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Where can i file my state and federal taxes for free 12. Where can i file my state and federal taxes for free   Self-Employment Tax Table of Contents What's New for 2013 What's New for 2014 Introduction Topics - This chapter discusses: Useful Items - You may want to see: Why Pay Self-Employment Tax? How To Pay Self-Employment TaxReplacing a lost social security card. Where can i file my state and federal taxes for free Name change. Where can i file my state and federal taxes for free Penalty for underpayment of estimated tax. Where can i file my state and federal taxes for free Who Must Pay Self-Employment Tax?Limited partner. Where can i file my state and federal taxes for free Community property. Where can i file my state and federal taxes for free Figuring Self-Employment EarningsLandlord Participation in Farming Methods for Figuring Net EarningsRegular Method Farm Optional Method Nonfarm Optional Method Using Both Optional Methods Reporting Self-Employment Tax What's New for 2013 Tax rates. Where can i file my state and federal taxes for free  For tax years beginning in 2013, the social security part of the self-employment tax increases from 10. Where can i file my state and federal taxes for free 4% to 12. Where can i file my state and federal taxes for free 4%. Where can i file my state and federal taxes for free The Medicare part of the tax remains at 2. Where can i file my state and federal taxes for free 9%. Where can i file my state and federal taxes for free As a result, the self-employment tax is increased from 13. Where can i file my state and federal taxes for free 3% to 15. Where can i file my state and federal taxes for free 3%. Where can i file my state and federal taxes for free Additional Medicare Tax. Where can i file my state and federal taxes for free . Where can i file my state and federal taxes for free  For tax years beginning in 2013, a 0. Where can i file my state and federal taxes for free 9% Additional Medicare Tax applies to your Medicare wages, Railroad Retirement Tax Act (RRTA) compensation, and self-employment income above a threshold amount. Where can i file my state and federal taxes for free Use Form 8959, Additional Medicare Tax, to figure this tax. Where can i file my state and federal taxes for free For more information, see the Instructions for Form 8959. Where can i file my state and federal taxes for free Maximum net earnings. Where can i file my state and federal taxes for free  The maximum net self-employment earnings subject to the social security part (12. Where can i file my state and federal taxes for free 4%) of the self-employment tax increased to $113,700 for 2013. Where can i file my state and federal taxes for free There is no maximum limit on earnings subject to the Medicare part (2. Where can i file my state and federal taxes for free 9%). Where can i file my state and federal taxes for free What's New for 2014 Maximum net earnings. Where can i file my state and federal taxes for free  The maximum net self-employment earnings subject to the social security part of the self-employment tax for 2014 will be discussed in the 2013 Publication 334. Where can i file my state and federal taxes for free Introduction Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. Where can i file my state and federal taxes for free It is similar to the social security and Medicare taxes withheld from the pay of most wage earners. Where can i file my state and federal taxes for free You usually have to pay SE tax if you are self-employed. Where can i file my state and federal taxes for free You are usually self-employed if you operate your own farm on land you either own or rent. Where can i file my state and federal taxes for free You have to figure SE tax on Schedule SE (Form 1040). Where can i file my state and federal taxes for free Farmers who have employees may have to pay the employer's share of social security and Medicare taxes, as well. Where can i file my state and federal taxes for free See chapter 13 for information on employment taxes. Where can i file my state and federal taxes for free Self-employment tax rate. Where can i file my state and federal taxes for free   For tax years beginning in 2013, the self-employment tax rate is 15. Where can i file my state and federal taxes for free 3%. Where can i file my state and federal taxes for free The rate consists of two parts: 12. Where can i file my state and federal taxes for free 4% for social security (old-age, survivors, and disability insurance) and 2. Where can i file my state and federal taxes for free 9% for Medicare (hospital insurance). Where can i file my state and federal taxes for free Topics - This chapter discusses: Why pay self-employment tax How to pay self-employment tax Who must pay self-employment tax Figuring self-employment earnings Landlord participation in farming Methods for figuring net earnings Reporting self-employment tax Useful Items - You may want to see: Publication 541 Partnerships Form (and Instructions) 1040 U. Where can i file my state and federal taxes for free S. Where can i file my state and federal taxes for free Individual Income Tax Return Sch F (Form 1040) Profit or Loss From Farming Sch SE (Form 1040) Self-Employment Tax 1065 U. Where can i file my state and federal taxes for free S. Where can i file my state and federal taxes for free Return of Partnership Income Sch K-1 (Form 1065) Partner's Share of Income, Deductions, Credits, etc. Where can i file my state and federal taxes for free See chapter 16 for information about getting publications and forms. Where can i file my state and federal taxes for free Why Pay Self-Employment Tax? Social security benefits are available to self-employed persons just as they are to wage earners. Where can i file my state and federal taxes for free Your payments of SE tax contribute to your coverage under the social security system. Where can i file my state and federal taxes for free Social security coverage provides you with retirement benefits, disability benefits, survivor benefits, and hospital insurance (Medicare) benefits. Where can i file my state and federal taxes for free How to become insured under social security. Where can i file my state and federal taxes for free   You must be insured under the social security system before you begin receiving social security benefits. Where can i file my state and federal taxes for free You are insured if you have the required number of credits (also called quarters of coverage). Where can i file my state and federal taxes for free Earning credits in 2013. Where can i file my state and federal taxes for free   You can earn a maximum of four credits per year. Where can i file my state and federal taxes for free For 2013, you earn one credit for each $1,160 of combined wages and self-employment earnings subject to social security tax. Where can i file my state and federal taxes for free You need $4,640 ($1,160 × 4) of combined wages and self-employment earnings subject to social security tax to earn four credits in 2013. Where can i file my state and federal taxes for free It does not matter whether the income is earned in 1 quarter or is spread over 2 or more quarters. Where can i file my state and federal taxes for free For an explanation of the number of credits you must have to be insured and the benefits available to you and your family under the social security program, consult your nearest Social Security Administration (SSA) office or visit the SSA website at www. Where can i file my state and federal taxes for free socialsecurity. Where can i file my state and federal taxes for free gov. Where can i file my state and federal taxes for free Making false statements to get or to increase social security benefits may subject you to penalties. Where can i file my state and federal taxes for free The Social Security Administration (SSA) time limit for posting self-employment earnings. Where can i file my state and federal taxes for free   Generally, the SSA will give you credit only for self-employment earnings reported on a tax return filed within 3 years, 3 months, and 15 days after the tax year you earned the income. Where can i file my state and federal taxes for free    If you file your tax return or report a change in your self-employment earnings after the SSA time limit for posting self-employment earnings, the SSA may change its records, but only to remove or reduce the amount. Where can i file my state and federal taxes for free The SSA will not change its records to increase your self-employment earnings after the SSA time limit listed above. Where can i file my state and federal taxes for free How To Pay Self-Employment Tax To pay SE tax, you must have a social security number (SSN) or an individual taxpayer identification number (ITIN). Where can i file my state and federal taxes for free This section explains how to: Obtain an SSN or ITIN, and Pay your SE tax using estimated tax. Where can i file my state and federal taxes for free An ITIN does not entitle you to social security benefits. Where can i file my state and federal taxes for free Obtaining an ITIN does not change your immigration or employment status under U. Where can i file my state and federal taxes for free S. Where can i file my state and federal taxes for free law. Where can i file my state and federal taxes for free Obtaining a social security number. Where can i file my state and federal taxes for free   If you have never had an SSN, apply for one using Form SS-5, Application for a Social Security Card. Where can i file my state and federal taxes for free The application is also available in Spanish. Where can i file my state and federal taxes for free You can get this form at any Social Security office or by calling 1-800-772-1213. Where can i file my state and federal taxes for free    You can also download Form SS-5 from the Social Security Administration website at  www. Where can i file my state and federal taxes for free socialsecurity. Where can i file my state and federal taxes for free gov. Where can i file my state and federal taxes for free   If you have a social security number from the time you were an employee, you must use that number. Where can i file my state and federal taxes for free Do not apply for a new one. Where can i file my state and federal taxes for free Replacing a lost social security card. Where can i file my state and federal taxes for free   If you have a number but lost your card, file Form SS-5. Where can i file my state and federal taxes for free You will get a new card showing your original number, not a new number. Where can i file my state and federal taxes for free Name change. Where can i file my state and federal taxes for free   If your name has changed since you received your social security card, complete Form SS-5 to report a name change. Where can i file my state and federal taxes for free Obtaining an individual taxpayer identification number. Where can i file my state and federal taxes for free   The IRS will issue you an ITIN, for tax use only, if you are a nonresident or resident alien and you do not have, and are not eligible to get, an SSN. Where can i file my state and federal taxes for free To apply for an ITIN, file Form W-7, Application for IRS Individual Taxpayer Identification Number. Where can i file my state and federal taxes for free You can get this form by calling 1-800-829-3676. Where can i file my state and federal taxes for free For more information on ITINs, see Publication 1915, Understanding Your IRS Individual Taxpayer Identification Number. Where can i file my state and federal taxes for free Form W-7 and Publication 1915 are also available in Spanish. Where can i file my state and federal taxes for free    You can also download Form W-7 from the IRS website at IRS. Where can i file my state and federal taxes for free gov. Where can i file my state and federal taxes for free Paying estimated tax. Where can i file my state and federal taxes for free   Estimated tax is the method used to pay tax (including SE tax) on income not subject to withholding. Where can i file my state and federal taxes for free You generally have to make estimated tax payments if you expect to owe tax, including SE tax, of $1,000 or more when you file your return. Where can i file my state and federal taxes for free Use Form 1040-ES, Estimated Tax for Individuals, to figure and pay the tax. Where can i file my state and federal taxes for free   However, if at least two-thirds of your gross income for 2013 or 2014 was from farming and you file your 2014 Form 1040 and pay all the tax due by March 2, 2015, you do not have to pay any estimated tax. Where can i file my state and federal taxes for free For more information about estimated tax for farmers, see chapter 15. Where can i file my state and federal taxes for free Penalty for underpayment of estimated tax. Where can i file my state and federal taxes for free   You may have to pay a penalty if you do not pay enough estimated tax by its due date. Where can i file my state and federal taxes for free Who Must Pay Self-Employment Tax? You must pay SE tax and file Schedule SE (Form 1040) if your net earnings from self-employment were $400 or more. Where can i file my state and federal taxes for free The SE tax rules apply no matter how old you are and even if you are already receiving social security or Medicare benefits. Where can i file my state and federal taxes for free Aliens. Where can i file my state and federal taxes for free   Generally, resident aliens must pay self-employment tax under the same rules that apply to U. Where can i file my state and federal taxes for free S. Where can i file my state and federal taxes for free citizens. Where can i file my state and federal taxes for free Nonresident aliens are not subject to self-employment tax. Where can i file my state and federal taxes for free However, residents of the Virgin Islands, Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, or American Samoa are subject to self-employment tax, as they are considered U. Where can i file my state and federal taxes for free S. Where can i file my state and federal taxes for free residents for self-employment tax purposes. Where can i file my state and federal taxes for free For more information on aliens, see Publication 519, U. Where can i file my state and federal taxes for free S. Where can i file my state and federal taxes for free Tax Guide for Aliens. Where can i file my state and federal taxes for free Are you self-employed?   You are self-employed if you carry on a trade or business (such as running a farm) as a sole proprietor, an independent contractor, a member of a partnership, or are otherwise in business for yourself. Where can i file my state and federal taxes for free A trade or business is generally an activity carried on for a livelihood or in good faith to make a profit. Where can i file my state and federal taxes for free Share farmer. Where can i file my state and federal taxes for free   You are a self-employed farmer under an income-sharing arrangement if both the following apply. Where can i file my state and federal taxes for free You produce a crop or raise livestock on land belonging to another person. Where can i file my state and federal taxes for free Your share of the crop or livestock, or the proceeds from their sale, depends on the amount produced. Where can i file my state and federal taxes for free Your net farm profit or loss from the income-sharing arrangement is reported on Schedule F (Form 1040) and included in your self-employment earnings. Where can i file my state and federal taxes for free   If you produce a crop or livestock on land belonging to another person and are to receive a specified rate of pay, a fixed sum of money, or a fixed quantity of the crop or livestock, and not a share of the crop or livestock or their proceeds, you may be either self-employed or an employee of the landowner. Where can i file my state and federal taxes for free This will depend on whether the landowner has the right to direct or control your performance of services. Where can i file my state and federal taxes for free Example. Where can i file my state and federal taxes for free A share farmer produces a crop on land owned by another person on a 50-50 crop-share basis. Where can i file my state and federal taxes for free Under the terms of their agreement, the share farmer furnishes the labor and half the cost of seed and fertilizer. Where can i file my state and federal taxes for free The landowner furnishes the machinery and equipment used to produce and harvest the crop, and half the cost of seed and fertilizer. Where can i file my state and federal taxes for free The share farmer is provided a house in which to live. Where can i file my state and federal taxes for free The landowner and the share farmer decide on a cropping plan. Where can i file my state and federal taxes for free The share farmer is a self-employed farmer for purposes of the agreement to produce the crops, and the share farmer's part of the profit or loss from the crops is reported on Schedule F (Form 1040) and included in self-employment earnings. Where can i file my state and federal taxes for free The tax treatment of the landowner is discussed later under Landlord Participation in Farming. Where can i file my state and federal taxes for free Contract farming. Where can i file my state and federal taxes for free   Under typical contract farming arrangements, the grower receives a fixed payment per unit of crops or finished livestock delivered to the processor or packing company. Where can i file my state and federal taxes for free Since the grower typically furnishes labor and bears some production risk, the payments are reported on Schedule F and are therefore subject to self-employment tax. Where can i file my state and federal taxes for free 4-H Club or FFA project. Where can i file my state and federal taxes for free   If an individual participates in a 4-H Club or Future Farmers of America (FFA) project, any net income received from sales or prizes related to the project may be subject to income tax. Where can i file my state and federal taxes for free Report the net income as “Other income” on line 21 of Form 1040. Where can i file my state and federal taxes for free If necessary, attach a statement showing the gross income and expenses. Where can i file my state and federal taxes for free The net income may not be subject to SE tax if the project is primarily for educational purposes and not for profit, and is completed by the individual under the rules and economic restrictions of the sponsoring 4-H or FFA organization. Where can i file my state and federal taxes for free Such a project is generally not considered a trade or business. Where can i file my state and federal taxes for free Partners in a partnership. Where can i file my state and federal taxes for free   Generally, you are self-employed if you are a member of a partnership that carries on a trade or business. Where can i file my state and federal taxes for free Limited partner. Where can i file my state and federal taxes for free   If you are a limited partner, your partnership income is generally not subject to SE tax. Where can i file my state and federal taxes for free However, guaranteed payments you receive for services you perform for the partnership are subject to SE tax and should be reported to you in box 14 of your Schedule K-1 (Form 1065). Where can i file my state and federal taxes for free Business Owned and Operated by Spouses. Where can i file my state and federal taxes for free   If you and your spouse jointly own and operate a farm as an unincorporated business and share in the profits and losses, you are partners in a partnership whether or not you have a formal partnership agreement. Where can i file my state and federal taxes for free You must file Form 1065, instead of Schedule F, unless you make a joint election to be treated as a qualified joint venture. Where can i file my state and federal taxes for free Making this election will allow you to avoid the complexity of Form 1065 but still give each spouse credit for social security earnings on which retirement benefits are based. Where can i file my state and federal taxes for free Qualified joint venture. Where can i file my state and federal taxes for free   If you and your spouse each materially participate as the only members of a jointly owned and operated farm, and you file a joint tax return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership for the tax year. Where can i file my state and federal taxes for free For an explanation of “material participation,” see the instructions for Schedule C, line G, and the instructions for Schedule F, line E. Where can i file my state and federal taxes for free   To make this election, you must divide all items of income, gain, loss, deduction, and credit attributable to the business between you and your spouse in accordance with your respective interests in the venture. Where can i file my state and federal taxes for free Each of you must file a separate Schedule F and a separate Schedule SE. Where can i file my state and federal taxes for free For more information, see Qualified Joint Venture in the Instructions for Schedule SE (Form 1040). Where can i file my state and federal taxes for free Spouse employee. Where can i file my state and federal taxes for free   If your spouse is your employee, not your partner, you must withhold and pay social security and Medicare taxes for him or her. Where can i file my state and federal taxes for free For more information about employment taxes, see chapter 13. Where can i file my state and federal taxes for free Community property. Where can i file my state and federal taxes for free   If you are a partner and your distributive share of any income or loss from a trade or business carried on by the partnership is community property, treat your share as your self-employment earnings. Where can i file my state and federal taxes for free Do not treat any of your share as self-employment earnings of your spouse. Where can i file my state and federal taxes for free Figuring Self-Employment Earnings Farmer. Where can i file my state and federal taxes for free   If you are self-employed as a farmer, use Schedule F (Form 1040) to figure your self-employment earnings. Where can i file my state and federal taxes for free Partnership income or loss. Where can i file my state and federal taxes for free   If you are a member of a partnership that carries on a trade or business, the partnership should report your self-employment earnings in box 14, code A, of your Schedule K-1 (Form 1065). Where can i file my state and federal taxes for free Box 14 of Schedule K-1 may also provide amounts for gross farming or fishing income (code B) and gross nonfarm income (code C). Where can i file my state and federal taxes for free Use these amounts if you use the farm or nonfarm optional method to figure net earnings from self-employment (see Methods for Figuring Net Earnings , later). Where can i file my state and federal taxes for free   If you are a general partner, you may need to reduce these reported earnings by amounts you claim as a section 179 deduction, unreimbursed partnership expenses, or depletion on oil and gas properties. Where can i file my state and federal taxes for free   If the amount reported is a loss, include only the deductible amount when you figure your total self-employment earnings. Where can i file my state and federal taxes for free   For more information, see the Partner's Instructions for Schedule K-1 (Form 1065). Where can i file my state and federal taxes for free   For general information on partnerships, see Publication 541. Where can i file my state and federal taxes for free More than one business. Where can i file my state and federal taxes for free   If you have self-employment earnings from more than one trade, business, or profession, you generally must combine the net profit or loss from each to determine your total self-employment earnings. Where can i file my state and federal taxes for free A loss from one business reduces your profit from another business. Where can i file my state and federal taxes for free However, do not combine earnings from farm and nonfarm businesses if you are using one of the optional methods (discussed later) to figure net earnings. Where can i file my state and federal taxes for free Community property. Where can i file my state and federal taxes for free   If any of the income from a farm or business, other than a partnership, is community property under state law, it is included in the self-employment earnings of the spouse carrying on the trade or business. Where can i file my state and federal taxes for free Lost income payments. Where can i file my state and federal taxes for free   Lost income payments received from insurance or other sources for reducing or stopping farming activities are included in self-employment earnings. Where can i file my state and federal taxes for free These include USDA payments to compensate for lost income resulting from reductions in tobacco quotas and allotments. Where can i file my state and federal taxes for free Even if you are not farming when you receive the payment, it is included in self-employment earnings if it relates to your farm business (even though it is temporarily inactive). Where can i file my state and federal taxes for free A connection exists if it is clear the payment would not have been made but for your conduct of your farm business. Where can i file my state and federal taxes for free Gain or loss. Where can i file my state and federal taxes for free   A gain or loss from the disposition of property that is neither stock in trade nor held primarily for sale to customers is not included in self-employment earnings. Where can i file my state and federal taxes for free It does not matter whether the disposition is a sale, exchange, or involuntary conversion. Where can i file my state and federal taxes for free For example, gains or losses from the disposition of the following types of property are not included in self-employment earnings. Where can i file my state and federal taxes for free Investment property. Where can i file my state and federal taxes for free Depreciable property or other fixed assets used in your trade or business. Where can i file my state and federal taxes for free Livestock held for draft, breeding, sport, or dairy purposes, and not held primarily for sale, regardless of how long the livestock was held, or whether it was raised or purchased. Where can i file my state and federal taxes for free Unharvested standing crops sold with land held more than 1 year. Where can i file my state and federal taxes for free Timber, coal, or iron ore held for more than 1 year if an economic interest was retained, such as a right to receive coal royalties. Where can i file my state and federal taxes for free   A gain or loss from the cutting of timber is not included in self-employment earnings if the cutting is treated as a sale or exchange. Where can i file my state and federal taxes for free For more information on electing to treat the cutting of timber as a sale or exchange, see Timber in chapter 8. Where can i file my state and federal taxes for free Wages and salaries. Where can i file my state and federal taxes for free   Wages and salaries received for services performed as an employee and covered by social security or railroad retirement are not included in self-employment earnings. Where can i file my state and federal taxes for free   Wages paid in kind to you for agricultural labor, such as commodity wages, are not included in self-employment earnings. Where can i file my state and federal taxes for free Retired partner. Where can i file my state and federal taxes for free   Retirement income received by a partner from his or her partnership under a written plan is not included in self-employment earnings if all the following apply. Where can i file my state and federal taxes for free The retired partner performs no services for the partnership during the year. Where can i file my state and federal taxes for free The retired partner is owed only the retirement payments. Where can i file my state and federal taxes for free The retired partner's share (if any) of the partnership capital was fully paid to the retired partner. Where can i file my state and federal taxes for free The payments to the retired partner are lifelong periodic payments. Where can i file my state and federal taxes for free Conservation Reserve Program (CRP) payments. Where can i file my state and federal taxes for free   Under the Conservation Reserve Program (CRP), if you own or operate highly erodible or other specified cropland, you may enter into a longterm contract with the USDA, agreeing to convert to a less intensive use of that cropland. Where can i file my state and federal taxes for free You must include the annual rental payments and any onetime incentive payment you receive under the program on Schedule F, lines 4a and 4b. Where can i file my state and federal taxes for free Cost share payments you receive may qualify for the costsharing exclusion. Where can i file my state and federal taxes for free See Cost-Sharing Exclusion (Improvements), above. Where can i file my state and federal taxes for free CRP payments are reported to you on Form 1099G. Where can i file my state and federal taxes for free Individuals who are receiving Social Security retirement or disability benefits may exclude CRP payments when calculating self-employment tax. Where can i file my state and federal taxes for free See the instructions for Schedule SE (Form 1040). Where can i file my state and federal taxes for free Self-employed health insurance deduction. Where can i file my state and federal taxes for free   You cannot deduct the self-employed health insurance deduction you report on Form 1040, line 29, from self-employment earnings on Schedule SE (Form 1040). Where can i file my state and federal taxes for free Landlord Participation in Farming As a general rule, income and deductions from rentals and from personal property leased with real estate are not included in determining self-employment earnings. Where can i file my state and federal taxes for free However, income and deductions from farm rentals, including government commodity program payments received by a landowner who rents land, are included if the rental arrangement provides that the landowner will, and does, materially participate in the production or management of production of the farm products on the land. Where can i file my state and federal taxes for free Crop shares. Where can i file my state and federal taxes for free   Rent paid in the form of crop shares is included in self-employment earnings for the year you sell, exchange, give away, or use the crop shares if you meet one of the four material participation tests (discussed next) at the time the crop shares are produced. Where can i file my state and federal taxes for free Feeding such crop shares to livestock is considered using them. Where can i file my state and federal taxes for free Your gross income for figuring your self-employment earnings includes the fair market value of the crop shares when they are used as feed. Where can i file my state and federal taxes for free Material participation for landlords. Where can i file my state and federal taxes for free   You materially participate if you have an arrangement with your tenant for your participation and you meet one or more of the following tests. Where can i file my state and federal taxes for free You do at least three of the following. Where can i file my state and federal taxes for free Pay, using cash or credit, at least half the direct costs of producing the crop or livestock. Where can i file my state and federal taxes for free Furnish at least half the tools, equipment, and livestock used in the production activities. Where can i file my state and federal taxes for free Advise or consult with your tenant. Where can i file my state and federal taxes for free Inspect the production activities periodically. Where can i file my state and federal taxes for free You regularly and frequently make, or take an important part in making, management decisions substantially contributing to or affecting the success of the enterprise. Where can i file my state and federal taxes for free You work 100 hours or more spread over a period of 5 weeks or more in activities connected with agricultural production. Where can i file my state and federal taxes for free You do things that, considered in their totality, show you are materially and significantly involved in the production of the farm commodities. Where can i file my state and federal taxes for free These tests may be used as general guides for determining whether you are a material participant. Where can i file my state and federal taxes for free Example. Where can i file my state and federal taxes for free Drew Houston agrees to produce a crop on J. Where can i file my state and federal taxes for free Clarke's cotton farm, with each receiving half the proceeds. Where can i file my state and federal taxes for free Clarke advises Houston when to plant, spray, and pick the cotton. Where can i file my state and federal taxes for free During the growing season, Clarke inspects the crop every few days to determine whether Houston is properly taking care of the crop. Where can i file my state and federal taxes for free Houston furnishes all labor needed to grow and harvest the crop. Where can i file my state and federal taxes for free The management decisions made by Clarke in connection with the care of the cotton crop and his regular inspection of the crop establish that he participates to a material degree in the cotton production operations. Where can i file my state and federal taxes for free The income Clarke receives from his cotton farm is included in his self-employment earnings. Where can i file my state and federal taxes for free Methods for Figuring Net Earnings There are three ways to figure your net earnings from self-employment. Where can i file my state and federal taxes for free The regular method. Where can i file my state and federal taxes for free The farm optional method. Where can i file my state and federal taxes for free The nonfarm optional method. Where can i file my state and federal taxes for free You must use the regular method unless you are eligible to use one or both of the optional methods. Where can i file my state and federal taxes for free See Figure 12-1 , shown later. Where can i file my state and federal taxes for free Figure 12-1. Where can i file my state and federal taxes for free Can I Use the Optional Methods? Please click here for the text description of the image. Where can i file my state and federal taxes for free Figure 12–1. Where can i file my state and federal taxes for free Can I Use the Optional Methods? Why use an optional method?   You may want to use the optional methods (discussed later) when you have a loss or a small net profit and any one of the following applies. Where can i file my state and federal taxes for free You want to receive credit for social security benefit coverage. Where can i file my state and federal taxes for free You incurred child or dependent care expenses for which you could claim a credit. Where can i file my state and federal taxes for free (An optional method may increase your earned income, which could increase your credit. Where can i file my state and federal taxes for free ) You are entitled to the earned income credit. Where can i file my state and federal taxes for free (An optional method may increase your earned income, which could increase your credit. Where can i file my state and federal taxes for free ) You are entitled to the additional child tax credit. Where can i file my state and federal taxes for free (An optional method may increase your earned income, which could increase your credit. Where can i file my state and federal taxes for free ) Effects of using an optional method. Where can i file my state and federal taxes for free   Using an optional method could increase your SE tax. Where can i file my state and federal taxes for free Paying more SE tax may result in you getting higher social security disability or retirement benefits. Where can i file my state and federal taxes for free   If you use either or both optional methods, you must figure and pay the SE tax due under these methods even if you would have had a smaller SE tax or no SE tax using the regular method. Where can i file my state and federal taxes for free   The optional methods may be used only to figure your SE tax. Where can i file my state and federal taxes for free To figure your income tax, include your actual self-employment earnings in gross income, regardless of which method you use to determine SE tax. Where can i file my state and federal taxes for free Regular Method Multiply your total self-employment earnings by 92. Where can i file my state and federal taxes for free 35% (. Where can i file my state and federal taxes for free 9235) to get your net earnings under the regular method. Where can i file my state and federal taxes for free See Short Schedule SE, line 4, or Long Schedule SE, line 4a. Where can i file my state and federal taxes for free Net earnings figured using the regular method are also called “actual net earnings. Where can i file my state and federal taxes for free ” Farm Optional Method Use the farm optional method only for self-employment earnings from a farming business. Where can i file my state and federal taxes for free You can use this method if you meet either of the following tests. Where can i file my state and federal taxes for free Your gross farm income is $6,960 or less. Where can i file my state and federal taxes for free Your net farm profits are less than $5,024. Where can i file my state and federal taxes for free Gross farm income. Where can i file my state and federal taxes for free   Your gross farm income is the total of the amounts from: Schedule F (Form 1040), line 9, and Schedule K-1 (Form 1065), box 14, code B (from farm partnerships). Where can i file my state and federal taxes for free Net farm profits. Where can i file my state and federal taxes for free   Net farm profits generally are the total of the amounts from: Schedule F (Form 1040), line 34, and Schedule K-1 (Form 1065), box 14, code A (from farm partnerships). Where can i file my state and federal taxes for free However, you may need to adjust the amount reported on Schedule K-1 if you are a general partner or if it is a loss. Where can i file my state and federal taxes for free For more information, see Partnership income or loss , earlier. Where can i file my state and federal taxes for free Figuring farm net earnings. Where can i file my state and federal taxes for free   If you meet either of the two tests explained above, use Table 12-1. Where can i file my state and federal taxes for free Figuring Farm Net Earnings , to figure your net earnings from self-employment under the farm optional method. Where can i file my state and federal taxes for free Table 12-1. Where can i file my state and federal taxes for free Figuring Farm Net Earnings IF your gross farm income  is. Where can i file my state and federal taxes for free . Where can i file my state and federal taxes for free . Where can i file my state and federal taxes for free THEN your net earnings are equal to. Where can i file my state and federal taxes for free . Where can i file my state and federal taxes for free . Where can i file my state and federal taxes for free $6,960 or less Two-thirds of your gross farm income. Where can i file my state and federal taxes for free More than $6,960 $4,640 Optional method can reduce or eliminate SE tax. Where can i file my state and federal taxes for free   If your gross farm income is $6,960 or less and your farm net earnings figured under the farm optional method are less than your actual net earnings, you can use the farm optional method to reduce or eliminate your SE tax. Where can i file my state and federal taxes for free Your actual net earnings are your net earnings figured using the regular method, explained earlier. Where can i file my state and federal taxes for free Example. Where can i file my state and federal taxes for free Your gross farm income is $540 and your net farm profit is $460. Where can i file my state and federal taxes for free Consequently, your net earnings figured under the farm optional method are $360 (2/3 of $540) and your actual net earnings are $425 (92. Where can i file my state and federal taxes for free 35% of $460). Where can i file my state and federal taxes for free You owe no SE tax if you use the optional method because your net earnings under the farm optional method are less than $400. Where can i file my state and federal taxes for free Nonfarm Optional Method This is an optional method available for determining net earnings from nonfarm self-employment, much like the farm optional method. Where can i file my state and federal taxes for free If you are also engaged in a nonfarm business, you may be able to use this method to figure your nonfarm net earnings. Where can i file my state and federal taxes for free You can use this method even if you do not use the farm optional method for determining your farm net earnings and even if you have a net loss from your nonfarm business. Where can i file my state and federal taxes for free For more information about the nonfarm optional method, see Publication 334. Where can i file my state and federal taxes for free You cannot combine farm and nonfarm self-employment earnings to figure your net earnings under either of the optional methods. Where can i file my state and federal taxes for free Using Both Optional Methods If you use both optional methods, you must add the net earnings figured under each method to arrive at your total net earnings from self-employment. Where can i file my state and federal taxes for free You can report less than your total actual farm and nonfarm net earnings but not less than actual nonfarm net earnings. Where can i file my state and federal taxes for free If you use both optional methods, you can report no more than $4,640 as your combined net earnings from self-employment. Where can i file my state and federal taxes for free Reporting Self-Employment Tax Use Schedule SE (Form 1040) to figure and report your SE tax. Where can i file my state and federal taxes for free Then, enter the SE tax on line 56 of Form 1040 and attach Schedule SE to Form 1040. Where can i file my state and federal taxes for free Most taxpayers can use Section A–Short Schedule SE to figure their SE tax. Where can i file my state and federal taxes for free However, certain taxpayers must use Section B–Long Schedule SE. Where can i file my state and federal taxes for free Use the chart on page 1 of Schedule SE to find out which one to use. Where can i file my state and federal taxes for free If you have to pay SE tax, you must file Form 1040 (with Schedule SE attached) even if you do not otherwise have to file a federal income tax return. Where can i file my state and federal taxes for free Deduction for employer-equivalent portion of self-employment tax. Where can i file my state and federal taxes for free   You can deduct the employer-equivalent portion of your SE tax in figuring your adjusted gross income. Where can i file my state and federal taxes for free This deduction only affects your income tax. Where can i file my state and federal taxes for free It does not affect either your net earnings from self-employment or your SE tax. Where can i file my state and federal taxes for free   To deduct the tax, enter on Form 1040, line 27, the amount shown on Section A, Line 6, or Section B, line 13, Deduction for employer-equivalent portion of self-employment tax, of the Schedule SE. Where can i file my state and federal taxes for free Joint return. Where can i file my state and federal taxes for free   Even if you file a joint return, you cannot file a joint Schedule SE. Where can i file my state and federal taxes for free This is true whether one spouse or both spouses have self-employment earnings. Where can i file my state and federal taxes for free Your spouse is not considered self-employed just because you are. Where can i file my state and federal taxes for free If both of you have self-employment earnings, each of you must complete a separate Schedule SE. Where can i file my state and federal taxes for free However, if one spouse uses the Short Schedule SE and the other spouse has to use the Long Schedule SE, both can use the same form. Where can i file my state and federal taxes for free Attach both schedules to the joint return. Where can i file my state and federal taxes for free If you and your spouse operate a business as a partnership, see Business Owned and Operated by Spouses and Qualified joint venture , earlier, under Who Must Pay Self-Employment Tax . Where can i file my state and federal taxes for free Prev  Up  Next   Home   More Online Publications
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IRS Offers Videos to Help Taxpayers Preparing to File in 2014

IR-2014-1, Jan. 3, 2014

WASHINGTON — The Internal Revenue Service is offering taxpayers a number of instructional YouTube videos to help prepare their taxes for the upcoming filing season, which begins on Jan. 31.

Several options are available to help taxpayers prepare for the 2014 tax season and get their refunds as easily as possible. Many software companies are expected to begin accepting tax returns in January and hold those returns until the IRS systems open on Jan. 31. This includes the Free File partners that offer access to their software for free at irs.gov/Free File. The IRS will not process any tax returns before Jan. 31, so there is no advantage to filing on paper before the opening date. Taxpayers will receive their tax refunds much faster by using e-file or Free File with the direct deposit option.

In addition, the IRS has short and informative YouTube videos on a number of tax-related topics in English, Spanish and American Sign Language (ASL). The channels have received nearly 6.5 million views:

Specific videos that taxpayers may view to help them get ready over the coming weeks include:

  • Do-It-Yourself Free Tax Preparation ─ Helps taxpayers find free help from certified volunteers to electronically file tax returns. Taxpayers interested in helping their own communities can also watch a video to learn about becoming involved in the Volunteer Income Tax Assistance or Tax Counseling for the Elderly programs.
  • Do I Have to File a Tax Return? ─ Learn about the requirements for filing a tax return, including income limits and age, and why taxpayers may want to file even if they don't have to.
  • How to Get 1040 Forms ─  Provides tips on the quickest way to get the various 1040 forms on IRS.gov.
  • Tax Scams ─  Offers some tips on how to protect personal information and avoid becoming a tax scam victim.
  • Record-keeping ─  Learn which financial and tax files to keep and how long to keep them.
  • Changed Your Name After Marriage or Divorce? ─  Find out what you need to do if you have changed your name before you file your tax return.
  • Choosing a Tax Preparer ─ Hear some useful tips for choosing a reputable tax preparer.

The IRS uses social media tools and platforms to share the latest information on tax changes, initiatives, products and services. These social media platforms include the IRS2Go phone application, YouTube, Tumblr, Twitter and Facebook. To protect taxpayer privacy, the IRS only uses social media tools to share public information, not to answer personal tax or account questions. It advises taxpayers to never post confidential information, like a Social Security number, on social media sites. A listing is available on IRS.gov.

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Page Last Reviewed or Updated: 03-Jan-2014

The Where Can I File My State And Federal Taxes For Free

Where can i file my state and federal taxes for free 8. Where can i file my state and federal taxes for free   Amortization Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: How To Deduct Amortization Starting a BusinessBusiness Start-Up Costs Costs of Organizing a Corporation Costs of Organizing a Partnership How To Amortize Getting a Lease Section 197 IntangiblesSection 197 Intangibles Defined Assets That Are Not Section 197 Intangibles Safe Harbor for Creative Property Costs Anti-Churning Rules Incorrect Amount of Amortization Deducted Disposition of Section 197 Intangibles Reforestation Costs Geological and Geophysical Costs Pollution Control FacilitiesNew identifiable treatment facility. Where can i file my state and federal taxes for free Research and Experimental Costs Optional Write-off of Certain Tax Preferences Introduction Amortization is a method of recovering (deducting) certain capital costs over a fixed period of time. Where can i file my state and federal taxes for free It is similar to the straight line method of depreciation. Where can i file my state and federal taxes for free The various amortizable costs covered in this chapter are included in the list below. Where can i file my state and federal taxes for free However, this chapter does not discuss amortization of bond premium. Where can i file my state and federal taxes for free For information on that topic, see chapter 3 of Publication 550, Investment Income and Expenses. Where can i file my state and federal taxes for free Topics - This chapter discusses: Deducting amortization Amortizing costs of starting a business Amortizing costs of getting a lease Amortizing costs of section 197 intangibles Amortizing reforestation costs Amortizing costs of geological and geophysical costs Amortizing costs of pollution control facilities Amortizing costs of research and experimentation Amortizing costs of certain tax preferences Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets 550 Investment Income and Expenses 946 How To Depreciate Property Form (and Instructions) 4562 Depreciation and Amortization 4626 Alternative Minimum Tax—Corporations 6251 Alternative Minimum Tax—Individuals See chapter 12 for information about getting publications and forms. Where can i file my state and federal taxes for free How To Deduct Amortization To deduct amortization that begins during the current tax year, complete Part VI of Form 4562 and attach it to your income tax return. Where can i file my state and federal taxes for free To report amortization from previous years, in addition to amortization that begins in the current year, list on Form 4562 each item separately. Where can i file my state and federal taxes for free For example, in 2012, you began to amortize a lease. Where can i file my state and federal taxes for free In 2013, you began to amortize a second lease. Where can i file my state and federal taxes for free Report amortization from the new lease on line 42 of your 2013 Form 4562. Where can i file my state and federal taxes for free Report amortization from the 2012 lease on line 43 of your 2013 Form 4562. Where can i file my state and federal taxes for free If you do not have any new amortizable expenses for the current year, you are not required to complete Form 4562 (unless you are claiming depreciation). Where can i file my state and federal taxes for free Report the current year's deduction for amortization that began in a prior year directly on the “Other deduction” or “Other expense line” of your return. Where can i file my state and federal taxes for free Starting a Business When you start a business, treat all eligible costs you incur before you begin operating the business as capital expenditures which are part of your basis in the business. Where can i file my state and federal taxes for free Generally, you recover costs for particular assets through depreciation deductions. Where can i file my state and federal taxes for free However, you generally cannot recover other costs until you sell the business or otherwise go out of business. Where can i file my state and federal taxes for free For a discussion on how to treat these costs, see If your attempt to go into business is unsuccessful under Capital Expenses in chapter 1. Where can i file my state and federal taxes for free For costs paid or incurred after September 8, 2008, you can deduct a limited amount of start-up and organizational costs. Where can i file my state and federal taxes for free The costs that are not deducted currently can be amortized ratably over a 180-month period. Where can i file my state and federal taxes for free The amortization period starts with the month you begin operating your active trade or business. Where can i file my state and federal taxes for free You are not required to attach a statement to make this election. Where can i file my state and federal taxes for free You can choose to forgo this election by affirmatively electing to capitalize your start-up costs on your income tax return filed by the due date (including extensions) for the tax year in which the active trade or business begins. Where can i file my state and federal taxes for free Once made, the election to either amortize or capitalize start-up costs is irrevocable and applies to all start-up costs that are related to your trade or business. Where can i file my state and federal taxes for free See Regulations sections 1. Where can i file my state and federal taxes for free 195-1, 1. Where can i file my state and federal taxes for free 248-1, and 1. Where can i file my state and federal taxes for free 709-1. Where can i file my state and federal taxes for free For costs paid or incurred after October 22, 2004, and before September 9, 2008, you can elect to deduct a limited amount of business start-up and organizational costs in the year your active trade or business begins. Where can i file my state and federal taxes for free Any costs not deducted can be amortized ratably over a 180-month period, beginning with the month you begin business. Where can i file my state and federal taxes for free If the election is made, you must attach any statement required by Regulations sections 1. Where can i file my state and federal taxes for free 195-1(b), 1. Where can i file my state and federal taxes for free 248-1(c), and 1. Where can i file my state and federal taxes for free 709-1(c), as in effect before September 9, 2008. Where can i file my state and federal taxes for free Note. Where can i file my state and federal taxes for free You can apply the provisions of Regulations sections 1. Where can i file my state and federal taxes for free 195-1, 1. Where can i file my state and federal taxes for free 248-1, and 1. Where can i file my state and federal taxes for free 709-1 to all business start-up and organizational costs paid or incurred after October 22, 2004, provided the period of limitations on assessment has not expired for the year of the election. Where can i file my state and federal taxes for free Otherwise, the provisions under Regulations sections 1. Where can i file my state and federal taxes for free 195-1(b), 1. Where can i file my state and federal taxes for free 248-1(c), and 1. Where can i file my state and federal taxes for free 709-1(c), as in effect before September 9, 2008, will apply. Where can i file my state and federal taxes for free For costs paid or incurred before October 23, 2004, you can elect to amortize business start-up and organization costs over an amortization period of 60 months or more. Where can i file my state and federal taxes for free See How To Make the Election , later. Where can i file my state and federal taxes for free The cost must qualify as one of the following. Where can i file my state and federal taxes for free A business start-up cost. Where can i file my state and federal taxes for free An organizational cost for a corporation. Where can i file my state and federal taxes for free An organizational cost for a partnership. Where can i file my state and federal taxes for free Business Start-Up Costs Start-up costs are amounts paid or incurred for: (a) creating an active trade or business; or (b) investigating the creation or acquisition of an active trade or business. Where can i file my state and federal taxes for free Start-up costs include amounts paid or incurred in connection with an existing activity engaged in for profit; and for the production of income in anticipation of the activity becoming an active trade or business. Where can i file my state and federal taxes for free Qualifying costs. Where can i file my state and federal taxes for free   A start-up cost is amortizable if it meets both of the following tests. Where can i file my state and federal taxes for free It is a cost you could deduct if you paid or incurred it to operate an existing active trade or business (in the same field as the one you entered into). Where can i file my state and federal taxes for free It is a cost you pay or incur before the day your active trade or business begins. Where can i file my state and federal taxes for free   Start-up costs include amounts paid for the following: An analysis or survey of potential markets, products, labor supply, transportation facilities, etc. Where can i file my state and federal taxes for free Advertisements for the opening of the business. Where can i file my state and federal taxes for free Salaries and wages for employees who are being trained and their instructors. Where can i file my state and federal taxes for free Travel and other necessary costs for securing prospective distributors, suppliers, or customers. Where can i file my state and federal taxes for free Salaries and fees for executives and consultants, or for similar professional services. Where can i file my state and federal taxes for free Nonqualifying costs. Where can i file my state and federal taxes for free   Start-up costs do not include deductible interest, taxes, or research and experimental costs. Where can i file my state and federal taxes for free See Research and Experimental Costs , later. Where can i file my state and federal taxes for free Purchasing an active trade or business. Where can i file my state and federal taxes for free   Amortizable start-up costs for purchasing an active trade or business include only investigative costs incurred in the course of a general search for or preliminary investigation of the business. Where can i file my state and federal taxes for free These are costs that help you decide whether to purchase a business. Where can i file my state and federal taxes for free Costs you incur in an attempt to purchase a specific business are capital expenses that you cannot amortize. Where can i file my state and federal taxes for free Example. Where can i file my state and federal taxes for free On June 1st, you hired an accounting firm and a law firm to assist you in the potential purchase of XYZ, Inc. Where can i file my state and federal taxes for free They researched XYZ's industry and analyzed the financial projections of XYZ, Inc. Where can i file my state and federal taxes for free In September, the law firm prepared and submitted a letter of intent to XYZ, Inc. Where can i file my state and federal taxes for free The letter stated that a binding commitment would result only after a purchase agreement was signed. Where can i file my state and federal taxes for free The law firm and accounting firm continued to provide services including a review of XYZ's books and records and the preparation of a purchase agreement. Where can i file my state and federal taxes for free On October 22nd, you signed a purchase agreement with XYZ, Inc. Where can i file my state and federal taxes for free All amounts paid or incurred to investigate the business before October 22nd are amortizable investigative costs. Where can i file my state and federal taxes for free Amounts paid on or after that date relate to the attempt to purchase the business and therefore must be capitalized. Where can i file my state and federal taxes for free Disposition of business. Where can i file my state and federal taxes for free   If you completely dispose of your business before the end of the amortization period, you can deduct any remaining deferred start-up costs. Where can i file my state and federal taxes for free However, you can deduct these deferred start-up costs only to the extent they qualify as a loss from a business. Where can i file my state and federal taxes for free Costs of Organizing a Corporation Amounts paid to organize a corporation are the direct costs of creating the corporation. Where can i file my state and federal taxes for free Qualifying costs. Where can i file my state and federal taxes for free   To qualify as an organizational cost, it must be: For the creation of the corporation, Chargeable to a capital account (see chapter 1), Amortized over the life of the corporation if the corporation had a fixed life, and Incurred before the end of the first tax year in which the corporation is in business. Where can i file my state and federal taxes for free   A corporation using the cash method of accounting can amortize organizational costs incurred within the first tax year, even if it does not pay them in that year. Where can i file my state and federal taxes for free   Examples of organizational costs include: The cost of temporary directors. Where can i file my state and federal taxes for free The cost of organizational meetings. Where can i file my state and federal taxes for free State incorporation fees. Where can i file my state and federal taxes for free The cost of legal services. Where can i file my state and federal taxes for free Nonqualifying costs. Where can i file my state and federal taxes for free   The following items are capital expenses that cannot be amortized: Costs for issuing and selling stock or securities, such as commissions, professional fees, and printing costs. Where can i file my state and federal taxes for free Costs associated with the transfer of assets to the corporation. Where can i file my state and federal taxes for free Costs of Organizing a Partnership The costs to organize a partnership are the direct costs of creating the partnership. Where can i file my state and federal taxes for free Qualifying costs. Where can i file my state and federal taxes for free   A partnership can amortize an organizational cost only if it meets all the following tests. Where can i file my state and federal taxes for free It is for the creation of the partnership and not for starting or operating the partnership trade or business. Where can i file my state and federal taxes for free It is chargeable to a capital account (see chapter 1). Where can i file my state and federal taxes for free It could be amortized over the life of the partnership if the partnership had a fixed life. Where can i file my state and federal taxes for free It is incurred by the due date of the partnership return (excluding extensions) for the first tax year in which the partnership is in business. Where can i file my state and federal taxes for free However, if the partnership uses the cash method of accounting and pays the cost after the end of its first tax year, see Cash method partnership under How To Amortize, later. Where can i file my state and federal taxes for free It is for a type of item normally expected to benefit the partnership throughout its entire life. Where can i file my state and federal taxes for free   Organizational costs include the following fees. Where can i file my state and federal taxes for free Legal fees for services incident to the organization of the partnership, such as negotiation and preparation of the partnership agreement. Where can i file my state and federal taxes for free Accounting fees for services incident to the organization of the partnership. Where can i file my state and federal taxes for free Filing fees. Where can i file my state and federal taxes for free Nonqualifying costs. Where can i file my state and federal taxes for free   The following costs cannot be amortized. Where can i file my state and federal taxes for free The cost of acquiring assets for the partnership or transferring assets to the partnership. Where can i file my state and federal taxes for free The cost of admitting or removing partners, other than at the time the partnership is first organized. Where can i file my state and federal taxes for free The cost of making a contract concerning the operation of the partnership trade or business including a contract between a partner and the partnership. Where can i file my state and federal taxes for free The costs for issuing and marketing interests in the partnership such as brokerage, registration, and legal fees and printing costs. Where can i file my state and federal taxes for free These “syndication fees” are capital expenses that cannot be depreciated or amortized. Where can i file my state and federal taxes for free Liquidation of partnership. Where can i file my state and federal taxes for free   If a partnership is liquidated before the end of the amortization period, the unamortized amount of qualifying organizational costs can be deducted in the partnership's final tax year. Where can i file my state and federal taxes for free However, these costs can be deducted only to the extent they qualify as a loss from a business. Where can i file my state and federal taxes for free How To Amortize Deduct start-up and organizational costs in equal amounts over the applicable amortization period (discussed earlier). Where can i file my state and federal taxes for free You can choose an amortization period for start-up costs that is different from the period you choose for organizational costs, as long as both are not less than the applicable amortization period. Where can i file my state and federal taxes for free Once you choose an amortization period, you cannot change it. Where can i file my state and federal taxes for free To figure your deduction, divide your total start-up or organizational costs by the months in the amortization period. Where can i file my state and federal taxes for free The result is the amount you can deduct for each month. Where can i file my state and federal taxes for free Cash method partnership. Where can i file my state and federal taxes for free   A partnership using the cash method of accounting can deduct an organizational cost only if it has been paid by the end of the tax year. Where can i file my state and federal taxes for free However, any cost the partnership could have deducted as an organizational cost in an earlier tax year (if it had been paid that year) can be deducted in the tax year of payment. Where can i file my state and federal taxes for free How To Make the Election To elect to amortize start-up or organizational costs, you must complete and attach Form 4562 to your return for the first tax year you are in business. Where can i file my state and federal taxes for free You may also be required to attach an accompanying statement (described later) to your return. Where can i file my state and federal taxes for free For start-up or organizational costs paid or incurred after September 8, 2008, an accompanying statement is not required. Where can i file my state and federal taxes for free Generally, for start-up or organizational costs paid or incurred before September 9, 2008, and after October 22, 2004, unless you choose to apply Regulations sections 1. Where can i file my state and federal taxes for free 195-1, 1. Where can i file my state and federal taxes for free 248-1, and 1. Where can i file my state and federal taxes for free 709-1, you must also attach an accompanying statement to elect to amortize the costs. Where can i file my state and federal taxes for free If you have both start-up and organizational costs, attach a separate statement (if required) to your return for each type of cost. Where can i file my state and federal taxes for free See Starting a Business , earlier, for more information. Where can i file my state and federal taxes for free Generally, you must file the return by the due date (including any extensions). Where can i file my state and federal taxes for free 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 return (excluding extensions). Where can i file my state and federal taxes for free For more information, see the instructions for Part VI of Form 4562. Where can i file my state and federal taxes for free You can choose to forgo the election to amortize by affirmatively electing to capitalize your start-up or organizational costs on your income tax return filed by the due date (including extensions) for the tax year in which the active trade or business begins. Where can i file my state and federal taxes for free Note. Where can i file my state and federal taxes for free The election to either amortize or capitalize start-up or organizational costs is irrevocable and applies to all start-up and organizational costs that are related to the trade or business. Where can i file my state and federal taxes for free If your business is organized as a corporation or partnership, only the corporation or partnership can elect to amortize its start-up or organizational costs. Where can i file my state and federal taxes for free A shareholder or partner cannot make this election. Where can i file my state and federal taxes for free You, as a shareholder or partner, cannot amortize any costs you incur in setting up your corporation or partnership. Where can i file my state and federal taxes for free Only the corporation or partnership can amortize these costs. Where can i file my state and federal taxes for free However, you, as an individual, can elect to amortize costs you incur to investigate an interest in an existing partnership. Where can i file my state and federal taxes for free These costs qualify as business start-up costs if you acquire the partnership interest. Where can i file my state and federal taxes for free Start-up costs election statement. Where can i file my state and federal taxes for free   If you elect to amortize your start-up costs, attach a separate statement (if required) that contains the following information. Where can i file my state and federal taxes for free A description of the business to which the start-up costs relate. Where can i file my state and federal taxes for free A description of each start-up cost incurred. Where can i file my state and federal taxes for free The month your active business began (or was acquired). Where can i file my state and federal taxes for free The number of months in your amortization period (which is generally 180 months). Where can i file my state and federal taxes for free Filing the statement early. Where can i file my state and federal taxes for free   You can elect to amortize your start-up costs by filing the statement with a return for any tax year before the year your active business begins. Where can i file my state and federal taxes for free If you file the statement early, the election becomes effective in the month of the tax year your active business begins. Where can i file my state and federal taxes for free Revised statement. Where can i file my state and federal taxes for free   You can file a revised statement to include any start-up costs not included in your original statement. Where can i file my state and federal taxes for free However, you cannot include on the revised statement any cost you previously treated on your return as a cost other than a start-up cost. Where can i file my state and federal taxes for free You can file the revised statement with a return filed after the return on which you elected to amortize your start-up costs. Where can i file my state and federal taxes for free Organizational costs election statement. Where can i file my state and federal taxes for free   If you elect to amortize your corporation's or partnership's organizational costs, attach a separate statement (if required) that contains the following information. Where can i file my state and federal taxes for free A description of each cost. Where can i file my state and federal taxes for free The amount of each cost. Where can i file my state and federal taxes for free The date each cost was incurred. Where can i file my state and federal taxes for free The month your corporation or partnership began active business (or acquired the business). Where can i file my state and federal taxes for free The number of months in your amortization period (which is generally 180 months). Where can i file my state and federal taxes for free Partnerships. Where can i file my state and federal taxes for free   The statement prepared for a cash basis partnership must also indicate the amount paid before the end of the year for each cost. Where can i file my state and federal taxes for free   You do not need to separately list any partnership organizational cost that is less than $10. Where can i file my state and federal taxes for free Instead, you can list the total amount of these costs with the dates the first and last costs were incurred. Where can i file my state and federal taxes for free   After a partnership makes the election to amortize organizational costs, it can later file an amended return to include additional organizational costs not included in the partnership's original return and statement. Where can i file my state and federal taxes for free Getting a Lease If you get a lease for business property, you may recover the cost of acquiring the lease by amortizing it over the term of the lease. Where can i file my state and federal taxes for free The term of the lease for amortization purposes generally includes all renewal options (and any other period for which you and the lessor reasonably expect the lease to be renewed). Where can i file my state and federal taxes for free However, renewal periods are not included if 75% or more of the cost of acquiring the lease is for the term of the lease remaining on the acquisition date (not including any period for which you may choose to renew, extend, or continue the lease). Where can i file my state and federal taxes for free For more information on the costs of getting a lease, see Cost of Getting a Lease in  chapter 3. Where can i file my state and federal taxes for free How to amortize. Where can i file my state and federal taxes for free   Enter your deduction in Part VI of Form 4562 if you are deducting amortization that begins during the current year, or on the appropriate line of your tax return if you are not otherwise required to file Form 4562. Where can i file my state and federal taxes for free Section 197 Intangibles Generally, you may amortize the capitalized costs of “section 197 intangibles” (defined later) ratably over a 15-year period. Where can i file my state and federal taxes for free You must amortize these costs if you hold the section 197 intangibles in connection with your trade or business or in an activity engaged in for the production of income. Where can i file my state and federal taxes for free You may not be able to amortize section 197 intangibles acquired in a transaction that did not result in a significant change in ownership or use. Where can i file my state and federal taxes for free See Anti-Churning Rules, later. Where can i file my state and federal taxes for free Your amortization deduction each year is the applicable part of the intangible's adjusted basis (for purposes of determining gain), figured by amortizing it ratably over 15 years (180 months). Where can i file my state and federal taxes for free The 15-year period begins with the later of: The month the intangible is acquired, or The month the trade or business or activity engaged in for the production of income begins. Where can i file my state and federal taxes for free You cannot deduct amortization for the month you dispose of the intangible. Where can i file my state and federal taxes for free If you pay or incur an amount that increases the basis of an amortizable section 197 intangible after the 15-year period begins, amortize it over the remainder of the 15-year period beginning with the month the basis increase occurs. Where can i file my state and federal taxes for free You are not allowed any other depreciation or amortization deduction for an amortizable section 197 intangible. Where can i file my state and federal taxes for free Tax-exempt use property subject to a lease. Where can i file my state and federal taxes for free   The amortization period for any section 197 intangible leased under a lease agreement entered into after March 12, 2004, to a tax-exempt organization, governmental unit, or foreign person or entity (other than a partnership), shall not be less than 125 percent of the lease term. Where can i file my state and federal taxes for free Cost attributable to other property. Where can i file my state and federal taxes for free   The rules for section 197 intangibles do not apply to any amount that is included in determining the cost of property that is not a section 197 intangible. Where can i file my state and federal taxes for free For example, if the cost of computer software is not separately stated from the cost of hardware or other tangible property and you consistently treat it as part of the cost of the hardware or other tangible property, these rules do not apply. Where can i file my state and federal taxes for free Similarly, none of the cost of acquiring real property held for the production of rental income is considered the cost of goodwill, going concern value, or any other section 197 intangible. Where can i file my state and federal taxes for free Section 197 Intangibles Defined The following assets are section 197 intangibles and must be amortized over 180 months: Goodwill; Going concern value; Workforce in place; Business books and records, operating systems, or any other information base, including lists or other information concerning current or prospective customers; A patent, copyright, formula, process, design, pattern, know-how, format, or similar item; A customer-based intangible; A supplier-based intangible; Any item similar to items (3) through (7); A license, permit, or other right granted by a governmental unit or agency (including issuances and renewals); A covenant not to compete entered into in connection with the acquisition of an interest in a trade or business; Any franchise, trademark, or trade name; and A contract for the use of, or a term interest in, any item in this list. Where can i file my state and federal taxes for free You cannot amortize any of the intangibles listed in items (1) through (8) that you created rather than acquired unless you created them in acquiring assets that make up a trade or business or a substantial part of a trade or business. Where can i file my state and federal taxes for free Goodwill. Where can i file my state and federal taxes for free   This is the value of a trade or business based on expected continued customer patronage due to its name, reputation, or any other factor. Where can i file my state and federal taxes for free Going concern value. Where can i file my state and federal taxes for free   This is the additional value of a trade or business that attaches to property because the property is an integral part of an ongoing business activity. Where can i file my state and federal taxes for free It includes value based on the ability of a business to continue to function and generate income even though there is a change in ownership (but does not include any other section 197 intangible). Where can i file my state and federal taxes for free It also includes value based on the immediate use or availability of an acquired trade or business, such as the use of earnings during any period in which the business would not otherwise be available or operational. Where can i file my state and federal taxes for free Workforce in place, etc. Where can i file my state and federal taxes for free   This includes the composition of a workforce (for example, its experience, education, or training). Where can i file my state and federal taxes for free It also includes the terms and conditions of employment, whether contractual or otherwise, and any other value placed on employees or any of their attributes. Where can i file my state and federal taxes for free   For example, you must amortize the part of the purchase price of a business that is for the existence of a highly skilled workforce. Where can i file my state and federal taxes for free Also, you must amortize the cost of acquiring an existing employment contract or relationship with employees or consultants. Where can i file my state and federal taxes for free Business books and records, etc. Where can i file my state and federal taxes for free   This includes the intangible value of technical manuals, training manuals or programs, data files, and accounting or inventory control systems. Where can i file my state and federal taxes for free It also includes the cost of customer lists, subscription lists, insurance expirations, patient or client files, and lists of newspaper, magazine, radio, and television advertisers. Where can i file my state and federal taxes for free Patents, copyrights, etc. Where can i file my state and federal taxes for free   This includes package design, computer software, and any interest in a film, sound recording, videotape, book, or other similar property, except as discussed later under Assets That Are Not Section 197 Intangibles . Where can i file my state and federal taxes for free Customer-based intangible. Where can i file my state and federal taxes for free   This is the composition of market, market share, and any other value resulting from the future provision of goods or services because of relationships with customers in the ordinary course of business. Where can i file my state and federal taxes for free For example, you must amortize the part of the purchase price of a business that is for the existence of the following intangibles. Where can i file my state and federal taxes for free A customer base. Where can i file my state and federal taxes for free A circulation base. Where can i file my state and federal taxes for free An undeveloped market or market growth. Where can i file my state and federal taxes for free Insurance in force. Where can i file my state and federal taxes for free A mortgage servicing contract. Where can i file my state and federal taxes for free An investment management contract. Where can i file my state and federal taxes for free Any other relationship with customers involving the future provision of goods or services. Where can i file my state and federal taxes for free   Accounts receivable or other similar rights to income for goods or services provided to customers before the acquisition of a trade or business are not section 197 intangibles. Where can i file my state and federal taxes for free Supplier-based intangible. Where can i file my state and federal taxes for free   A supplier-based intangible is the value resulting from the future acquisitions, (through contract or other relationships with suppliers in the ordinary course of business) of goods or services that you will sell or use. Where can i file my state and federal taxes for free The amount you pay or incur for supplier-based intangibles includes, for example, any portion of the purchase price of an acquired trade or business that is attributable to the existence of a favorable relationship with persons providing distribution services (such as a favorable shelf or display space or a retail outlet), or the existence of favorable supply contracts. Where can i file my state and federal taxes for free Do not include any amount required to be paid for the goods or services to honor the terms of the agreement or other relationship. Where can i file my state and federal taxes for free Also, see Assets That Are Not Section 197 Intangibles below. Where can i file my state and federal taxes for free Government-granted license, permit, etc. Where can i file my state and federal taxes for free   This is any right granted by a governmental unit or an agency or instrumentality of a governmental unit. Where can i file my state and federal taxes for free For example, you must amortize the capitalized costs of acquiring (including issuing or renewing) a liquor license, a taxicab medallion or license, or a television or radio broadcasting license. Where can i file my state and federal taxes for free Covenant not to compete. Where can i file my state and federal taxes for free   Section 197 intangibles include a covenant not to compete (or similar arrangement) entered into in connection with the acquisition of an interest in a trade or business, or a substantial portion of a trade or business. Where can i file my state and federal taxes for free An interest in a trade or business includes an interest in a partnership or a corporation engaged in a trade or business. Where can i file my state and federal taxes for free   An arrangement that requires the former owner to perform services (or to provide property or the use of property) is not similar to a covenant not to compete to the extent the amount paid under the arrangement represents reasonable compensation for those services or for that property or its use. Where can i file my state and federal taxes for free Franchise, trademark, or trade name. Where can i file my state and federal taxes for free   A franchise, trademark, or trade name is a section 197 intangible. Where can i file my state and federal taxes for free You must amortize its purchase or renewal costs, other than certain contingent payments that you can deduct currently. Where can i file my state and federal taxes for free For information on currently deductible contingent payments, see chapter 11. Where can i file my state and federal taxes for free Professional sports franchise. Where can i file my state and federal taxes for free   A franchise engaged in professional sports and any intangible assets acquired in connection with acquiring the franchise (including player contracts) is a section 197 intangible amortizable over a 15-year period. Where can i file my state and federal taxes for free Contract for the use of, or a term interest in, a section 197 intangible. Where can i file my state and federal taxes for free   Section 197 intangibles include any right under a license, contract, or other arrangement providing for the use of any section 197 intangible. Where can i file my state and federal taxes for free It also includes any term interest in any section 197 intangible, whether the interest is outright or in trust. Where can i file my state and federal taxes for free Assets That Are Not Section 197 Intangibles The following assets are not section 197 intangibles. Where can i file my state and federal taxes for free Any interest in a corporation, partnership, trust, or estate. Where can i file my state and federal taxes for free Any interest under an existing futures contract, foreign currency contract, notional principal contract, interest rate swap, or similar financial contract. Where can i file my state and federal taxes for free Any interest in land. Where can i file my state and federal taxes for free Most computer software. Where can i file my state and federal taxes for free (See Computer software , later. Where can i file my state and federal taxes for free ) Any of the following assets not acquired in connection with the acquisition of a trade or business or a substantial part of a trade or business. Where can i file my state and federal taxes for free An interest in a film, sound recording, video tape, book, or similar property. Where can i file my state and federal taxes for free A right to receive tangible property or services under a contract or from a governmental agency. Where can i file my state and federal taxes for free An interest in a patent or copyright. Where can i file my state and federal taxes for free Certain rights that have a fixed duration or amount. Where can i file my state and federal taxes for free (See Rights of fixed duration or amount , later. Where can i file my state and federal taxes for free ) An interest under either of the following. Where can i file my state and federal taxes for free An existing lease or sublease of tangible property. Where can i file my state and federal taxes for free A debt that was in existence when the interest was acquired. Where can i file my state and federal taxes for free A right to service residential mortgages unless the right is acquired in connection with the acquisition of a trade or business or a substantial part of a trade or business. Where can i file my state and federal taxes for free Certain transaction costs incurred by parties to a corporate organization or reorganization in which any part of a gain or loss is not recognized. Where can i file my state and federal taxes for free Intangible property that is not amortizable under the rules for section 197 intangibles can be depreciated if it meets certain requirements. Where can i file my state and federal taxes for free You generally must use the straight line method over its useful life. Where can i file my state and federal taxes for free For certain intangibles, the depreciation period is specified in the law and regulations. Where can i file my state and federal taxes for free For example, the depreciation period for computer software that is not a section 197 intangible is generally 36 months. Where can i file my state and federal taxes for free For more information on depreciating intangible property, see Intangible Property under What Method Can You Use To Depreciate Your Property? in chapter 1 of Publication 946. Where can i file my state and federal taxes for free Computer software. Where can i file my state and federal taxes for free   Section 197 intangibles do not include the following types of computer software. Where can i file my state and federal taxes for free Software that meets all the following requirements. Where can i file my state and federal taxes for free It is, or has been, readily available for purchase by the general public. Where can i file my state and federal taxes for free It is subject to a nonexclusive license. Where can i file my state and federal taxes for free It has not been substantially modified. Where can i file my state and federal taxes for free This requirement is considered met if the cost of all modifications is not more than the greater of 25% of the price of the publicly available unmodified software or $2,000. Where can i file my state and federal taxes for free Software that is not acquired in connection with the acquisition of a trade or business or a substantial part of a trade or business. Where can i file my state and federal taxes for free Computer software defined. Where can i file my state and federal taxes for free   Computer software includes all programs designed to cause a computer to perform a desired function. Where can i file my state and federal taxes for free It also includes any database or similar item that is in the public domain and is incidental to the operation of qualifying software. Where can i file my state and federal taxes for free Rights of fixed duration or amount. Where can i file my state and federal taxes for free   Section 197 intangibles do not include any right under a contract or from a governmental agency if the right is acquired in the ordinary course of a trade or business (or in an activity engaged in for the production of income) but not as part of a purchase of a trade or business and either: Has a fixed life of less than 15 years, or Is of a fixed amount that, except for the rules for section 197 intangibles, would be recovered under a method similar to the unit-of-production method of cost recovery. Where can i file my state and federal taxes for free However, this does not apply to the following intangibles. Where can i file my state and federal taxes for free Goodwill. Where can i file my state and federal taxes for free Going concern value. Where can i file my state and federal taxes for free A covenant not to compete. Where can i file my state and federal taxes for free A franchise, trademark, or trade name. Where can i file my state and federal taxes for free A customer-related information base, customer-based intangible, or similar item. Where can i file my state and federal taxes for free Safe Harbor for Creative Property Costs If you are engaged in the trade or business of film production, you may be able to amortize the creative property costs for properties not set for production within 3 years of the first capitalized transaction. Where can i file my state and federal taxes for free You may amortize these costs ratably over a 15-year period beginning on the first day of the second half of the tax year in which you properly write off the costs for financial accounting purposes. Where can i file my state and federal taxes for free If, during the 15-year period, you dispose of the creative property rights, you must continue to amortize the costs over the remainder of the 15-year period. Where can i file my state and federal taxes for free Creative property costs include costs paid or incurred to acquire and develop screenplays, scripts, story outlines, motion picture production rights to books and plays, and other similar properties for purposes of potential future film development, production, and exploitation. Where can i file my state and federal taxes for free Amortize these costs using the rules of Revenue Procedure 2004-36. Where can i file my state and federal taxes for free For more information, see Revenue Procedure 2004-36, 2004-24 I. Where can i file my state and federal taxes for free R. Where can i file my state and federal taxes for free B. Where can i file my state and federal taxes for free 1063, available at  www. Where can i file my state and federal taxes for free irs. Where can i file my state and federal taxes for free gov/irb/2004-24_IRB/ar16. Where can i file my state and federal taxes for free html. Where can i file my state and federal taxes for free A change in the treatment of creative property costs is a change in method of accounting. Where can i file my state and federal taxes for free Anti-Churning Rules Anti-churning rules prevent you from amortizing most section 197 intangibles if the transaction in which you acquired them did not result in a significant change in ownership or use. Where can i file my state and federal taxes for free These rules apply to goodwill and going concern value, and to any other section 197 intangible that is not otherwise depreciable or amortizable. Where can i file my state and federal taxes for free Under the anti-churning rules, you cannot use 15-year amortization for the intangible if any of the following conditions apply. Where can i file my state and federal taxes for free You or a related person (defined later) held or used the intangible at any time from July 25, 1991, through August 10, 1993. Where can i file my state and federal taxes for free You acquired the intangible from a person who held it at any time during the period in (1) and, as part of the transaction, the user did not change. Where can i file my state and federal taxes for free You granted the right to use the intangible to a person (or a person related to that person) who held or used it at any time during the period in (1). Where can i file my state and federal taxes for free This applies only if the transaction in which you granted the right and the transaction in which you acquired the intangible are part of a series of related transactions. Where can i file my state and federal taxes for free See Related person , later, for more information. Where can i file my state and federal taxes for free Exceptions. Where can i file my state and federal taxes for free   The anti-churning rules do not apply in the following situations. Where can i file my state and federal taxes for free You acquired the intangible from a decedent and its basis was stepped up to its fair market value. Where can i file my state and federal taxes for free The intangible was amortizable as a section 197 intangible by the seller or transferor you acquired it from. Where can i file my state and federal taxes for free This exception does not apply if the transaction in which you acquired the intangible and the transaction in which the seller or transferor acquired it are part of a series of related transactions. Where can i file my state and federal taxes for free The gain-recognition exception, discussed later, applies. Where can i file my state and federal taxes for free Related person. Where can i file my state and federal taxes for free   For purposes of the anti-churning rules, the following are related persons. Where can i file my state and federal taxes for free An individual and his or her brothers, sisters, half-brothers, half-sisters, spouse, ancestors (parents, grandparents, etc. Where can i file my state and federal taxes for free ), and lineal descendants (children, grandchildren, etc. Where can i file my state and federal taxes for free ). Where can i file my state and federal taxes for free A corporation and an individual who owns, directly or indirectly, more than 20% of the value of the corporation's outstanding stock. Where can i file my state and federal taxes for free Two corporations that are members of the same controlled group as defined in section 1563(a) of the Internal Revenue Code, except that “more than 20%” is substituted for “at least 80%” in that definition and the determination is made without regard to subsections (a)(4) and (e)(3)(C) of section 1563. Where can i file my state and federal taxes for free (For an exception, see section 1. Where can i file my state and federal taxes for free 197-2(h)(6)(iv) of the regulations. Where can i file my state and federal taxes for free ) A trust fiduciary and a corporation if more than 20% of the value of the corporation's outstanding stock is owned, directly or indirectly, by or for the trust or grantor of the trust. Where can i file my state and federal taxes for free The grantor and fiduciary, and the fiduciary and beneficiary, of any trust. Where can i file my state and federal taxes for free 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. Where can i file my state and federal taxes for free The executor and beneficiary of an estate. Where can i file my state and federal taxes for free A tax-exempt educational or charitable organization and a person who directly or indirectly controls the organization (or whose family members control it). Where can i file my state and federal taxes for free A corporation and a partnership if the same persons own more than 20% of the value of the outstanding stock of the corporation and more than 20% of the capital or profits interest in the partnership. Where can i file my state and federal taxes for free Two S corporations, and an S corporation and a regular corporation, if the same persons own more than 20% of the value of the outstanding stock of each corporation. Where can i file my state and federal taxes for free Two partnerships if the same persons own, directly or indirectly, more than 20% of the capital or profits interests in both partnerships. Where can i file my state and federal taxes for free A partnership and a person who owns, directly or indirectly, more than 20% of the capital or profits interests in the partnership. Where can i file my state and federal taxes for free Two persons who are engaged in trades or businesses under common control (as described in section 41(f)(1) of the Internal Revenue Code). Where can i file my state and federal taxes for free When to determine relationship. Where can i file my state and federal taxes for free   Persons are treated as related if the relationship existed at the following time. Where can i file my state and federal taxes for free In the case of a single transaction, immediately before or immediately after the transaction in which the intangible was acquired. Where can i file my state and federal taxes for free In the case of a series of related transactions (or a series of transactions that comprise a qualified stock purchase under section 338(d)(3) of the Internal Revenue Code), immediately before the earliest transaction or immediately after the last transaction. Where can i file my state and federal taxes for free Ownership of stock. Where can i file my state and federal taxes for free   In determining whether an individual directly or indirectly owns any of the outstanding stock of a corporation, the following rules apply. Where can i file my state and federal taxes for free Rule 1. Where can i file my state and federal taxes for free   Stock directly or indirectly owned by or for a corporation, partnership, estate, or trust is considered owned proportionately by or for its shareholders, partners, or beneficiaries. Where can i file my state and federal taxes for free Rule 2. Where can i file my state and federal taxes for free   An individual is considered to own the stock directly or indirectly owned by or for his or her family. Where can i file my state and federal taxes for free Family includes only brothers and sisters, half-brothers and half-sisters, spouse, ancestors, and lineal descendants. Where can i file my state and federal taxes for free Rule 3. Where can i file my state and federal taxes for free   An individual owning (other than by applying Rule 2) any stock in a corporation is considered to own the stock directly or indirectly owned by or for his or her partner. Where can i file my state and federal taxes for free Rule 4. Where can i file my state and federal taxes for free   For purposes of applying Rule 1, 2, or 3, treat stock constructively owned by a person under Rule 1 as actually owned by that person. Where can i file my state and federal taxes for free Do not treat stock constructively owned by an individual under Rule 2 or 3 as owned by the individual for reapplying Rule 2 or 3 to make another person the constructive owner of the stock. Where can i file my state and federal taxes for free Gain-recognition exception. Where can i file my state and federal taxes for free   This exception to the anti-churning rules applies if the person you acquired the intangible from (the transferor) meets both of the following requirements. Where can i file my state and federal taxes for free That person would not be related to you (as described under Related person , earlier) if the 20% test for ownership of stock and partnership interests were replaced by a 50% test. Where can i file my state and federal taxes for free That person chose to recognize gain on the disposition of the intangible and pay income tax on the gain at the highest tax rate. Where can i file my state and federal taxes for free See chapter 2 in Publication 544 for information on making this choice. Where can i file my state and federal taxes for free   If this exception applies, the anti-churning rules apply only to the amount of your adjusted basis in the intangible that is more than the gain recognized by the transferor. Where can i file my state and federal taxes for free Notification. Where can i file my state and federal taxes for free   If the person you acquired the intangible from chooses to recognize gain under the rules for this exception, that person must notify you in writing by the due date of the return on which the choice is made. Where can i file my state and federal taxes for free Anti-abuse rule. Where can i file my state and federal taxes for free   You cannot amortize any section 197 intangible acquired in a transaction for which the principal purpose was either of the following. Where can i file my state and federal taxes for free To avoid the requirement that the intangible be acquired after August 10, 1993. Where can i file my state and federal taxes for free To avoid any of the anti-churning rules. Where can i file my state and federal taxes for free More information. Where can i file my state and federal taxes for free   For more information about the anti-churning rules, including additional rules for partnerships, see Regulations section 1. Where can i file my state and federal taxes for free 197-2(h). Where can i file my state and federal taxes for free Incorrect Amount of Amortization Deducted If you later discover that you deducted an incorrect amount for amortization for a section 197 intangible in any year, you may be able to make a correction for that year by filing an amended return. Where can i file my state and federal taxes for free See Amended Return , next. Where can i file my state and federal taxes for free If you are not allowed to make the correction on an amended return, you can change your accounting method to claim the correct amortization. Where can i file my state and federal taxes for free See Changing Your Accounting Method , later. Where can i file my state and federal taxes for free Amended Return If you deducted an incorrect amount for amortization, you can file an amended return to correct the following. Where can i file my state and federal taxes for free A mathematical error made in any year. Where can i file my state and federal taxes for free A posting error made in any year. Where can i file my state and federal taxes for free An amortization deduction for a section 197 intangible for which you have not adopted a method of accounting. Where can i file my state and federal taxes for free When to file. Where can i file my state and federal taxes for free   If an amended return is allowed, you must file it by the later of the following dates. Where can i file my state and federal taxes for free 3 years from the date you filed your original return for the year in which you did not deduct the correct amount. Where can i file my state and federal taxes for free (A return filed early is considered filed on the due date. Where can i file my state and federal taxes for free ) 2 years from the time you paid your tax for that year. Where can i file my state and federal taxes for free Changing Your Accounting Method Generally, you must get IRS approval to change your method of accounting. Where can i file my state and federal taxes for free File Form 3115, Application for Change in Accounting Method, to request a change to a permissible method of accounting for amortization. Where can i file my state and federal taxes for free The following are examples of a change in method of accounting for amortization. Where can i file my state and federal taxes for free A change in the amortization method, period of recovery, or convention of an amortizable asset. Where can i file my state and federal taxes for free A change in the accounting for amortizable assets from a single asset account to a multiple asset account (pooling), or vice versa. Where can i file my state and federal taxes for free A change in the accounting for amortizable assets from one type of multiple asset account to a different type of multiple asset account. Where can i file my state and federal taxes for free Changes in amortization that are not a change in method of accounting include the following: A change in computing amortization in the tax year in which your use of the asset changes. Where can i file my state and federal taxes for free An adjustment in the useful life of an amortizable asset. Where can i file my state and federal taxes for free Generally, the making of a late amortization election or the revocation of a timely valid amortization election. Where can i file my state and federal taxes for free Any change in the placed-in-service date of an amortizable asset. Where can i file my state and federal taxes for free See Regulations section 1. Where can i file my state and federal taxes for free 446-1(e)(2)(ii)(a) for more information and examples. Where can i file my state and federal taxes for free Automatic approval. Where can i file my state and federal taxes for free   In some instances, you may be able to get automatic approval from the IRS to change your method of accounting for amortization. Where can i file my state and federal taxes for free For a list of automatic accounting method changes, see the Instructions for Form 3115. Where can i file my state and federal taxes for free Also see the Instructions for Form 3115 for more information on getting approval, automatic approval procedures, and a list of exceptions to the automatic approval process. Where can i file my state and federal taxes for free For more information, see Revenue Procedure 2006-12, as modified by Revenue Procedure 2006-37, and Revenue Procedure 2008-52, as amplified, clarified, and modified by Revenue Procedure 2009-39, as clarified and modified by Revenue Procedure 2011-14, as modified and amplified by Revenue Procedure 2011-22, as modified by Revenue Procedure 2012-39, or any successor. Where can i file my state and federal taxes for free See Revenue Procedure 2006-12, 2006-3 I. Where can i file my state and federal taxes for free R. Where can i file my state and federal taxes for free B. Where can i file my state and federal taxes for free 310, available at  www. Where can i file my state and federal taxes for free irs. Where can i file my state and federal taxes for free gov/irb/2006-03_IRB/ar14. Where can i file my state and federal taxes for free html. Where can i file my state and federal taxes for free  See Revenue Procedure 2006-37, 2006-38 I. Where can i file my state and federal taxes for free R. Where can i file my state and federal taxes for free B. Where can i file my state and federal taxes for free 499, available at  www. Where can i file my state and federal taxes for free irs. Where can i file my state and federal taxes for free gov/irb/2006-38_IRB/ar10. Where can i file my state and federal taxes for free html. Where can i file my state and federal taxes for free  See Revenue Procedure 2008-52, 2008-36 I. Where can i file my state and federal taxes for free R. Where can i file my state and federal taxes for free B. Where can i file my state and federal taxes for free 587, available at www. Where can i file my state and federal taxes for free irs. Where can i file my state and federal taxes for free gov/irb/2008-36_IRB/ar09. Where can i file my state and federal taxes for free html. Where can i file my state and federal taxes for free  See Revenue Procedure 2009-39, 2009-38 I. Where can i file my state and federal taxes for free R. Where can i file my state and federal taxes for free B. Where can i file my state and federal taxes for free 371, available at  www. Where can i file my state and federal taxes for free irs. Where can i file my state and federal taxes for free gov/irb/2009-38_IRB/ar08. Where can i file my state and federal taxes for free html. Where can i file my state and federal taxes for free  See Revenue Procedure 2011-14, 2011-4 I. Where can i file my state and federal taxes for free R. Where can i file my state and federal taxes for free B. Where can i file my state and federal taxes for free 330, available at  www. Where can i file my state and federal taxes for free irs. Where can i file my state and federal taxes for free gov/irb/2011-04_IRB/ar08. Where can i file my state and federal taxes for free html. Where can i file my state and federal taxes for free  See Revenue Procedure 2011-22, 2011-18 I. Where can i file my state and federal taxes for free R. Where can i file my state and federal taxes for free B. Where can i file my state and federal taxes for free 737, available at  www. Where can i file my state and federal taxes for free irs. Where can i file my state and federal taxes for free gov/irb/2011-18_IRB/ar08. Where can i file my state and federal taxes for free html. Where can i file my state and federal taxes for free Also, see Revenue Procedure 2012-39, 2012-41 I. Where can i file my state and federal taxes for free R. Where can i file my state and federal taxes for free B. Where can i file my state and federal taxes for free 470 available at www. Where can i file my state and federal taxes for free irs. Where can i file my state and federal taxes for free gov/irb/2012-41_IRB/index. Where can i file my state and federal taxes for free html. Where can i file my state and federal taxes for free Disposition of Section 197 Intangibles A section 197 intangible is treated as depreciable property used in your trade or business. Where can i file my state and federal taxes for free If you held the intangible for more than 1 year, any gain on its disposition, up to the amount of allowable amortization, is ordinary income (section 1245 gain). Where can i file my state and federal taxes for free If multiple section 197 intangibles are disposed of in a single transaction or a series of related transactions, treat all of the section 197 intangibles as if they were a single asset for purposes of determining the amount of gain that is ordinary income. Where can i file my state and federal taxes for free Any remaining gain, or any loss, is a section 1231 gain or loss. Where can i file my state and federal taxes for free If you held the intangible 1 year or less, any gain or loss on its disposition is an ordinary gain or loss. Where can i file my state and federal taxes for free For more information on ordinary or capital gain or loss on business property, see chapter 3 in Publication 544. Where can i file my state and federal taxes for free Nondeductible loss. Where can i file my state and federal taxes for free   You cannot deduct any loss on the disposition or worthlessness of a section 197 intangible that you acquired in the same transaction (or series of related transactions) as other section 197 intangibles you still have. Where can i file my state and federal taxes for free Instead, increase the adjusted basis of each remaining amortizable section 197 intangible by a proportionate part of the nondeductible loss. Where can i file my state and federal taxes for free Figure the increase by multiplying the nondeductible loss on the disposition of the intangible by the following fraction. Where can i file my state and federal taxes for free The numerator is the adjusted basis of each remaining intangible on the date of the disposition. Where can i file my state and federal taxes for free The denominator is the total adjusted bases of all remaining amortizable section 197 intangibles on the date of the disposition. Where can i file my state and federal taxes for free Covenant not to compete. Where can i file my state and federal taxes for free   A covenant not to compete, or similar arrangement, is not considered disposed of or worthless before you dispose of your entire interest in the trade or business for which you entered into the covenant. Where can i file my state and federal taxes for free Nonrecognition transfers. Where can i file my state and federal taxes for free   If you acquire a section 197 intangible in a nonrecognition transfer, you are treated as the transferor with respect to the part of your adjusted basis in the intangible that is not more than the transferor's adjusted basis. Where can i file my state and federal taxes for free You amortize this part of the adjusted basis over the intangible's remaining amortization period in the hands of the transferor. Where can i file my state and federal taxes for free Nonrecognition transfers include transfers to a corporation, partnership contributions and distributions, like-kind exchanges, and involuntary conversions. Where can i file my state and federal taxes for free   In a like-kind exchange or involuntary conversion of a section 197 intangible, you must continue to amortize the part of your adjusted basis in the acquired intangible that is not more than your adjusted basis in the exchanged or converted intangible over the remaining amortization period of the exchanged or converted intangible. Where can i file my state and federal taxes for free Amortize over a new 15-year period the part of your adjusted basis in the acquired intangible that is more than your adjusted basis in the exchanged or converted intangible. Where can i file my state and federal taxes for free Example. Where can i file my state and federal taxes for free You own a section 197 intangible you have amortized for 4 full years. Where can i file my state and federal taxes for free It has a remaining unamortized basis of $30,000. Where can i file my state and federal taxes for free You exchange the asset plus $10,000 for a like-kind section 197 intangible. Where can i file my state and federal taxes for free The nonrecognition provisions of like-kind exchanges apply. Where can i file my state and federal taxes for free You amortize $30,000 of the $40,000 adjusted basis of the acquired intangible over the 11 years remaining in the original 15-year amortization period for the transferred asset. Where can i file my state and federal taxes for free You amortize the other $10,000 of adjusted basis over a new 15-year period. Where can i file my state and federal taxes for free For more information, see Regulations section 1. Where can i file my state and federal taxes for free 197-2(g). Where can i file my state and federal taxes for free Reforestation Costs You can elect to deduct a limited amount of reforestation costs paid or incurred during the tax year. Where can i file my state and federal taxes for free See Reforestation Costs in chapter 7. Where can i file my state and federal taxes for free You can elect to amortize the qualifying costs that are not deducted currently over an 84-month period. Where can i file my state and federal taxes for free There is no limit on the amount of your amortization deduction for reforestation costs paid or incurred during the tax year. Where can i file my state and federal taxes for free The election to amortize reforestation costs incurred by a partnership, S corporation, or estate must be made by the partnership, corporation, or estate. Where can i file my state and federal taxes for free A partner, shareholder, or beneficiary cannot make that election. Where can i file my state and federal taxes for free A partner's or shareholder's share of amortizable costs is figured under the general rules for allocating items of income, loss, deduction, etc. Where can i file my state and federal taxes for free , of a partnership or S corporation. Where can i file my state and federal taxes for free The amortizable costs of an estate are divided between the estate and the income beneficiary based on the income of the estate allocable to each. Where can i file my state and federal taxes for free Qualifying costs. Where can i file my state and federal taxes for free   Reforestation costs are the direct costs of planting or seeding for forestation or reforestation. Where can i file my state and federal taxes for free Qualifying costs include only those costs you must capitalize and include in the adjusted basis of the property. Where can i file my state and federal taxes for free They include costs for the following items. Where can i file my state and federal taxes for free Site preparation. Where can i file my state and federal taxes for free Seeds or seedlings. Where can i file my state and federal taxes for free Labor. Where can i file my state and federal taxes for free Tools. Where can i file my state and federal taxes for free Depreciation on equipment used in planting and seeding. Where can i file my state and federal taxes for free Qualifying costs do not include costs for which the government reimburses you under a cost-sharing program, unless you include the reimbursement in your income. Where can i file my state and federal taxes for free Qualified timber property. Where can i file my state and federal taxes for free   Qualified timber property is property that contains trees in significant commercial quantities. Where can i file my state and federal taxes for free It can be a woodlot or other site that you own or lease. Where can i file my state and federal taxes for free The property qualifies only if it meets all of the following requirements. Where can i file my state and federal taxes for free It is located in the United States. Where can i file my state and federal taxes for free It is held for the growing and cutting of timber you will either use in, or sell for use in, the commercial production of timber products. Where can i file my state and federal taxes for free It consists of at least one acre planted with tree seedlings in the manner normally used in forestation or reforestation. Where can i file my state and federal taxes for free Qualified timber property does not include property on which you have planted shelter belts or ornamental trees, such as Christmas trees. Where can i file my state and federal taxes for free Amortization period. Where can i file my state and federal taxes for free   The 84-month amortization period starts on the first day of the first month of the second half of the tax year you incur the costs (July 1 for a calendar year taxpayer), regardless of the month you actually incur the costs. Where can i file my state and federal taxes for free You can claim amortization deductions for no more than 6 months of the first and last (eighth) tax years of the period. Where can i file my state and federal taxes for free Life tenant and remainderman. Where can i file my state and federal taxes for free   If one person holds the property for life with the remainder going to another person, the life tenant is entitled to the full amortization for qualifying reforestation costs incurred by the life tenant. Where can i file my state and federal taxes for free Any remainder interest in the property is ignored for amortization purposes. Where can i file my state and federal taxes for free Recapture. Where can i file my state and federal taxes for free   If you dispose of qualified timber property within 10 years after the tax year you incur qualifying reforestation expenses, report any gain as ordinary income up to the amortization you took. Where can i file my state and federal taxes for free See chapter 3 of Publication 544 for more information. Where can i file my state and federal taxes for free How to make the election. Where can i file my state and federal taxes for free   To elect to amortize qualifying reforestation costs, complete Part VI of Form 4562 and attach a statement that contains the following information. Where can i file my state and federal taxes for free A description of the costs and the dates you incurred them. Where can i file my state and federal taxes for free A description of the type of timber being grown and the purpose for which it is grown. Where can i file my state and federal taxes for free Attach a separate statement for each property for which you amortize reforestation costs. Where can i file my state and federal taxes for free   Generally, you must make the election on a timely filed return (including extensions) for the tax year in which you incurred the costs. Where can i file my state and federal taxes for free 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 return (excluding extensions). Where can i file my state and federal taxes for free Attach Form 4562 and the statement to the amended return and write “Filed pursuant to section 301. Where can i file my state and federal taxes for free 9100-2” on Form 4562. Where can i file my state and federal taxes for free File the amended return at the same address you filed the original return. Where can i file my state and federal taxes for free Revoking the election. Where can i file my state and federal taxes for free   You must get IRS approval to revoke your election to amortize qualifying reforestation costs. Where can i file my state and federal taxes for free Your application to revoke the election must include your name, address, the years for which your election was in effect, and your reason for revoking it. Where can i file my state and federal taxes for free Please provide your daytime telephone number (optional), in case we need to contact you. Where can i file my state and federal taxes for free You, or your duly authorized representative, must sign the application and file it at least 90 days before the due date (without extensions) for filing your income tax return for the first tax year for which your election is to end. Where can i file my state and federal taxes for free    Send the application to: Internal Revenue Service Associate Chief Counsel Passthroughs and Special Industries CC:PSI:6 1111 Constitution Ave. Where can i file my state and federal taxes for free NW, IR-5300 Washington, DC 20224 Geological and Geophysical Costs You can amortize the cost of geological and geophysical expenses paid or incurred in connection with oil and gas exploration or development within the United States. Where can i file my state and federal taxes for free These costs can be amortized ratably over a 24-month period beginning on the mid-point of the tax year in which the expenses were paid or incurred. Where can i file my state and federal taxes for free For major integrated oil companies (as defined in section 167(h)(5)), these costs must be amortized ratably over a 5-year period for costs paid or incurred after May 17, 2006 (a 7-year period for costs paid or incurred after December 19, 2007). Where can i file my state and federal taxes for free If you retire or abandon the property during the amortization period, no amortization deduction is allowed in the year of retirement or abandonment. Where can i file my state and federal taxes for free Pollution Control Facilities You can elect to amortize the cost of a certified pollution control facility over 60 months. Where can i file my state and federal taxes for free However, see Atmospheric pollution control facilities for an exception. Where can i file my state and federal taxes for free The cost of a pollution control facility that is not eligible for amortization can be depreciated under the regular rules for depreciation. Where can i file my state and federal taxes for free Also, you can claim a special depreciation allowance on a certified pollution control facility that is qualified property even if you elect to amortize its cost. Where can i file my state and federal taxes for free You must reduce its cost (amortizable basis) by the amount of any special allowance you claim. Where can i file my state and federal taxes for free See chapter 3 of Publication 946. Where can i file my state and federal taxes for free A certified pollution control facility is a new identifiable treatment facility used in connection with a plant or other property in operation before 1976, to reduce or control water or atmospheric pollution or contamination. Where can i file my state and federal taxes for free The facility must do so by removing, changing, disposing, storing, or preventing the creation or emission of pollutants, contaminants, wastes, or heat. Where can i file my state and federal taxes for free The facility must be certified by state and federal certifying authorities. Where can i file my state and federal taxes for free The facility must not significantly increase the output or capacity, extend the useful life, or reduce the total operating costs of the plant or other property. Where can i file my state and federal taxes for free Also, it must not significantly change the nature of the manufacturing or production process or facility. Where can i file my state and federal taxes for free The federal certifying authority will not certify your property to the extent it appears you will recover (over the property's useful life) all or part of its cost from the profit based on its operation (such as through sales of recovered wastes). Where can i file my state and federal taxes for free The federal certifying authority will describe the nature of the potential cost recovery. Where can i file my state and federal taxes for free You must then reduce the amortizable basis of the facility by this potential recovery. Where can i file my state and federal taxes for free New identifiable treatment facility. Where can i file my state and federal taxes for free   A new identifiable treatment facility is tangible depreciable property that is identifiable as a treatment facility. Where can i file my state and federal taxes for free It does not include a building and its structural components unless the building is exclusively a treatment facility. Where can i file my state and federal taxes for free Atmospheric pollution control facilities. Where can i file my state and federal taxes for free   Certain atmospheric pollution control facilities can be amortized over 84 months. Where can i file my state and federal taxes for free To qualify, the following must apply. Where can i file my state and federal taxes for free The facility must be acquired and placed in service after April 11, 2005. Where can i file my state and federal taxes for free If acquired, the original use must begin with you after April 11, 2005. Where can i file my state and federal taxes for free The facility must be used in connection with an electric generation plant or other property placed in operation after December 31, 1975, that is primarily coal fired. Where can i file my state and federal taxes for free If you construct, reconstruct, or erect the facility, only the basis attributable to the construction, reconstruction, or erection completed after April 11, 2005, qualifies. Where can i file my state and federal taxes for free Basis reduction for corporations. Where can i file my state and federal taxes for free   A corporation must reduce the amortizable basis of a pollution control facility by 20% before figuring the amortization deduction. Where can i file my state and federal taxes for free More information. Where can i file my state and federal taxes for free   For more information on the amortization of pollution control facilities, see Code sections 169 and 291(c) and the related regulations. Where can i file my state and federal taxes for free Research and Experimental Costs You can elect to amortize your research and experimental costs, deduct them as current business expenses, or write them off over a 10-year period (see Optional write-off method below). Where can i file my state and federal taxes for free If you elect to amortize these costs, deduct them in equal amounts over 60 months or more. Where can i file my state and federal taxes for free The amortization period begins the month you first receive an economic benefit from the costs. Where can i file my state and federal taxes for free For a definition of “research and experimental costs” and information on deducting them as current business expenses, see chapter 7. Where can i file my state and federal taxes for free Optional write-off method. Where can i file my state and federal taxes for free   Rather than amortize these costs or deduct them as a current expense, you have the option of deducting (writing off) research and experimental costs ratably over a 10-year period beginning with the tax year in which you incurred the costs. Where can i file my state and federal taxes for free For more information, see Optional Write-off of Certain Tax Preferences , later, and section 59(e) of the Internal Revenue Code. Where can i file my state and federal taxes for free Costs you can amortize. Where can i file my state and federal taxes for free   You can amortize costs chargeable to a capital account (see chapter 1) if you meet both of the following requirements. Where can i file my state and federal taxes for free You paid or incurred the costs in your trade or business. Where can i file my state and federal taxes for free You are not deducting the costs currently. Where can i file my state and federal taxes for free How to make the election. Where can i file my state and federal taxes for free   To elect to amortize research and experimental costs, complete Part VI of Form 4562 and attach it to your income tax return. Where can i file my state and federal taxes for free Generally, you must file the return by the due date (including extensions). Where can i file my state and federal taxes for free 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 return (excluding extensions). Where can i file my state and federal taxes for free Attach Form 4562 to the amended return and write “Filed pursuant to section 301. Where can i file my state and federal taxes for free 9100-2” on Form 4562. Where can i file my state and federal taxes for free File the amended return at the same address you filed the original return. Where can i file my state and federal taxes for free   Your election is binding for the year it is made and for all later years unless you obtain approval from the IRS to change to a different method. Where can i file my state and federal taxes for free Optional Write-off of Certain Tax Preferences You can elect to amortize certain tax preference items over an optional period beginning in the tax year in which you incurred the costs. Where can i file my state and federal taxes for free If you make this election, there is no AMT adjustment. Where can i file my state and federal taxes for free The applicable costs and the optional recovery periods are as follows: Circulation costs — 3 years, Intangible drilling and development costs — 60 months, Mining exploration and development costs — 10 years, and Research and experimental costs — 10 years. Where can i file my state and federal taxes for free How to make the election. Where can i file my state and federal taxes for free   To elect to amortize qualifying costs over the optional recovery period, complete Part VI of Form 4562 and attach a statement containing the following information to your return for the tax year in which the election begins: Your name, address, and taxpayer identification number; and The type of cost and the specific amount of the cost for which you are making the election. Where can i file my state and federal taxes for free   Generally, the election must be made on a timely filed return (including extensions) for the tax year in which you incurred the costs. Where can i file my state and federal taxes for free 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 return (excluding extensions). Where can i file my state and federal taxes for free Attach Form 4562 to the amended return and write “Filed pursuant to section 301. Where can i file my state and federal taxes for free 9100-2” on Form 4562. Where can i file my state and federal taxes for free File the amended return at the same address you filed the original return. Where can i file my state and federal taxes for free Revoking the election. Where can i file my state and federal taxes for free   You must obtain consent from the IRS to revoke your election. Where can i file my state and federal taxes for free Your request to revoke the election must be submitted to the IRS in the form of a letter ruling before the end of the tax year in which the optional recovery period ends. Where can i file my state and federal taxes for free The request must contain all of the information necessary to demonstrate the rare and unusual circumstances that would justify granting revocation. Where can i file my state and federal taxes for free If the request for revocation is approved, any unamortized costs are deductible in the year the revocation is effective. Where can i file my state and federal taxes for free Prev  Up  Next   Home   More Online Publications