding. State income tax return C Capital gains and losses Annualized estimated tax, Tax on net capital gain. State income tax return Estimated tax on net capital gain, Tax on net capital gain. State income tax return Qualified dividends, Tax on qualified dividends and capital gains. State income tax return Casualty and theft losses, Itemized deductions (worksheet line 1). State income tax return Waiver of penalty, Waiver of Penalty Change of address, Change of address. State income tax return Change of name, Name changed. State income tax return Charitable contributions, Itemized deductions (worksheet line 1). State income tax return Child and dependent care credit Personal Allowances Worksheet (Form W-4), Child and dependent care credit (worksheet line F). State income tax return Child tax credit Personal Allowances Worksheet (Form W-4), Child tax credit (worksheet line G). State income tax return Claim of right, Itemized deductions (worksheet line 1). State income tax return Commodity credit corporation loans, Federal Payments Community property states, Community property states. State income tax return Compensation, Salaries and Wages Independent contractors, backup withholding, Backup Withholding Supplemental wages, Supplemental Wages Tips, Tips Wages and salaries, Salaries and Wages Crediting of overpayment, Credit an Overpayment Credits 2013 withholding and estimated taxes, Credit for Withholding and Estimated Tax for 2013 Deductions and Adjustments Worksheet (Form W-4), Tax credits (worksheet line 5). State income tax return Estimated tax against income tax, Estimated Tax Excess withholding on social security or railroad retirement taxes, Excess Social Security or Railroad Retirement Tax Withholding Expected taxes and credits, Expected Taxes and Credits— Lines 6–13c Withholding allowances, Tax credits (worksheet line 5). State income tax return Withholding tax, credit for, Withholding Criminal penalties Willfully false or fraudulent Form W-4, Penalties Crop insurance payments, Federal Payments Cumulative wage method of withholding, Cumulative Wage Method D Deductions Home mortgage interest, Itemized deductions (worksheet line 1). State income tax return Worksheet instructions, Deductions and Adjustments Worksheet Dependents Exemptions, Dependents. State income tax return Disabled persons Impairment-related work expenses, Itemized deductions (worksheet line 1). State income tax return Disaster Waiver of penalty, Waiver of Penalty Dividends Backup withholding, Backup Withholding Underreported, Underreported interest or dividends. State income tax return Divorced taxpayers Estimated tax credit, Divorced Taxpayers Form W-4, Single. State income tax return Domestic help, Household workers. State income tax return Definition, Household workers. State income tax return Withholding, Household workers. State income tax return E Earned income credit (EIC), What's New for 2014 Eligible rollover distributions, Eligible Rollover Distributions Employee business expenses Accountable plans, Accountable plan. State income tax return Nonaccountable plans, Nonaccountable plan. State income tax return Reimbursements, Expense allowances. State income tax return Employer Identification Numbers (EINs), Taxpayer identification number. State income tax return Employers Excess withholding on social security and railroad retirement taxes, Two or more employers. State income tax return , Employer's error. State income tax return Repaying withheld tax, Repaying withheld tax. State income tax return Tips, Tips Withholding rules, Rules Your Employer Must Follow Estate beneficiaries Underpayment penalty, Estate or trust payments of estimated tax. State income tax return Estate tax Income in respect of a decedent, Itemized deductions (worksheet line 1). State income tax return Estates Estimated tax, Estates and Trusts Estimated tax Adjustments to income, Adjustments to income. State income tax return Aliens, Aliens, Nonresident aliens. State income tax return Amended tax, Regular Installment Method Annualized income installment method, Annualized Income Installment Method Change in amount, Change in estimated tax. State income tax return Change of address, Change of address. State income tax return Change of name, Name changed. State income tax return Credit against income tax, Estimated Tax Crediting of overpayment, Credit an Overpayment Divorced taxpayers, Divorced Taxpayers Estates and trusts, Estates and Trusts Exemptions, Exemptions—line 4. State income tax return Expected AGI, Expected AGI—Line 1 Expected taxable income, Expected Taxable Income— Lines 2–5 Expected taxes and credits, Expected Taxes and Credits— Lines 6–13c Farmers and fishermen, Farmers and Fishermen, Farmers and fishermen. State income tax return , Farmers and Fishermen Fiscal year taxpayers, Fiscal year taxpayers. State income tax return Higher income individuals, Higher income taxpayers. State income tax return How to figure, How To Figure Estimated Tax, How To Figure Each Payment How to pay, How To Pay Estimated Tax Instructions for Worksheet 2-9, annualized estimated tax, Instructions for the 2014 Annualized Estimated Tax Worksheet (Worksheet 2-9) Itemized deductions, Itemized deductions—line 2. State income tax return Married taxpayers, Married Taxpayers Net capital gain, Tax on net capital gain. State income tax return , Tax on net capital gain. State income tax return No standard deduction, No standard deduction. State income tax return Nonresident aliens, Nonresident aliens. State income tax return Overpayment, Credit an Overpayment Payment vouchers, Pay by Check or Money Order Using the Estimated Tax Payment Voucher Payments not required, Estimated Tax Payments Not Required Regular installment method, Regular Installment Method Required annual payment, Required Annual Payment— Line 14c Self-employment income, Self-employment income. State income tax return Separate returns, Separate Returns Sick pay, Estimated tax. State income tax return Standard deduction, Standard deduction—line 2. State income tax return , Line 7. State income tax return Total estimated tax payments, Total Estimated Tax Payments Needed—Line 16a Types of taxes included, Introduction Underpayment penalty, Underpayment penalty. State income tax return , Underpayment Penalty for 2013 When to pay, When To Pay Estimated Tax When to start payments, When To Start Who does not have to pay, Who Does Not Have To Pay Estimated Tax Who must pay, Who Must Pay Estimated Tax Estimated tax worksheets, Worksheets for Chapter 2, Worksheet 2-1. State income tax return 2014 Estimated Tax Worksheet, Worksheet 2-2. State income tax return 2014 Estimated Tax Worksheet—Line 1 Estimated Taxable Social Security and Railroad Retirement Benefits 2014 annualized estimated tax worksheet, Worksheet 2-9. State income tax return 2014 Annualized Estimated Tax Worksheet Capital gains, tax on, Tax on net capital gain. State income tax return Foreign earned income, Worksheet 2-8. State income tax return 2014 Estimated Tax Worksheet—Line 6 Foreign Earned Income Tax Worksheet Form 1040-ES, Worksheet 2-1. State income tax return 2014 Estimated Tax Worksheet Phaseout of itemized deductions, Worksheet 2-5. State income tax return 2014 Estimated Tax Worksheet—Line 2 Phaseout of Itemized Deductions Railroad retirement benefits, Worksheet 2-2. State income tax return 2014 Estimated Tax Worksheet—Line 1 Estimated Taxable Social Security and Railroad Retirement Benefits Reduction of exemption amount, Worksheet 2-6. State income tax return 2014 Estimated Tax Worksheet—Line 4 Reduction of Exemption Amount Self-employment tax, Worksheet 2-3. State income tax return 2014 Estimated Tax Worksheet—Lines 1 and 11 Estimated Self-Employment Tax and Deduction Worksheet Social security benefits, Worksheet 2-2. State income tax return 2014 Estimated Tax Worksheet—Line 1 Estimated Taxable Social Security and Railroad Retirement Benefits Standard deduction, Worksheet 2-4. State income tax return 2014 Estimated Tax Worksheet—Line 2 Standard Deduction Worksheet Excess social security or railroad retirement tax withholding, Excess Social Security or Railroad Retirement Tax Withholding, How to claim refund of excess tier 2 RRTA. State income tax return Nonrailroad employees worksheet, Worksheet for Nonrailroad Employees Railroad employees worksheets, Worksheets for Railroad Employees Exemption from withholding, Exemption From Withholding Claiming, Claiming exemption from withholding. State income tax return Good for only one year, An exemption is good for only 1 year. State income tax return Itemized deductions, Itemizing deductions or claiming exemptions or credits. State income tax return Students, Students. State income tax return Exemptions, Line 10. State income tax return Dependents, Dependents. State income tax return Expected taxable income, Exemptions—line 4. State income tax return Personal Allowances Worksheet, Exemptions (worksheet lines A, C, and D). State income tax return Self, Self. State income tax return Spouse, Spouse. State income tax return Withholding allowances, Withholding Allowances Expenses, Itemized deductions (worksheet line 1). State income tax return Allowances, Expense allowances. State income tax return F Farmers Estimated tax, Special Rules, Farmers and fishermen. State income tax return , Farmers and Fishermen Fiscal years, Fiscal year farmers and fishermen. State income tax return Gross income, Gross income from farming. State income tax return Joint returns, Joint returns. State income tax return Required annual payment, Farmers and fishermen. State income tax return Underpayment penalty, Farmers and fishermen. State income tax return , Farmers and Fishermen Waiver of underpayment penalty, Farmers and fishermen. State income tax return Withholding for farmworkers, Farmworkers. State income tax return Figures Tables and figures (see Tables and figures) Fiscal years Estimated tax, Fiscal year taxpayers. State income tax return Farmers and fishermen, Fiscal year farmers and fishermen. State income tax return Withholding tax credit, Fiscal Years (FY) Fishermen Estimated tax, Special Rules, Farmers and fishermen. State income tax return , Farmers and Fishermen Fiscal years, Fiscal year farmers and fishermen. State income tax return Gross income, Gross income from fishing. State income tax return Joint returns, Joint returns. State income tax return Required annual payment, Farmers and fishermen. State income tax return Underpayment penalty, Farmers and fishermen. State income tax return , Farmers and Fishermen Waiver of underpayment penalty, Farmers and fishermen. State income tax return Form 1040-ES, Introduction, How To Pay Estimated Tax Form 1040-ES (NR), Aliens Form 1040X, Form Received After Filing Form 1041-ES, Estates and Trusts Form 1099 series, Backup Withholding, The 1099 Series Form 2210, Form 2210. State income tax return , Figuring Your Required Annual Payment (Part I) Form 2210-F, Form 2210-F. State income tax return Form W-2, Form W-2 Form W-2c, Form Not Correct Form W-2G, Form W-2G. State income tax return , Form W-2G Form W-4 worksheets, Completing Form W-4 and Worksheets Completing of, Completing Form W-4 and Worksheets Deductions and adjustments worksheet, Deductions and Adjustments Worksheet IRS withholding calculator, IRS Withholding Calculator. State income tax return Number of allowances claimed, Only one job (worksheet line B). State income tax return Two-Earners/Multiple Jobs Worksheet, Two-Earners/Multiple Jobs Worksheet Withholding allowances, Completing Form W-4 and Worksheets, Form W-4 worksheets. State income tax return Form W-4, Employee's Allowance Withholding Certificate, Determining Amount of Tax Withheld Using Form W-4 Form W-4P, Periodic Payments Form W-4S, Form W-4S. State income tax return Form W-4V, Unemployment Compensation Form W-7, Taxpayer identification number. State income tax return Form W-9, Withholding rules. State income tax return Fraud Form W-4 statements, Penalties Free tax services, Free help with your tax return. State income tax return Fringe benefits, Taxable Fringe Benefits, More information. State income tax return G Gambling Form W-2G, Form W-2G Losses, Itemized deductions (worksheet line 1). State income tax return , Form W-2G Winnings, Form W-2G Gross income, Gross income. State income tax return Farming, Gross income from farming. State income tax return Fishing, Gross income from fishing. State income tax return H Head of household Personal Allowances Worksheet, Head of household filing status (worksheet line E). State income tax return Withholding allowance, Head of household filing status (worksheet line E). State income tax return Help (see Tax help) Higher income individuals Required annual payment, Higher income taxpayers. State income tax return Underpayment penalty, Higher income taxpayers. State income tax return Household workers, Household workers. State income tax return I Individual retirement arrangements (IRAs), Pensions and Annuities (see also Pensions) Interest income Backup withholding, Backup Withholding Underreported, Underreported interest or dividends. State income tax return IRS withholding calculator, IRS Withholding Calculator. State income tax return Itemized deductions Deductions and Adjustments Worksheet, Itemized deductions (worksheet line 1). State income tax return Estimated tax, expected taxable income, Itemized deductions—line 2. State income tax return Exemption from withholding, Itemizing deductions or claiming exemptions or credits. State income tax return Gambling losses, Itemized deductions (worksheet line 1). State income tax return , Form W-2G J Joint returns Excess withholding on social security and railroad retirement taxes, Joint returns. State income tax return Farmers and fishermen, Joint returns. State income tax return Underpayment penalty, 2012 separate returns and 2013 joint return. State income tax return M Marital status Form W-4 worksheet, Marital Status Withholding rate, Marital Status Married taxpayers, Joint returns. State income tax return (see also Joint returns) Estimated tax, Married Taxpayers Marital status, Married. State income tax return Withholding allowances, Married individuals. State income tax return Medical and dental expenses, Itemized deductions (worksheet line 1). State income tax return Military retirement pay, Military retirees. State income tax return , Periodic Payments Missing children, photographs of, Reminders Multiple jobs Excess social security and railroad retirement withholding, Excess Social Security or Railroad Retirement Tax Withholding Withholding allowances, Multiple jobs. State income tax return N Name change, Name changed. State income tax return Net investment income tax, Step 5. State income tax return , Line 18. State income tax return NIIT, Step 5. State income tax return , Line 18. State income tax return Noncitizens Estimated tax, Aliens Withholding, Single. State income tax return , Employees who are not citizens or residents. State income tax return Nonqualified deferred compensation, Periodic Payments Nonresident aliens Estimated tax, Aliens, Nonresident aliens. State income tax return Individual taxpayer identification numbers (ITINs), Taxpayer identification number. State income tax return O Overpayment Crediting to estimated tax, Credit an Overpayment P Part-year method of withholding, Part-Year Method Patronage dividends Backup withholding, Backup Withholding Payment vouchers, Pay by Check or Money Order Using the Estimated Tax Payment Voucher Penalties Backup withholding, Penalties. State income tax return Underpayment of estimated tax, Underpayment Penalty for 2013 Waiver of underpayment penalty, Waiver of Penalty Willfully false or fraudulent Form W-4, Penalties Withholding allowances, Penalties Pensions, Pensions and Annuities New job, Employee also receiving pension income. State income tax return Rollovers, Eligible Rollover Distributions Wages and salaries withholding rules compared, Withholding rules. State income tax return Personal Allowances Worksheet, Personal Allowances Worksheet, Total personal allowances (worksheet line H). State income tax return Publications (see Tax help) R Railroad retirement benefits Choosing to withhold, Federal Payments Railroad retirement tax Excess withholding, Excess Social Security or Railroad Retirement Tax Withholding, Worksheets for Railroad Employees Refund claims (tier 2), How to claim refund of excess tier 2 RRTA. State income tax return Regular installment method, estimated tax, Regular Installment Method Reimbursements, Expense allowances. State income tax return Excess, Accountable plan. State income tax return Reporting Fringe benefits, How your employer reports your benefits. State income tax return Gambling winnings, Information to give payer. State income tax return Tips to employer, Reporting tips to your employer. State income tax return Required annual payment, Required Annual Payment— Line 14c, Example. State income tax return Retirement plans Pension plans, Pensions and Annuities Pensions, Pensions and Annuities Rollovers, Eligible Rollover Distributions State or local deferred compensation plan payments, Periodic Payments Rollovers, Eligible Rollover Distributions Royalties Backup withholding, Backup Withholding S Salaries, Salaries and Wages Saturday, Sunday, holiday rule, Saturday, Sunday, holiday rule. State income tax return Self-employment tax, Self-employment income. State income tax return Separate returns Estimated tax credit, Separate Returns Underpayment penalty, 2012 joint return and 2013 separate returns. State income tax return Withholding tax credit, Separate Returns Sick pay, Sick Pay, Estimated tax. State income tax return Single marital status, Single. State income tax return Social security benefits Choosing to withhold, Federal Payments Social security taxes Excess withholding, Excess Social Security or Railroad Retirement Tax Withholding Taxpayer identification numbers (TINs), Taxpayer identification number. State income tax return Withholding obligation, Reminders Spouse, Marital Status (see also Married taxpayers) Exemption, Spouse. State income tax return Marital status, Marital Status Personal Allowances Worksheet, Spouse. State income tax return Standard deduction, Standard deduction—line 2. State income tax return , Line 7. State income tax return State and local income taxes and property taxes, Itemized deductions (worksheet line 1). State income tax return State or local deferred compensation plan payments, Periodic Payments Students, Students. State income tax return Supplemental wages, Supplemental Wages T Tables and figures Do you have to pay estimated tax? (Figure 2-A), Exemption from withholding on Form W-4 (Figure 1-A), Railroad retirement, maximum withholding (Table 3-2), Table 3-2. State income tax return Maximum Social Security and RRTA Withholding for 2013 Social security, maximum withholding (Table 3-2), Table 3-2. State income tax return Maximum Social Security and RRTA Withholding for 2013 Worksheets, where to find, Worksheets for Chapter 2 Tax help, How To Get Tax Help Tax Rate Schedules, 2014 Tax Rate Schedules Taxpayer identification numbers (TINs), Taxpayer identification number. State income tax return Tips, Tips, More information. State income tax return Total income, Total income. State income tax return Trust beneficiaries Underpayment penalty, Estate or trust payments of estimated tax. State income tax return TTY/TDD information, How To Get Tax Help Two-Earners/Multiple Jobs Worksheet, Two-Earners/Multiple Jobs Worksheet U Underpayment penalty, Underpayment Penalty for 2013, Worksheet for Form 2210, Part IV, Section B—Figuring the Penalty Actual withholding method, Actual withholding method. State income tax return Amended estimated tax, Underpayment penalty. State income tax return Amended returns, Amended returns. State income tax return Annualized income installment method, Annualized Income Installment Method (Schedule AI) Beneficiaries of estates and trusts, Estate or trust payments of estimated tax. State income tax return Capital gains (Worksheet 4-1), Worksheet 4-1. State income tax return 2013 Form 2210, Schedule AI—Line 12 Qualified Dividends and Capital Gain Tax Worksheet Exceptions, Exceptions Farmers and fishermen, Farmers and fishermen. State income tax return , Farmers and Fishermen, Farmers and fishermen. State income tax return Figuring, IRS can figure the penalty for you. State income tax return , Short Method for Figuring the Penalty (Part III), Regular Method for Figuring the Penalty (Part IV) Higher income individuals, Higher income taxpayers. State income tax return Joint returns, 2012 separate returns and 2013 joint return. State income tax return Lowering or eliminating, Lowering or eliminating the penalty. State income tax return Minimum required each period, Minimum required each period. State income tax return No penalty, No penalty. State income tax return No tax liability last year exception, No Tax Liability Last Year Paid through withholding, Paid through withholding. State income tax return , Actual withholding method. State income tax return Penalty figured for each period, Penalty figured separately for each period. State income tax return Penalty thresholds, General Rule Qualified dividends (Worksheet 4-1), Worksheet 4-1. State income tax return 2013 Form 2210, Schedule AI—Line 12 Qualified Dividends and Capital Gain Tax Worksheet Required annual payment, Figuring Your Required Annual Payment (Part I) Schedule AI, Annualized Income Installment Method (Schedule AI) Separate returns, 2012 joint return and 2013 separate returns. State income tax return Waiver, Waiver of Penalty When charged, When penalty is charged. State income tax return Unemployment compensation, Unemployment Compensation, Form 1099-G. State income tax return W Wages and salaries, Salaries and Wages Waiver of penalty, Waiver of Penalty Withholding Allowances, Withholding Allowances, Alternative method of figuring withholding allowances. State income tax return , Only one job (worksheet line B). State income tax return Personal Allowances Worksheet, Personal Allowances Worksheet Amended returns, Form Received After Filing Amount of tax withheld, Form W-4, Determining Amount of Tax Withheld Using Form W-4 Annuities, Pensions and Annuities Backup withholding, Backup Withholding Changing, Changing Your Withholding Checking amount of, Checking Your Withholding Choosing not to withhold, Choosing Not To Have Income Tax Withheld Community property states, Community property states. State income tax return Credit against income tax, Withholding Cumulative wage method, Cumulative Wage Method Deductions and adjustments worksheet, Deductions and Adjustments Worksheet Divorced taxpayers, Single. State income tax return Domestic help, Household workers. State income tax return Employers' rules, Rules Your Employer Must Follow Estimated tax, Withholding—line 15. State income tax return Excess social security and railroad retirement taxes, Excess Social Security or Railroad Retirement Tax Withholding Exemption from, Exemption From Withholding Farmworkers, Farmworkers. State income tax return Fiscal years, Fiscal Years (FY) Form received after filing, Form Received After Filing Form W-2, Form W-2 Form W-2c, Form Not Correct Form W-2G, Form W-2G. State income tax return , Form W-2G Form W-4, Determining Amount of Tax Withheld Using Form W-4 Fringe benefits, Taxable Fringe Benefits Gambling winnings, Gambling Winnings, Backup withholding on gambling winnings. State income tax return , Form W-2G Getting right amount of tax withheld, Getting the Right Amount of Tax Withheld, IRS Withholding Calculator. State income tax return Household workers, Household workers. State income tax return Marital status, Marital Status Married taxpayers, Married. State income tax return , Married individuals. State income tax return Multiple jobs, Multiple jobs. State income tax return Noncitizens, Single. State income tax return , Employees who are not citizens or residents. State income tax return Nonperiodic payments, Nonperiodic Payments Part-year method, Part-Year Method Penalties, Penalties Pensions, Pensions and Annuities Periodic payments, Periodic Payments Railroad retirement benefits, Federal Payments Repaying withheld tax, Repaying withheld tax. State income tax return Rollovers, Eligible Rollover Distributions Salaries and wages, Salaries and Wages Separate returns, Separate Returns Sick pay, Sick Pay Single taxpayers, Single. State income tax return Social security (FICA) tax, Reminders, Federal Payments Tips, Tips Types of income, Introduction, Salaries and Wages Underpayment penalty, Paid through withholding. State income tax return , Actual withholding method. State income tax return Unemployment compensation, Unemployment Compensation Worksheet for Form 2210, Part IV, Section B-Figure the Penalty Penalty Worksheet, Worksheet for Form 2210, Part IV, Section B—Figuring the Penalty Worksheets (blank) Annualized - Capital gains (Worksheet 2-12), Worksheet 2-12. State income tax return 2014 Annualized Estimated Tax Worksheet—Line 12 Qualified Dividends and Capital Gain Tax Worksheet Annualized - Foreign Earned Income (Worksheet 2-13), Worksheet 2-13. State income tax return 2014 Annualized Estimated Tax Worksheet—Line 12 Foreign Earned Income Tax Worksheet Annualized - Phaseout of itemized deductions (Worksheet 2-10), Worksheet 2-10. State income tax return 2014 Annualized Estimated Tax Worksheet—Line 6 Phaseout of Itemized Deductions Annualized - Qualified dividends (Worksheet 2-12), Worksheet 2-12. State income tax return 2014 Annualized Estimated Tax Worksheet—Line 12 Qualified Dividends and Capital Gain Tax Worksheet Annualized - Reduction of exemption amount (Worksheet 2-11), Worksheet 2-11. State income tax return 2014 Annualized Estimated Tax Worksheet—Line 10 Reduction of Exemption Amount Annualized estimated tax (Worksheet 2-9), Worksheet 2-9. State income tax return 2014 Annualized Estimated Tax Worksheet, Worksheet 2-9. State income tax return 2014 Annualized Estimated Tax Worksheet(Continued) Capital gains tax worksheet Worksheet 4-1, Worksheet 4-1. State income tax return 2013 Form 2210, Schedule AI—Line 12 Qualified Dividends and Capital Gain Tax Worksheet Dependents (age 65 or older or blind) exemption from withholding (Worksheet 1-4), Worksheet 1-4. State income tax return Exemption From Withholding for Dependents Age 65 or Older or Blind Estimated tax worksheets (Worksheet 2-1), Worksheet 2-1. State income tax return 2014 Estimated Tax Worksheet Foreign earned income (Worksheet 2-8), Worksheet 2-8. State income tax return 2014 Estimated Tax Worksheet—Line 6 Foreign Earned Income Tax Worksheet Phaseout of itemized deductions (Worksheet 2-5), Worksheet 2-5. State income tax return 2014 Estimated Tax Worksheet—Line 2 Phaseout of Itemized Deductions Qualified dividends Worksheet 4-1, Worksheet 4-1. State income tax return 2013 Form 2210, Schedule AI—Line 12 Qualified Dividends and Capital Gain Tax Worksheet Railroad retirement benefits (Worksheet 2-2), Worksheet 2-2. State income tax return 2014 Estimated Tax Worksheet—Line 1 Estimated Taxable Social Security and Railroad Retirement Benefits Reduction of exemption amount (Worksheet 2-6), Worksheet 2-6. State income tax return 2014 Estimated Tax Worksheet—Line 4 Reduction of Exemption Amount Self-employment tax and deduction (Worksheet 2-3), Worksheet 2-3. State income tax return 2014 Estimated Tax Worksheet—Lines 1 and 11 Estimated Self-Employment Tax and Deduction Worksheet Social security benefits (Worksheet 2-2), Worksheet 2-2. State income tax return 2014 Estimated Tax Worksheet—Line 1 Estimated Taxable Social Security and Railroad Retirement Benefits Standard deduction (Worksheet 2-4), Worksheet 2-4. State income tax return 2014 Estimated Tax Worksheet—Line 2 Standard Deduction Worksheet Prev  Up     Home   More Online Publications