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

TurboTax Federal Free Edition - File Taxes Online

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

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


© 2012 - 2018 All rights reserved.

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

Tax Filing 2010

Free H&r Block SoftwareState Tax Forms 2013Amended 2009 Tax ReturnFile Your Taxes For Free2012 Tax Forms 1040ez2008 Tax SoftwareW 2 Show State Income Tax Withheld1040nr SoftwareFree Tax Filing For 2012Tax 2011H&r Block File For FreeH&rblockTax Form 1040Download Tax Forms 2011Free Internet Tax FilingFreefilefillableformsWhere To Get Tax Form 1040x2010 Tax Act Online Login1040 Ez1040 Tax Form 2011Turbotax For MilitaryForm 1040ezUnemployment TaxFile 2010 Taxes For FreeH&r Block Free Tax For MilitaryFiling My State Taxes FreeOrder 2012 Tax Forms From Irs1040expressHow Do I Amend My State Tax ReturnH&r Block Federal Free2008 Taxes Online For FreeInstructions For 1040xTurbo Tax Free State EfileForgot To File 2012 Taxes1090 EzFederal Tax Return 2011File 2007 Fed Income Tax1040 Ez For 2011Free FileHttp Freefile Irs Gov

Tax Filing 2010

Tax filing 2010 3. Tax filing 2010   Section 501(c)(3) Organizations Table of Contents IntroductionChild care organizations. Tax filing 2010 Topics - This chapter discusses: Useful Items - You may want to see: Contributions to 501(c)(3) OrganizationsCertain annuity contracts. Tax filing 2010 Certain contracts held by a charitable remainder trust. Tax filing 2010 Excise Taxes. Tax filing 2010 Indoor tanning services. Tax filing 2010 Application for Recognition of ExemptionPolitical activity. Tax filing 2010 Private delivery service. Tax filing 2010 Amendments to organizing documents required. Tax filing 2010 How to show reasonable action and good faith. Tax filing 2010 Not acting reasonably and in good faith. Tax filing 2010 Prejudicing the interest of the Government. Tax filing 2010 Procedure for requesting extension. Tax filing 2010 More information. Tax filing 2010 Organizations Not Required To File Form 1023 Articles of OrganizationOrganizational Test Dedication and Distribution of Assets Educational Organizations and Private SchoolsEducational Organizations Private Schools Organizations Providing InsuranceCharitable Risk Pools Other Section 501(c)(3) OrganizationsCharitable Organizations Religious Organizations Scientific Organizations Literary Organizations Amateur Athletic Organizations Prevention of Cruelty to Children or Animals Private Foundations and Public CharitiesPrivate Foundations Public Charities Private Operating Foundations Lobbying ExpendituresLobbying expenditures. Tax filing 2010 Grass roots expenditures. Tax filing 2010 Lobbying nontaxable amount. Tax filing 2010 Grass roots nontaxable amount. Tax filing 2010 Organization that no longer qualifies. Tax filing 2010 Tax on organization. Tax filing 2010 Tax on managers. Tax filing 2010 Taxes on organizations. Tax filing 2010 Taxes on managers. Tax filing 2010 Political expenditures. Tax filing 2010 Correction of expenditure. Tax filing 2010 Introduction An organization may qualify for exemption from federal income tax if it is organized and operated exclusively for one or more of the following purposes. Tax filing 2010 Religious. Tax filing 2010 Charitable. Tax filing 2010 Scientific. Tax filing 2010 Testing for public safety. Tax filing 2010 Literary. Tax filing 2010 Educational. Tax filing 2010 Fostering national or international amateur sports competition (but only if none of its activities involve providing athletic facilities or equipment; however, see Amateur Athletic Organizations , later in this chapter). Tax filing 2010 The prevention of cruelty to children or animals. Tax filing 2010 To qualify, the organization must be a corporation, community chest, fund, articles of association, or foundation. Tax filing 2010 A trust is a fund or foundation and will qualify. Tax filing 2010 However, an individual or a partnership will not qualify. Tax filing 2010 Examples. Tax filing 2010   Qualifying organizations include: Nonprofit old-age homes, Parent-teacher associations, Charitable hospitals or other charitable organizations, Alumni associations, Schools, Chapters of the Red Cross, Boys' or Girls' Clubs, and Churches. Tax filing 2010 Child care organizations. Tax filing 2010   The term educational purposes includes providing for care of children away from their homes if substantially all the care provided is to enable individuals (the parents) to be gainfully employed and the services are available to the general public. Tax filing 2010 Instrumentalities. Tax filing 2010   A state or municipal instrumentality may qualify under section 501(c)(3) if it is organized as a separate entity from the governmental unit that created it and if it otherwise meets the organizational and operational tests of section 501(c)(3). Tax filing 2010 Examples of a qualifying instrumentality might include state schools, universities, or hospitals. Tax filing 2010 However, if an organization is an integral part of the local government or possesses governmental powers, it does not qualify for exemption. Tax filing 2010 A state or municipality itself does not qualify for exemption. Tax filing 2010 Topics - This chapter discusses: Contributions to 501(c)(3) organizations, Applications for recognition of exemption, Articles of Organization, Educational organizations and private schools, Organizations providing insurance, Other section 501(c)(3) organizations, Private foundations and public charities, and Lobbying expenditures. Tax filing 2010 Useful Items - You may want to see: Forms (and Instructions) 1023 Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code See chapter 6 for information about getting publications and forms. Tax filing 2010 Contributions to 501(c)(3) Organizations Contributions to domestic organizations described in this chapter, except organizations testing for public safety, are deductible as charitable contributions on the donor's federal income tax return. Tax filing 2010 Fundraising events. Tax filing 2010   If the donor receives something of value in return for the contribution, a common occurrence with fundraising efforts, part or all of the contribution may not be deductible. Tax filing 2010 This may apply to fundraising activities such as charity balls, bazaars, banquets, auctions, concerts, athletic events, and solicitations for membership or contributions when merchandise or benefits are given in return for payment of a specified minimum contribution. Tax filing 2010   If the donor receives or expects to receive goods or services in return for a contribution to your organization, the donor cannot deduct any part of the contribution unless the donor intends to, and does, make a payment greater than the fair market value of the goods or services. Tax filing 2010 If a deduction is allowed, the donor can deduct only the part of the contribution, if any, that is more than the fair market value of the goods or services received. Tax filing 2010 You should determine in advance the fair market value of any goods or services to be given to contributors and tell them, when you publicize the fundraising event or solicit their contributions, how much is deductible and how much is for the goods or services. Tax filing 2010 See Disclosure of Quid Pro Quo Contributions in chapter 2. Tax filing 2010 Exemption application not filed. Tax filing 2010   Donors cannot deduct any charitable contribution to an organization that is required to apply for recognition of exemption but has not done so. Tax filing 2010 Separate fund—contributions that are deductible. Tax filing 2010   An organization that is exempt from federal income tax other than as an organization described in section 501(c)(3) can, if it desires, establish a fund, separate and apart from its other funds, exclusively for religious, charitable, scientific, literary, or educational purposes, fostering national or international amateur sports competition, or for the prevention of cruelty to children or animals. Tax filing 2010   If the fund is organized and operated exclusively for these purposes, it may qualify for exemption as an organization described in section 501(c)(3), and contributions made to it will be deductible as provided by section 170. Tax filing 2010 A fund with these characteristics must be organized in such a manner as to prohibit the use of its funds upon dissolution, or otherwise, for the general purposes of the organization creating it. Tax filing 2010 Personal benefit contracts. Tax filing 2010   Generally, charitable deductions will not be allowed for a transfer to, or for the use of, a section 501(c)(3) or (c)(4) organization if in connection with the transfer: The organization directly or indirectly pays, or previously paid, a premium on a personal benefit contract for the transferor, or There is an understanding or expectation that anyone will directly or indirectly pay a premium on a personal benefit contract for the transferor. Tax filing 2010   A personal benefit contract with respect to the transferor is any life insurance, annuity, or endowment contract, if any direct or indirect beneficiary under the contract is the transferor, any member of the transferor's family, or any other person designated by the transferor. Tax filing 2010 Certain annuity contracts. Tax filing 2010   If an organization incurs an obligation to pay a charitable gift annuity, and the organization purchases an annuity contract to fund the obligation, individuals receiving payments under the charitable gift annuity will not be treated as indirect beneficiaries if the organization owns all of the incidents of ownership under the contract, is entitled to all payments under the contract, and the timing and amount of the payments are substantially the same as the timing and amount of payments to each person under the obligation (as such obligation is in effect at the time of the transfer). Tax filing 2010 Certain contracts held by a charitable remainder trust. Tax filing 2010   An individual will not be considered an indirect beneficiary under a life insurance, annuity, or endowment contract held by a charitable remainder annuity trust or a charitable remainder unitrust solely by reason of being entitled to the payment if the trust owns all of the incidents of ownership under the contract, and the trust is entitled to all payments under the contract. Tax filing 2010 Excise tax. Tax filing 2010   If the premiums are paid in connection with a transfer for which a deduction is not allowable under the deduction denial rule, without regard to when the transfer to the charitable organization was made, an excise tax will be applied that is equal to the amount of the premiums paid by the organization on any life insurance, annuity, or endowment contract. Tax filing 2010 The excise tax does not apply if all of the direct and indirect beneficiaries under the contract are organizations. Tax filing 2010 Excise Taxes. Tax filing 2010   A charitable organization liable for excise taxes must file Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code. Tax filing 2010 Generally, the due date for filing Form 4720 occurs on the fifteenth day of the fifth month following the close of the organization's tax year. Tax filing 2010 Indoor tanning services. Tax filing 2010   If your organization provides an indoor tanning bed service, the ACA imposed a 10% excise tax on services provided after June 30, 2010. Tax filing 2010 For more information, go to IRS. Tax filing 2010 gov and select Affordable Care Act Tax Provisions. Tax filing 2010 Application for Recognition of Exemption This discussion describes certain information to be provided upon application for recognition of exemption by all organizations created for any of the purposes described earlier in this chapter. Tax filing 2010 For example, the application must include a conformed copy of the organization's articles of incorporation, as discussed under Articles of Organization , later in this chapter. Tax filing 2010 See the organization headings that follow for specific information your organization may need to provide. Tax filing 2010 Form 1023. Tax filing 2010   Your organization must file its application for recognition of exemption on Form 1023. Tax filing 2010 See chapter 1 and the instructions accompanying Form 1023 for the procedures to follow in applying. Tax filing 2010 Some organizations are not required to file Form 1023. Tax filing 2010 See Organizations Not Required To File Form 1023, later. Tax filing 2010    Additional information to help you complete your application can be found online. Tax filing 2010 Go to Exemption Requirement – Section 501(c)(3) Organizations and select the link at the bottom of the Web page for step by step help with the application process. Tax filing 2010 See Exemption Requirements - Section 501(c)(3) Organizations. Tax filing 2010   Form 1023 and accompanying statements must show that all of the following are true. Tax filing 2010 The organization is organized exclusively for, and will be operated exclusively for, one or more of the purposes (religious, charitable, etc. Tax filing 2010 ) specified in the introduction to this chapter. Tax filing 2010 No part of the organization's net earnings will inure to the benefit of private shareholders or individuals. Tax filing 2010 You must establish that your organization will not be organized or operated for the benefit of private interests, such as the creator or the creator's family, shareholders of the organization, other designated individuals, or persons controlled directly or indirectly by such private interests. Tax filing 2010 The organization will not, as a substantial part of its activities, attempt to influence legislation (unless it elects to come under the provisions allowing certain lobbying expenditures) or participate to any extent in a political campaign for or against any candidate for public office. Tax filing 2010 See Political activity, next, and Lobbying Expenditures , near the end of this chapter. Tax filing 2010 Political activity. Tax filing 2010   If any of the activities (whether or not substantial) of your organization consist of participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for public office, your organization will not qualify for tax-exempt status under section 501(c)(3). Tax filing 2010 Such participation or intervention includes the publishing or distributing of statements. Tax filing 2010   Whether your organization is participating or intervening, directly or indirectly, in any political campaign on behalf of (or in opposition to) any candidate for public office depends upon all of the facts and circumstances of each case. Tax filing 2010 Certain voter education activities or public forums conducted in a nonpartisan manner may not be prohibited political activity under section 501(c)(3), while other so-called voter education activities may be prohibited. Tax filing 2010 Effective date of exemption. Tax filing 2010   Most organizations described in this chapter that were organized after October 9, 1969, will not be treated as tax exempt unless they apply for recognition of exemption by filing Form 1023. Tax filing 2010 These organizations will not be treated as tax exempt for any period before they file Form 1023, unless they file the form within 27 months from the end of the month in which they were organized. Tax filing 2010 If the organization files the application within this 27-month period, the organization's exemption will be recognized retroactively to the date it was organized. Tax filing 2010 Otherwise, exemption will be recognized only from the date of receipt. Tax filing 2010 The date of receipt is the date of the U. Tax filing 2010 S. Tax filing 2010 postmark on the cover in which an exemption application is mailed or, if no postmark appears on the cover, the date the application is stamped as received by the IRS. Tax filing 2010 Private delivery service. Tax filing 2010   If a private delivery service designated by the IRS, rather than the U. Tax filing 2010 S. Tax filing 2010 Postal Service, is used to deliver the application, the date of receipt is the date recorded or marked by the private delivery service. Tax filing 2010 The following private delivery services have been designated by the IRS. Tax filing 2010 DHL Express (DHL): DHL “Same Day” Service. Tax filing 2010 Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day, FedEx International Priority, and FedEx International First. Tax filing 2010 United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A. Tax filing 2010 M. Tax filing 2010 , UPS Worldwide Express Plus, and UPS Worldwide Express. Tax filing 2010 Amendments to organizing documents required. Tax filing 2010   If an organization is required to alter its activities or to make substantive amendments to its organizing document, the ruling or determination letter recognizing its exempt status will be effective as of the date the changes are made. Tax filing 2010 If only a nonsubstantive amendment is made, exempt status will be effective as of the date it was organized, if the application was filed within the 15-month period, or the date the application was filed. Tax filing 2010 Extensions of time for filing. Tax filing 2010   There are two ways organizations seeking exemption can receive an extension of time for filing Form 1023. Tax filing 2010 Automatic 12-month extension. Tax filing 2010 Organizations will receive an automatic 12-month extension if they file an application for recognition of exemption with the IRS within 12 months of the original deadline. Tax filing 2010 To get this extension, an organization must add the following statement at the top of its application: “Filed Pursuant to Section 301. Tax filing 2010 9100-2. Tax filing 2010 ” Discretionary extensions. Tax filing 2010 An organization that fails to file a Form 1023 within the extended 12-month period will be granted an extension to file if it submits evidence (including affidavits) to establish that: It acted reasonably and in good faith, and Granting a discretionary extension will not prejudice the interests of the government. Tax filing 2010 How to show reasonable action and good faith. Tax filing 2010   An organization acted reasonably and showed good faith if at least one of the following is true. Tax filing 2010 The organization requests relief before its failure to file is discovered by the IRS. Tax filing 2010 The organization failed to file because of intervening events beyond its control. Tax filing 2010 The organization exercised reasonable diligence (taking into account the complexity of the return or issue and the organization's experience in these matters) but was not aware of the filing requirement. Tax filing 2010 The organization reasonably relied upon the written advice of the IRS. Tax filing 2010 The organization reasonably relied upon the advice of a qualified tax professional who failed to file or advise the organization to file Form 1023. Tax filing 2010 An organization cannot rely on the advice of a tax professional if it knows or should know that he or she is not competent to render advice on filing exemption applications or is not aware of all the relevant facts. Tax filing 2010 Not acting reasonably and in good faith. Tax filing 2010   An organization has not acted reasonably and in good faith under the following circumstances. Tax filing 2010 It seeks to change a return position for which an accuracy-related penalty has been or could be imposed at the time the relief is requested. Tax filing 2010 It was informed of the requirement to file and related tax consequences, but chose not to file. Tax filing 2010 It uses hindsight in requesting relief. Tax filing 2010 The IRS will not ordinarily grant an extension if specific facts have changed since the due date that makes filing an application advantageous to an organization. Tax filing 2010 Prejudicing the interest of the Government. Tax filing 2010   Prejudice to the interest of the Government results if granting an extension of time to file to an organization results in a lower total tax liability for the years to which the filing applies than would have been the case if the organization had filed on time. Tax filing 2010 Before granting an extension, the IRS can require the organization requesting it to submit a statement from an independent auditor certifying that no prejudice will result if the extension is granted. Tax filing 2010 The interests of the Government are ordinarily prejudiced if the tax year in which the application should have been filed (or any tax year that would have been affected had the filing been timely) are closed by the statute of limitations before relief is granted. Tax filing 2010 The IRS can condition a grant of relief on the organization providing the IRS with a statement from an independent auditor certifying that the interests of the Government are not prejudiced. Tax filing 2010 Procedure for requesting extension. Tax filing 2010   To request a discretionary extension, an organization must submit (to the IRS address shown on Form 1023 and Notice 1382) the following. Tax filing 2010 A statement showing the date Form 1023 was required to have been filed and the date it was actually filed. Tax filing 2010 Any documents relevant to the application. Tax filing 2010 An affidavit describing in detail the events that led to the failure to apply and to the discovery of that failure. Tax filing 2010 If the organization relied on a tax professional's advice, the affidavit must describe the engagement and responsibilities of the professional and the extent to which the organization relied on him or her. Tax filing 2010 This affidavit must be accompanied by a dated declaration, signed by an individual who has personal knowledge of the facts and circumstances, who is authorized to act for the organization, which states, “Under penalties of perjury, I declare that I have examined this request, including accompanying documents, and, to the best of my knowledge and belief, the request contains all the relevant facts relating to the request, and such facts are true, correct, and complete. Tax filing 2010 ” Detailed affidavits from individuals having knowledge or information about the events that led to the failure to make the application and to the discovery of that failure. Tax filing 2010 This includes the organization's return preparer, and any accountant or attorney, knowledgeable in tax matters, who advised the taxpayer on the application. Tax filing 2010 The affidavits must describe the engagement and responsibilities of the individual and the advice that he or she provided. Tax filing 2010 These affidavits must include the name, current address, and taxpayer identification number of the individual, and be accompanied by a dated declaration, signed by the individual, which states: “Under penalties of perjury, I declare that I have examined this request, including accompanying documents, and, to the best of my knowledge and belief, the request contains all the relevant facts relating to the request, and such facts are true, correct, and complete. Tax filing 2010 ” The organization must state whether the returns for the tax year in which the application should have been filed or any tax years that would have been affected by the application had it been timely made are being examined by the IRS, an appeals office, or a federal court. Tax filing 2010 The organization must notify the IRS office considering the request for relief if the IRS starts an examination of any such return while the organization's request for relief is pending. Tax filing 2010 The organization, if requested, has to submit copies of its tax returns, and copies of the returns of other affected taxpayers. Tax filing 2010   A request for this relief in connection with an application for exemption does not require payment of an additional user fee. Tax filing 2010 Also, a request for relief under the automatic 12-month extension does not require payment of a user fee. Tax filing 2010 More information. Tax filing 2010   For more information about these procedures, see Regulations sections 301. Tax filing 2010 9100-1, 301. Tax filing 2010 9100-2, 301. Tax filing 2010 9100-3, Revenue Procedure 2013-4, section 6. Tax filing 2010 04, 2013-1 I. Tax filing 2010 R. Tax filing 2010 B. Tax filing 2010 126, and Revenue Procedure 2013-8, 2013-1 I. Tax filing 2010 R. Tax filing 2010 B. Tax filing 2010 237. Tax filing 2010 See Revenue Procedure 2013-4 and Revenue Procedure 2013-8. Tax filing 2010 Notification from the IRS. Tax filing 2010   Organizations filing Form 1023 and satisfying all requirements of section 501(c)(3) will be notified of their exempt status in writing. Tax filing 2010 Organizations Not Required To File Form 1023 Some organizations are not required to file Form 1023. Tax filing 2010 These include: Churches, interchurch organizations of local units of a church, conventions or associations of churches, or integrated auxiliaries of a church, such as a men's or women's organization, religious school, mission society, or youth group. Tax filing 2010 Any organization (other than a private foundation) normally having annual gross receipts of not more than $5,000 (see Gross receipts test, later). Tax filing 2010 These organizations are exempt automatically if they meet the requirements of section 501(c)(3). Tax filing 2010 Filing Form 1023 to establish exemption. Tax filing 2010   If the organization wants to establish its exemption with the IRS and receive a ruling or determination letter recognizing its exempt status, it should file Form 1023. Tax filing 2010 By establishing its exemption, potential contributors are assured by the IRS that contributions will be deductible. Tax filing 2010 A subordinate organization (other than a private foundation) covered by a group exemption letter does not have to submit a Form 1023 for itself. Tax filing 2010 Private foundations. Tax filing 2010   See Private Foundations and Public Charities, later in this chapter, for more information about the additional notice required from an organization in order for it not to be presumed to be a private foundation and for the additional information required from a private foundation claiming to be an operating foundation. Tax filing 2010 Gross receipts test. Tax filing 2010   For purposes of the gross receipts test, an organization normally does not have more than $5,000 annually in gross receipts if: During its first tax year the organization received gross receipts of $7,500 or less, During its first 2 years the organization had a total of $12,000 or less in gross receipts, and In the case of an organization that has been in existence for at least 3 years, the total gross receipts received by the organization during the immediately preceding 2 years, plus the current year, are $15,000 or less. Tax filing 2010   An organization with gross receipts more than the amounts in the gross receipts test, unless otherwise exempt from filing Form 1023, must file a Form 1023 within 90 days after the end of the period in which the amounts are exceeded. Tax filing 2010 For example, an organization's gross receipts for its first tax year were less than $7,500, but at the end of its second tax year its gross receipts for the 2-year period were more than $12,000. Tax filing 2010 The organization must file Form 1023 within 90 days after the end of its second tax year. Tax filing 2010   If the organization had existed for at least 3 tax years and had met the gross receipts test for all prior tax years but fails to meet the requirement for the current tax year, its tax-exempt status for the prior years will not be lost even if Form 1023 is not filed within 90 days after the close of the current tax year. Tax filing 2010 However, the organization will not be treated as a section 501(c)(3) organization for the period beginning with the current tax year and ending with the filing of Form 1023. Tax filing 2010 Example. Tax filing 2010   An organization is organized and operated exclusively for charitable purposes and is not a private foundation. Tax filing 2010 It was incorporated on January 1, 2009, and files returns on a calendar-year basis. Tax filing 2010 It did not file a Form 1023. Tax filing 2010 The organization's gross receipts during the years 2009 through 2012 were as follows: 2009 $3,600 2010 2,900 2011 400 2012 12,600   The organization's total gross receipts for 2009, 2010, and 2011 were $6,900. Tax filing 2010 Therefore, it did not have to file Form 1023 and is exempt for those years. Tax filing 2010 However, for 2010, 2011, and 2012 the total gross receipts were $15,900. Tax filing 2010 Therefore, the organization must file Form 1023 within 90 days after the end of its 2012 tax year. Tax filing 2010 If it does not file within this time period, it will not be exempt under section 501(c)(3) for the period beginning with tax year 2012 ending when the Form 1023 is received by the IRS. Tax filing 2010 The organization, however, will not lose its exempt status for the tax years ending before January 1, 2012. Tax filing 2010   The IRS will consider applying the Commissioner's discretionary authority to extend the time for filing Form 1023. Tax filing 2010 See the procedures for this extension discussed earlier. Tax filing 2010 Articles of Organization Your organization must include a conformed copy of its articles of organization with the application for recognition of exemption. Tax filing 2010 This may be its trust instrument, corporate charter, articles of association, or any other written instrument by which it is created. Tax filing 2010 Organizational Test The articles of organization must limit the organization's purposes to one or more of those described at the beginning of this chapter and must not expressly empower it to engage, other than as an insubstantial part of its activities, in activities that do not further one or more of those purposes. Tax filing 2010 These conditions for exemption are referred to as the organizational test. Tax filing 2010 Section 501(c)(3) is the provision of law that grants exemption to the organizations described in this chapter. Tax filing 2010 Therefore, the organizational test may be met if the purposes stated in the articles of organization are limited in some way by reference to section 501(c)(3). Tax filing 2010 The requirement that your organization's purposes and powers must be limited by the articles of organization is not satisfied if the limit is contained only in the bylaws or other rules or regulations. Tax filing 2010 Moreover, the organizational test is not satisfied by statements of your organization's officers that you intend to operate only for exempt purposes. Tax filing 2010 Also, the test is not satisfied by the fact that your actual operations are for exempt purposes. Tax filing 2010 In interpreting an organization's articles, the law of the state where the organization was created is controlling. Tax filing 2010 If an organization contends that the terms of its articles have a different meaning under state law than their generally accepted meaning, such meaning must be established by a clear and convincing reference to relevant court decisions, opinions of the state attorney general, or other appropriate state authorities. Tax filing 2010 The following are examples illustrating the organizational test. Tax filing 2010 Example 1. Tax filing 2010 Articles of organization state that an organization is formed exclusively for literary and scientific purposes within the meaning of section 501(c)(3). Tax filing 2010 These articles appropriately limit the organization's purposes. Tax filing 2010 The organization meets the organizational test. Tax filing 2010 Example 2. Tax filing 2010 An organization, by the terms of its articles, is formed to engage in research without any further description or limitation. Tax filing 2010 The organization will not be properly limited as to its purposes since all research is not scientific. Tax filing 2010 The organization does not meet the organizational test. Tax filing 2010 Example 3. Tax filing 2010 An organization's articles state that its purpose is to receive contributions and pay them over to organizations that are described in section 501(c)(3) and exempt from taxation under section 501(a). Tax filing 2010 The organization meets the organizational test. Tax filing 2010 Example 4. Tax filing 2010 If a stated purpose in the articles is the conduct of a school of adult education and its manner of operation is described in detail, such a purpose will be satisfactorily limited. Tax filing 2010 Example 5. Tax filing 2010 If the articles state the organization is formed for charitable purposes, without any further description, such language ordinarily will be sufficient since the term charitable has a generally accepted legal meaning. Tax filing 2010 On the other hand, if the purposes are stated to be charitable, philanthropic, and benevolent, the organizational requirement will not be met since the terms philanthropic and benevolent have no generally accepted legal meaning and, therefore, the stated purposes may, under the laws of the state, permit activities that are broader than those intended by the exemption law. Tax filing 2010 Example 6. Tax filing 2010 If the articles state an organization is formed to promote American ideals, or to foster the best interests of the people, or to further the common welfare and well-being of the community, without any limitation or provision restricting such purposes to accomplishment only in a charitable manner, the purposes will not be sufficiently limited. Tax filing 2010 Such purposes are vague and may be accomplished other than in an exempt manner. Tax filing 2010 Example 7. Tax filing 2010 A stated purpose to operate a hospital does not meet the organizational test since it is not necessarily charitable. Tax filing 2010 A hospital may or may not be exempt depending on the manner in which it is operated. Tax filing 2010 Example 8. Tax filing 2010 An organization that is expressly empowered by its articles to carry on social activities will not be sufficiently limited as to its power, even if its articles state that it is organized and will be operated exclusively for charitable purposes. Tax filing 2010 Dedication and Distribution of Assets Assets of an organization must be permanently dedicated to an exempt purpose. Tax filing 2010 This means that should an organization dissolve, its assets must be distributed for an exempt purpose described in this chapter, or to the Federal Government or to a state or local government for a public purpose. Tax filing 2010 If the assets could be distributed to members or private individuals or for any other purpose, the organizational test is not met. Tax filing 2010 Dedication. Tax filing 2010   To establish that your organization's assets will be permanently dedicated to an exempt purpose, the articles of organization should contain a provision ensuring their distribution for an exempt purpose in the event of dissolution. Tax filing 2010 Although reliance can be placed upon state law to establish permanent dedication of assets for exempt purposes, your organization's application probably can be processed much more rapidly if its articles of organization include a provision ensuring permanent dedication of assets for exempt purposes. Tax filing 2010 Distribution. Tax filing 2010   Revenue Procedure 82-2, 1982-1 C. Tax filing 2010 B. Tax filing 2010 367, identifies the states and circumstances in which the IRS will not require an express provision for the distribution of assets upon dissolution in the articles of organization. Tax filing 2010 The procedure also provides a sample of an acceptable dissolution provision for organizations required to have one. Tax filing 2010   If a named beneficiary is to be the distributee, it must be one that would qualify and would be exempt within the meaning of section 501(c)(3) at the time the dissolution takes place. Tax filing 2010 Since the named beneficiary at the time of dissolution may not be qualified, may not be in existence, or may be unwilling or unable to accept the assets of the dissolving organization, a provision should be made for distribution of the assets for one or more of the purposes specified in this chapter in the event of any such contingency. Tax filing 2010 Sample articles of organization. Tax filing 2010   See sample articles of organization in the Appendix in the back of this publication. Tax filing 2010 Educational Organizations and Private Schools If your organization wants to obtain recognition of exemption as an educational organization, you must submit complete information as to how your organization carries on or plans to carry on its educational activities, such as by conducting a school, by panels, discussions, lectures, forums, radio and television programs, or through various cultural media such as museums, symphony orchestras, or art exhibits. Tax filing 2010 In each instance, you must explain by whom and where these activities are or will be conducted and the amount of admission fees, if any. Tax filing 2010 You must submit a copy of the pertinent contracts, agreements, publications, programs, etc. Tax filing 2010 If you are organized to conduct a school, you must submit full information regarding your tuition charges, number of faculty members, number of full-time and part-time students enrolled, courses of study and degrees conferred, together with a copy of your school catalog. Tax filing 2010 See also Private Schools , discussed later. Tax filing 2010 Educational Organizations The term educational relates to: The instruction or training of individuals for the purpose of improving or developing their capabilities, or The instruction of the public on subjects useful to individuals and beneficial to the community. Tax filing 2010 Advocacy of a position. Tax filing 2010   Advocacy of a particular position or viewpoint may be educational if there is a sufficiently full and fair exposition of pertinent facts to permit an individual or the public to form an independent opinion or conclusion. Tax filing 2010 The mere presentation of unsupported opinion is not educational. Tax filing 2010 Method not educational. Tax filing 2010   The method used by an organization to develop and present its views is a factor in determining if an organization qualifies as educational within the meaning of section 501(c)(3). Tax filing 2010 The following factors may indicate that the method is not educational. Tax filing 2010 The presentation of viewpoints unsupported by facts is a significant part of the organization's communications. Tax filing 2010 The facts that purport to support the viewpoint are distorted. Tax filing 2010 The organization's presentations make substantial use of inflammatory and disparaging terms and express conclusions more on the basis of emotion than of objective evaluations. Tax filing 2010 The approach used is not aimed at developing an understanding on the part of the audience because it does not consider their background or training. Tax filing 2010   Exceptional circumstances, however, may exist where an organization's advocacy may be educational even if one or more of the factors listed above are present. Tax filing 2010 Qualifying organizations. Tax filing 2010   The following types of organizations may qualify as educational: An organization, such as a primary or secondary school, a college, or a professional or trade school, that has a regularly scheduled curriculum, a regular faculty, and a regularly enrolled student body in attendance at a place where the educational activities are regularly carried on, An organization whose activities consist of conducting public discussion groups, forums, panels, lectures, or other similar programs, An organization that presents a course of instruction by correspondence or through the use of television or radio, A museum, zoo, planetarium, symphony orchestra, or other similar organization, A nonprofit children's day-care center, and A credit counseling organization. Tax filing 2010 College book stores, cafeterias, restaurants, etc. Tax filing 2010   These and other on-campus organizations should submit information to show that they are controlled by and operated for the convenience of the faculty and student body or by whom they are controlled and whom they serve. Tax filing 2010 Alumni association. Tax filing 2010   An alumni association should establish that it is organized to promote the welfare of the university with which it is affiliated, is subject to the control of the university as to its policies and destination of funds, and is operated as an integral part of the university or is otherwise organized to promote the welfare of the college or university. Tax filing 2010 If your association does not have these characteristics, it may still be exempt as a social club if it meets the requirements described in chapter 4, under 501(c)(7) - Social and Recreation Clubs . Tax filing 2010 Athletic organization. Tax filing 2010   This type of organization must submit evidence that it is engaged in activities such as directing and controlling interscholastic athletic competitions, conducting tournaments, and prescribing eligibility rules for contestants. Tax filing 2010 If it is not so engaged, your organization may be exempt as a social club described in chapter 4. Tax filing 2010 Raising funds to be used for travel and other activities to interview and persuade prospective students with outstanding athletic ability to attend a particular university does not show an exempt purpose. Tax filing 2010 If your organization is not exempt as an educational organization, see Amateur Athletic Organizations , later in this chapter. Tax filing 2010 Private Schools Every private school filing an application for recognition of tax-exempt status must supply the IRS (on Schedule B, Form 1023) with the following information. Tax filing 2010 The racial composition of the student body, and of the faculty and administrative staff, as of the current academic year. Tax filing 2010 (This information also must be projected, so far as may be feasible, for the next academic year. Tax filing 2010 ) The amount of scholarship and loan funds, if any, awarded to students enrolled and the racial composition of students who have received the awards. Tax filing 2010 A list of the school's incorporators, founders, board members, and donors of land or buildings, whether individuals or organizations. Tax filing 2010 A statement indicating whether any of the organizations described in item (3) above have an objective of maintaining segregated public or private school education at the time the application is filed and, if so, whether any of the individuals described in item (3) are officers or active members of those organizations at the time the application is filed. Tax filing 2010 The public school district and county in which the school is located. Tax filing 2010 How to determine racial composition. Tax filing 2010   The racial composition of the student body, faculty, and administrative staff can be an estimate based on the best information readily available to the school, without requiring student applicants, students, faculty, or administrative staff to submit to the school information that the school otherwise does not require. Tax filing 2010 Nevertheless, a statement of the method by which the racial composition was determined must be supplied. Tax filing 2010 The identity of individual students or members of the faculty and administrative staff should not be included with this information. Tax filing 2010   A school that is a state or municipal instrumentality (see Instrumentalities , near the beginning of this chapter), whether or not it qualifies for exemption under section 501(c)(3), is not considered to be a private school for purposes of the following discussion. Tax filing 2010 Racially Nondiscriminatory Policy To qualify as an organization exempt from federal income tax, a private school must include a statement in its charter, bylaws, or other governing instrument, or in a resolution of its governing body, that it has a racially nondiscriminatory policy as to students and that it does not discriminate against applicants and students on the basis of race, color, or national or ethnic origin. Tax filing 2010 Also, the school must circulate information that clearly states the school's admission policies. Tax filing 2010 A racially nondiscriminatory policy toward students means that the school admits the students of any race to all the rights, privileges, programs, and activities generally accorded or made available to students at that school and that the school does not discriminate on the basis of race in administering its educational policies, admission policies, scholarship and loan programs, and athletic and other school-administered programs. Tax filing 2010 The IRS considers discrimination on the basis of race to include discrimination on the basis of color or national or ethnic origin. Tax filing 2010 The existence of a racially discriminatory policy with respect to the employment of faculty and administrative staff is indicative of a racially discriminatory policy as to students. Tax filing 2010 Conversely, the absence of racial discrimination in the employment of faculty and administrative staff is indicative of a racially nondiscriminatory policy as to students. Tax filing 2010 A policy of a school that favors racial minority groups with respect to admissions, facilities and programs, and financial assistance is not discrimination on the basis of race when the purpose and effect of this policy is to promote establishing and maintaining the school's nondiscriminatory policy. Tax filing 2010 A school that selects students on the basis of membership in a religious denomination or unit is not discriminating if membership in the denomination or unit is open to all on a racially nondiscriminatory basis. Tax filing 2010 Policy statement. Tax filing 2010   The school must include a statement of its racially nondiscriminatory policy in all its brochures and catalogs dealing with student admissions, programs, and scholarships. Tax filing 2010 Also, the school must include a reference to its racially nondiscriminatory policy in other written advertising that it uses to inform prospective students of its programs. Tax filing 2010 Publicity requirement. Tax filing 2010   The school must make its racially nondiscriminatory policy known to all segments of the general community served by the school. Tax filing 2010 Selective communication of a racially nondiscriminatory policy that a school provides solely to leaders of racial groups will not be considered an effective means of communication to make the policy known to all segments of the community. Tax filing 2010 To satisfy this requirement, the school must use one of the following two methods. Tax filing 2010 Method one. Tax filing 2010   The school can publish a notice of its racially nondiscriminatory policy in a newspaper of general circulation that serves all racial segments of the community. Tax filing 2010 Such publication must be repeated at least once annually during the period of the school's solicitation for students or, in the absence of a solicitation program, during the school's registration period. Tax filing 2010 When more than one community is served by a school, the school can publish the notice in those newspapers that are reasonably likely to be read by all racial segments in the communities that the school serves. Tax filing 2010 If this method is used, the notice must meet the following printing requirements. Tax filing 2010 It must appear in a section of the newspaper likely to be read by prospective students and their families. Tax filing 2010 It must occupy at least 3 column inches. Tax filing 2010 It must have its title printed in at least 12 point bold face type. Tax filing 2010 It must have the remaining text printed in at least 8 point type. Tax filing 2010 The following is an acceptable example of the notice:   NOTICE OF NONDISCRIMINATORY POLICY AS TO STUDENTS     The M School admits students of any race, color, national and ethnic origin to all the rights, privileges, programs, and activities generally accorded or made available to students at the school. Tax filing 2010 It does not discriminate on the basis of race, color, national and ethnic origin in administration of its educational policies, admissions policies, scholarship and loan programs, and athletic and other school-administered programs. Tax filing 2010   Method two. Tax filing 2010   The school can use the broadcast media to publicize its racially nondiscriminatory policy if this use makes the policy known to all segments of the general community the school serves. Tax filing 2010 If the school uses this method, it must provide documentation showing that the means by which this policy was communicated to all segments of the general community was reasonably expected to be effective. Tax filing 2010 In this case, appropriate documentation would include copies of the tapes or scripts used and records showing that there was an adequate number of announcements. Tax filing 2010 The documentation also would include proof that these announcements were made during hours when they were likely to be communicated to all segments of the general community, that they were long enough to convey the message clearly, and that they were broadcast on radio or television stations likely to be listened to by substantial numbers of members of all racial segments of the general community. Tax filing 2010 Announcements must be made during the period of the school's solicitation for students or, in the absence of a solicitation program, during the school's registration period. Tax filing 2010 Exceptions. Tax filing 2010   The publicity requirements will not apply in the following situations. Tax filing 2010 First, if for the preceding 3 years the enrollment of a parochial or other church-related school consists of students at least 75% of whom are members of the sponsoring religious denomination or unit, the school can make known its racially nondiscriminatory policy in whatever newspapers or circulars the religious denomination or unit uses in the communities from which the students are drawn. Tax filing 2010 These newspapers and circulars can be distributed by a particular religious denomination or unit or by an association that represents a number of religious organizations of the same denomination. Tax filing 2010 If, however, the school advertises in newspapers of general circulation in the community or communities from which its students are drawn and the second exception (discussed next) does not apply to the school, then it must comply with either of the publicity requirements explained earlier. Tax filing 2010 Second, if a school customarily draws a substantial percentage of its students nationwide, worldwide, from a large geographic section or sections of the United States, or from local communities, and if the school follows a racially nondiscriminatory policy as to its students, the school may satisfy the publicity requirement by complying with the instructions explained earlier under Policy statement . Tax filing 2010   The school can demonstrate that it follows a racially nondiscriminatory policy either by showing that it currently enrolls students of racial minority groups in meaningful numbers or, except for local community schools, when minority students are not enrolled in meaningful numbers, that its promotional activities and recruiting efforts in each geographic area were reasonably designed to inform students of all racial segments in the general communities within the area of the availability of the school. Tax filing 2010 The question as to whether a school demonstrates such a policy satisfactorily will be determined on the basis of the facts and circumstances of each case. Tax filing 2010   The IRS recognizes that the failure by a school drawing its students from local communities to enroll racial minority group students may not necessarily indicate the absence of a racially nondiscriminatory policy when there are relatively few or no such students in these communities. Tax filing 2010 Actual enrollment is, however, a meaningful indication of a racially nondiscriminatory policy in a community in which a public school or schools became subject to a desegregation order of a federal court or are otherwise expressly obligated to implement a desegregation plan under the terms of any written contract or other commitment to which any federal agency was a party. Tax filing 2010   The IRS encourages schools to satisfy the publicity requirement by using either of the methods described earlier, even though a school considers itself to be within one of the Exceptions. Tax filing 2010 The IRS believes that these publicity requirements are the most effective methods to make known a school's racially nondiscriminatory policy. Tax filing 2010 In this regard, it is each school's responsibility to determine whether either of the exceptions applies. Tax filing 2010 Such responsibility will prepare the school, if it is audited by the IRS, to demonstrate that the failure to publish its racially nondiscriminatory policy in accordance with either one of the publicity requirements was justified by one of the exceptions. Tax filing 2010 Also, a school must be prepared to demonstrate that it has publicly disavowed or repudiated any statements purported to have been made on its behalf (after November 6, 1975) that are contrary to its publicity of a racially nondiscriminatory policy as to students, to the extent that the school or its principal official was aware of these statements. Tax filing 2010 Facilities and programs. Tax filing 2010   A school must be able to show that all of its programs and facilities are operated in a racially nondiscriminatory manner. Tax filing 2010 Scholarship and loan programs. Tax filing 2010   As a general rule, all scholarship or other comparable benefits obtainable at the school must be offered on a racially nondiscriminatory basis. Tax filing 2010 This must be known throughout the general community being served by the school and should be referred to in its publicity. Tax filing 2010 Financial assistance programs, as well as scholarships and loans made under financial assistance programs, that favor members of one or more racial minority groups and that do not significantly detract from or are designed to promote a school's racially nondiscriminatory policy will not adversely affect the school's exempt status. Tax filing 2010 Certification. Tax filing 2010   An individual authorized to take official action on behalf of a school that claims to be racially nondiscriminatory as to students must certify annually, under penalties of perjury, on Schedule E (Form 990 or 990-EZ) or Form 5578, Annual Certification of Racial Nondiscrimination for a Private School Exempt From Federal Income Tax, whichever applies, that to the best of his or her knowledge and belief the school has satisfied all requirements that apply, as previously explained. Tax filing 2010   Failure to comply with the guidelines ordinarily will result in the proposed revocation of the exempt status of a school. Tax filing 2010 Recordkeeping requirements. Tax filing 2010 With certain exceptions, given later, each exempt private school must maintain the following records for a minimum period of 3 years, beginning with the year after the year of compilation or acquisition. Tax filing 2010 Records indicating the racial composition of the student body, faculty, and administrative staff for each academic year. Tax filing 2010 Records sufficient to document that scholarship and other financial assistance is awarded on a racially nondiscriminatory basis. Tax filing 2010 Copies of all materials used by or on behalf of the school to solicit contributions. Tax filing 2010 Copies of all brochures, catalogs, and advertising dealing with student admissions, programs, and scholarships. Tax filing 2010 (Schools advertising nationally or in a large geographic segment or segments of the United States need only maintain a record sufficient to indicate when and in what publications their advertisements were placed. Tax filing 2010 ) The racial composition of the student body, faculty, and administrative staff can be determined in the same manner as that described at the beginning of this section. Tax filing 2010 However, a school cannot discontinue maintaining a system of records that reflect the racial composition of its students, faculty, and administrative staff used on November 6, 1975, unless it substitutes a different system that compiles substantially the same information, without advance approval of the IRS. Tax filing 2010 The IRS does not require that a school release any personally identifiable records or personal information except in accordance with the requirements of the Family Educational Rights and Privacy Act of 1974. Tax filing 2010 Similarly, the IRS does not require a school to keep records prohibited under state or federal law. Tax filing 2010 Exceptions. Tax filing 2010   The school does not have to independently maintain these records for IRS use if both of the following are true. Tax filing 2010 Substantially the same information has been included in a report or reports filed with an agency or agencies of federal, state, or local governments, and this information is current within 1 year. Tax filing 2010 The school maintains copies of these reports from which this information is readily obtainable. Tax filing 2010 If these reports do not include all of the information required, as discussed earlier, records providing such remaining information must be maintained by the school for IRS use. Tax filing 2010 Failure to maintain records. Tax filing 2010   Failure to maintain or to produce the required records and information, upon proper request, will create a presumption that the organization has failed to comply with these guidelines. Tax filing 2010 Organizations Providing Insurance An organization described in sections 501(c)(3) or 501(c)(4) may be exempt from tax only if no substantial part of its activities consists of providing commercial-type insurance. Tax filing 2010 However, this rule does not apply to state-sponsored organizations described in sections 501(c)(26) or 501(c)(27), which are discussed in chapter 4, or to charitable risk pools, discussed next. Tax filing 2010 Charitable Risk Pools A charitable risk pool is treated as organized and operated exclusively for charitable purposes if it: Is organized and operated only to pool insurable risks of its members (not including risks related to medical malpractice) and to provide information to its members about loss control and risk management, Consists only of members that are section 501(c)(3) organizations exempt from tax under section 501(a), Is organized under state law authorizing this type of risk pooling, Is exempt from state income tax (or will be after qualifying as a section 501(c)(3) organization), Has obtained at least $1,000,000 in startup capital from nonmember charitable organizations, Is controlled by a board of directors elected by its members, and Is organized under documents requiring that: Each member be a section 501(c)(3) organization exempt from tax under section 501(a), Each member that receives a final determination that it no longer qualifies under section 501(c)(3) notify the pool immediately, and Each insurance policy issued by the pool provide that it will not cover events occurring after a final determination described in (b). Tax filing 2010 Other Section 501(c)(3) Organizations In addition to the information required for all organizations, as described earlier, you should include any other information described in this section. Tax filing 2010 Charitable Organizations If your organization is applying for recognition of exemption as a charitable organization, it must show that it is organized and operated for purposes that are beneficial to the public interest. Tax filing 2010 Some examples of this type of organization are those organized for: Relief of the poor, the distressed, or the underprivileged, Advancement of religion, Advancement of education or science, Erection or maintenance of public buildings, monuments, or works, Lessening the burdens of government, Lessening of neighborhood tensions, Elimination of prejudice and discrimination, Defense of human and civil rights secured by law, and Combating community deterioration and juvenile delinquency. Tax filing 2010 The rest of this section contains a description of the information to be provided by certain specific organizations. Tax filing 2010 This information is in addition to the required inclusions described in chapter 1, and other statements requested on Form 1023. Tax filing 2010 Each of the following organizations must submit the information described. Tax filing 2010 Charitable organization supporting education. Tax filing 2010   Submit information showing how your organization supports education — for example, contributes to an existing educational institution, endows a professorial chair, contributes toward paying teachers' salaries, or contributes to an educational institution to enable it to carry on research. Tax filing 2010 Scholarships. Tax filing 2010   If the organization awards or plans to award scholarships, complete Schedule H of Form 1023. Tax filing 2010 Also, submit the following: Criteria used for selecting recipients, including the rules of eligibility. Tax filing 2010 How and by whom the recipients are or will be selected. Tax filing 2010 If awards are or will be made directly to individuals, whether information is required assuring that the student remains in school. Tax filing 2010 If awards are or will be made to recipients of a particular class, for example, children of employees of a particular employer— Whether any preference is or will be accorded an applicant by reason of the parent's position, length of employment, or salary, Whether as a condition of the award the recipient must upon graduation accept employment with the company, and Whether the award will be continued even if the parent's employment ends. Tax filing 2010 A copy of the scholarship application form and any brochures or literature describing the scholarship program. Tax filing 2010 Hospital. Tax filing 2010   If you are organized to operate a charitable hospital, complete and attach Section I of Schedule C, Form 1023. Tax filing 2010   If your hospital was transferred to you from proprietary ownership, complete and attach Schedule G of Form 1023. Tax filing 2010 You must attach a list showing: The names of the active and courtesy staff members of the proprietary hospital, as well as the names of your medical staff members after the transfer to nonprofit ownership, and The names of any doctors who continued to lease office space in the hospital after its transfer to nonprofit ownership and the amount of rent paid. Tax filing 2010 Submit also an appraisal showing the fair rental value of the rented space. Tax filing 2010 Clinic. Tax filing 2010   If you are organized to operate a clinic, attach a statement including: A description of the facilities and services, To whom the services are offered, such as the public at large or a specific group, How charges are determined, such as on a profit basis, to recover costs, or at less than cost, By whom administered and controlled, Whether any of the professional staff (that is, those who perform or will perform the clinical services) also serve or will serve in an administrative capacity, and How compensation paid the professional staff is or will be determined. Tax filing 2010 Home for the aged. Tax filing 2010   If you are organized to operate a home for the aged, complete and attach Schedule F of Form 1023 and required attachments. Tax filing 2010 Community nursing bureau. Tax filing 2010   If you provide a nursing register or community nursing bureau, provide information showing that your organization will be operated as a community project and will receive its primary support from public contributions to maintain a nonprofit register of qualified nursing personnel, including graduate nurses, unregistered nursing school graduates, licensed attendants and practical nurses for the benefit of hospitals, health agencies, doctors, and individuals. Tax filing 2010 Organization providing loans. Tax filing 2010   If you make, or will make, loans for charitable and educational purposes, submit the following information. Tax filing 2010 An explanation of the circumstances under which such loans are, or will be, made. Tax filing 2010 Criteria for selection, including the rules of eligibility. Tax filing 2010 How and by whom the recipients are or will be selected. Tax filing 2010 Manner of repayment of the loan. Tax filing 2010 Security required, if any. Tax filing 2010 Interest charged, if any, and when payable. Tax filing 2010 Copies in duplicate of the loan application and any brochures or literature describing the loan program. Tax filing 2010 Public-interest law firms. Tax filing 2010   If your organization was formed to litigate in the public interest (as opposed to providing legal services to the poor), such as in the area of protection of the environment, you should submit the following information. Tax filing 2010 How the litigation can reasonably be said to be representative of a broad public interest rather than a private one. Tax filing 2010 Whether the organization will accept fees for its services. Tax filing 2010 A description of the cases litigated or to be litigated and how they benefit the public generally. Tax filing 2010 Whether the policies and program of the organization are the responsibility of a board or committee representative of the public interest, which is neither controlled by employees or persons who litigate on behalf of the organization nor by any organization that is not itself an organization described in this chapter. Tax filing 2010 Whether the organization is operated, through sharing of office space or otherwise, in a way to create identification or confusion with a particular private law firm. Tax filing 2010 Whether there is an arrangement to provide, directly or indirectly, a deduction for the cost of litigation that is for the private benefit of the donor. Tax filing 2010 Acceptance of attorneys' fees. Tax filing 2010   A nonprofit public-interest law firm can accept attorneys' fees in public-interest cases if the fees are paid directly by its clients and the fees are not more than the actual costs incurred in the case. Tax filing 2010 Upon undertaking a representation, the organization cannot withdraw from the case because the litigant is unable to pay the fee. Tax filing 2010   Firms can accept fees awarded or approved by a court or an administrative agency and paid by an opposing party if the firms do not use the likelihood or probability of fee awards as a consideration in the selection of cases. Tax filing 2010 All fee awards must be paid to the organization and not to its individual staff attorneys. Tax filing 2010 Instead, a public-interest law firm can reasonably compensate its staff attorneys, but only on a straight salary basis. Tax filing 2010 Private attorneys, whose services are retained by the firm to assist it in particular cases, can be compensated by the firm, but only on a fixed fee or salary basis. Tax filing 2010   The total amount of all attorneys' fees (court awarded and those received from clients) must not be more than 50% of the total cost of operations of the organization's legal functions, calculated over a 5-year period. Tax filing 2010   If, in order to carry out its program, an organization violates applicable canons of ethics, disrupts the judicial system, or engages in any illegal action, the organization will jeopardize its exemption. Tax filing 2010 Religious Organizations To determine whether an organization meets the religious purposes test of section 501(c)(3), the IRS maintains two basic guidelines. Tax filing 2010 That the particular religious beliefs of the organization are truly and sincerely held. Tax filing 2010 That the practices and rituals associated with the organization's religious belief or creed are not illegal or contrary to clearly defined public policy. Tax filing 2010 Therefore, your group (or organization) may not qualify for treatment as an exempt religious organization for tax purposes if its actions, as contrasted with its beliefs, are contrary to well established and clearly defined public policy. Tax filing 2010 If there is a clear showing that the beliefs (or doctrines) are sincerely held by those professing them, the IRS will not question the religious nature of those beliefs. Tax filing 2010 Churches. Tax filing 2010   Although a church, its integrated auxiliaries, or a convention or association of churches is not required to file Form 1023 to be exempt from federal income tax or to receive tax deductible contributions, the organization may find it advantageous to obtain recognition of exemption. Tax filing 2010 In this event, you should submit information showing that your organization is a church, synagogue, association or convention of churches, religious order, or religious organization that is an integral part of a church, and that it is engaged in carrying out the function of a church. Tax filing 2010   In determining whether an admittedly religious organization is also a church, the IRS does not accept every assertion that the organization is a church. Tax filing 2010 Because beliefs and practices vary so widely, there is no single definition of the word church for tax purposes. Tax filing 2010 The IRS considers the facts and circumstances of each organization applying for church status. Tax filing 2010 Convention or association of churches. Tax filing 2010   Any organization that is otherwise a convention or association of churches will not fail to qualify as a church merely because the membership of the organization includes individuals as well as churches or because the individuals have voting rights in the organization. Tax filing 2010 Integrated auxiliaries. Tax filing 2010   An organization is an integrated auxiliary of a church if all the following are true. Tax filing 2010 The organization is described both in sections 501(c)(3) and 509(a)(1), 509(a)(2), or 509(a)(3). Tax filing 2010 It is affiliated with a church or a convention or association of churches. Tax filing 2010 It is internally supported. Tax filing 2010 An organization is internally supported unless both of the following are true. Tax filing 2010 It offers admissions, goods, services, or facilities for sale, other than on an incidental basis, to the general public (except goods, services, or facilities sold at a nominal charge or for a small part of the cost). Tax filing 2010 It normally gets more than 50% of its support from a combination of governmental sources, public solicitation of contributions, and receipts from the sale of admissions, goods, performance of services, or furnishing of facilities in activities that are not unrelated trades or businesses. Tax filing 2010 Special rule. Tax filing 2010   Men's and women's organizations, seminaries, mission societies, and youth groups that satisfy (1) and (2) shown earlier are integrated auxiliaries of a church even if they are not internally supported. Tax filing 2010   In order for an organization (including a church and religious organization) to qualify for tax exemption, no part of its net earnings can inure to any individual. Tax filing 2010   Although an individual is entitled to a charitable deduction for contributions to a church, the assignment or similar transfer of compensation for personal services to a church generally does not relieve a taxpayer of federal income tax liability on the compensation, regardless of the motivation behind the transfer. Tax filing 2010 Scientific Organizations You must show that your organization's research will be carried on in the public interest. Tax filing 2010 Scientific research will be considered to be in the public interest if the results of the research (including any patents, copyrights, processes, or formulas) are made available to the public on a nondiscriminatory basis; if the research is performed for the United States or a state, county, or municipal government; or if the research is carried on for one of the following purposes. Tax filing 2010 Aiding in the scientific education of college or university students. Tax filing 2010 Obtaining scientific information that is published in a treatise, thesis, trade publication, or in any other form th
Español

The Tax Filing 2010

Tax filing 2010 3. Tax filing 2010   Claiming the Special Depreciation Allowance Table of Contents Introduction What Is Qualified Property?Qualified Reuse and Recycling Property Qualified Cellulosic Biofuel Plant Property Qualified Disaster Assistance Property Certain Qualified Property Acquired After December 31, 2007 Election to Accelerate Certain Credits in Lieu of the Special Depreciation Allowance How Much Can You Deduct? How Can You Elect Not To Claim an Allowance? When Must You Recapture an Allowance? Introduction You can take a special depreciation allowance to recover part of the cost of qualified property (defined next), placed in service during the tax year. Tax filing 2010 The allowance applies only for the first year you place the property in service. Tax filing 2010 For qualified property placed in service in 2013, you can take an additional 50% special allowance. Tax filing 2010 The allowance is an additional deduction you can take after any section 179 deduction and before you figure regular depreciation under MACRS for the year you place the property in service. Tax filing 2010 This chapter explains what is qualified property. Tax filing 2010 It also includes rules regarding how to figure an allowance, how to elect not to claim an allowance, and when you must recapture an allowance. Tax filing 2010 Corporations can elect to accelerate certain minimum tax credits in lieu of claiming the special depreciation allowance for eligible qualified property. Tax filing 2010 See Election to Accelerate Certain Credits in Lieu of the Special Depreciation Allowance , later. Tax filing 2010 See chapter 6 for information about getting publications and forms. Tax filing 2010 What Is Qualified Property? Your property is qualified property if it is one of the following. Tax filing 2010 Qualified reuse and recycling property. Tax filing 2010 Qualified cellulosic biofuel plant property. Tax filing 2010 Qualified disaster assistance property. Tax filing 2010 Certain qualified property acquired after December 31, 2007. Tax filing 2010 The following discussions provide information about the types of qualified property listed above for which you can take the special depreciation allowance. Tax filing 2010 Qualified Reuse and Recycling Property You can take a 50% special depreciation allowance for qualified reuse and recycling property. Tax filing 2010 Qualified reuse and recycling property is any machinery or equipment (not including buildings or real estate), along with any appurtenance, that is used exclusively to collect, distribute, or recycle qualified reuse and recyclable materials (as defined in section 168(m)(3)(B) of the Internal Revenue Code). Tax filing 2010 Qualified reuse and recycling property also includes software necessary to operate such equipment. Tax filing 2010 The property must meet the following requirements. Tax filing 2010 The property must be depreciated under MACRS. Tax filing 2010 The property must have a useful life of at least 5 years. Tax filing 2010 The original use of the property must begin with you after August 31, 2008. Tax filing 2010 You must have acquired the property by purchase (as discussed under Property Acquired by Purchase in chapter 2 ) after August 31, 2008, with no binding written contract for the acquisition in effect before September 1, 2008. Tax filing 2010 The property must be placed in service for use in your trade or business after August 31, 2008. Tax filing 2010 Excepted Property Qualified reuse and recycling property does not include any of the following. Tax filing 2010 Any rolling stock or other equipment used to transport reuse or recyclable materials. Tax filing 2010 Property required to be depreciated using the Alternative Depreciation System (ADS). Tax filing 2010 For other property required to be depreciated using ADS, see Required use of ADS under Which Depreciation System (GDS or ADS) Applies , in chapter 4 . Tax filing 2010 Other bonus depreciation property to which section 168(k) of the Internal Revenue Code applies. Tax filing 2010 Property for which you elected not to claim any special depreciation allowance (discussed later). Tax filing 2010 Property placed in service and disposed of in the same tax year. Tax filing 2010 Property converted from business use to personal use in the same tax year acquired. Tax filing 2010 Property converted from personal use to business use in the same or later tax year may be qualified reuse and recycling property. Tax filing 2010 Qualified Cellulosic Biofuel Plant Property You can take a 50% special depreciation allowance for qualified cellulosic biofuel plant property. Tax filing 2010 Cellulosic biofuel is any liquid fuel which is produced from any lignocellulosic or hemicellulosic matter that is available on a renewable or recurring basis. Tax filing 2010 Examples include bagasse (from sugar cane), corn stalks, and switchgrass. Tax filing 2010 The property must meet the following requirements. Tax filing 2010 The property is used in the United States solely to produce cellulosic biofuel. Tax filing 2010 The original use of the property must begin with you after December 20, 2006. Tax filing 2010 You must have acquired the property by purchase (as discussed under Property Acquired by Purchase in chapter 2 ) after December 20, 2006, with no binding written contract for acquisition in effect before December 21, 2006. Tax filing 2010 The property must be placed in service for use in your trade or business or for the production of income after October 3, 2008, and before January 3, 2013. Tax filing 2010 Note. Tax filing 2010 For property placed in service after January 2, 2013, and before January 1, 2014, you can take a 50% special depreciation allowance for qualified second generation biofuel plant property that is used solely in the United States to produce second generation biofuel (as defined in section 40(b)(6)(E)). Tax filing 2010 The other requirements for qualified second generation biofuel plant property to be eligible for the special depreciation allowance are identical to the requirements discussed for Qualified Cellulosic Biofuel Plant Property above. Tax filing 2010 Special Rules Sale-leaseback. Tax filing 2010   If you sold qualified cellulosic biofuel plant property you placed in service after October 3, 2008, and leased it back within 3 months after you originally placed it in service, the property is treated as originally placed in service no earlier than the date it is used by you under the leaseback. Tax filing 2010   The property will not qualify for the special allowance if the lessee or a related person to the lessee or lessor had a written binding contract in effect for the acquisition of the property before December 21, 2006. Tax filing 2010 Syndicated leasing transactions. Tax filing 2010   If qualified cellulosic biofuel plant property is originally placed in service by a lessor after October 3, 2008, the property is sold within 3 months of the date it was placed in service, and the user of the property does not change, then the property is treated as originally placed in service by the taxpayer no earlier than the date of the last sale. Tax filing 2010   Multiple units of property subject to the same lease will be treated as originally placed in service no earlier than the date of sale if the property is sold within 3 months after the final unit is placed in service and the period between the times the first and last units are placed in service does not exceed 12 months. Tax filing 2010 Excepted Property Qualified cellulosic biofuel plant property does not include any of the following. Tax filing 2010 Property placed in service and disposed of in the same tax year. Tax filing 2010 Property converted from business use to personal use in the same tax year it is acquired. Tax filing 2010 Property converted from personal use to business use in the same or later tax year may be qualified cellulosic biomass ethanol plant property. Tax filing 2010 Property required to be depreciated using the Alternative Depreciation System (ADS). Tax filing 2010 For other property required to be depreciated using ADS, see Required use of ADS under Which Depreciation System (GDS or ADS) Applies , in chapter 4 . Tax filing 2010 Property any portion of which is financed with the proceeds of any obligation the interest on which is exempt from tax under section 103 of the Internal Revenue Code. Tax filing 2010 Property for which you elected not to claim any special depreciation allowance (discussed later). Tax filing 2010 Property for which a deduction was taken under section 179C for certain qualified refinery property. Tax filing 2010 Other bonus depreciation property to which section 168(k) of the Internal Revenue Code applies. Tax filing 2010 Qualified Disaster Assistance Property You can take a 50% special depreciation allowance for qualified disaster assistance property placed in service in federally declared disaster areas in which the disaster occurred in 2009. Tax filing 2010 A list of the federally declared disaster areas is available at the FEMA website at www. Tax filing 2010 fema. Tax filing 2010 gov. Tax filing 2010 Your property is qualified disaster assistance property if it meets the following requirements. Tax filing 2010 The property is nonresidential real property or residential real property placed in service before January 1, 2014, in a federally declared disaster area in which the disaster occurred in 2009. Tax filing 2010 You must have acquired the property by purchase (as discussed under Property Acquired by Purchase in chapter 2 ) on or after the applicable disaster date, with no binding written contract for the acquisition in effect before the applicable disaster date. Tax filing 2010 The property must rehabilitate property damaged, or replace property destroyed or condemned, as a result of the applicable federally declared disaster. Tax filing 2010 The property must be similar in nature to, and located in the same county as, the rehabilitated or replaced property. Tax filing 2010 The original use of the property within the applicable disaster area must have begun with you on or after the applicable disaster date. Tax filing 2010 The property is placed in service by you on or before the date which is the last day of the fourth calendar year. Tax filing 2010 Substantially all (80% or more) of the use of the property must be in the active conduct of your trade or business in a federally declared disaster area, occurring in 2009. Tax filing 2010 It is not excepted property (explained later in Excepted Property ). Tax filing 2010 Special Rules Sale-leaseback. Tax filing 2010   If you sold qualified disaster assistance property you placed in service after the applicable disaster date and leased it back within 3 months after you originally placed it in service, the property is treated as originally placed in service no earlier than the date it is used by you under the leaseback. Tax filing 2010   The property will not qualify for the special allowance if the lessee or a related person to the lessee or lessor had a written binding contract in effect for the acquisition of the property before the applicable disaster date. Tax filing 2010 Syndicated leasing transactions. Tax filing 2010   If qualified disaster assistance property is originally placed in service by a lessor after the applicable disaster date, the property is sold within 3 months of the date it was placed in service, and the user of the property does not change, then the property is treated as originally placed in service by the taxpayer no earlier than the date of the last sale. Tax filing 2010   Multiple units of property subject to the same lease will be treated as originally placed in service no earlier than the date of sale if the property is sold within 3 months after the final unit is placed in service and the period between the times the first and last units are placed in service does not exceed 12 months. Tax filing 2010 Excepted Property Qualified disaster assistance property does not include any of the following. Tax filing 2010 Property required to be depreciated using the Alternative Depreciation System (ADS). Tax filing 2010 For other property required to be depreciated using ADS, see Required use of ADS under Which Depreciation System (GDS or ADS) Applies , in chapter 4 . Tax filing 2010 Property any portion of which is financed with the proceeds of a tax-exempt obligation under section 103 of the Internal Revenue Code. Tax filing 2010 Any qualified revitalization building (defined later) placed in service before January 1, 2010, for which you have elected to claim a commercial revitalization deduction for qualified revitalization expenditures. Tax filing 2010 Any property used in connection with any private or commercial golf course, country club, massage parlor, hot tub facility, suntan facility, or any store, the principal business of which is the sale of alcoholic beverages for consumption off premises. Tax filing 2010 Any property for which the special allowance under section 168(k) or section 1400N(d) of the Internal Revenue Code applies. Tax filing 2010 Property for which you elected not to claim any special depreciation allowance (discussed later). Tax filing 2010 Property placed in service and disposed of in the same tax year. Tax filing 2010 Property converted from business use to personal use in the same tax year acquired. Tax filing 2010 Property converted from personal use to business use in the same or later tax year may be qualified disaster assistance property. Tax filing 2010 Any gambling or animal racing property (defined later). Tax filing 2010 Qualified revitalization building. Tax filing 2010   This is a commercial building and its structural components that you placed in service in a renewal community before January 1, 2010. Tax filing 2010 If the building is new, the original use of the building must begin with you. Tax filing 2010 If the building is not new, you must substantially rehabilitate the building and then place it in service. Tax filing 2010 For more information, including definitions of substantially rehabilitated building and qualified revitalization expenditure, see section 1400I(b) of the Internal Revenue Code. Tax filing 2010 Gambling or animal racing property. Tax filing 2010   Gambling or animal racing property includes the following personal and real property. Tax filing 2010 Any equipment, furniture, software, or other property used directly in connection with gambling, the racing of animals, or the on-site viewing of such racing. Tax filing 2010 Any real property determined by square footage (other than any portion that is less than 100 square feet) that is dedicated to gambling, the racing of animals, or the on-site viewing of such racing. Tax filing 2010 Certain Qualified Property Acquired After December 31, 2007 You can take a 50% special depreciation deduction allowance for certain qualified property acquired after December 31, 2007. Tax filing 2010 Your property is qualified property if it meets the following requirements. Tax filing 2010 It is one of the following types of property. Tax filing 2010 Tangible property depreciated under MACRS with a recovery period of 20 years or less. Tax filing 2010 Water utility property. Tax filing 2010 Computer software that is readily available for purchase by the general public, is subject to a nonexclusive license, and has not been substantially modified. Tax filing 2010 (The cost of some computer software is treated as part of the cost of hardware and is depreciated under MACRS. Tax filing 2010 ) Qualified leasehold improvement property (defined under Qualified leasehold improvement property later). Tax filing 2010 You must have acquired the property after December 31, 2007, with no binding written contract for the acquisition in effect before January 1, 2008. Tax filing 2010 The property must be placed in service for use in your trade or business or for the production of income before January 1, 2014 (before January 1, 2015, for certain property with a long production period and certain aircraft (defined next)). Tax filing 2010 The original use of the property must begin with you after December 31, 2007. Tax filing 2010 It is not excepted property (explained later in Excepted property). Tax filing 2010 Qualified leasehold improvement property. Tax filing 2010    Generally, this is any improvement to an interior part of a building that is nonresidential real property, if all the following requirements are met. Tax filing 2010 The improvement is made under or according to a lease by the lessee (or any sublessee) or the lessor of that part of the building. Tax filing 2010 That part of the building is to be occupied exclusively by the lessee (or any sublessee) of that part. Tax filing 2010 The improvement is placed in service more than 3 years after the date the building was first placed in service by any person. Tax filing 2010 The improvement is section 1250 property. Tax filing 2010 See chapter 3 in Publication 544, Sales and Other Dispositions of Assets, for the definition of section 1250 property. Tax filing 2010   However, a qualified leasehold improvement does not include any improvement for which the expenditure is attributable to any of the following. Tax filing 2010 The enlargement of the building. Tax filing 2010 Any elevator or escalator. Tax filing 2010 Any structural component benefiting a common area. Tax filing 2010 The internal structural framework of the building. Tax filing 2010   Generally, a binding commitment to enter into a lease is treated as a lease and the parties to the commitment are treated as the lessor and lessee. Tax filing 2010 However, a lease between related persons is not treated as a lease. Tax filing 2010 Related persons. Tax filing 2010   For this purpose, the following are related persons. Tax filing 2010 Members of an affiliated group. Tax filing 2010 An individual and a member of his or her family, including only a spouse, child, parent, brother, sister, half-brother, half-sister, ancestor, and lineal descendant. Tax filing 2010 A corporation and an individual who directly or indirectly owns 80% or more of the value of the outstanding stock of that corporation. Tax filing 2010 Two corporations that are members of the same controlled group. Tax filing 2010 A trust fiduciary and a corporation if 80% or more of the value of the outstanding stock is directly or indirectly owned by or for the trust or grantor of the trust. Tax filing 2010 The grantor and fiduciary, and the fiduciary and beneficiary, of any trust. Tax filing 2010 The fiduciaries of two different trusts, and the fiduciaries and beneficiaries of two different trusts, if the same person is the grantor of both trusts. Tax filing 2010 A tax-exempt educational or charitable organization and any person (or, if that person is an individual, a member of that person's family) who directly or indirectly controls the organization. Tax filing 2010 Two S corporations, and an S corporation and a regular corporation, if the same persons own 80% or more of the value of the outstanding stock of each corporation. Tax filing 2010 A corporation and a partnership if the same persons own both of the following. Tax filing 2010 80% or more of the value of the outstanding stock of the corporation. Tax filing 2010 80% or more of the capital or profits interest in the partnership. Tax filing 2010 The executor and beneficiary of any estate. Tax filing 2010 Long Production Period Property To be qualified property, long production period property must meet the following requirements. Tax filing 2010 It must meet the requirements in (2)-(5), above. Tax filing 2010 The property has a recovery period of at least 10 years or is transportation property. Tax filing 2010 Transportation property is tangible personal property used in the trade or business of transporting persons or property. Tax filing 2010 The property is subject to section 263A of the Internal Revenue Code. Tax filing 2010 The property has an estimated production period exceeding 1 year and an estimated production cost exceeding $1,000,000. Tax filing 2010 Noncommercial Aircraft To be qualified property, noncommercial aircraft must meet the following requirements. Tax filing 2010 It must meet the requirements in (2)-(5), above. Tax filing 2010 The aircraft must not be tangible personal property used in the trade or business of transporting persons or property (except for agricultural or firefighting purposes). Tax filing 2010 The aircraft must be purchased (as discussed under Property Acquired by Purchase in chapter 2 ) by a purchaser who at the time of the contract for purchase, makes a nonrefundable deposit of the lesser of 10% of the cost or $100,000. Tax filing 2010 The aircraft must have an estimated production period exceeding four months and a cost exceeding $200,000. Tax filing 2010 Special Rules Sale-leaseback. Tax filing 2010   If you sold qualified property you placed in service after December 31, 2007, and leased it back within 3 months after you originally placed in service, the property is treated as originally placed in service no earlier than the date it is used by you under the leaseback. Tax filing 2010   The property will not qualify for the special depreciation allowance if the lessee or a related person to the lessee or lessor had a written binding contract in effect for the acquisition of the property before January 1, 2008. Tax filing 2010 Syndicated leasing transactions. Tax filing 2010   If qualified property is originally placed in service by a lessor after December 31, 2007, the property is sold within 3 months of the date it was placed in service, and the user of the property does not change, then the property is treated as originally placed in service by the taxpayer no earlier than the date of the last sale. Tax filing 2010   Multiple units of property subject to the same lease will be treated as originally placed in service no earlier than the date of the last sale if the property is sold within 3 months after the final unit is placed in service and the period between the time the first and last units are placed in service does not exceed 12 months. Tax filing 2010 Excepted Property Qualified property does not include any of the following. Tax filing 2010 Property placed in service and disposed of in the same tax year. Tax filing 2010 Property converted from business use to personal use in the same tax year acquired. Tax filing 2010 Property converted from personal use to business use in the same or later tax year may be qualified property. Tax filing 2010 Property required to be depreciated under the Alternative Depreciation System (ADS). Tax filing 2010 This includes listed property used 50% or less in a qualified business use. Tax filing 2010 For other property required to be depreciated using ADS, see Required use of ADS under Which Depreciation System (GDS or ADS) Applies , in chapter 4 . Tax filing 2010 Qualified restaurant property (as defined in section 168(e)(7) of the Internal Revenue Code). Tax filing 2010 Qualified retail improvement property (as defined in section 168(e)(8) of the Internal Revenue Code). Tax filing 2010 Property for which you elected not to claim any special depreciation allowance (discussed later). Tax filing 2010 Property for which you elected to accelerate certain credits in lieu of the special depreciation allowance (discussed next). Tax filing 2010 Election to Accelerate Certain Credits in Lieu of the Special Depreciation Allowance An election made by a corporation to claim pre-2006 unused minimum tax credits in lieu of claiming the special depreciation allowance for either its first tax year ending after March 31, 2008, its first tax year ending after December 31, 2008, or its first tax year ending after December 31, 2010, continues to apply to round 2 extension property (as defined in section 168(k)(4)(I)(iv)), unless the corporation made an election not to apply the section 168(k)(4) election to round 2 extension property for its first tax year ending after December 31, 2010. Tax filing 2010 For 2013, round 2 extension property generally is long production period and noncommercial aircraft if acquired after March 31, 2008, and placed in service after December 31, 2012, but before January 1, 2014. Tax filing 2010 An election made by a corporation to claim pre-2006 unused minimum tax credits in lieu of claiming the special depreciation allowance for either its first tax year ending after March 31, 2008, its first tax year ending after December 31, 2008, or its first tax year ending after December 31, 2010, continues to apply to round 3 extension property (as defined in section 168(k)(4)(J)(iv)), unless the corporation makes an election not to apply the section 168(k)(4) election to round 3 extension property. Tax filing 2010 If a corporation did not make a section 168(k)(4) election for either its first tax year ending after March 31, 2008, its first tax year ending after December 31, 2008, or its first tax year ending after December 31, 2010, the corporation may elect for its first tax year ending after December 31, 2012, to claim pre-2006 unused minimum tax credits in lieu of claiming the special depreciation allowance for only round 3 extension property. Tax filing 2010 If you make an election to accelerate these credits in lieu of claiming the special depreciation allowance for eligible property, you must not take the 50% special depreciation allowance for the property and must depreciate the basis in the property under MACRS using the straight line method. Tax filing 2010 See Which Depreciation Method Applies in chapter 4 . Tax filing 2010 Once made, the election cannot be revoked without IRS consent. Tax filing 2010 Additional guidance. Tax filing 2010   For additional guidance on the election to accelerate the research or minimum tax credit in lieu of claiming the special depreciation allowance, see Rev. Tax filing 2010 Proc. Tax filing 2010 2008-65 on page 1082 of Internal Revenue Bulletin 2008-44, available at www. Tax filing 2010 irs. Tax filing 2010 gov/pub/irs-irbs/irb08-44. Tax filing 2010 pdf, Rev. Tax filing 2010 Proc. Tax filing 2010 2009-16 on page 449 of Internal Revenue Bulletin 2009-06, available at www. Tax filing 2010 irs. Tax filing 2010 gov/pub/irs-irbs/irb09-06. Tax filing 2010 pdf, and Rev. Tax filing 2010 Proc. Tax filing 2010 2009-33 on page 150 of Internal Revenue Bulletin 2009-29, available at www. Tax filing 2010 irs. Tax filing 2010 gov/pub/irs-irbs/irb09-29. Tax filing 2010 pdf. Tax filing 2010 Also, see Form 3800, General Business Credit; Form 8827, Credit for Prior Year Minimum Tax — Corporations; and related instructions. Tax filing 2010   Additional guidance regarding the election to accelerate the minimum tax credit in lieu of claiming the special depreciation allowance for round 2 extension property and round 3 extension property may also be available in later Internal Revenue Bulletins available at www. Tax filing 2010 irs. Tax filing 2010 gov/irb. Tax filing 2010 How Much Can You Deduct? Figure the special depreciation allowance by multiplying the depreciable basis of qualified reuse and recycling property, qualified cellulosic biofuel plant property, qualified disaster assistance property, and certain qualified property acquired after December 31, 2007, by 50%. Tax filing 2010 For qualified property other than listed property, enter the special allowance on line 14 in Part II of Form 4562. Tax filing 2010 For qualified property that is listed property, enter the special allowance on line 25 in Part V of Form 4562. Tax filing 2010 If you place qualified property in service in a short tax year, you can take the full amount of a special depreciation allowance. Tax filing 2010 Depreciable basis. Tax filing 2010   This is the property's cost or other basis multiplied by the percentage of business/investment use, reduced by the total amount of any credits and deductions allocable to the property. Tax filing 2010   The following are examples of some credits and deductions that reduce depreciable basis. Tax filing 2010 Any section 179 deduction. Tax filing 2010 Any deduction for removal of barriers to the disabled and the elderly. Tax filing 2010 Any disabled access credit, enhanced oil recovery credit, and credit for employer-provided childcare facilities and services. Tax filing 2010 Basis adjustment to investment credit property under section 50(c) of the Internal Revenue Code. Tax filing 2010   For additional credits and deductions that affect basis, see section 1016 of the Internal Revenue Code. Tax filing 2010   For information about how to determine the cost or other basis of property, see What Is the Basis of Your Depreciable Property in chapter 1 . Tax filing 2010 For a discussion of business/investment use, see Partial business or investment use under Property Used in Your Business or Income-Producing Activity in chapter 1 . Tax filing 2010 Depreciating the remaining cost. Tax filing 2010   After you figure your special depreciation allowance for your qualified property, you can use the remaining cost to figure your regular MACRS depreciation deduction (discussed in chapter 4 . Tax filing 2010 Therefore, you must reduce the depreciable basis of the property by the special depreciation allowance before figuring your regular MACRS depreciation deduction. Tax filing 2010 Example. Tax filing 2010 On November 1, 2013, Tom Brown bought and placed in service in his business qualified property that cost $450,000. Tax filing 2010 He did not elect to claim a section 179 deduction. Tax filing 2010 He deducts 50% of the cost ($225,000) as a special depreciation allowance for 2013. Tax filing 2010 He uses the remaining $225,000 of cost to figure his regular MACRS depreciation deduction for 2013 and later years. Tax filing 2010 Like-kind exchanges and involuntary conversions. Tax filing 2010   If you acquire qualified property in a like-kind exchange or involuntary conversion, the carryover basis of the acquired property is eligible for a special depreciation allowance. Tax filing 2010 After you figure your special allowance, you can use the remaining carryover basis to figure your regular MACRS depreciation deduction. Tax filing 2010 In the year you claim the allowance (the year you place in service the property received in the exchange or dispose of involuntarily converted property), you must reduce the carryover basis of the property by the allowance before figuring your regular MACRS depreciation deduction. Tax filing 2010 See Figuring the Deduction for Property Acquired in a Nontaxable Exchange , in chapter 4 under How Is the Depreciation Deduction Figured . Tax filing 2010 The excess basis (the part of the acquired property's basis that exceeds its carryover basis) is also eligible for a special depreciation allowance. Tax filing 2010 How Can You Elect Not To Claim an Allowance? You can elect, for any class of property, not to deduct any special allowances for all property in such class placed in service during the tax year. Tax filing 2010 To make an election, attach a statement to your return indicating what election you are making and the class of property for which you are making the election. Tax filing 2010 When to make election. Tax filing 2010   Generally, you must make the election on a timely filed tax return (including extensions) for the year in which you place the property in service. Tax filing 2010   However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the original return (not including extensions). Tax filing 2010 Attach the election statement to the amended return. Tax filing 2010 On the amended return, write “Filed pursuant to section 301. Tax filing 2010 9100-2. Tax filing 2010 ” Revoking an election. Tax filing 2010   Once you elect not to deduct a special depreciation allowance for a class of property, you cannot revoke the election without IRS consent. Tax filing 2010 A request to revoke the election is a request for a letter ruling. Tax filing 2010 If you elect not to have any special allowance apply, the property may be subject to an alternative minimum tax adjustment for depreciation. Tax filing 2010 When Must You Recapture an Allowance? When you dispose of property for which you claimed a special depreciation allowance, any gain on the disposition is generally recaptured (included in income) as ordinary income up to the amount of the special depreciation allowance previously allowed or allowable. Tax filing 2010 See When Do You Recapture MACRS Depreciation in chapter 4 or more information. Tax filing 2010 Recapture of allowance deducted for qualified GO Zone property. Tax filing 2010   If, in any year after the year you claim the special depreciation allowance for qualified GO Zone property (including specified GO Zone extension property), the property ceases to be used in the GO Zone, you may have to recapture as ordinary income the excess benefit you received from claiming the special depreciation allowance. Tax filing 2010 For additional guidance, see Notice 2008-25 on page 484 of Internal Revenue Bulletin 2008-9. Tax filing 2010 Qualified cellulosic biomass ethanol plant property and qualified cellulosic biofuel plant property. Tax filing 2010   If, in any year after the year you claim the special depreciation allowance for any qualified cellulosic biomass ethanol plant property or qualified biofuel plant property, the property ceases to be qualified cellulosic biomass ethanol plant property or qualified biofuel plant property, you may have to recapture as ordinary income the excess benefit you received from claiming the special depreciation allowance. Tax filing 2010 Recapture of allowance for qualified Recovery Assistance property. Tax filing 2010   If, in any year after the year you claim the special depreciation allowance for qualified Recovery Assistance property, the property ceases to be used in the Kansas disaster area, you may have to recapture as ordinary income the excess benefit you received from claiming the special depreciation allowance. Tax filing 2010 For additional guidance, see Notice 2008-67 on page 307 of Internal Revenue Bulletin 2008-32. Tax filing 2010 Recapture of allowance for qualified disaster assistance property. Tax filing 2010   If, in any year after the year you claim the special depreciation allowance for qualified disaster assistance property, the property ceases to be used in the applicable disaster area, you may have to recapture as ordinary income the excess benefit you received from claiming the special depreciation allowance. Tax filing 2010   For additional guidance, see Notice 2008-67 on page 307 of Internal Revenue Bulletin 2008-32. Tax filing 2010 Prev  Up  Next   Home   More Online Publications