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Tax Amendments 2013 14

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Tax Amendments 2013 14

Tax amendments 2013 14 Publication 584SP - Additional Material Table of Contents This image is too large to be displayed in the current screen. Tax amendments 2013 14 Please click the link to view the image. Tax amendments 2013 14 Pasillo de Entrada (Entrance Hall) This image is too large to be displayed in the current screen. Tax amendments 2013 14 Please click the link to view the image. Tax amendments 2013 14 Sala de Estar (Living Room) This image is too large to be displayed in the current screen. Tax amendments 2013 14 Please click the link to view the image. Tax amendments 2013 14 Comedor (Dining Room) This image is too large to be displayed in the current screen. Tax amendments 2013 14 Please click the link to view the image. Tax amendments 2013 14 Cocina (Kitchen) This image is too large to be displayed in the current screen. Tax amendments 2013 14 Please click the link to view the image. Tax amendments 2013 14 Cuarto de Trabajo (Den) This image is too large to be displayed in the current screen. Tax amendments 2013 14 Please click the link to view the image. Tax amendments 2013 14 Dormitorios (Bedrooms) This image is too large to be displayed in the current screen. Tax amendments 2013 14 Please click the link to view the image. Tax amendments 2013 14 Baños (Bathrooms) This image is too large to be displayed in the current screen. Tax amendments 2013 14 Please click the link to view the image. Tax amendments 2013 14 Cuarto de Recreación/Juegos (Recreation Room) This image is too large to be displayed in the current screen. Tax amendments 2013 14 Please click the link to view the image. Tax amendments 2013 14 Lavadero y Sótano (Laundry and Basement) This image is too large to be displayed in the current screen. Tax amendments 2013 14 Please click the link to view the image. Tax amendments 2013 14 Garaje (Garage) This image is too large to be displayed in the current screen. Tax amendments 2013 14 Please click the link to view the image. Tax amendments 2013 14 Equipo Deportivo (Sporting Equipment) This image is too large to be displayed in the current screen. Tax amendments 2013 14 Please click the link to view the image. Tax amendments 2013 14 Ropa de Hombres (Men's Clothing) This image is too large to be displayed in the current screen. Tax amendments 2013 14 Please click the link to view the image. Tax amendments 2013 14 Ropa de Mujeres (Women's Clothing) This image is too large to be displayed in the current screen. Tax amendments 2013 14 Please click the link to view the image. Tax amendments 2013 14 Ropa de Niños (Children's Clothing) This image is too large to be displayed in the current screen. Tax amendments 2013 14 Please click the link to view the image. Tax amendments 2013 14 Joyería (Jewelry) This image is too large to be displayed in the current screen. Tax amendments 2013 14 Please click the link to view the image. Tax amendments 2013 14 Enseres Eléctricos (Electrical Appliances) This image is too large to be displayed in the current screen. Tax amendments 2013 14 Please click the link to view the image. Tax amendments 2013 14 Artículos de Hilo (Linens) This image is too large to be displayed in the current screen. Tax amendments 2013 14 Please click the link to view the image. Tax amendments 2013 14 Artículos Misceláneos (Miscellaneous) This image is too large to be displayed in the current screen. Tax amendments 2013 14 Please click the link to view the image. Tax amendments 2013 14 vehículos motorizados This image is too large to be displayed in the current screen. Tax amendments 2013 14 Please click the link to view the image. Tax amendments 2013 14 Hogar (Excluyendo su contenido) Hoja de Trabajo A. Tax amendments 2013 14 Costo u Otra Base (Ajustada) Precaución:Vea Instrucciones de la Hoja de Trabajo A antes de usar esta hoja de trabajo. Tax amendments 2013 14         (a) Parte Personal (b) Parte Comercial/de Alquiler 1. Tax amendments 2013 14   Anote el precio de compra de la vivienda dañada o destruida. Tax amendments 2013 14 (Si usted presentó el Formulario 2119 cuando en un principio adquirió dicha vivienda para aplazar ganancias provenientes de la venta de una vivienda anterior antes del 7 de mayo de 1997, anote la base ajustada de la vivienda nueva, usando la cantidad que aparece en dicho Formulario 2119). Tax amendments 2013 14 1. Tax amendments 2013 14     2. Tax amendments 2013 14   Puntos pagados por el vendedor para una vivienda comprada después de 1990. Tax amendments 2013 14 No incluya puntos pagados por el vendedor que ya restó para llegar a la cantidad anotada en la línea 1 2. Tax amendments 2013 14     3. Tax amendments 2013 14   Reste la línea 2 de la línea 1 3. Tax amendments 2013 14     4. Tax amendments 2013 14   Cargos por liquidación o costos de cierre. Tax amendments 2013 14 (Vea Settlement Costs (Costos de Liquidación) en la Publicación 551, en inglés). Tax amendments 2013 14 Si la línea 1 incluye la base ajustada de la vivienda nueva del Formulario 2119, ignore las líneas 4a a la 4g y 5; para entonces pasar a la línea 6. Tax amendments 2013 14         a. Tax amendments 2013 14 Honorarios por estudios de escritura 4a. Tax amendments 2013 14       b. Tax amendments 2013 14 Honorarios legales (incluyendo honorarios por trámites relacionados con la escritura y la preparación de documentos) 4b. Tax amendments 2013 14       c. Tax amendments 2013 14 Estudios topográficos 4c. Tax amendments 2013 14       d. Tax amendments 2013 14 Seguro de escritura de propietario 4d. Tax amendments 2013 14       e. Tax amendments 2013 14 Impuestos de traspaso o de sello 4e. Tax amendments 2013 14       f. Tax amendments 2013 14 Cantidades que el vendedor adeudaba y que usted acordó pagar (impuestos atrasados o intereses, costos de registro o cargos hipotecarios y comisiones sobre las ventas) 4f. Tax amendments 2013 14       g. Tax amendments 2013 14 Otros gastos 4g. Tax amendments 2013 14     5. Tax amendments 2013 14   Sume las líneas 4a a la 4g 5. Tax amendments 2013 14     6. Tax amendments 2013 14   Costo de ampliaciones y mejoras. Tax amendments 2013 14 (Vea Increases to Basis (Aumentos en la Base) en la Publicación 551, en inglés). Tax amendments 2013 14 No incluya ninguna de las ampliaciones o mejoras incluidas en la línea 1 6. Tax amendments 2013 14     7. Tax amendments 2013 14   Tasaciones tributarias especiales pagadas por concepto de mejoras locales, tales como calles y aceras o banquetas 7. Tax amendments 2013 14     8. Tax amendments 2013 14   Otros aumentos en la base 8. Tax amendments 2013 14     9. Tax amendments 2013 14   Sume las líneas 3, 5, 6, 7 y 8 9. Tax amendments 2013 14     10. Tax amendments 2013 14   Depreciación (permitida o permisible) relacionada con el uso comercial o alquiler de la vivienda 10. Tax amendments 2013 14 0   11. Tax amendments 2013 14   Otras disminuciones en la base (Vea Decreases to Basis (Disminuciones en la Base) en la Publicación 551, en inglés). Tax amendments 2013 14 11. Tax amendments 2013 14     12. Tax amendments 2013 14   Sume las líneas 10 y 11 12. Tax amendments 2013 14     13. Tax amendments 2013 14   Costo u otra base (ajustada) de la vivienda dañada o destruida. Tax amendments 2013 14 Reste la línea 12 de la línea 9. Tax amendments 2013 14 Anote dicha cantidad aquí y en la línea 2 del Anexo 20 13. Tax amendments 2013 14     Instrucciones para la Hoja de Trabajo A. Tax amendments 2013 14 Si usted usa la Hoja de Trabajo A para calcular el costo u otra base (ajustada) de su vivienda, siga estas instrucciones. Tax amendments 2013 14 NO utilice esta hoja de trabajo para determinar el costo de su base si adquirió interés de su vivienda por un difunto que falleció en 2010 y el albacea de su caudal hereditario presentó el Formulario 8939. Tax amendments 2013 14 SI. Tax amendments 2013 14 . Tax amendments 2013 14 . Tax amendments 2013 14   ENTONCES. Tax amendments 2013 14 . Tax amendments 2013 14 . Tax amendments 2013 14 usted heredó su vivienda de un difunto que falleció antes o depués del 2010, o de un difunto que falleció en el 2010 pero la albacea de su caudal hereditario no presentó el Formulario 8939. Tax amendments 2013 14 1 omita las líneas 1 a la 4 de la hoja de trabajo. Tax amendments 2013 14 2 encuentre su base utilizando las reglas bajo Inherited Property (Bienes Heredados) en la Publicación 551, en inglés. Tax amendments 2013 14 Anote esta cantidad en la línea 5 de la hoja de trabajo. Tax amendments 2013 14 3 llene las líneas 6 a la 13 de la hoja de trabajo. Tax amendments 2013 14 usted recibió su vivienda como un regalo (donación) 1 lea Property Received as Gift (Bienes Recibidos como Regalo (Donación)) en la Publicación 551, en inglés, y anote en las líneas 1 y 3 de la hoja de trabajo la base ajustada del donante o el valor justo de mercado de la vivienda en el momento del regalo (donación), lo que proceda. Tax amendments 2013 14 2 si usted puede sumar algún impuesto federal sobre donaciones a su base, anote esa cantidad en la línea 5 de la hoja de trabajo. Tax amendments 2013 14 3 llene el resto de la hoja de trabajo. Tax amendments 2013 14 usted recibió su vivienda como un canje por otra propiedad 1 anote en la línea 1 de la hoja de trabajo el valor justo de mercado de la otra propiedad al tiempo del canje. Tax amendments 2013 14 (Pero si usted recibió su vivienda como un canje por su vivienda anterior antes del 7 de mayo de 1997, y tuvo una ganancia en que el canje se aplazó utilizando el Formulario 2119, anote en la línea 1 de la hoja de trabajo la base ajustada de la vivienda nueva que aparece en dicho formulario). Tax amendments 2013 14 2 llene el resto de la hoja de trabajo. Tax amendments 2013 14 usted construyó su vivienda 1 sume el precio de compra del terreno y el costo de la construcción de la vivienda. Tax amendments 2013 14 Anote ese total en la línea 1 de la hoja de trabajo. Tax amendments 2013 14 (Sin embargo, si usted presentó un Formulario 2119 para aplazar ganancias en la venta de una vivienda anterior antes del 7 de mayo de 1997, anote en la línea 1 de la hoja de trabajo la base ajustada de la vivienda nueva que aparece en dicho formulario). Tax amendments 2013 14 2 llene el resto de la hoja de trabajo. Tax amendments 2013 14 usted recibió su vivienda de su cónyuge después del 18 de julio de 1984 1 ignore las líneas 1 a la 4 de la hoja de trabajo. Tax amendments 2013 14 2 anote en la línea 5 de la hoja de trabajo el costo u otra base (ajustada) de su cónyuge en la vivienda justo antes de que usted la haya recibido. Tax amendments 2013 14 3 llene las líneas 6 a la 13 de la hoja de trabajo, haciendo ajustes a la base solamente por acontecimientos después del traspaso. Tax amendments 2013 14 usted fue dueño de una vivienda conjuntamente con su cónyuge, el cual le traspasó su participación en la misma después del 18 de julio de 1984     llene una hoja de trabajo, haciendo los ajustes a la base por acontecimientos tanto antes como después del traspaso. Tax amendments 2013 14   usted recibió su vivienda de su cónyuge antes del 19 de julio de 1984 1 ignore las líneas 1 a la 4 de la hoja de trabajo. Tax amendments 2013 14 2 anote en la línea 5 de la hoja de trabajo el valor justo de mercado de la vivienda cuando usted la recibió. Tax amendments 2013 14 3 llene las líneas 6 a la 13 de la hoja de trabajo, ajustando la base solamente por acontecimientos después del traspaso. Tax amendments 2013 14 usted fue dueño de una vivienda conjuntamente con su cónyuge, el cual le traspasó su participación en la misma antes del 19 de julio de 1984 1 llene una hoja de trabajo, las líneas 1 a la 13, ajustando la base solamente por acontecimientos antes del traspaso. Tax amendments 2013 14 2 multiplique la cantidad de la línea 13 de esa hoja de trabajo por 0. Tax amendments 2013 14 5 para obtener la base ajustada de la mitad de su participación a la hora del traspaso. Tax amendments 2013 14 3 multiplique el valor justo de mercado de la vivienda a la hora del traspaso por 0. Tax amendments 2013 14 5. Tax amendments 2013 14 Generalmente, el resultado corresponde a la base de la mitad de la participación de su cónyuge. Tax amendments 2013 14 4 sume las cantidades de los pasos 2 y 3 y anote el total en la línea 5 de una segunda hoja de trabajo. Tax amendments 2013 14 5 complete el resto de la segunda hoja de trabajo, ajustando la base solamente por acontecimientos después del traspaso. Tax amendments 2013 14 usted fue dueño de su vivienda conjuntamente con alguien (aparte de cónyuges que presenten una declaración conjunta) 1 llene las líneas 1 a la 13 de la hoja de trabajo. Tax amendments 2013 14 2 multiplique la cantidad de la línea 13 para obtener la base ajustada suya por el porcentaje de su parte de su participación de la vivienda. Tax amendments 2013 14 Instrucciones para la Hoja de Trabajo A. Tax amendments 2013 14 (Continuación) SI. Tax amendments 2013 14 . Tax amendments 2013 14 . Tax amendments 2013 14   ENTONCES. Tax amendments 2013 14 . Tax amendments 2013 14 . Tax amendments 2013 14 usted fue dueño de su vivienda conjuntamente con su cónyuge que falleció antes de 2010 y antes de un hecho fortuito 1 llene una hoja de trabajo, las líneas 1 a la 13, incluyendo ajustes a la base solamente por acontecimientos antes del fallecimiento de su cónyuge. Tax amendments 2013 14 2 multiplique la cantidad de la línea 13 de esa hoja de trabajo por 0. Tax amendments 2013 14 5 para obtener la base ajustada de la mitad de su participación a la fecha del fallecimiento. Tax amendments 2013 14 3 calcule la base de la mitad de la participación de su cónyuge. Tax amendments 2013 14 Esto corresponde a la mitad del valor justo de mercado en la fecha del fallecimiento (o la valoración alternativa usada posteriormente para propósitos de los impuestos de sucesiones o caudales hereditarios). Tax amendments 2013 14 (La base de su mitad seguirá siendo la mitad de la base ajustada determinada en el paso 2). Tax amendments 2013 14 4 sume las cantidades de los pasos 2 y 3 y anote el total en la línea 5 de una segunda hoja de trabajo. Tax amendments 2013 14 5 complete las líneas 6 a la 13 de la segunda hoja de trabajo, ajustando la base solamente por acontecimientos después del fallecimiento de su cónyuge. Tax amendments 2013 14 usted fue dueño de su vivienda conjuntamente con su cónyuge que falleció antes de 2010 y antes de un hecho fortuito y, su vivienda permanente está en un estado donde rigen las leyes de la comunidad de bienes matrimoniales 1 ignore las líneas 1 a la 4 de la hoja de trabajo. Tax amendments 2013 14 2 anote la cantidad de su base en la línea 5 de la hoja de trabajo. Tax amendments 2013 14 Generalmente, esto corresponde al valor justo de mercado de la vivienda al momento del fallecimiento. Tax amendments 2013 14 (No obstante, vea Community Property (Comunidad de Bienes Matrimoniales) en la Publicación 551, en inglés, para reglas especiales). Tax amendments 2013 14 3 llene el resto de la hoja de trabajo, ajustando la base solamente por acontecimientos después del fallecimiento de su cónyuge. Tax amendments 2013 14 usted fue dueño de su vivienda conjuntamente con alguien (que no sean cónyuges que presenten la declaración conjunta) que falleció antes de 2010 y antes de un hecho fortuito 1 llene las líneas 1 a la 13 de la hoja de trabajo, incluyendo ajustes a la base solamente por acontecimientos antes del fallecimiento del codueño. Tax amendments 2013 14 2 multiplique la cantidad de la línea 13 por el porcentaje de su parte de su participación de la vivienda para obtener la base ajustada suyo en la fecha del fallecimiento. Tax amendments 2013 14 3 multiplique el valor justo del mercado en la fecha del fallecimiento (o use la valuació alterna usada posteriormente para propositos de los impuestos de sucesiones o caudales hereditarios) por el porcentaje que corresponde a la participación del codueño. Tax amendments 2013 14 Ésta es la base para el interés parcial del codueño. Tax amendments 2013 14 4 sume las cantidades de los pasos 2 y 3 y anote el total en la línea 5 de una segunda hoja de trabajo. Tax amendments 2013 14 5 complete las líneas 6 a la 13 de la segunda hoja de trabajo incluyendo ajustes a la base solamente por acontecimientos después del fallecimiento del codueño. Tax amendments 2013 14 alguna vez su vivienda sufrió daños debido a un hecho fortuito anterior 1 en la línea 8 de la hoja de trabajo, anote toda cantidad que haya gastado para restaurar la vivienda a su estado original antes del hecho fortuito anterior. Tax amendments 2013 14 2 en la línea 11 anote: todo reembolso de seguros que usted haya recibido (o espera recibir) por la pérdida anterior  y toda pérdida por hecho fortuito deducible de años anteriores no cubierta por  su seguro. Tax amendments 2013 14 la persona que le vendió su vivienda pagó puntos sobre su préstamo y usted compró su vivienda después de 1990 pero antes del 4 de abril de 1994   en la línea 2 anote los puntos pagados por el vendedor solamente si usted los dedujo como intereses hipotecarios de la vivienda en el año en que fueron pagados (a no ser que haya utilizado los puntos pagados por el vendedor para reducir la cantidad de la línea 1). Tax amendments 2013 14 la persona que le vendió su vivienda pagó puntos sobre su préstamo y usted compró su vivienda después del 3 de abril de 1994   en la línea 2 anote los puntos pagados por el vendedor aun si usted no los dedujo (a no ser que haya utilizado los puntos pagados por el vendedor para reducir la cantidad de la línea 1). Tax amendments 2013 14 usted usó parte de la propiedad como su vivienda y parte de ella para propósitos comerciales o para generar ingresos de alquiler   usted debe asignar las anotaciones en la Hoja de Trabajo A entre la parte personal (columna (a)) y la parte comercial/de alquiler (columna (b)). Tax amendments 2013 14 no corresponde ninguno de los puntos anteriores   llene completamente la hoja de trabajo. Tax amendments 2013 14 Prev  Up  Next   Home   More Online Publications
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The Tax Amendments 2013 14

Tax amendments 2013 14 5. Tax amendments 2013 14   Additional Rules for Listed Property Table of Contents Introduction Useful Items - You may want to see: What Is Listed Property?Passenger Automobiles Other Property Used for Transportation Computers and Related Peripheral Equipment Can Employees Claim a Deduction? What Is the Business-Use Requirement?How To Allocate Use Qualified Business Use Recapture of Excess Depreciation Lessee's Inclusion Amount Do the Passenger Automobile Limits Apply?Maximum Depreciation Deduction Deductions After the Recovery Period Deductions For Passenger Automobiles Acquired in a Trade-in What Records Must Be Kept?Adequate Records How Is Listed Property Information Reported? Introduction This chapter discusses the deduction limits and other special rules that apply to certain listed property. Tax amendments 2013 14 Listed property includes cars and other property used for transportation, property used for entertainment, and certain computers. Tax amendments 2013 14 Deductions for listed property (other than certain leased property) are subject to the following special rules and limits. Tax amendments 2013 14 Deduction for employees. Tax amendments 2013 14 If your use of the property is not for your employer's convenience or is not required as a condition of your employment, you cannot deduct depreciation or rent expenses for your use of the property as an employee. Tax amendments 2013 14 Business-use requirement. Tax amendments 2013 14 If the property is not used predominantly (more than 50%) for qualified business use, you cannot claim the section 179 deduction or a special depreciation allowance. Tax amendments 2013 14 In addition, you must figure any depreciation deduction under the Modified Accelerated Cost Recovery System (MACRS) using the straight line method over the ADS recovery period. Tax amendments 2013 14 You may also have to recapture (include in income) any excess depreciation claimed in previous years. Tax amendments 2013 14 A similar inclusion amount applies to certain leased property. Tax amendments 2013 14 Passenger automobile limits and rules. Tax amendments 2013 14 Annual limits apply to depreciation deductions (including section 179 deductions and any special depreciation allowance) for certain passenger automobiles. Tax amendments 2013 14 You can continue to deduct depreciation for the unrecovered basis resulting from these limits after the end of the recovery period. Tax amendments 2013 14 This chapter defines listed property and explains the special rules and depreciation deduction limits that apply, including the special inclusion amount rule for leased property. Tax amendments 2013 14 It also discusses the recordkeeping rules for listed property and explains how to report information about the property on your tax return. Tax amendments 2013 14 Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 535 Business Expenses 587 Business Use of Your Home (Including Use by Daycare Providers) Form (and Instructions) 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses 4562 Depreciation and Amortization 4797 Sales of Business Property See chapter 6 for information about getting publications and forms. Tax amendments 2013 14 What Is Listed Property? Listed property is any of the following. Tax amendments 2013 14 Passenger automobiles (as defined later). Tax amendments 2013 14 Any other property used for transportation, unless it is an excepted vehicle. Tax amendments 2013 14 Property generally used for entertainment, recreation, or amusement (including photographic, phonographic, communication, and video-recording equipment). Tax amendments 2013 14 Computers and related peripheral equipment, unless used only at a regular business establishment and owned or leased by the person operating the establishment. Tax amendments 2013 14 A regular business establishment includes a portion of a dwelling unit that is used both regularly and exclusively for business as discussed in Publication 587. Tax amendments 2013 14 Improvements to listed property. Tax amendments 2013 14   An improvement made to listed property that must be capitalized is treated as a new item of depreciable property. Tax amendments 2013 14 The recovery period and method of depreciation that apply to the listed property as a whole also apply to the improvement. Tax amendments 2013 14 For example, if you must depreciate the listed property using the straight line method, you also must depreciate the improvement using the straight line method. Tax amendments 2013 14 Passenger Automobiles A passenger automobile is any four-wheeled vehicle made primarily for use on public streets, roads, and highways and rated at 6,000 pounds or less of unloaded gross vehicle weight (6,000 pounds or less of gross vehicle weight for trucks and vans). Tax amendments 2013 14 It includes any part, component, or other item physically attached to the automobile at the time of purchase or usually included in the purchase price of an automobile. Tax amendments 2013 14 The following vehicles are not considered passenger automobiles for these purposes. Tax amendments 2013 14 An ambulance, hearse, or combination ambulance-hearse used directly in a trade or business. Tax amendments 2013 14 A vehicle used directly in the trade or business of transporting persons or property for pay or hire. Tax amendments 2013 14 A truck or van that is a qualified nonpersonal use vehicle. Tax amendments 2013 14 Qualified nonpersonal use vehicles. Tax amendments 2013 14   Qualified nonpersonal use vehicles are vehicles that by their nature are not likely to be used more than a minimal amount for personal purposes. Tax amendments 2013 14 They include the trucks and vans listed as excepted vehicles under Other Property Used for Transportation , next. Tax amendments 2013 14 They also include trucks and vans that have been specially modified so that they are not likely to be used more than a minimal amount for personal purposes, such as by installation of permanent shelving and painting the vehicle to display advertising or the company's name. Tax amendments 2013 14 For a detailed discussion of passenger automobiles, including leased passenger automobiles, see  Publication 463. Tax amendments 2013 14 Other Property Used for Transportation Although vehicles used to transport persons or property for pay or hire and vehicles rated at more than the 6,000-pound threshold are not passenger automobiles, they are still “other property used for transportation” and are subject to the special rules for listed property. Tax amendments 2013 14 Other property used for transportation includes trucks, buses, boats, airplanes, motorcycles, and any other vehicles used to transport persons or goods. Tax amendments 2013 14 Excepted vehicles. Tax amendments 2013 14   Other property used for transportation does not include the following qualified nonpersonal use vehicles (defined earlier under Passenger Automobiles ). Tax amendments 2013 14 Clearly marked police and fire vehicles. Tax amendments 2013 14 Unmarked vehicles used by law enforcement officers if the use is officially authorized. Tax amendments 2013 14 Ambulances used as such and hearses used as such. Tax amendments 2013 14 Any vehicle with a loaded gross vehicle weight of over 14,000 pounds that is designed to carry cargo. Tax amendments 2013 14 Bucket trucks (cherry pickers), cement mixers, dump trucks (including garbage trucks), flatbed trucks, and refrigerated trucks. Tax amendments 2013 14 Combines, cranes and derricks, and forklifts. Tax amendments 2013 14 Delivery trucks with seating only for the driver, or only for the driver plus a folding jump seat. Tax amendments 2013 14 Qualified moving vans. Tax amendments 2013 14 Qualified specialized utility repair trucks. Tax amendments 2013 14 School buses used in transporting students and employees of schools. Tax amendments 2013 14 Other buses with a capacity of at least 20 passengers that are used as passenger buses. Tax amendments 2013 14 Tractors and other special purpose farm vehicles. Tax amendments 2013 14 Clearly marked police and fire vehicle. Tax amendments 2013 14   A clearly marked police or fire vehicle is a vehicle that meets all the following requirements. Tax amendments 2013 14 It is owned or leased by a governmental unit or an agency or instrumentality of a governmental unit. Tax amendments 2013 14 It is required to be used for commuting by a police officer or fire fighter who, when not on a regular shift, is on call at all times. Tax amendments 2013 14 It is prohibited from being used for personal use (other than commuting) outside the limit of the police officer's arrest powers or the fire fighter's obligation to respond to an emergency. Tax amendments 2013 14 It is clearly marked with painted insignia or words that make it readily apparent that it is a police or fire vehicle. Tax amendments 2013 14 A marking on a license plate is not a clear marking for these purposes. Tax amendments 2013 14 Qualified moving van. Tax amendments 2013 14   A qualified moving van is any truck or van used by a professional moving company for moving household or business goods if the following requirements are met. Tax amendments 2013 14 No personal use of the van is allowed other than for travel to and from a move site or for minor personal use, such as a stop for lunch on the way from one move site to another. Tax amendments 2013 14 Personal use for travel to and from a move site happens no more than five times a month on average. Tax amendments 2013 14 Personal use is limited to situations in which it is more convenient to the employer, because of the location of the employee's residence in relation to the location of the move site, for the van not to be returned to the employer's business location. Tax amendments 2013 14 Qualified specialized utility repair truck. Tax amendments 2013 14   A truck is a qualified specialized utility repair truck if it is not a van or pickup truck and all the following apply. Tax amendments 2013 14 The truck was specifically designed for and is used to carry heavy tools, testing equipment, or parts. Tax amendments 2013 14 Shelves, racks, or other permanent interior construction has been installed to carry and store the tools, equipment, or parts and would make it unlikely that the truck would be used, other than minimally, for personal purposes. Tax amendments 2013 14 The employer requires the employee to drive the truck home in order to be able to respond in emergency situations for purposes of restoring or maintaining electricity, gas, telephone, water, sewer, or steam utility services. Tax amendments 2013 14 Computers and Related Peripheral Equipment A computer is a programmable, electronically activated device capable of accepting information, applying prescribed processes to the information, and supplying the results of those processes with or without human intervention. Tax amendments 2013 14 It consists of a central processing unit with extensive storage, logic, arithmetic, and control capabilities. Tax amendments 2013 14 Related peripheral equipment is any auxiliary machine which is designed to be controlled by the central processing unit of a computer. Tax amendments 2013 14 The following are neither computers nor related peripheral equipment. Tax amendments 2013 14 Any equipment that is an integral part of other property that is not a computer. Tax amendments 2013 14 Typewriters, calculators, adding and accounting machines, copiers, duplicating equipment, and similar equipment. Tax amendments 2013 14 Equipment of a kind used primarily for the user's amusement or entertainment, such as video games. Tax amendments 2013 14 Can Employees Claim a Deduction? If you are an employee, you can claim a depreciation deduction for the use of your listed property (whether owned or rented) in performing services as an employee only if your use is a business use. Tax amendments 2013 14 The use of your property in performing services as an employee is a business use only if both the following requirements are met. Tax amendments 2013 14 The use is for your employer's convenience. Tax amendments 2013 14 The use is required as a condition of your employment. Tax amendments 2013 14 If these requirements are not met, you cannot deduct depreciation (including the section 179 deduction) or rent expenses for your use of the property as an employee. Tax amendments 2013 14 Employer's convenience. Tax amendments 2013 14   Whether the use of listed property is for your employer's convenience must be determined from all the facts. Tax amendments 2013 14 The use is for your employer's convenience if it is for a substantial business reason of the employer. Tax amendments 2013 14 The use of listed property during your regular working hours to carry on your employer's business generally is for the employer's convenience. Tax amendments 2013 14 Condition of employment. Tax amendments 2013 14   Whether the use of listed property is a condition of your employment depends on all the facts and circumstances. Tax amendments 2013 14 The use of property must be required for you to perform your duties properly. Tax amendments 2013 14 Your employer does not have to require explicitly that you use the property. Tax amendments 2013 14 However, a mere statement by the employer that the use of the property is a condition of your employment is not sufficient. Tax amendments 2013 14 Example 1. Tax amendments 2013 14 Virginia Sycamore is employed as a courier with We Deliver, which provides local courier services. Tax amendments 2013 14 She owns and uses a motorcycle to deliver packages to downtown offices. Tax amendments 2013 14 We Deliver explicitly requires all delivery persons to own a car or motorcycle for use in their employment. Tax amendments 2013 14 Virginia's use of the motorcycle is for the convenience of We Deliver and is required as a condition of employment. Tax amendments 2013 14 Example 2. Tax amendments 2013 14 Bill Nelson is an inspector for Uplift, a construction company with many sites in the local area. Tax amendments 2013 14 He must travel to these sites on a regular basis. Tax amendments 2013 14 Uplift does not furnish an automobile or explicitly require him to use his own automobile. Tax amendments 2013 14 However, it pays him for any costs he incurs in traveling to the various sites. Tax amendments 2013 14 The use of his own automobile or a rental automobile is for the convenience of Uplift and is required as a condition of employment. Tax amendments 2013 14 Example 3. Tax amendments 2013 14 Assume the same facts as in Example 2 except that Uplift furnishes a car to Bill, who chooses to use his own car and receive payment for using it. Tax amendments 2013 14 The use of his own car is neither for the convenience of Uplift nor required as a condition of employment. Tax amendments 2013 14 Example 4. Tax amendments 2013 14 Marilyn Lee is a pilot for Y Company, a small charter airline. Tax amendments 2013 14 Y requires pilots to obtain 80 hours of flight time annually in addition to flight time spent with the airline. Tax amendments 2013 14 Pilots usually can obtain these hours by flying with the Air Force Reserve or by flying part-time with another airline. Tax amendments 2013 14 Marilyn owns her own airplane. Tax amendments 2013 14 The use of her airplane to obtain the required flight hours is neither for the convenience of the employer nor required as a condition of employment. Tax amendments 2013 14 Example 5. Tax amendments 2013 14 David Rule is employed as an engineer with Zip, an engineering contracting firm. Tax amendments 2013 14 He occasionally takes work home at night rather than work late in the office. Tax amendments 2013 14 He owns and uses a home computer which is virtually identical to the office model. Tax amendments 2013 14 His use of the computer is neither for the convenience of his employer nor required as a condition of employment. Tax amendments 2013 14 What Is the Business-Use Requirement? You can claim the section 179 deduction and a special depreciation allowance for listed property and depreciate listed property using GDS and a declining balance method if the property meets the business-use requirement. Tax amendments 2013 14 To meet this requirement, listed property must be used predominantly (more than 50% of its total use) for qualified business use. Tax amendments 2013 14 If this requirement is not met, the following rules apply. Tax amendments 2013 14 Property not used predominantly for qualified business use during the year it is placed in service does not qualify for the section 179 deduction. Tax amendments 2013 14 Property not used predominantly for qualified business use during the year it is placed in service does not qualify for a special depreciation allowance. Tax amendments 2013 14 Any depreciation deduction under MACRS for property not used predominantly for qualified business use during any year must be figured using the straight line method over the ADS recovery period. Tax amendments 2013 14 This rule applies each year of the recovery period. Tax amendments 2013 14 Excess depreciation on property previously used predominantly for qualified business use must be recaptured (included in income) in the first year in which it is no longer used predominantly for qualified business use. Tax amendments 2013 14 A lessee must add an inclusion amount to income in the first year in which the leased property is not used predominantly for qualified business use. Tax amendments 2013 14 Being required to use the straight line method for an item of listed property not used predominantly for qualified business use is not the same as electing the straight line method. Tax amendments 2013 14 It does not mean that you have to use the straight line method for other property in the same class as the item of listed property. Tax amendments 2013 14 Exception for leased property. Tax amendments 2013 14   The business-use requirement generally does not apply to any listed property leased or held for leasing by anyone regularly engaged in the business of leasing listed property. Tax amendments 2013 14   You are considered regularly engaged in the business of leasing listed property only if you enter into contracts for the leasing of listed property with some frequency over a continuous period of time. Tax amendments 2013 14 This determination is made on the basis of the facts and circumstances in each case and takes into account the nature of your business in its entirety. Tax amendments 2013 14 Occasional or incidental leasing activity is insufficient. Tax amendments 2013 14 For example, if you lease only one passenger automobile during a tax year, you are not regularly engaged in the business of leasing automobiles. Tax amendments 2013 14 An employer who allows an employee to use the employer's property for personal purposes and charges the employee for the use is not regularly engaged in the business of leasing the property used by the employee. Tax amendments 2013 14 How To Allocate Use To determine whether the business-use requirement is met, you must allocate the use of any item of listed property used for more than one purpose during the year among its various uses. Tax amendments 2013 14 For passenger automobiles and other means of transportation, allocate the property's use on the basis of mileage. Tax amendments 2013 14 You determine the percentage of qualified business use by dividing the number of miles you drove the vehicle for business purposes during the year by the total number of miles you drove the vehicle for all purposes (including business miles) during the year. Tax amendments 2013 14 For other listed property, allocate the property's use on the basis of the most appropriate unit of time the property is actually used (rather than merely being available for use). Tax amendments 2013 14 For example, you can determine the percentage of business use of a computer by dividing the number of hours you used the computer for business purposes during the year by the total number of hours you used the computer for all purposes (including business use) during the year. Tax amendments 2013 14 Entertainment use. Tax amendments 2013 14   Treat the use of listed property for entertainment, recreation, or amusement purposes as a business use only to the extent you can deduct expenses (other than interest and property tax expenses) due to its use as an ordinary and necessary business expense. Tax amendments 2013 14 Commuting use. Tax amendments 2013 14   The use of an automobile for commuting is not business use, regardless of whether work is performed during the trip. Tax amendments 2013 14 For example, a business telephone call made on a car telephone while commuting to work does not change the character of the trip from commuting to business. Tax amendments 2013 14 This is also true for a business meeting held in a car while commuting to work. Tax amendments 2013 14 Similarly, a business call made on an otherwise personal trip does not change the character of a trip from personal to business. Tax amendments 2013 14 The fact that an automobile is used to display material that advertises the owner's or user's trade or business does not convert an otherwise personal use into business use. Tax amendments 2013 14 Use of your automobile by another person. Tax amendments 2013 14   If someone else uses your automobile, do not treat that use as business use unless one of the following conditions applies. Tax amendments 2013 14 That use is directly connected with your business. Tax amendments 2013 14 You properly report the value of the use as income to the other person and withhold tax on the income where required. Tax amendments 2013 14 You are paid a fair market rent. Tax amendments 2013 14 Treat any payment to you for the use of the automobile as a rent payment for purposes of item (3). Tax amendments 2013 14 Employee deductions. Tax amendments 2013 14   If you are an employee, do not treat your use of listed property as business use unless it is for your employer's convenience and is required as a condition of your employment. Tax amendments 2013 14 See Can Employees Claim a Deduction , earlier. Tax amendments 2013 14 Qualified Business Use Qualified business use of listed property is any use of the property in your trade or business. Tax amendments 2013 14 However, it does not include the following uses. Tax amendments 2013 14 The leasing of property to any 5% owner or related person (to the extent the property is used by a 5% owner or person related to the owner or lessee of the property). Tax amendments 2013 14 The use of property as pay for the services of a 5% owner or related person. Tax amendments 2013 14 The use of property as pay for services of any person (other than a 5% owner or related person), unless the value of the use is included in that person's gross income and income tax is withheld on that amount where required. Tax amendments 2013 14 Property does not stop being used predominantly for qualified business use because of a transfer at death. Tax amendments 2013 14 Exception for leasing or compensatory use of aircraft. Tax amendments 2013 14   Treat the leasing of any aircraft by a 5% owner or related person, or the compensatory use of any aircraft, as a qualified business use if at least 25% of the total use of the aircraft during the year is for a qualified business use. Tax amendments 2013 14 5% owner. Tax amendments 2013 14   For a business entity that is not a corporation, a 5% owner is any person who owns more than 5% of the capital or profits interest in the business. Tax amendments 2013 14   For a corporation, a 5% owner is any person who owns, or is considered to own, either of the following. Tax amendments 2013 14 More than 5% of the outstanding stock of the corporation. Tax amendments 2013 14 Stock possessing more than 5% of the total combined voting power of all stock in the corporation. Tax amendments 2013 14 Related persons. Tax amendments 2013 14   For a description of related persons, see Related persons in the discussion on property owned or used in 1986 under What Method Can You Use To Depreciate Your Property in chapter 1 . Tax amendments 2013 14 For this purpose, however, treat as related persons only the relationships listed in items (1) through (10) of that discussion and substitute “50%” for “10%” each place it appears. Tax amendments 2013 14 Examples. Tax amendments 2013 14   The following examples illustrate whether the use of business property is qualified business use. Tax amendments 2013 14 Example 1. Tax amendments 2013 14 John Maple is the sole proprietor of a plumbing contracting business. Tax amendments 2013 14 John employs his brother, Richard, in the business. Tax amendments 2013 14 As part of Richard's pay, he is allowed to use one of the company automobiles for personal use. Tax amendments 2013 14 The company includes the value of the personal use of the automobile in Richard's gross income and properly withholds tax on it. Tax amendments 2013 14 The use of the automobile is pay for the performance of services by a related person, so it is not a qualified business use. Tax amendments 2013 14 Example 2. Tax amendments 2013 14 John, in Example 1, allows unrelated employees to use company automobiles for personal purposes. Tax amendments 2013 14 He does not include the value of the personal use of the company automobiles as part of their compensation and he does not withhold tax on the value of the use of the automobiles. Tax amendments 2013 14 This use of company automobiles by employees is not a qualified business use. Tax amendments 2013 14 Example 3. Tax amendments 2013 14 James Company Inc. Tax amendments 2013 14 owns several automobiles that its employees use for business purposes. Tax amendments 2013 14 The employees also are allowed to take the automobiles home at night. Tax amendments 2013 14 The fair market value of each employee's use of an automobile for any personal purpose, such as commuting to and from work, is reported as income to the employee and James Company withholds tax on it. Tax amendments 2013 14 This use of company automobiles by employees, even for personal purposes, is a qualified business use for the company. Tax amendments 2013 14 Investment Use The use of property to produce income in a nonbusiness activity (investment use) is not a qualified business use. Tax amendments 2013 14 However, you can treat the investment use as business use to figure the depreciation deduction for the property in a given year. Tax amendments 2013 14 Example 1. Tax amendments 2013 14 Sarah Bradley uses a home computer 50% of the time to manage her investments. Tax amendments 2013 14 She also uses the computer 40% of the time in her part-time consumer research business. Tax amendments 2013 14 Sarah's home computer is listed property because it is not used at a regular business establishment. Tax amendments 2013 14 She does not use the computer predominantly for qualified business use. Tax amendments 2013 14 Therefore, she cannot elect a section 179 deduction or claim a special depreciation allowance for the computer. Tax amendments 2013 14 She must depreciate it using the straight line method over the ADS recovery period. Tax amendments 2013 14 Her combined business/investment use for determining her depreciation deduction is 90%. Tax amendments 2013 14 Example 2. Tax amendments 2013 14 If Sarah uses her computer 30% of the time to manage her investments and 60% of the time in her consumer research business, it is used predominantly for qualified business use. Tax amendments 2013 14 She can elect a section 179 deduction and, if she does not deduct all the computer's cost, she can claim a special depreciation allowance and depreciate the computer using the 200% declining balance method over the GDS recovery period. Tax amendments 2013 14 Her combined business/investment use for determining her depreciation deduction is 90%. Tax amendments 2013 14 Recapture of Excess Depreciation If you used listed property more than 50% in a qualified business use in the year you placed it in service, you must recapture (include in income) excess depreciation in the first year you use it 50% or less. Tax amendments 2013 14 You also increase the adjusted basis of your property by the same amount. Tax amendments 2013 14 Excess depreciation is: The depreciation allowable for the property (including any section 179 deduction and special depreciation allowance claimed) for years before the first year you do not use the property predominantly for qualified business use, minus The depreciation that would have been allowable for those years if you had not used the property predominantly for qualified business use in the year you placed it in service. Tax amendments 2013 14 To determine the amount in (2) above, you must refigure the depreciation using the straight line method and the ADS recovery period. Tax amendments 2013 14 Example. Tax amendments 2013 14 In June 2009, Ellen Rye purchased and placed in service a pickup truck that cost $18,000. Tax amendments 2013 14 She used it only for qualified business use for 2009 through 2012. Tax amendments 2013 14 Ellen claimed a section 179 deduction of $10,000 based on the purchase of the truck. Tax amendments 2013 14 She began depreciating it using the 200% DB method over a 5-year GDS recovery period. Tax amendments 2013 14 The pickup truck's gross vehicle weight was over 6,000 pounds, so it was not subject to the passenger automobile limits discussed later under Do the Passenger Automobile Limits Apply. Tax amendments 2013 14 During 2013, she used the truck 50% for business and 50% for personal purposes. Tax amendments 2013 14 She includes $4,018 excess depreciation in her gross income for 2013. Tax amendments 2013 14 The excess depreciation is determined as follows. Tax amendments 2013 14 Total section 179 deduction ($10,000) and depreciation claimed ($6,618) for 2009 through 2012. Tax amendments 2013 14 (Depreciation is from Table A-1. Tax amendments 2013 14 ) $16,618 Minus: Depreciation allowable (Table A-8):     2009 – 10% of $18,000 $1,800   2010 – 20% of $18,000 3,600   2011 – 20% of $18,000 3,600   2012 – 20% of $18,000 3,600 12,600 Excess depreciation $4,018 If Ellen's use of the truck does not change to 50% for business and 50% for personal purposes until 2015, there will be no excess depreciation. Tax amendments 2013 14 The total depreciation allowable using Table A-8 through 2015 will be $18,000, which equals the total of the section 179 deduction and depreciation she will have claimed. Tax amendments 2013 14 Where to figure and report recapture. Tax amendments 2013 14   Use Form 4797, Part IV, to figure the recapture amount. Tax amendments 2013 14 Report the recapture amount as other income on the same form or schedule on which you took the depreciation deduction. Tax amendments 2013 14 For example, report the recapture amount as other income on Schedule C (Form 1040) if you took the depreciation deduction on Schedule C. Tax amendments 2013 14 If you took the depreciation deduction on Form 2106, report the recapture amount as other income on Form 1040, line 21. Tax amendments 2013 14 Lessee's Inclusion Amount If you use leased listed property other than a passenger automobile for business/investment use, you must include an amount in your income in the first year your qualified business-use percentage is 50% or less. Tax amendments 2013 14 Your qualified business-use percentage is the part of the property's total use that is qualified business use (defined earlier). Tax amendments 2013 14 For the inclusion amount rules for a leased passenger automobile, see Leasing a Car in chapter 4 of Publication 463. Tax amendments 2013 14 The inclusion amount is the sum of Amount A and Amount B, described next. Tax amendments 2013 14 However, see the special rules for the inclusion amount, later, if your lease begins in the last 9 months of your tax year or is for less than one year. Tax amendments 2013 14 Amount A. Tax amendments 2013 14   Amount A is: The fair market value of the property, multiplied by The business/investment use for the first tax year the qualified business-use percentage is 50% or less, multiplied by The applicable percentage from Table A-19 in Appendix A . Tax amendments 2013 14   The fair market value of the property is the value on the first day of the lease term. Tax amendments 2013 14 If the capitalized cost of an item of listed property is specified in the lease agreement, you must treat that amount as the fair market value. Tax amendments 2013 14 Amount B. Tax amendments 2013 14   Amount B is: The fair market value of the property, multiplied by The average of the business/investment use for all tax years the property was leased that precede the first tax year the qualified business-use percentage is 50% or less, multiplied by The applicable percentage from Table A–20 in Appendix A . Tax amendments 2013 14 Maximum inclusion amount. Tax amendments 2013 14   The inclusion amount cannot be more than the sum of the deductible amounts of rent for the tax year in which the lessee must include the amount in gross income. Tax amendments 2013 14 Inclusion amount worksheet. Tax amendments 2013 14   The following worksheet is provided to help you figure the inclusion amount for leased listed property. Tax amendments 2013 14 Inclusion Amount Worksheet for Leased Listed Property 1. Tax amendments 2013 14 Fair market value   2. Tax amendments 2013 14 Business/investment use for first year business use is 50% or less   3. Tax amendments 2013 14 Multiply line 1 by line 2. Tax amendments 2013 14   4. Tax amendments 2013 14 Rate (%) from Table A-19   5. Tax amendments 2013 14 Multiply line 3 by line 4. Tax amendments 2013 14 This is Amount A. Tax amendments 2013 14   6. Tax amendments 2013 14 Fair market value   7. Tax amendments 2013 14 Average business/investment use for years property leased before the first year business use is 50% or less . Tax amendments 2013 14 . Tax amendments 2013 14 . Tax amendments 2013 14 . Tax amendments 2013 14 . Tax amendments 2013 14 . Tax amendments 2013 14 . Tax amendments 2013 14 . Tax amendments 2013 14 . Tax amendments 2013 14 . Tax amendments 2013 14 . Tax amendments 2013 14 . Tax amendments 2013 14 . Tax amendments 2013 14   8. Tax amendments 2013 14 Multiply line 6 by line 7   9. Tax amendments 2013 14 Rate (%) from Table A-20   10. Tax amendments 2013 14 Multiply line 8 by line 9. Tax amendments 2013 14 This is Amount B. Tax amendments 2013 14   11. Tax amendments 2013 14 Add line 5 and line 10. Tax amendments 2013 14 This is your inclusion amount. Tax amendments 2013 14 Enter here and as other income on the form or schedule on which you originally took the deduction (for example, Schedule C or F (Form 1040), Form 1040, Form 1120, etc. Tax amendments 2013 14 )         Example. Tax amendments 2013 14 On February 1, 2011, Larry House, a calendar year taxpayer, leased and placed in service a computer with a fair market value of $3,000. Tax amendments 2013 14 The lease is for a period of 5 years. Tax amendments 2013 14 Larry does not use the computer at a regular business establishment, so it is listed property. Tax amendments 2013 14 His business use of the property (all of which is qualified business use) is 80% in 2011, 60% in 2012, and 40% in 2013. Tax amendments 2013 14 He must add an inclusion amount to gross income for 2013, the first tax year his qualified business-use percentage is 50% or less. Tax amendments 2013 14 The computer has a 5-year recovery period under both GDS and ADS. Tax amendments 2013 14 2013 is the third tax year of the lease, so the applicable percentage from Table A-19 is −19. Tax amendments 2013 14 8%. Tax amendments 2013 14 The applicable percentage from Table A-20 is 22. Tax amendments 2013 14 0%. Tax amendments 2013 14 Larry's deductible rent for the computer for 2013 is $800. Tax amendments 2013 14 Larry uses the Inclusion amount worksheet. Tax amendments 2013 14 to figure the amount he must include in income for 2013. Tax amendments 2013 14 His inclusion amount is $224, which is the sum of −$238 (Amount A) and $462 (Amount B). Tax amendments 2013 14 Inclusion Amount Worksheet for Leased Listed Property 1. Tax amendments 2013 14 Fair market value $3,000   2. Tax amendments 2013 14 Business/investment use for first year business use is 50% or less 40 % 3. Tax amendments 2013 14 Multiply line 1 by line 2. Tax amendments 2013 14 1,200   4. Tax amendments 2013 14 Rate (%) from Table A-19 −19. Tax amendments 2013 14 8 % 5. Tax amendments 2013 14 Multiply line 3 by line 4. Tax amendments 2013 14 This is Amount A. Tax amendments 2013 14 −238   6. Tax amendments 2013 14 Fair market value 3,000   7. Tax amendments 2013 14 Average business/investment use for years property leased before the first year business use is 50% or less 70 % 8. Tax amendments 2013 14 Multiply line 6 by line 7 2,100   9. Tax amendments 2013 14 Rate (%) from Table A-20 22. Tax amendments 2013 14 0 % 10. Tax amendments 2013 14 Multiply line 8 by line 9. Tax amendments 2013 14 This is Amount B. Tax amendments 2013 14 462   11. Tax amendments 2013 14 Add line 5 and line 10. Tax amendments 2013 14 This is your inclusion amount. Tax amendments 2013 14 Enter here and as other income on the form or schedule on which you originally took the deduction (for example, Schedule C or F (Form 1040), Form 1040, Form 1120, etc. Tax amendments 2013 14 ) $224           Lease beginning in the last 9 months of your tax year. Tax amendments 2013 14    The inclusion amount is subject to a special rule if all the following apply. Tax amendments 2013 14 The lease term begins within 9 months before the close of your tax year. Tax amendments 2013 14 You do not use the property predominantly (more than 50%) for qualified business use during that part of the tax year. Tax amendments 2013 14 The lease term continues into your next tax year. Tax amendments 2013 14 Under this special rule, add the inclusion amount to income in the next tax year. Tax amendments 2013 14 Figure the inclusion amount by taking into account the average of the business/investment use for both tax years (line 2 of the Inclusion Amount Worksheet for Leased Listed Property) and the applicable percentage for the tax year the lease term begins. Tax amendments 2013 14 Skip lines 6 through 9 of the worksheet and enter zero on line 10. Tax amendments 2013 14 Example 1. Tax amendments 2013 14 On August 1, 2012, Julie Rule, a calendar year taxpayer, leased and placed in service an item of listed property. Tax amendments 2013 14 The property is 5-year property with a fair market value of $10,000. Tax amendments 2013 14 Her property has a recovery period of 5 years under ADS. Tax amendments 2013 14 The lease is for 5 years. Tax amendments 2013 14 Her business use of the property was 50% in 2012 and 90% in 2013. Tax amendments 2013 14 She paid rent of $3,600 for 2012, of which $3,240 is deductible. Tax amendments 2013 14 She must include $147 in income in 2013. Tax amendments 2013 14 The $147 is the sum of Amount A and Amount B. Tax amendments 2013 14 Amount A is $147 ($10,000 × 70% × 2. Tax amendments 2013 14 1%), the product of the fair market value, the average business use for 2012 and 2013, and the applicable percentage for year one from Table A-19 . Tax amendments 2013 14 Amount B is zero. Tax amendments 2013 14 Lease for less than one year. Tax amendments 2013 14   A special rule for the inclusion amount applies if the lease term is less than one year and you do not use the property predominantly (more than 50%) for qualified business use. Tax amendments 2013 14 The amount included in income is the inclusion amount (figured as described in the preceding discussions) multiplied by a fraction. Tax amendments 2013 14 The numerator of the fraction is the number of days in the lease term and the denominator is 365 (or 366 for leap years). Tax amendments 2013 14   The lease term for listed property other than residential rental or nonresidential real property includes options to renew. Tax amendments 2013 14 If you have two or more successive leases that are part of the same transaction (or a series of related transactions) for the same or substantially similar property, treat them as one lease. Tax amendments 2013 14 Example 2. Tax amendments 2013 14 On October 1, 2012, John Joyce, a calendar year taxpayer, leased and placed in service an item of listed property that is 3-year property. Tax amendments 2013 14 This property had a fair market value of $15,000 and a recovery period of 5 years under ADS. Tax amendments 2013 14 The lease term was 6 months (ending on March 31, 2013), during which he used the property 45% in business. Tax amendments 2013 14 He must include $71 in income in 2013. Tax amendments 2013 14 The $71 is the sum of Amount A and Amount B. Tax amendments 2013 14 Amount A is $71 ($15,000 × 45% × 2. Tax amendments 2013 14 1% × 183/365), the product of the fair market value, the average business use for both years, and the applicable percentage for year one from Table A-19 , prorated for the length of the lease. Tax amendments 2013 14 Amount B is zero. Tax amendments 2013 14 Where to report inclusion amount. Tax amendments 2013 14   Report the inclusion amount figured as described in the preceding discussions as other income on the same form or schedule on which you took the deduction for your rental costs. Tax amendments 2013 14 For example, report the inclusion amount as other income on Schedule C (Form 1040) if you took the deduction on Schedule C. Tax amendments 2013 14 If you took the deduction for rental costs on Form 2106, report the inclusion amount as other income on Form 1040, line 21. Tax amendments 2013 14 Do the Passenger Automobile Limits Apply? The depreciation deduction, including the section 179 deduction and special depreciation allowance, you can claim for a passenger automobile (defined earlier) each year is limited. Tax amendments 2013 14 This section describes the maximum depreciation deduction amounts for 2013 and explains how to deduct, after the recovery period, the unrecovered basis of your property that results from applying the passenger automobile limit. Tax amendments 2013 14 Exception for leased cars. Tax amendments 2013 14   The passenger automobile limits generally do not apply to passenger automobiles leased or held for leasing by anyone regularly engaged in the business of leasing passenger automobiles. Tax amendments 2013 14 For information on when you are considered regularly engaged in the business of leasing listed property, including passenger automobiles, see Exception for leased property , earlier, under What Is the Business-Use Requirement . Tax amendments 2013 14 Maximum Depreciation Deduction The passenger automobile limits are the maximum depreciation amounts you can deduct for a passenger automobile. Tax amendments 2013 14 They are based on the date you placed the automobile in service. Tax amendments 2013 14 Passenger Automobiles The maximum deduction amounts for most passenger automobiles are shown in the following table. Tax amendments 2013 14 Maximum Depreciation Deduction for Passenger Automobiles Date       4th & Placed 1st 2nd 3rd Later In Service Year Year Year Years 2013 $11,1601 $5,100 $3,050 $1,875 2012 11,1601 5,100 3,050 1,875 2011 11,0602 4,900 2,950 1,775 2010 11,0602  4,900 2,950 1,775 2009 10,9603 4,800 2,850 1,775 2008 10,9603  4,800 2,850 1,775 2007 3,060 4,900 2,850 1,775 2006 2,960 4,800 2,850 1,775 2005 2,960 4,700 2,850 1,675 2004 10,6104 4,800 2,850 1,675 5/06/2003– 12/31/2003 10,7105 4,900 2,950 1,775 1/01/2003– 5/05/2003 7,6606 4,900 2,950 1,775 1If you elected not to claim any special depreciation allowance or the vehicle is not qualified property, the maximum deduction is $3,160. Tax amendments 2013 14 2If you elected not to claim any special depreciation allowance or the vehicle is not qualified property, the maximum deduction is $3,060. Tax amendments 2013 14 3If you elected not to claim any special depreciation allowance for the vehicle or the vehicle is not qualified property, the maximum deduction is $2,960. Tax amendments 2013 14 4If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $2,960. Tax amendments 2013 14 5If you acquired the vehicle before 5/06/03, the maximum deduction is $7,660. Tax amendments 2013 14 If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $3,060. Tax amendments 2013 14 6If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $3,060. Tax amendments 2013 14 If your business/investment use of the automobile is less than 100%, you must reduce the maximum deduction amount by multiplying the maximum amount by the percentage of business/investment use determined on an annual basis during the tax year. Tax amendments 2013 14 If you have a short tax year, you must reduce the maximum deduction amount by multiplying the maximum amount by a fraction. Tax amendments 2013 14 The numerator of the fraction is the number of months and partial months in the short tax year and the denominator is 12. Tax amendments 2013 14 Example. Tax amendments 2013 14 On April 15, 2013, Virginia Hart bought and placed in service a new car for $14,500. Tax amendments 2013 14 She used the car only in her business. Tax amendments 2013 14 She files her tax return based on the calendar year. Tax amendments 2013 14 She does not elect a section 179 deduction and elected not to claim any special depreciation allowance for the car. Tax amendments 2013 14 Under MACRS, a car is 5-year property. Tax amendments 2013 14 Since she placed her car in service on April 15 and used it only for business, she uses the percentages in Table A-1 to figure her MACRS depreciation on the car. Tax amendments 2013 14 Virginia multiplies the $14,500 unadjusted basis of her car by 0. Tax amendments 2013 14 20 to get her MACRS depreciation of $2,900 for 2013. Tax amendments 2013 14 This $2,900 is below the maximum depreciation deduction of $3,160 for passenger automobiles placed in service in 2013. Tax amendments 2013 14 She can deduct the full $2,900. Tax amendments 2013 14 Electric Vehicles The maximum depreciation deductions for passenger automobiles that are produced to run primarily on electricity are higher than those for other automobiles. Tax amendments 2013 14 The maximum deduction amounts for electric vehicles placed in service after August 5, 1997, and before January 1, 2007, are shown in the following table. Tax amendments 2013 14 Owners of electric vehicles placed in service after December 31, 2006, should use the table of maximum deduction amounts later for electric vehicles classified as passenger automobiles or use the table of maximum deduction amounts for trucks and vans later, for electric vehicles classified as trucks and vans. Tax amendments 2013 14 Maximum Depreciation Deduction For Electric Vehicles Date       4th & Placed 1st 2nd 3rd Later In Service Year Year Year Years 2006 $8,980 $14,400 $8,650 $5,225 2005 8,880 14,200 8,450 5,125 2004 31,8301 14,300 8,550 5,125 5/06/2003– 12/31/2003 32,0302 14,600 8,750 5,225 1/01/2003– 5/05/2003 22,8803 14,600 8,750 5,225 1If you elected not to claim any special depreciation allowance for the vehicle or the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $8,880. Tax amendments 2013 14 2If you acquired the vehicle before 5/06/03, the maximum deduction is $22,880. Tax amendments 2013 14 If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $9,080. Tax amendments 2013 14 3 If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $9,080. Tax amendments 2013 14 Trucks and Vans The maximum depreciation deductions for trucks and vans placed in service after 2002 are higher than those for other passenger automobiles. Tax amendments 2013 14 The maximum deduction amounts for trucks and vans are shown in the following table. Tax amendments 2013 14 Maximum Depreciation Deduction For Trucks and Vans Date       4th & Placed 1st 2nd 3rd Later In Service Year Year Year Years 2013 $11,3601 $5,400 $3,250 $1,975 2012 11,3601 5,300 3,150 1,875 2011 11,2602 5,200 3,150 1,875 2010 11,1603 5,100 3,050 1,875 2009 11,0604 4,900 2,950 1,775 2008 11,1605 5,100 3,050 1,875 2007 3,260 5,200 3,050 1,875 2006 3,260 5,200 3,150 1,875 2005 3,260 5,200 3,150 1,875 2004 10,9106 5,300 3,150 1,875 5/06/2003– 12/31/2003 11,0107 5,400 3,250 1,975 1/01/2003– 5/05/2003 7,9608 5,400 3,250 1,975 1 If you elected not to claim any special depreciation allowance or the vehicle is not qualified property, the maximum deduction is $3,360. Tax amendments 2013 14 2 If you elected not to claim any special depreciation allowance or the vehicle is not qualified property, the maximum deduction is $3,260. Tax amendments 2013 14 3 If you elected not to claim any special depreciation allowance or the vehicle is not qualified property, the maximum deduction is $3,160. Tax amendments 2013 14 4 If you elect not to claim any special depreciation allowance for the vehicle or the vehicle is not qualified property, the maximum deduction is $3,060. Tax amendments 2013 14 5If you elected not to claim any special depreciation allowance for the vehicle or the vehicle is not qualified property, the maximum deduction is $3,160. Tax amendments 2013 14 6If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, or the maximum deduction is $3,260. Tax amendments 2013 14 7 If you acquired the vehicle before 5/06/03, the maximum deduction is $7,960. Tax amendments 2013 14 If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $3,360. Tax amendments 2013 14 8 If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $3,360. Tax amendments 2013 14 Depreciation Worksheet for Passenger Automobiles You can use the following worksheet to figure your depreciation deduction using the percentage tables. Tax amendments 2013 14 Then use the information from this worksheet to prepare Form 4562. Tax amendments 2013 14 Depreciation Worksheet for Passenger Automobiles   Part I   1. Tax amendments 2013 14 MACRS system (GDS or ADS)     2. Tax amendments 2013 14 Property class     3. Tax amendments 2013 14 Date placed in service     4. Tax amendments 2013 14 Recovery period     5. Tax amendments 2013 14 Method and convention     6. Tax amendments 2013 14 Depreciation rate (from tables)     7. Tax amendments 2013 14 Maximum depreciation deduction for this year from the appropriate table       8. Tax amendments 2013 14 Business/investment-use percentage       9. Tax amendments 2013 14 Multiply line 7 by line 8. Tax amendments 2013 14 This is your adjusted maximum depreciation deduction       10. Tax amendments 2013 14 Section 179 deduction claimed this year (not more than line 9). Tax amendments 2013 14 Enter -0- if this is not the year you placed the car in service. Tax amendments 2013 14         Note. Tax amendments 2013 14  1) If line 10 is equal to line 9, stop here. Tax amendments 2013 14 Your combined section 179 and depreciation deduction (including your special depreciation allowance) is limited to the amount on line 9. Tax amendments 2013 14  2) If line 10 is less than line 9, complete Part II. Tax amendments 2013 14   Part II   11. Tax amendments 2013 14 Subtract line 10 from line 9. Tax amendments 2013 14 This is the limit on the amount you can deduct for depreciation (including any special depreciation allowance )       12. Tax amendments 2013 14 Cost or other basis (reduced by any alternative motor vehicle credit 1or credit for electric vehicles 2)       13. Tax amendments 2013 14 Multiply line 12 by line 8. Tax amendments 2013 14 This is your business/investment cost       14. Tax amendments 2013 14 Section 179 deduction claimed in the year you placed the car in service       15. Tax amendments 2013 14 Subtract line 14 from line 13. Tax amendments 2013 14 This is your tentative basis for depreciation       16. Tax amendments 2013 14 Multiply line 15 by . Tax amendments 2013 14 50 if the 50% special depreciation allowance applies. Tax amendments 2013 14 This is your special depreciation allowance. Tax amendments 2013 14 Enter -0- if this is not the year you placed the car in service, the car is not qualified property, or you elected not to claim a special depreciation allowance       Note 1) If line 16 is equal to line 11, stop here. Tax amendments 2013 14 Your depreciation deduction (including your special depreciation allowance) is limited to the amount on line 11. Tax amendments 2013 14  2) If line 16 is less than line 11, complete Part III. Tax amendments 2013 14   Part III   17. Tax amendments 2013 14 Subtract line 16 from 11. Tax amendments 2013 14 This is the limit on the amount you can deduct for MACRS depreciation       18. Tax amendments 2013 14 Subtract line 16 from line 15. Tax amendments 2013 14 This is your basis for depreciation. Tax amendments 2013 14       19. Tax amendments 2013 14 Multiply line 18 by line 6. Tax amendments 2013 14 This is your tentative MACRS depreciation deduction. Tax amendments 2013 14       20. Tax amendments 2013 14 Enter the lesser of line 17 or line 19. Tax amendments 2013 14 This is your MACRS depreciation deduction. Tax amendments 2013 14     1 When figuring the amount to enter on line 12, do not reduce your cost or other basis by any section 179 deduction you claimed for your car. Tax amendments 2013 14 2 Reduce the basis by the lesser of $4,000 or 10% of the cost of the vehicle even if the credit is less than that amount. Tax amendments 2013 14             Deductions After the Recovery Period If the depreciation deductions for your automobile are reduced under the passenger automobile limits, you will have unrecovered basis in your automobile at the end of the recovery period. Tax amendments 2013 14 If you continue to use the automobile for business, you can deduct that unrecovered basis after the recovery period ends. Tax amendments 2013 14 You can claim a depreciation deduction in each succeeding tax year until you recover your full basis in the car. Tax amendments 2013 14 The maximum amount you can deduct each year is determined by the date you placed the car in service and your business/investment-use percentage. Tax amendments 2013 14 See Maximum Depreciation Deduction , earlier. Tax amendments 2013 14 Unrecovered basis is the cost or other basis of the passenger automobile reduced by any clean-fuel vehicle deduction, electric vehicle credit, depreciation, and section 179 deductions that would have been allowable if you had used the car 100% for business and investment use and the passenger automobile limits had not applied. Tax amendments 2013 14 You cannot claim a depreciation deduction for listed property other than passenger automobiles after the recovery period ends. Tax amendments 2013 14 There is no unrecovered basis at the end of the recovery period because you are considered to have used this property 100% for business and investment purposes during all of the recovery period. Tax amendments 2013 14 Example. Tax amendments 2013 14 In May 2007, you bought and placed in service a car costing $31,500. Tax amendments 2013 14 The car was 5-year property under GDS (MACRS). Tax amendments 2013 14 You did not elect a section 179 deduction and elected not to claim any special depreciation allowance for the car. Tax amendments 2013 14 You used the car exclusively for business during the recovery period (2007 through 2012). Tax amendments 2013 14 You figured your depreciation as shown below. Tax amendments 2013 14 Year Percentage Amount Limit   Allowed 2007 20. Tax amendments 2013 14 0% $6,300 $2,960   $2,960 2008 32. Tax amendments 2013 14 0 10,080 4,800   4,800 2009 19. Tax amendments 2013 14 2 6,048 2,850   2,850 2010 11. Tax amendments 2013 14 52 3,629 1,675   1,675 2011 11. Tax amendments 2013 14 52 3,629 1,675   1,675 2012 5. Tax amendments 2013 14 76 1,814 1,675   1,675 Total   $15,635 At the end of 2012, you had an unrecovered basis of $15,865 ($31,500 − $15,635). Tax amendments 2013 14 If in 2013 and later years you continue to use the car 100% for business, you can deduct each year the lesser of $1,675 or your remaining unrecovered basis. Tax amendments 2013 14 If your business use of the car had been less than 100% during any year, your depreciation deduction would have been less than the maximum amount allowable for that year. Tax amendments 2013 14 However, in figuring your unrecovered basis in the car, you would still reduce your basis by the maximum amount allowable as if the business use had been 100%. Tax amendments 2013 14 For example, if you had used your car 60% for business instead of 100%, your allowable depreciation deductions would have been $9,519 ($15,865 × 60%), but you still would have to reduce your basis by $15,865 to determine your unrecovered basis. Tax amendments 2013 14 Deductions For Passenger Automobiles Acquired in a Trade-in If you acquire a passenger automobile in a trade-in, depreciate the carryover basis separately as if the trade-in did not occur. Tax amendments 2013 14 Depreciate the part of the new automobile's basis that exceeds its carryover basis (excess basis) as if it were newly placed in service property. Tax amendments 2013 14 This excess basis is the additional cash paid for the new automobile in the trade-in. Tax amendments 2013 14 The depreciation figured for the two components of the basis (carryover basis and excess basis) is subject to a single passenger automobile limit. Tax amendments 2013 14 Special rules apply in determining the passenger automobile limits. Tax amendments 2013 14 These rules and examples are discussed in section 1. Tax amendments 2013 14 168(i)-6(d)(3) of the regulations. Tax amendments 2013 14 Instead of figuring depreciation for the carryover basis and the excess basis separately, you can elect to treat the old automobile as disposed of and both of the basis components for the new automobile as if placed in service at the time of the trade-in. Tax amendments 2013 14 For more information, including how to make this election, see Election out under Property Acquired in a Like-kind Exchange or Involuntary Conversion in chapter 4 and sections 1. Tax amendments 2013 14 168(i)-6(i) and 1. Tax amendments 2013 14 168(i)-6(j) of the regulations. Tax amendments 2013 14 What Records Must Be Kept? You cannot take any depreciation or section 179 deduction for the use of listed property unless you can prove your business/investment use with adequate records or with sufficient evidence to support your own statements. Tax amendments 2013 14 For listed property, you must keep records for as long as any recapture can still occur. Tax amendments 2013 14 Recapture can occur in any tax year of the recovery period. Tax amendments 2013 14 Adequate Records To meet the adequate records requirement, you must maintain an account book, diary, log, statement of expense, trip sheet, or similar record or other documentary evidence that, together with the receipt, is sufficient to establish each element of an expenditure or use. Tax amendments 2013 14 You do not have to record information in an account book, diary, or similar record if the information is already shown on the receipt. Tax amendments 2013 14 However, your records should back up your receipts in an orderly manner. Tax amendments 2013 14 Elements of expenditure or use. Tax amendments 2013 14   Your records or other documentary evidence must support all the following. Tax amendments 2013 14 The amount of each separate expenditure, such as the cost of acquiring the item, maintenance and repair costs, capital improvement costs, lease payments, and any other expenses. Tax amendments 2013 14 The amount of each business and investment use (based on an appropriate measure, such as mileage for vehicles and time for other listed property), and the total use of the property for the tax year. Tax amendments 2013 14 The date of the expenditure or use. Tax amendments 2013 14 The business or investment purpose for the expenditure or use. Tax amendments 2013 14   Written documents of your expenditure or use are generally better evidence than oral statements alone. Tax amendments 2013 14 You do not have to keep a daily log. Tax amendments 2013 14 However, some type of record containing the elements of an expenditure or the business or investment use of listed property made at or near the time of the expenditure or use and backed up by other documents is preferable to a statement you prepare later. Tax amendments 2013 14 Timeliness. Tax amendments 2013 14   You must record the elements of an expenditure or use at the time you have full knowledge of the elements. Tax amendments 2013 14 An expense account statement made from an account book, diary, or similar record prepared or maintained at or near the time of the expenditure or use generally is considered a timely record if, in the regular course of business: The statement is given by an employee to the employer, or The statement is given by an independent contractor to the client or customer. Tax amendments 2013 14   For example, a log maintained on a weekly basis, that accounts for use during the week, will be considered a record made at or near the time of use. Tax amendments 2013 14 Business purpose supported. Tax amendments 2013 14   Generally, an adequate record of business purpose must be in the form of a written statement. Tax amendments 2013 14 However, the amount of detail necessary to establish a business purpose depends on the facts and circumstances of each case. Tax amendments 2013 14 A written explanation of the business purpose will not be required if the purpose can be determined from the surrounding facts and circumstances. Tax amendments 2013 14 For example, a salesperson visiting customers on an established sales route will not normally need a written explanation of the business purpose of his or her travel. Tax amendments 2013 14 Business use supported. Tax amendments 2013 14   An adequate record contains enough information on each element of every business or investment use. Tax amendments 2013 14 The amount of detail required to support the use depends on the facts and circumstances. Tax amendments 2013 14 For example, a taxpayer who uses a truck for both business and personal purposes and whose only business use of the truck is to make customer deliveries on an established route can satisfy the requirement by recording the length of the route, including the total number of miles driven during the tax year and the date of each trip at or near the time of the trips. Tax amendments 2013 14   Although you generally must prepare an adequate written record, you can prepare a record of the business use of listed property in a computer memory device that uses a logging program. Tax amendments 2013 14 Separate or combined expenditures or uses. Tax amendments 2013 14   Each use by you normally is considered a separate use. Tax amendments 2013 14 However, you can combine repeated uses as a single item. Tax amendments 2013 14   Record each expenditure as a separate item. Tax amendments 2013 14 Do not combine it with other expenditures. Tax amendments 2013 14 If you choose, however, you can combine amounts you spent for the use of listed property during a tax year, such as for gasoline or automobile repairs. Tax amendments 2013 14 If you combine these expenses, you do not need to support the business purpose of each expense. Tax amendments 2013 14 Instead, you can divide the expenses based on the total business use of the listed property. Tax amendments 2013 14   You can account for uses that can be considered part of a single use, such as a round trip or uninterrupted business use, by a single record. Tax amendments 2013 14 For example, you can account for the use of a truck to make deliveries at several locations that begin and end at the business premises and can include a stop at the business in between deliveries by a single record of miles driven. Tax amendments 2013 14 You can account for the use of a passenger automobile by a salesperson for a business trip away from home over a period of time by a single record of miles traveled. Tax amendments 2013 14 Minimal personal use (such as a stop for lunch between two business stops) is not an interruption of business use. Tax amendments 2013 14 Confidential information. Tax amendments 2013 14   If any of the information on the elements of an expenditure or use is confidential, you do not need to include it in the account book or similar record if you record it at or near the time of the expenditure or use. Tax amendments 2013 14 You must keep it elsewhere and make it available as support to the IRS director for your area on request. Tax amendments 2013 14 Substantial compliance. Tax amendments 2013 14   If you have not fully supported a particular element of an expenditure or use, but have complied with the adequate records requirement for the expenditure or use to the satisfaction of the IRS director for your area, you can establish this element by any evidence the IRS director for your area deems adequate. Tax amendments 2013 14   If you fail to establish to the satisfaction of the IRS director for your area that you have substantially complied with the adequate records requirement for an element of an expenditure or use, you must establish the element as follows. Tax amendments 2013 14 By your own oral or written statement containing detailed information as to the element. Tax amendments 2013 14 By other evidence sufficient to establish the element. Tax amendments 2013 14   If the element is the cost or amount, time, place, or date of an expenditure or use, its supporting evidence must be direct evidence, such as oral testimony by witnesses or a written statement setting forth detailed information about the element or the documentary evidence. Tax amendments 2013 14 If the element is the business purpose of an expenditure, its supporting evidence can be circumstantial evidence. Tax amendments 2013 14 Sampling. Tax amendments 2013 14   You can maintain an adequate record for part of a tax year and use that record to support your business and investment use of listed property for the entire tax year if it can be shown by other evidence that the periods for which you maintain an adequate record are representative of the use throughout the year. Tax amendments 2013 14 Example 1. Tax amendments 2013 14 Denise Williams, a sole proprietor and calendar year taxpayer, operates an interior decorating business out of her home. Tax amendments 2013 14 She uses her automobile for local business visits to the homes or offices of clients, for meetings with suppliers and subcontractors, and to pick up and deliver items to clients. Tax amendments 2013 14 There is no other business use of the automobile, but she and family members also use it for personal purposes. Tax amendments 2013 14 She maintains adequate records for the first 3 months of the year showing that 75% of the automobile use was for business. Tax amendments 2013 14 Subcontractor invoices and paid bills show that her business continued at approximately the same rate for the rest of the year. Tax amendments 2013 14 If there is no change in circumstances, such as the purchase of a second car for exclusive use in her business, the determination that her combined business/investment use of the automobile for the tax year is 75% rests on sufficient supporting evidence. Tax amendments 2013 14 Example 2. Tax amendments 2013 14 Assume the same facts as in Example 1, except that Denise maintains adequate records during the first week of every month showing that 75% of her use of the automobile is for business. Tax amendments 2013 14 Her business invoices show that her business continued at the same rate during the later weeks of each month so that her weekly records are representative of the automobile's business use throughout the month. Tax amendments 2013 14 The determination that her business/investment use of the automobile for the tax year is 75% rests on sufficient supporting evidence. Tax amendments 2013 14 Example 3. Tax amendments 2013 14 Bill Baker, a sole proprietor and calendar year taxpayer, is a salesman in a large metropolitan area for a company that manufactures household products. Tax amendments 2013 14 For the first 3 weeks of each month, he occasionally uses his own automobile for business travel within the metropolitan area. Tax amendments 2013 14 During these weeks, his business use of the automobile does not follow a consistent pattern. Tax amendments 2013 14 During the fourth week of each month, he delivers all business orders taken during the previous month. Tax amendments 2013 14 The business use of his automobile, as supported by adequate records, is 70% of its total use during that fourth week. Tax amendments 2013 14 The determination based on the record maintained during the fourth week of the month that his business/investment use of the automobile for the tax year is 70% does not rest on sufficient supporting evidence because his use during that week is not representative of use during other periods. Tax amendments 2013 14 Loss of records. Tax amendments 2013 14   When you establish that failure to produce adequate records is due to loss of the records through circumstances beyond your control, such as through fire, flood, earthquake, or other casualty, you have the right to support a deduction by reasonable reconstruction of your expenditures and use. Tax amendments 2013 14 How Is Listed Property Information Reported? You must provide the information about your listed property requested in Part V of Form 4562, Section A, if you claim either of the following deductions. Tax amendments 2013 14 Any deduction for a vehicle. Tax amendments 2013 14 A depreciation deduction for any other listed property. Tax amendments 2013 14 If you claim any deduction for a vehicle, you also must provide the information requested in Section B. Tax amendments 2013 14 If you provide the vehicle for your employee's use, the employee must give you this information. Tax amendments 2013 14 If you provide any vehicle for use by an employee, you must first answer the questions in Section C to see if you meet an exception to completing Section B for that vehicle. Tax amendments 2013 14 Vehicles used by your employees. Tax amendments 2013 14   You do not have to complete Section B, Part V, for vehicles used by your employees who are not more-than-5% owners or related persons if you meet at least one of the following requirements. Tax amendments 2013 14 You maintain a written policy statement that prohibits one of the following uses of the vehicles. Tax amendments 2013 14 All personal use including commuting. Tax amendments 2013 14 Personal use, other than commuting, by employees who are not officers, directors, or 1%-or-more owners. Tax amendments 2013 14 You treat all use of the vehicles by your employees as personal use. Tax amendments 2013 14 You provide more than five vehicles for use by your employees, and you keep in your records the information on their use given to you by the employees. Tax amendments 2013 14 For demonstrator automobiles provided to full-time salespersons, you maintain a written policy statement that limits the total mileage outside the salesperson's normal working hours and prohibits use of the automobile by anyone else, for vacation trips, or to store personal possessions. Tax amendments 2013 14 Exceptions. Tax amendments 2013 14   If you file Form 2106, 2106-EZ, or Schedule C-EZ (Form 1040), and you are not required to file Form 4562, report information about listed property on that form and not on Form 4562. Tax amendments 2013 14 Also, if you file Schedule C (Form 1040) and are claiming the standard mileage rate or actual vehicle expenses (except depreciation) and you are not required to file Form 4562 for any other reason, report vehicle information in Part IV of Schedule C and not on Form 4562. Tax amendments 2013 14 Prev  Up  Next   Home   More Online Publications