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Where To Send 2011 Tax Return

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Where To Send 2011 Tax Return

Where to send 2011 tax return Index Symbols 403(b) plans Defined, Tax-sheltered annuity plan. Where to send 2011 tax return Loans from, without tax consequences, Exception for qualified plan, 403(b) plan, and government plan loans. Where to send 2011 tax return Simplified Method to be used, Who must use the Simplified Method. Where to send 2011 tax return 5% owners, 5% owners. Where to send 2011 tax return A Age 70, Age 70½. Where to send 2011 tax return Alimony (see Qualified domestic relations orders (QDROs)) Annuities 5% rate on early distributions, 5% rate on certain early distributions from deferred annuity contracts. Where to send 2011 tax return Defined, Annuity. Where to send 2011 tax return Fixed-period, Fixed-period annuities. Where to send 2011 tax return , Fixed-period annuity. Where to send 2011 tax return Guaranteed payments, Guaranteed payments. Where to send 2011 tax return Joint and survivor annuities, Joint and survivor annuities. Where to send 2011 tax return Minimum distributions from, Minimum distributions from an annuity plan. Where to send 2011 tax return Payments under, Annuity payments. Where to send 2011 tax return Qualified plan annuity starting before November 19, 1996, Qualified plan annuity starting before November 19, 1996. Where to send 2011 tax return Rollovers, Annuity contracts. Where to send 2011 tax return (see also Rollovers) Single-life, Annuities for a single life. Where to send 2011 tax return , Single-life annuity. Where to send 2011 tax return Starting date of, Annuity starting date defined. Where to send 2011 tax return , Who must use the Simplified Method. Where to send 2011 tax return , Annuity starting before November 19, 1996. Where to send 2011 tax return , Annuity starting date. Where to send 2011 tax return Before November 19, 1996, Annuity starting before November 19, 1996. Where to send 2011 tax return Distribution on or after, Distribution On or After Annuity Starting Date Transfers of contracts, Transfers of Annuity Contracts Types of, Types of pensions and annuities. Where to send 2011 tax return Variable annuities, Variable annuities. Where to send 2011 tax return , Variable Annuities, Death benefits. Where to send 2011 tax return Assistance (see Tax help) B Beneficiaries, Survivors and Beneficiaries C Capital gains Lump-sum distributions, Capital Gain Treatment Cash withdrawals (see Nonperiodic payments) Child support (see Qualified domestic relations orders (QDROs)) Corrective distributions of excess plan contributions, Corrective distributions of excess plan contributions. Where to send 2011 tax return Costs Investment in the contract, Cost (Investment in the Contract) Lump-sum distribution, determination for, Cost. Where to send 2011 tax return D Death benefits, Death benefits. Where to send 2011 tax return Death of employee, Distributions after the employee's death. Where to send 2011 tax return , Survivors of employees. Where to send 2011 tax return Death of retiree, Survivors of retirees. Where to send 2011 tax return Deductible voluntary employee contributions, Deductible voluntary employee contributions. Where to send 2011 tax return Defined contribution plans, Defined contribution plan. Where to send 2011 tax return Designated Roth accounts Costs, Designated Roth accounts. Where to send 2011 tax return Defined, Designated Roth account. Where to send 2011 tax return Qualified distributions, Designated Roth accounts. Where to send 2011 tax return Rollovers, Designated Roth accounts. Where to send 2011 tax return Disability pensions, Disability pensions. Where to send 2011 tax return , Disability Pensions Distributions, Examples (see also Rollovers) Beginning date for, Required beginning date. Where to send 2011 tax return Early distributions and penalty tax, Payment to you option. Where to send 2011 tax return , Tax on Early Distributions Employer securities, Distributions of employer securities. Where to send 2011 tax return Loans treated as, Loans Treated as Distributions Lump-sum, Distributions of employer securities. Where to send 2011 tax return , Lump-Sum Distributions, Examples Minimum required, Recapture tax for changes in distribution method under equal payment exception. Where to send 2011 tax return Nonperiodic, taxation of, Taxation of Nonperiodic Payments Periodic, taxation of, Taxation of Periodic Payments Public safety employees, Qualified public safety employees. Where to send 2011 tax return Qualified reservist, Qualified reservist distributions. Where to send 2011 tax return U. Where to send 2011 tax return S. Where to send 2011 tax return savings bonds, Distribution of U. Where to send 2011 tax return S. Where to send 2011 tax return savings bonds. Where to send 2011 tax return Dividends, Taxation of Nonperiodic Payments E Early withdrawal from deferred interest account Penalty tax on, Payment to you option. Where to send 2011 tax return , Tax on Early Distributions Employer securities, distributions of, Distributions of employer securities. Where to send 2011 tax return Estate tax, Reduction for federal estate tax. Where to send 2011 tax return Deduction, Estate tax deduction. Where to send 2011 tax return Estimated tax, Estimated tax. Where to send 2011 tax return Excess accumulation, tax on, Recapture tax for changes in distribution method under equal payment exception. Where to send 2011 tax return Excess plan contributions, corrective distributions of, Corrective distributions of excess plan contributions. Where to send 2011 tax return F Figuring taxable amount, Figuring the Taxable Amount, Distribution of U. Where to send 2011 tax return S. Where to send 2011 tax return savings bonds. Where to send 2011 tax return Fixed-period annuities, Fixed-period annuities. Where to send 2011 tax return , Fixed-period annuity. Where to send 2011 tax return Foreign employment contributions, Foreign employment contributions. Where to send 2011 tax return Form 4972, Lump-Sum Distributions W-4P, Choosing no withholding. Where to send 2011 tax return Form 1040/1040A Rollovers, How to report. Where to send 2011 tax return Form 1040X Changing your mind on lump-sum treatment, Changing your mind. Where to send 2011 tax return Form 1099-INT U. Where to send 2011 tax return S. Where to send 2011 tax return savings bonds distributions, Distribution of U. Where to send 2011 tax return S. Where to send 2011 tax return savings bonds. Where to send 2011 tax return Form 1099-R 10-year tax option for lump-sum distribution, 10-Year Tax Option Corrected form, Introduction Corrective distributions of excess plan contributions, Corrective distributions of excess plan contributions. Where to send 2011 tax return Exceptions to tax, Exceptions to tax. Where to send 2011 tax return Investment in the contract, Cost (Investment in the Contract) Loan treated as distribution from plan, Reporting by plan. Where to send 2011 tax return Rollovers, How to report. Where to send 2011 tax return Tax-free exchanges, Tax-free exchange reported on Form 1099-R. Where to send 2011 tax return Form 4972 10-year tax option for lump-sum distribution, 10-Year Tax Option Lump-sum distributions, Lump-Sum Distributions, Electing optional lump-sum treatment. Where to send 2011 tax return Form 5329 Recapture tax, Recapture tax for changes in distribution method under equal payment exception. Where to send 2011 tax return Special additional taxes (penalty taxes), Special Additional Taxes, Exceptions to tax. Where to send 2011 tax return Form RRB-1099-R, Form RRB-1099-R. Where to send 2011 tax return Form W-4P Withholding from retirement plan payments, Choosing no withholding. Where to send 2011 tax return , Nonperiodic distributions. Where to send 2011 tax return Form W-4V Voluntary withholding request for social security or railroad retirement benefits, Withholding Tax and Estimated Tax Free tax services, Free help with your tax return. Where to send 2011 tax return Frozen deposits, Frozen deposits. Where to send 2011 tax return Fully taxable payments, Fully Taxable Payments G General Rule, Partly Taxable Payments, General Rule Death of retiree under, Survivors of retirees. Where to send 2011 tax return Investment in the contract, determination of, Cost (Investment in the Contract) Guaranteed payments, Guaranteed payments. Where to send 2011 tax return H Help (see Tax help) Home purchase Loans from qualified plans for, Exception for qualified plan, 403(b) plan, and government plan loans. Where to send 2011 tax return I In-plan Roth rollovers, In-plan Roth rollovers. Where to send 2011 tax return Individual retirement accounts Minimum distributions from, Minimum distributions from an individual account plan. Where to send 2011 tax return Rollovers, Rollovers (see also Rollovers) Interest deduction Denial on loan from plan, Denial of interest deduction. Where to send 2011 tax return J Joint and survivor annuities, Joint and survivor annuities. Where to send 2011 tax return L Loans treated as distributions, Loans Treated as Distributions Local government employees Section 457 plans, Section 457 Deferred Compensation Plans Losses Lump-sum distribution, Losses. Where to send 2011 tax return Lump-sum distributions, Distributions of employer securities. Where to send 2011 tax return , Lump-Sum Distributions, Examples 10-year tax option, 10-Year Tax Option Capital gain treatment, Capital Gain Treatment Defined, Lump-Sum Distributions Election of, Changing your mind. Where to send 2011 tax return Form 4972, Lump-Sum Distributions M Minimum required distributions, Recapture tax for changes in distribution method under equal payment exception. Where to send 2011 tax return Missing children, photographs of, Reminders Multiple annuitants, Multiple annuitants. Where to send 2011 tax return Multiple-lives annuities, Multiple-lives annuity. Where to send 2011 tax return N Net Investment Income Tax, Net investment income tax. Where to send 2011 tax return , Distribution Before Annuity Starting Date From a Nonqualified Plan Net unrealized appreciation (NUA), Net unrealized appreciation (NUA). Where to send 2011 tax return Deferring tax on, Distributions of employer securities. Where to send 2011 tax return Nonperiodic payments Loan treated as, Loans Treated as Distributions Taxation of, Taxation of Nonperiodic Payments Nonqualified plans Distribution before annuity start date, Distribution Before Annuity Starting Date From a Nonqualified Plan General Rule to be used, Who must use the General Rule. Where to send 2011 tax return Loans treated as distributions from, Effect on investment in the contract. Where to send 2011 tax return Nonresident aliens Railroad retirement, Nonresident aliens. Where to send 2011 tax return P Partial rollovers, Partial rollovers. Where to send 2011 tax return Partly taxable payments, Partly Taxable Payments Penalty taxes Early distributions, Tax on Early Distributions Excess accumulation, Tax on Excess Accumulation Pensions Defined, Pension. Where to send 2011 tax return Disability pensions, Disability pensions. Where to send 2011 tax return , Disability Pensions Types of, Types of pensions and annuities. Where to send 2011 tax return Periodic payments Taxation of, Taxation of Periodic Payments Withholding tax, Periodic payments. Where to send 2011 tax return Public safety officers insurance premiums, Insurance Premiums for Retired Public Safety Officers Public school employees Tax-sheltered annuity plans for (see 403(b) plans) Publications (see Tax help) Q Qualified domestic relations orders (QDROs), Qualified domestic relations order (QDRO). Where to send 2011 tax return , Qualified domestic relations order (QDRO). Where to send 2011 tax return Alternate payee under and lump-sum distribution, Alternate payee under qualified domestic relations order. Where to send 2011 tax return Qualified employee annuities Defined, Qualified employee annuity. Where to send 2011 tax return Simplified Method to be used, Who must use the Simplified Method. Where to send 2011 tax return Qualified employee plans Defined, Qualified employee plan. Where to send 2011 tax return Simplified Method to be used, Who must use the Simplified Method. Where to send 2011 tax return Qualified plans, Who must use the General Rule. Where to send 2011 tax return (see also specific type of plan ) Distribution before annuity starting date, Distribution Before Annuity Starting Date From a Qualified Plan General Rule, Who must use the General Rule. Where to send 2011 tax return Loans from, without tax consequences, Exception for qualified plan, 403(b) plan, and government plan loans. Where to send 2011 tax return Rollovers, Qualified retirement plan. Where to send 2011 tax return Qualified settlement income Exxon Valdez litigation settlement, Qualified settlement income. Where to send 2011 tax return R Railroad retirement benefits, Railroad Retirement Benefits, Repayment of benefits received in an earlier year. Where to send 2011 tax return Taxability of, Withholding Tax and Estimated Tax Recapture tax Changes in distribution method, Recapture tax for changes in distribution method under equal payment exception. Where to send 2011 tax return Reemployment, Reemployment. Where to send 2011 tax return Related employers and related plans, Related employers and related plans. Where to send 2011 tax return Repayment of loan within 5 years, Exception for qualified plan, 403(b) plan, and government plan loans. Where to send 2011 tax return Required beginning date, Required beginning date. Where to send 2011 tax return Required distributions, minimum, Recapture tax for changes in distribution method under equal payment exception. Where to send 2011 tax return Retirement bonds, Retirement bonds. Where to send 2011 tax return Rollovers, Rollovers, Choosing the right option. Where to send 2011 tax return 20% tax rate on distribution, Eligible rollover distribution. Where to send 2011 tax return Comparison of direct payment vs. Where to send 2011 tax return direct rollover (Table 1), Choosing the right option. Where to send 2011 tax return Direct rollover to another qualified plan, Eligible rollover distribution. Where to send 2011 tax return , Direct rollover option. Where to send 2011 tax return In-plan Roth, In-plan Roth rollovers. Where to send 2011 tax return Nonspouse beneficiary, Rollovers by nonspouse beneficiary. Where to send 2011 tax return Nontaxable amounts, Rollover of nontaxable amounts. Where to send 2011 tax return Notice to recipients of eligible rollover distribution, Written explanation to recipients. Where to send 2011 tax return Property and cash distributed, Property and cash distributed. Where to send 2011 tax return Roth IRAs, Rollovers to Roth IRAs. Where to send 2011 tax return Substitution of other property, Rollovers of property. Where to send 2011 tax return Surviving spouse making, Rollover by surviving spouse. Where to send 2011 tax return S Section 457 deferred compensation plans, Section 457 Deferred Compensation Plans Securities of employer, distributions of, Distributions of employer securities. Where to send 2011 tax return Self-employed persons' rollovers, Rollovers Simplified Method, Partly Taxable Payments, Simplified Method Death of retiree under, Survivors of retirees. Where to send 2011 tax return How to use, How to use the Simplified Method. Where to send 2011 tax return Investment in the contract, determination of, Cost (Investment in the Contract) Not allowed, Who cannot use the Simplified Method. Where to send 2011 tax return Single-sum in connection with start of payments, Single-sum in connection with the start of annuity payments. Where to send 2011 tax return Single-life annuities, Annuities for a single life. Where to send 2011 tax return , Single-life annuity. Where to send 2011 tax return Social security, tax on, Withholding Tax and Estimated Tax State employees Section 457 plans, Section 457 Deferred Compensation Plans State insurer delinquency proceedings, State insurer delinquency proceedings. Where to send 2011 tax return Surviving spouse Distribution rules for, Distributions after the employee's death. Where to send 2011 tax return Rollovers by, Rollover by surviving spouse. Where to send 2011 tax return T Tables Comparison of direct payment vs. Where to send 2011 tax return direct rollover (Table 1), Choosing the right option. Where to send 2011 tax return Tax help, How To Get Tax Help Tax-free exchanges, Tax-free exchange. Where to send 2011 tax return Ten percent tax for early withdrawal, Payment to you option. Where to send 2011 tax return , Tax on Early Distributions Ten-year tax option, 10-Year Tax Option Time for making rollover, Time for making rollover. Where to send 2011 tax return Transfers of annuity contracts, Transfers of Annuity Contracts TTY/TDD information, How To Get Tax Help U U. Where to send 2011 tax return S. Where to send 2011 tax return savings bonds Distribution of, Distribution of U. Where to send 2011 tax return S. Where to send 2011 tax return savings bonds. Where to send 2011 tax return V Variable annuities, Variable annuities. Where to send 2011 tax return , Variable Annuities Voluntary employee contributions, Deductible voluntary employee contributions. Where to send 2011 tax return W Withdrawals, Withdrawals. Where to send 2011 tax return Employees withdrawing contributions, Plans that permitted withdrawal of employee contributions. Where to send 2011 tax return Withholding, Withholding Tax and Estimated Tax 10% rate used, Nonperiodic distributions. Where to send 2011 tax return 20% of eligible rollover, Withholding requirements. Where to send 2011 tax return , Payment to you option. Where to send 2011 tax return , 20% Mandatory withholding. Where to send 2011 tax return Periodic payments, Periodic payments. Where to send 2011 tax return Railroad retirement, Tax withholding. Where to send 2011 tax return Worksheets Simplified Method, How to use the Simplified Method. Where to send 2011 tax return Worksheet A, illustrated, Worksheet A. Where to send 2011 tax return Simplified Method Worksheet for Bill Smith Worksheet A, Simplified Method, Worksheet A. Where to send 2011 tax return Simplified Method Prev  Up     Home   More Online Publications
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The Where To Send 2011 Tax Return

Where to send 2011 tax return 2. Where to send 2011 tax return   Accounting Methods Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Accounting MethodsCash Method Accrual Method Farm Inventory Cash Versus Accrual Method Special Methods of Accounting Combination Method Changes in Methods of Accounting Introduction You must use an accounting method that clearly shows your income and expenses. Where to send 2011 tax return You must also figure your taxable income and file an income tax return for an annual accounting period called a tax year. Where to send 2011 tax return This chapter discusses accounting methods. Where to send 2011 tax return For information on accounting periods, see Publication 538, Accounting Periods and Methods, and the Instructions for Form 1128, Application To Adopt, Change, or Retain a Tax Year. Where to send 2011 tax return Topics - This chapter discusses: Cash method Accrual method Farm inventory Special methods of accounting Changes in methods of accounting Useful Items - You may want to see: Publication 538 Accounting Periods and Methods 535 Business Expenses Form (and Instructions) 1128 Application To Adopt, Change, or Retain a Tax Year 3115 Application for Change in Accounting Method See chapter 16 for information about getting publications and forms. Where to send 2011 tax return Accounting Methods An accounting method is a set of rules used to determine when and how your income and expenses are reported on your tax return. Where to send 2011 tax return Your accounting method includes not only your overall method of accounting, but also the accounting treatment you use for any material item. Where to send 2011 tax return A material item is one that affects the proper time for inclusion of income or allowance of a deduction. Where to send 2011 tax return An item considered material for financial statement purposes is generally also considered material for income tax purposes. Where to send 2011 tax return See Publication 538 for more information. Where to send 2011 tax return You generally choose an accounting method for your farm business when you file your first income tax return that includes a Schedule F (Form 1040), Profit or Loss From Farming. Where to send 2011 tax return If you later want to change your accounting method, you generally must get IRS approval. Where to send 2011 tax return How to obtain IRS approval is discussed later under Changes in Methods of Accounting . Where to send 2011 tax return Types of accounting methods. Where to send 2011 tax return   Generally, you can use any of the following accounting methods. Where to send 2011 tax return Each method is discussed in detail below. Where to send 2011 tax return Cash method. Where to send 2011 tax return Accrual method. Where to send 2011 tax return Special methods of accounting for certain items of income and expenses. Where to send 2011 tax return Combination (hybrid) method using elements of two or more of the above. Where to send 2011 tax return Business and other items. Where to send 2011 tax return   You can account for business and personal items using different accounting methods. Where to send 2011 tax return For example, you can figure your business income under an accrual method, even if you use the cash method to figure personal items. Where to send 2011 tax return Two or more businesses. Where to send 2011 tax return   If you operate two or more separate and distinct businesses, you can use a different accounting method for each business. Where to send 2011 tax return Generally, no business is separate and distinct unless a complete and separate set of books and records is maintained for each business. Where to send 2011 tax return Cash Method Most farmers use the cash method because they find it easier to keep records using the cash method. Where to send 2011 tax return However, certain farm corporations and partnerships and all tax shelters must use an accrual method of accounting. Where to send 2011 tax return See Accrual Method Required , later. Where to send 2011 tax return Income Under the cash method, include in your gross income all items of income you actually or constructively received during the tax year. Where to send 2011 tax return Items of income include money received as well as property or services received. Where to send 2011 tax return If you receive property or services, you must include the fair market value (FMV) of the property or services in income. Where to send 2011 tax return See chapter 3 for information on how to report farm income on your income tax return. Where to send 2011 tax return Constructive receipt. Where to send 2011 tax return   Income is constructively received when an amount is credited to your account or made available to you without restriction. Where to send 2011 tax return You do not need to have possession of the income for it to be treated as income for the tax year. Where to send 2011 tax return If you authorize someone to be your agent and receive income for you, you are considered to have received the income when your agent receives it. Where to send 2011 tax return Income is not constructively received if your receipt of the income is subject to substantial restrictions or limitations. Where to send 2011 tax return Direct payments and counter-cyclical payments. Where to send 2011 tax return   If you received direct payments or counter-cyclical payments under Subtitle A or C of the Farm Security and Rural Investment Act of 2002, you will not be considered to have constructively received a payment merely because you had the option to receive it in the year before it is required to be paid. Where to send 2011 tax return Delaying receipt of income. Where to send 2011 tax return   You cannot hold checks or postpone taking possession of similar property from one tax year to another to avoid paying tax on the income. Where to send 2011 tax return You must report the income in the year the money or property is received or made available to you without restriction. Where to send 2011 tax return Example. Where to send 2011 tax return Frances Jones, a farmer, was entitled to receive a $10,000 payment on a grain contract in December 2013. Where to send 2011 tax return She was told in December that her payment was available. Where to send 2011 tax return She requested not to be paid until January 2014. Where to send 2011 tax return However, she must still include this payment in her 2013 income because it was made available to her in 2013. Where to send 2011 tax return Debts paid by another person or canceled. Where to send 2011 tax return   If your debts are paid by another person or are canceled by your creditors, you may have to report part or all of this debt relief as income. Where to send 2011 tax return If you receive income in this way, you constructively receive the income when the debt is canceled or paid. Where to send 2011 tax return See Cancellation of Debt in chapter 3. Where to send 2011 tax return Deferred payment contract. Where to send 2011 tax return   If you sell an item under a deferred payment contract that calls for payment in a future year, there is no constructive receipt in the year of sale. Where to send 2011 tax return However, if the sales contract states that you have the right to the proceeds of the sale from the buyer at any time after delivery of the item, then you must include the sales price in income in the year of the sale, regardless of when you actually receive payment. Where to send 2011 tax return Example. Where to send 2011 tax return You are a farmer who uses the cash method and a calendar tax year. Where to send 2011 tax return You sell grain in December 2013 under a bona fide arm's-length contract that calls for payment in 2014. Where to send 2011 tax return You include the proceeds from the sale in your 2014 gross income since that is the year payment is received. Where to send 2011 tax return However, if the contract states that you have the right to the proceeds from the buyer at any time after the grain is delivered, you must include the sales price in your 2013 income, regardless of when you actually receive payment. Where to send 2011 tax return Repayment of income. Where to send 2011 tax return   If you include an amount in income and in a later year you have to repay all or part of it, then you can usually deduct the repayment in the year repaid. Where to send 2011 tax return If the repayment is more than $3,000, a special rule applies. Where to send 2011 tax return For details, see Repayments in chapter 11 of Publication 535, Business Expenses. Where to send 2011 tax return Expenses Under the cash method, generally you deduct expenses in the tax year you pay them. Where to send 2011 tax return This includes business expenses for which you contest liability. Where to send 2011 tax return However, you may not be able to deduct an expense paid in advance or you may be required to capitalize certain costs, as explained under Uniform Capitalization Rules in chapter 6. Where to send 2011 tax return See chapter 4 for information on how to deduct farm business expenses on your income tax return. Where to send 2011 tax return Prepayment. Where to send 2011 tax return   Generally, you cannot deduct expenses paid in advance. Where to send 2011 tax return This rule applies to any expense paid far enough in advance to, in effect, create an asset with a useful life extending substantially beyond the end of the current tax year. Where to send 2011 tax return Example. Where to send 2011 tax return On November 1, 2013, you signed and paid $3,600 for a 3-year (36-month) insurance contract for equipment. Where to send 2011 tax return In 2013, you are allowed to deduct only $200 (2/36 x $3,600) of the cost of the policy that is attributable to 2013. Where to send 2011 tax return In 2014, you'll be able to deduct $1,200 (12/36 x $3,600); in 2015, you'll be able to deduct $1,200 (12/36 x $3,600); and in 2016 you'll be able to deduct the remaining balance of $1,000. Where to send 2011 tax return An exception applies if the expense qualifies for the 12-month rule. Where to send 2011 tax return See Publication 538 for more information and examples. Where to send 2011 tax return See chapter 4 for special rules for prepaid farm supplies and prepaid livestock feed. Where to send 2011 tax return Accrual Method Under an accrual method of accounting, you generally report income in the year earned and deduct or capitalize expenses in the year incurred. Where to send 2011 tax return The purpose of an accrual method of accounting is to correctly match income and expenses. Where to send 2011 tax return Certain businesses engaged in farming must use an accrual method of accounting for its farm business and for sales and purchases of inventory items. Where to send 2011 tax return See Accrual Method Required and Farm Inventory , later. Where to send 2011 tax return Income Generally, you include an amount in income for the tax year in which all events that fix your right to receive the income have occurred, and you can determine the amount with reasonable accuracy. Where to send 2011 tax return Under this rule, include an amount in income on the earliest of the following dates. Where to send 2011 tax return When you receive payment. Where to send 2011 tax return When the income amount is due to you. Where to send 2011 tax return When you earn the income. Where to send 2011 tax return When title passes. Where to send 2011 tax return If you use an accrual method of accounting, complete Part III of Schedule F (Form 1040) to report your income. Where to send 2011 tax return Inventory. Where to send 2011 tax return   If you keep an inventory, generally you must use an accrual method of accounting to determine your gross income. Where to send 2011 tax return An inventory is necessary to clearly show income when the production, purchase, or sale of merchandise is an income-producing factor. Where to send 2011 tax return See Publication 538 for more information. Where to send 2011 tax return Also see Farm Inventory , later, for more information on items that must be included in inventory by farmers and inventory valuation methods for farmers. Where to send 2011 tax return Expenses Under an accrual method of accounting, you generally deduct or capitalize a business expense when both of the following apply. Where to send 2011 tax return The all-events test has been met. Where to send 2011 tax return This test is met when: All events have occurred that fix the fact that you have a liability, and The amount of the liability can be determined with reasonable accuracy. Where to send 2011 tax return Economic performance has occurred. Where to send 2011 tax return Economic performance. Where to send 2011 tax return   Generally, you cannot deduct or capitalize a business expense until economic performance occurs. Where to send 2011 tax return If your expense is for property or services provided to you, or for your use of property, economic performance occurs as the property or services are provided or as the property is used. Where to send 2011 tax return If your expense is for property or services you provide to others, economic performance occurs as you provide the property or services. Where to send 2011 tax return Example. Where to send 2011 tax return Jane, who is a farmer, uses a calendar tax year and an accrual method of accounting. Where to send 2011 tax return She entered into a contract with ABC Farm Consulting in 2012. Where to send 2011 tax return The contract stated that Jane pay ABC Farm Consulting $2,000 in December 2012. Where to send 2011 tax return It further stipulates that ABC Farm Consulting will develop a plan for integrating her farm with a larger farm operation based in a neighboring state by March 1, 2013. Where to send 2011 tax return Jane paid ABC Farm Consulting $2,000 in December 2012. Where to send 2011 tax return Integration of operations according to the plan began in May 2013 and they completed the integration in December 2013. Where to send 2011 tax return Economic performance for Jane's liability in the contract occurs as the services are provided. Where to send 2011 tax return Jane incurs the $2,000 cost in 2013. Where to send 2011 tax return An exception to the economic performance rule allows certain recurring items to be treated as incurred during a tax year even though economic performance has not occurred. Where to send 2011 tax return For more information, see Economic Performance in Publication 538. Where to send 2011 tax return Special rule for related persons. Where to send 2011 tax return   Business expenses and interest owed to a related person who uses the cash method of accounting are not deductible until you make the payment and the corresponding amount is includible in the related person's gross income. Where to send 2011 tax return Determine the relationship for this rule as of the end of the tax year for which the expense or interest would otherwise be deductible. Where to send 2011 tax return For more information, see Internal Revenue Code section 267. Where to send 2011 tax return Accrual Method Required Generally, the following businesses, if engaged in farming, must use an accrual method of accounting. Where to send 2011 tax return A corporation (other than a family corporation) that had gross receipts of more than $1,000,000 for any tax year beginning after 1975. Where to send 2011 tax return A family corporation that had gross receipts of more than $25,000,000 for any tax year beginning after 1985. Where to send 2011 tax return A partnership with a corporation as a partner, if that corporation meets the requirements of (1) or (2) above. Where to send 2011 tax return A tax shelter. Where to send 2011 tax return Note. Where to send 2011 tax return Items (1), (2), and (3) above do not apply to an S corporation or a business operating a nursery or sod farm, or the raising or harvesting of trees (other than fruit and nut trees). Where to send 2011 tax return Family corporation. Where to send 2011 tax return   A family corporation is generally a corporation that meets one of the following ownership requirements. Where to send 2011 tax return Members of the same family own at least 50% of the total combined voting power of all classes of stock entitled to vote and at least 50% of the total shares of all other classes of stock of the corporation. Where to send 2011 tax return Members of two families have owned, directly or indirectly, since October 4, 1976, at least 65% of the total combined voting power of all classes of voting stock and at least 65% of the total shares of all other classes of the corporation's stock. Where to send 2011 tax return Members of three families have owned, directly or indirectly, since October 4, 1976, at least 50% of the total combined voting power of all classes of voting stock and at least 50% of the total shares of all other classes of the corporation's stock. Where to send 2011 tax return For more information on family corporations, see Internal Revenue Code section 447. Where to send 2011 tax return Tax shelter. Where to send 2011 tax return   A tax shelter is a partnership, noncorporate enterprise, or S corporation that meets either of the following tests. Where to send 2011 tax return Its principal purpose is the avoidance or evasion of federal income tax. Where to send 2011 tax return It is a farming syndicate. Where to send 2011 tax return A farming syndicate is an entity that meets either of the following tests. Where to send 2011 tax return Interests in the activity have been offered for sale in an offering required to be registered with a federal or state agency with the authority to regulate the offering of securities for sale. Where to send 2011 tax return More than 35% of the losses during the tax year are allocable to limited partners or limited entrepreneurs. Where to send 2011 tax return   A “limited partner” is one whose personal liability for partnership debts is limited to the money or other property the partner contributed or is required to contribute to the partnership. Where to send 2011 tax return   A “limited entrepreneur” is one who has an interest in an enterprise other than as a limited partner and does not actively participate in the management of the enterprise. Where to send 2011 tax return Farm Inventory If you are required to keep an inventory, you should keep a complete record of your inventory as part of your farm records. Where to send 2011 tax return This record should show the actual count or measurement of the inventory. Where to send 2011 tax return It should also show all factors that enter into its valuation, including quality and weight, if applicable. Where to send 2011 tax return Hatchery business. Where to send 2011 tax return   If you are in the hatchery business, and use an accrual method of accounting, you must include in inventory eggs in the process of incubation. Where to send 2011 tax return Products held for sale. Where to send 2011 tax return   All harvested and purchased farm products held for sale or for feed or seed, such as grain, hay, silage, concentrates, cotton, tobacco, etc. Where to send 2011 tax return , must be included in inventory. Where to send 2011 tax return Supplies. Where to send 2011 tax return   Supplies acquired for sale or that become a physical part of items held for sale must be included in inventory. Where to send 2011 tax return Deduct the cost of supplies in the year used or consumed in operations. Where to send 2011 tax return Do not include incidental supplies in inventory as these are deductible in the year of purchase. Where to send 2011 tax return Livestock. Where to send 2011 tax return   Livestock held primarily for sale must be included in inventory. Where to send 2011 tax return Livestock held for draft, breeding, or dairy purposes can either be depreciated or included in inventory. Where to send 2011 tax return See also Unit-livestock-price method , later. Where to send 2011 tax return If you are in the business of breeding and raising chinchillas, mink, foxes, or other fur-bearing animals, these animals are livestock for inventory purposes. Where to send 2011 tax return Growing crops. Where to send 2011 tax return   Generally, growing crops are not required to be included in inventory. Where to send 2011 tax return However, if the crop has a preproductive period of more than 2 years, you may have to capitalize (or include in inventory) costs associated with the crop. Where to send 2011 tax return See Uniform capitalization rules below. Where to send 2011 tax return Also see Uniform Capitalization Rules in  chapter 6. Where to send 2011 tax return Items to include in inventory. Where to send 2011 tax return   Your inventory should include all items held for sale, or for use as feed, seed, etc. Where to send 2011 tax return , whether raised or purchased, that are unsold at the end of the year. Where to send 2011 tax return Uniform capitalization rules. Where to send 2011 tax return   The following applies if you are required to use an accrual method of accounting. Where to send 2011 tax return The uniform capitalization rules apply to all costs of raising a plant, even if the preproductive period of raising a plant is 2 years or less. Where to send 2011 tax return The costs of animals are subject to the uniform capitalization rules. Where to send 2011 tax return Inventory valuation methods. Where to send 2011 tax return   The following methods, described below, are those generally available for valuing inventory. Where to send 2011 tax return The method you use must conform to generally accepted accounting principles for similar businesses and must clearly reflect income. Where to send 2011 tax return Cost. Where to send 2011 tax return Lower of cost or market. Where to send 2011 tax return Farm-price method. Where to send 2011 tax return Unit-livestock-price method. Where to send 2011 tax return Cost and lower of cost or market methods. Where to send 2011 tax return   See Publication 538 for information on these valuation methods. Where to send 2011 tax return If you value your livestock inventory at cost or the lower of cost or market, you do not need IRS approval to change to the unit-livestock-price method. Where to send 2011 tax return However, if you value your livestock inventory using the farm-price method, then you must obtain permission from the IRS to change to the unit-livestock-price method. Where to send 2011 tax return Farm-price method. Where to send 2011 tax return   Under this method, each item, whether raised or purchased, is valued at its market price less the direct cost of disposition. Where to send 2011 tax return Market price is the current price at the nearest market in the quantities you usually sell. Where to send 2011 tax return Cost of disposition includes broker's commissions, freight, hauling to market, and other marketing costs. Where to send 2011 tax return If you use this method, you must use it for your entire inventory, except that livestock can be inventoried under the unit-livestock-price method. Where to send 2011 tax return Unit-livestock-price method. Where to send 2011 tax return   This method recognizes the difficulty of establishing the exact costs of producing and raising each animal. Where to send 2011 tax return You group or classify livestock according to type and age and use a standard unit price for each animal within a class or group. Where to send 2011 tax return The unit price you assign should reasonably approximate the normal costs incurred in producing the animals in such classes. Where to send 2011 tax return Unit prices and classifications are subject to approval by the IRS on examination of your return. Where to send 2011 tax return You must annually reevaluate your unit livestock prices and adjust the prices upward or downward to reflect increases or decreases in the costs of raising livestock. Where to send 2011 tax return IRS approval is not required for these adjustments. Where to send 2011 tax return Any other changes in unit prices or classifications do require IRS approval. Where to send 2011 tax return   If you use this method, include all raised livestock in inventory, regardless of whether they are held for sale or for draft, breeding, sport, or dairy purposes. Where to send 2011 tax return This method accounts only for the increase in cost of raising an animal to maturity. Where to send 2011 tax return It does not provide for any decrease in the animal's market value after it reaches maturity. Where to send 2011 tax return Also, if you raise cattle, you are not required to inventory hay you grow to feed your herd. Where to send 2011 tax return   Do not include sold or lost animals in the year-end inventory. Where to send 2011 tax return If your records do not show which animals were sold or lost, treat the first animals acquired as sold or lost. Where to send 2011 tax return The animals on hand at the end of the year are considered those most recently acquired. Where to send 2011 tax return   You must include in inventory all livestock purchased primarily for sale. Where to send 2011 tax return You can choose either to include in inventory or depreciate livestock purchased for draft, breeding, sport or dairy purposes. Where to send 2011 tax return However, you must be consistent from year to year, regardless of the method you have chosen. Where to send 2011 tax return You cannot change your method without obtaining approval from the IRS. Where to send 2011 tax return   You must include in inventory animals purchased after maturity or capitalize them at their purchase price. Where to send 2011 tax return If the animals are not mature at purchase, increase the cost at the end of each tax year according to the established unit price. Where to send 2011 tax return However, in the year of purchase, do not increase the cost of any animal purchased during the last 6 months of the year. Where to send 2011 tax return This “no increase” rule does not apply to tax shelters which must make an adjustment for any animal purchased during the year. Where to send 2011 tax return It also does not apply to taxpayers that must make an adjustment to reasonably reflect the particular period in the year in which animals are purchased, if necessary to avoid significant distortions in income. Where to send 2011 tax return Uniform capitalization rules. Where to send 2011 tax return   A farmer can determine costs required to be allocated under the uniform capitalization rules by using the farm-price or unit-livestock-price inventory method. Where to send 2011 tax return This applies to any plant or animal, even if the farmer does not hold or treat the plant or animal as inventory property. Where to send 2011 tax return Cash Versus Accrual Method The following examples compare the cash and accrual methods of accounting. Where to send 2011 tax return Example 1. Where to send 2011 tax return You are a farmer who uses an accrual method of accounting. Where to send 2011 tax return You keep your books on the calendar year basis. Where to send 2011 tax return You sell grain in December 2013 but you are not paid until January 2014. Where to send 2011 tax return Because the accrual method was used and 2013 was the tax year in which the grain was sold, you must both include the sales proceeds and deduct the costs incurred in producing the grain on your 2013 tax return. Where to send 2011 tax return Example 2. Where to send 2011 tax return Assume the same facts as in Example 1 except that you use the cash method and there was no constructive receipt of the sales proceeds in 2013. Where to send 2011 tax return Under this method, you include the sales proceeds in income for 2014, the year you receive payment. Where to send 2011 tax return Deduct the costs of producing the grain in the year you pay for them. Where to send 2011 tax return Special Methods of Accounting There are special methods of accounting for certain items of income and expense. Where to send 2011 tax return Crop method. Where to send 2011 tax return   If you do not harvest and dispose of your crop in the same tax year that you plant it, you can, with IRS approval, use the crop method of accounting. Where to send 2011 tax return You cannot use the crop method for any tax return, including your first tax return, unless you receive approval from the IRS. Where to send 2011 tax return Under this method, you deduct the entire cost of producing the crop, including the expense of seed or young plants, in the year you realize income from the crop. Where to send 2011 tax return    See chapter 4 for details on deducting the costs of operating a farm. Where to send 2011 tax return Also see Regulations section 1. Where to send 2011 tax return 162-12. Where to send 2011 tax return Other special methods. Where to send 2011 tax return   Other special methods of accounting apply to the following items. Where to send 2011 tax return Amortization, see chapter 7. Where to send 2011 tax return Casualties, see chapter 11. Where to send 2011 tax return Condemnations, see chapter 11. Where to send 2011 tax return Depletion, see chapter 7. Where to send 2011 tax return Depreciation, see chapter 7. Where to send 2011 tax return Farm business expenses, see chapter 4. Where to send 2011 tax return Farm income, see chapter 3. Where to send 2011 tax return Installment sales, see chapter 10. Where to send 2011 tax return Soil and water conservation expenses, see chapter 5. Where to send 2011 tax return Thefts, see chapter 11. Where to send 2011 tax return Combination Method Generally, you can use any combination of cash, accrual, and special methods of accounting if the combination clearly shows your income and expenses and you use it consistently. Where to send 2011 tax return However, the following restrictions apply. Where to send 2011 tax return If you use the cash method for figuring your income, you must use the cash method for reporting your expenses. Where to send 2011 tax return If you use an accrual method for reporting your expenses, you must use an accrual method for figuring your income. Where to send 2011 tax return Changes in Methods of Accounting A change in your method of accounting includes a change in: Your overall method, such as from the cash method to an accrual method, and Your treatment of any material item, such as a change in your method of valuing inventory (for example, a change from the farm-price method to the unit-livestock-price method, discussed earlier). Where to send 2011 tax return Generally, once you have set up your accounting method, you must receive approval from the IRS before you can change to another method of accounting. Where to send 2011 tax return You may also have to pay a fee. Where to send 2011 tax return To obtain approval, you must generally file Form 3115. Where to send 2011 tax return There are instances when you can obtain automatic consent to change certain methods of accounting. Where to send 2011 tax return See the List of Automatic Accounting Method Changes located in the Instructions for Form 3115. Where to send 2011 tax return For more information on changes in methods of accounting, see Form 3115 and the Instructions for Form 3115. Where to send 2011 tax return Also see Publication 538. Where to send 2011 tax return Prev  Up  Next   Home   More Online Publications