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Who Can File A 1040ez

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Who Can File A 1040ez

Who can file a 1040ez Publication 551 - Main Content Table of Contents Cost BasisStocks and Bonds Real Property Business Assets Allocating the Basis Adjusted BasisIncreases to Basis Decreases to Basis Adjustments to Basis Example Basis Other Than CostProperty Received for Services Taxable Exchanges Nontaxable Exchanges Property Transferred From a Spouse Property Received as a Gift Inherited Property Property Changed to Business or Rental Use How To Get Tax HelpLow Income Taxpayer Clinics (LITCs). Who can file a 1040ez Cost Basis The basis of property you buy is usually its cost. Who can file a 1040ez The cost is the amount you pay in cash, debt obligations, other property, or services. Who can file a 1040ez Your cost also includes amounts you pay for the following items. Who can file a 1040ez Sales tax, Freight, Installation and testing, Excise taxes, Legal and accounting fees (when they must be capitalized), Revenue stamps, Recording fees, and Real estate taxes (if assumed for the seller). Who can file a 1040ez  You may also have to capitalize (add to basis) certain other costs related to buying or producing property. Who can file a 1040ez Loans with low or no interest. Who can file a 1040ez   If you buy property on a time-payment plan that charges little or no interest, the basis of your property is your stated purchase price, minus the amount considered to be unstated interest. Who can file a 1040ez You generally have unstated interest if your interest rate is less than the applicable federal rate. Who can file a 1040ez For more information, see Unstated Interest and Original Issue Discount in Publication 537. Who can file a 1040ez Purchase of a business. Who can file a 1040ez   When you purchase a trade or business, you generally purchase all assets used in the business operations, such as land, buildings, and machinery. Who can file a 1040ez Allocate the price among the various assets, including any section 197 intangibles. Who can file a 1040ez See Allocating the Basis, later. Who can file a 1040ez Stocks and Bonds The basis of stocks or bonds you buy is generally the purchase price plus any costs of purchase, such as commissions and recording or transfer fees. Who can file a 1040ez If you get stocks or bonds other than by purchase, your basis is usually determined by the fair market value (FMV) or the previous owner's adjusted basis of the stock. Who can file a 1040ez You must adjust the basis of stocks for certain events that occur after purchase. Who can file a 1040ez See Stocks and Bonds in chapter 4 of Publication 550 for more information on the basis of stock. Who can file a 1040ez Identifying stock or bonds sold. Who can file a 1040ez   If you can adequately identify the shares of stock or the bonds you sold, their basis is the cost or other basis of the particular shares of stock or bonds. Who can file a 1040ez If you buy and sell securities at various times in varying quantities and you cannot adequately identify the shares you sell, the basis of the securities you sell is the basis of the securities you acquired first. Who can file a 1040ez For more information about identifying securities you sell, see Stocks and Bonds under Basis of Investment Property in chapter 4 of Publication 550. Who can file a 1040ez Mutual fund shares. Who can file a 1040ez   If you sell mutual fund shares acquired at different times and prices, you can choose to use an average basis. Who can file a 1040ez For more information, see Publication 550. Who can file a 1040ez Real Property Real property, also called real estate, is land and generally anything built on or attached to it. Who can file a 1040ez If you buy real property, certain fees and other expenses become part of your cost basis in the property. Who can file a 1040ez Real estate taxes. Who can file a 1040ez   If you pay real estate taxes the seller owed on real property you bought, and the seller did not reimburse you, treat those taxes as part of your basis. Who can file a 1040ez You cannot deduct them as taxes. Who can file a 1040ez   If you reimburse the seller for taxes the seller paid for you, you can usually deduct that amount as an expense in the year of purchase. Who can file a 1040ez Do not include that amount in the basis of the property. Who can file a 1040ez If you did not reimburse the seller, you must reduce your basis by the amount of those taxes. Who can file a 1040ez Settlement costs. Who can file a 1040ez   Your basis includes the settlement fees and closing costs for buying property. Who can file a 1040ez You cannot include in your basis the fees and costs for getting a loan on property. Who can file a 1040ez A fee for buying property is a cost that must be paid even if you bought the property for cash. Who can file a 1040ez   The following items are some of the settlement fees or closing costs you can include in the basis of your property. Who can file a 1040ez Abstract fees (abstract of title fees); Charges for installing utility services; Legal fees (including title search and preparation of the sales contract and deed); Recording fees; Surveys; Transfer taxes; Owner's title insurance; and Any amounts the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, charges for improvements or repairs, and sales commissions. Who can file a 1040ez   Settlement costs do not include amounts placed in escrow for the future payment of items such as taxes and insurance. Who can file a 1040ez   The following items are some settlement fees and closing costs you cannot include in the basis of the property. Who can file a 1040ez Casualty insurance premiums. Who can file a 1040ez Rent for occupancy of the property before closing. Who can file a 1040ez Charges for utilities or other services related to occupancy of the property before closing. Who can file a 1040ez Charges connected with getting a loan. Who can file a 1040ez The following are examples of these charges. Who can file a 1040ez Points (discount points, loan origination fees). Who can file a 1040ez Mortgage insurance premiums. Who can file a 1040ez Loan assumption fees. Who can file a 1040ez Cost of a credit report. Who can file a 1040ez Fees for an appraisal required by a lender. Who can file a 1040ez Fees for refinancing a mortgage. Who can file a 1040ez If these costs relate to business property, items (1) through (3) are deductible as business expenses. Who can file a 1040ez Items (4) and (5) must be capitalized as costs of getting a loan and can be deducted over the period of the loan. Who can file a 1040ez Points. Who can file a 1040ez   If you pay points to obtain a loan (including a mortgage, second mortgage, line of credit, or a home equity loan), do not add the points to the basis of the related property. Who can file a 1040ez Generally, you deduct the points over the term of the loan. Who can file a 1040ez For more information on how to deduct points, see Points in chapter 4 of Publication 535. Who can file a 1040ez Points on home mortgage. Who can file a 1040ez   Special rules may apply to points you and the seller pay when you obtain a mortgage to purchase your main home. Who can file a 1040ez If certain requirements are met, you can deduct the points in full for the year in which they are paid. Who can file a 1040ez Reduce the basis of your home by any seller-paid points. Who can file a 1040ez For more information, see Points in Publication 936, Home Mortgage Interest Deduction. Who can file a 1040ez Assumption of mortgage. Who can file a 1040ez   If you buy property and assume (or buy subject to) an existing mortgage on the property, your basis includes the amount you pay for the property plus the amount to be paid on the mortgage. Who can file a 1040ez Example. Who can file a 1040ez If you buy a building for $20,000 cash and assume a mortgage of $80,000 on it, your basis is $100,000. Who can file a 1040ez Constructing assets. Who can file a 1040ez   If you build property or have assets built for you, your expenses for this construction are part of your basis. Who can file a 1040ez Some of these expenses include the following costs. Who can file a 1040ez Land, Labor and materials, Architect's fees, Building permit charges, Payments to contractors, Payments for rental equipment, and Inspection fees. Who can file a 1040ez In addition, if you own a business and use your employees, material, and equipment to build an asset, do not deduct the following expenses. Who can file a 1040ez You must include them in the asset's basis. Who can file a 1040ez Employee wages paid for the construction work, reduced by any employment credits allowed; Depreciation on equipment you own while it is used in the construction; Operating and maintenance costs for equipment used in the construction; and The cost of business supplies and materials used in the construction. Who can file a 1040ez    Do not include the value of your own labor, or any other labor you did not pay for, in the basis of any property you construct. Who can file a 1040ez Business Assets If you purchase property to use in your business, your basis is usually its actual cost to you. Who can file a 1040ez If you construct, create, or otherwise produce property, you must capitalize the costs as your basis. Who can file a 1040ez In certain circumstances, you may be subject to the uniform capitalization rules, next. Who can file a 1040ez Uniform Capitalization Rules The uniform capitalization rules specify the costs you add to basis in certain circumstances. Who can file a 1040ez Activities subject to the rules. Who can file a 1040ez   You must use the uniform capitalization rules if you do any of the following in your trade or business or activity carried on for profit. Who can file a 1040ez Produce real or tangible personal property for use in the business or activity, Produce real or tangible personal property for sale to customers, or Acquire property for resale. Who can file a 1040ez However, this rule does not apply to personal property if your average annual gross receipts for the 3 previous tax years are $10 million or less. Who can file a 1040ez   You produce property if you construct, build, install, manufacture, develop, improve, create, raise, or grow the property. Who can file a 1040ez Treat property produced for you under a contract as produced by you up to the amount you pay or costs you otherwise incur for the property. Who can file a 1040ez Tangible personal property includes films, sound recordings, video tapes, books, or similar property. Who can file a 1040ez    Under the uniform capitalization rules, you must capitalize all direct costs and an allocable part of most indirect costs you incur due to your production or resale activities. Who can file a 1040ez To capitalize means to include certain expenses in the basis of property you produce or in your inventory costs rather than deduct them as a current expense. Who can file a 1040ez You recover these costs through deductions for depreciation, amortization, or cost of goods sold when you use, sell, or otherwise dispose of the property. Who can file a 1040ez   Any cost you cannot use to figure your taxable income for any tax year is not subject to the uniform capitalization rules. Who can file a 1040ez Example. Who can file a 1040ez If you incur a business meal expense for which your deduction would be limited to 50% of the cost of the meal, that amount is subject to the uniform capitalization rules. Who can file a 1040ez The nondeductible part of the cost is not subject to the uniform capitalization rules. Who can file a 1040ez More information. Who can file a 1040ez   For more information about these rules, see the regulations under section 263A of the Internal Revenue Code and Publication 538, Accounting Periods and Methods. Who can file a 1040ez Exceptions. Who can file a 1040ez   The following are not subject to the uniform capitalization rules. Who can file a 1040ez Property you produce that you do not use in your trade, business, or activity conducted for profit; Qualified creative expenses you pay or incur as a free-lance (self-employed) writer, photographer, or artist that are otherwise deductible on your tax return; Property you produce under a long-term contract, except for certain home construction contracts; Research and experimental expenses deductible under section 174 of the Internal Revenue Code; and Costs for personal property acquired for resale if your (or your predecessor's) average annual gross receipts for the 3 previous tax years do not exceed $10 million. Who can file a 1040ez For other exceptions to the uniform capitalization rules, see section 1. Who can file a 1040ez 263A-1(b) of the regulations. Who can file a 1040ez   For information on the special rules that apply to costs incurred in the business of farming, see chapter 6 of Publication 225, Farmer's Tax Guide. Who can file a 1040ez Intangible Assets Intangible assets include goodwill, patents, copyrights, trademarks, trade names, and franchises. Who can file a 1040ez The basis of an intangible asset is usually the cost to buy or create it. Who can file a 1040ez If you acquire multiple assets, for example a going business for a lump sum, see Allocating the Basis below to figure the basis of the individual assets. Who can file a 1040ez The basis of certain intangibles can be amortized. Who can file a 1040ez See chapter 8 of Publication 535 for information on the amortization of these costs. Who can file a 1040ez Patents. Who can file a 1040ez   The basis of a patent you get for an invention is the cost of development, such as research and experimental expenditures, drawings, working models, and attorneys' and governmental fees. Who can file a 1040ez If you deduct the research and experimental expenditures as current business expenses, you cannot include them in the basis of the patent. Who can file a 1040ez The value of the inventor's time spent on an invention is not part of the basis. Who can file a 1040ez Copyrights. Who can file a 1040ez   If you are an author, the basis of a copyright will usually be the cost of getting the copyright plus copyright fees, attorneys' fees, clerical assistance, and the cost of plates that remain in your possession. Who can file a 1040ez Do not include the value of your time as the author, or any other person's time you did not pay for. Who can file a 1040ez Franchises, trademarks, and trade names. Who can file a 1040ez   If you buy a franchise, trademark, or trade name, the basis is its cost, unless you can deduct your payments as a business expense. Who can file a 1040ez Allocating the Basis If you buy multiple assets for a lump sum, allocate the amount you pay among the assets you receive. Who can file a 1040ez You must make this allocation to figure your basis for depreciation and gain or loss on a later disposition of any of these assets. Who can file a 1040ez See Trade or Business Acquired below. Who can file a 1040ez Group of Assets Acquired If you buy multiple assets for a lump sum, you and the seller may agree to a specific allocation of the purchase price among the assets in the sales contract. Who can file a 1040ez If this allocation is based on the value of each asset and you and the seller have adverse tax interests, the allocation generally will be accepted. Who can file a 1040ez However, see Trade or Business Acquired, next. Who can file a 1040ez Trade or Business Acquired If you acquire a trade or business, allocate the consideration paid to the various assets acquired. Who can file a 1040ez Generally, reduce the consideration paid by any cash and general deposit accounts (including checking and savings accounts) received. Who can file a 1040ez Allocate the remaining consideration to the other business assets received in proportion to (but not more than) their fair market value in the following order. Who can file a 1040ez Certificates of deposit, U. Who can file a 1040ez S. Who can file a 1040ez Government securities, foreign currency, and actively traded personal property, including stock and securities. Who can file a 1040ez Accounts receivable, other debt instruments, and assets you mark to market at least annually for federal income tax purposes. Who can file a 1040ez Property of a kind that would properly be included in inventory if on hand at the end of the tax year or property held primarily for sale to customers in the ordinary course of business. Who can file a 1040ez All other assets except section 197 intangibles, goodwill, and going concern value. Who can file a 1040ez Section 197 intangibles except goodwill and going concern value. Who can file a 1040ez Goodwill and going concern value (whether or not they qualify as section 197 intangibles). Who can file a 1040ez Agreement. Who can file a 1040ez   The buyer and seller may enter into a written agreement as to the allocation of any consideration or the fair market value (FMV) of any of the assets. Who can file a 1040ez This agreement is binding on both parties unless the IRS determines the amounts are not appropriate. Who can file a 1040ez Reporting requirement. Who can file a 1040ez   Both the buyer and seller involved in the sale of business assets must report to the IRS the allocation of the sales price among section 197 intangibles and the other business assets. Who can file a 1040ez Use Form 8594 to provide this information. Who can file a 1040ez The buyer and seller should each attach Form 8594 to their federal income tax return for the year in which the sale occurred. Who can file a 1040ez More information. Who can file a 1040ez   See Sale of a Business in chapter 2 of Publication 544 for more information. Who can file a 1040ez Land and Buildings If you buy buildings and the land on which they stand for a lump sum, allocate the basis of the property among the land and the buildings so you can figure the depreciation allowable on the buildings. Who can file a 1040ez Figure the basis of each asset by multiplying the lump sum by a fraction. Who can file a 1040ez The numerator is the FMV of that asset and the denominator is the FMV of the whole property at the time of purchase. Who can file a 1040ez If you are not certain of the FMV of the land and buildings, you can allocate the basis based on their assessed values for real estate tax purposes. Who can file a 1040ez Demolition of building. Who can file a 1040ez   Add demolition costs and other losses incurred for the demolition of any building to the basis of the land on which the demolished building was located. Who can file a 1040ez Do not claim the costs as a current deduction. Who can file a 1040ez Modification of building. Who can file a 1040ez   A modification of a building will not be treated as a demolition if the following conditions are satisfied. Who can file a 1040ez 75 percent or more of the existing external walls of the building are retained in place as internal or external walls, and 75 percent or more of the existing internal structural framework of the building is retained in place. Who can file a 1040ez   If the building is a certified historic structure, the modification must also be part of a certified rehabilitation. Who can file a 1040ez   If these conditions are met, add the costs of the modifications to the basis of the building. Who can file a 1040ez Subdivided lots. Who can file a 1040ez   If you buy a tract of land and subdivide it, you must determine the basis of each lot. Who can file a 1040ez This is necessary because you must figure the gain or loss on the sale of each individual lot. Who can file a 1040ez As a result, you do not recover your entire cost in the tract until you have sold all of the lots. Who can file a 1040ez   To determine the basis of an individual lot, multiply the total cost of the tract by a fraction. Who can file a 1040ez The numerator is the FMV of the lot and the denominator is the FMV of the entire tract. Who can file a 1040ez Future improvement costs. Who can file a 1040ez   If you are a developer and sell subdivided lots before the development work is completed, you can (with IRS consent) include in the basis of the properties sold an allocation of the estimated future cost for common improvements. Who can file a 1040ez See Revenue Procedure 92–29 for more information, including an explanation of the procedures for getting consent from the IRS. Who can file a 1040ez Use of erroneous cost basis. Who can file a 1040ez   If you made a mistake in figuring the cost basis of subdivided lots sold in previous years, you cannot correct the mistake for years for which the statute of limitations (generally 3 tax years) has expired. Who can file a 1040ez Figure the basis of any remaining lots by allocating the correct original cost basis of the entire tract among the original lots. Who can file a 1040ez Example. Who can file a 1040ez You bought a tract of land to which you assigned a cost of $15,000. Who can file a 1040ez You subdivided the land into 15 building lots of equal size and equitably divided your basis so that each lot had a basis of $1,000. Who can file a 1040ez You treated the sale of each lot as a separate transaction and figured gain or loss separately on each sale. Who can file a 1040ez Several years later you determine that your original basis in the tract was $22,500 and not $15,000. Who can file a 1040ez You sold eight lots using $8,000 of basis in years for which the statute of limitations has expired. Who can file a 1040ez You now can take $1,500 of basis into account for figuring gain or loss only on the sale of each of the remaining seven lots ($22,500 basis divided among all 15 lots). Who can file a 1040ez You cannot refigure the basis of the eight lots sold in tax years barred by the statute of limitations. Who can file a 1040ez Adjusted Basis Before figuring gain or loss on a sale, exchange, or other disposition of property or figuring allowable depreciation, depletion, or amortization, you must usually make certain adjustments to the basis of the property. Who can file a 1040ez The result of these adjustments to the basis is the adjusted basis. Who can file a 1040ez Increases to Basis Increase the basis of any property by all items properly added to a capital account. Who can file a 1040ez These include the cost of any improvements having a useful life of more than 1 year. Who can file a 1040ez Rehabilitation expenses also increase basis. Who can file a 1040ez However, you must subtract any rehabilitation credit allowed for these expenses before you add them to your basis. Who can file a 1040ez If you have to recapture any of the credit, increase your basis by the recaptured amount. Who can file a 1040ez If you make additions or improvements to business property, keep separate accounts for them. Who can file a 1040ez Also, you must depreciate the basis of each according to the depreciation rules that would apply to the underlying property if you had placed it in service at the same time you placed the addition or improvement in service. Who can file a 1040ez For more information, see Publication 946. Who can file a 1040ez The following items increase the basis of property. Who can file a 1040ez The cost of extending utility service lines to the property; Impact fees; Legal fees, such as the cost of defending and perfecting title; Legal fees for obtaining a decrease in an assessment levied against property to pay for local improvements; Zoning costs; and The capitalized value of a redeemable ground rent. Who can file a 1040ez Assessments for Local Improvements Increase the basis of property by assessments for items such as paving roads and building ditches that increase the value of the property assessed. Who can file a 1040ez Do not deduct them as taxes. Who can file a 1040ez However, you can deduct as taxes charges for maintenance, repairs, or interest charges related to the improvements. Who can file a 1040ez Example. Who can file a 1040ez Your city changes the street in front of your store into an enclosed pedestrian mall and assesses you and other affected landowners for the cost of the conversion. Who can file a 1040ez Add the assessment to your property's basis. Who can file a 1040ez In this example, the assessment is a depreciable asset. Who can file a 1040ez Deducting vs. Who can file a 1040ez Capitalizing Costs Do not add to your basis costs you can deduct as current expenses. Who can file a 1040ez For example, amounts paid for incidental repairs or maintenance that are deductible as business expenses cannot be added to basis. Who can file a 1040ez However, you can choose either to deduct or to capitalize certain other costs. Who can file a 1040ez If you capitalize these costs, include them in your basis. Who can file a 1040ez If you deduct them, do not include them in your basis. Who can file a 1040ez See Uniform Capitalization Rules earlier. Who can file a 1040ez The costs you can choose to deduct or to capitalize include the following. Who can file a 1040ez Carrying charges, such as interest and taxes, that you pay to own property, except carrying charges that must be capitalized under the uniform capitalization rules; Research and experimentation costs; Intangible drilling and development costs for oil, gas, and geothermal wells; Exploration costs for new mineral deposits; Mining development costs for a new mineral deposit; Costs of establishing, maintaining, or increasing the circulation of a newspaper or other periodical; and Costs of removing architectural and transportation barriers to people with disabilities and the elderly. Who can file a 1040ez If you claim the disabled access credit, you must reduce the amount you deduct or capitalize by the amount of the credit. Who can file a 1040ez For more information about deducting or capitalizing costs, see chapter 7 in Publication 535. Who can file a 1040ez Table 1. Who can file a 1040ez Examples of Increases and Decreases to Basis Increases to Basis Decreases to Basis Capital improvements:   Putting an addition on your home   Replacing an entire roof  Paving your driveway  Installing central air conditioning Rewiring your home Exclusion from income of subsidies for energy conservation measures  Casualty or theft loss deductions and insurance reimbursements  Vehicle credits Assessments for local improvements: Water connections Sidewalks Roads Section 179 deduction  Casualty losses: Restoring damaged property Depreciation  Nontaxable corporate distributions Legal fees:  Cost of defending and perfecting a title   Zoning costs   Decreases to Basis The following are some items that reduce the basis of property. Who can file a 1040ez Section 179 deduction; Nontaxable corporate distributions; Deductions previously allowed (or allowable) for amortization, depreciation, and depletion; Exclusion of subsidies for energy conservation measures; Vehicle credits; Residential energy credits; Postponed gain from sale of home; Investment credit (part or all) taken; Casualty and theft losses and insurance reimbursement; Certain canceled debt excluded from income; Rebates from a manufacturer or seller; Easements; Gas-guzzler tax; Adoption tax benefits; and Credit for employer-provided child care. Who can file a 1040ez Some of these items are discussed next. Who can file a 1040ez Casualties and Thefts If you have a casualty or theft loss, decrease the basis in your property by any insurance or other reimbursement and by any deductible loss not covered by insurance. Who can file a 1040ez You must increase your basis in the property by the amount you spend on repairs that substantially prolong the life of the property, increase its value, or adapt it to a different use. Who can file a 1040ez To make this determination, compare the repaired property to the property before the casualty. Who can file a 1040ez For more information on casualty and theft losses, see Publication 547, Casualties, Disasters, and Thefts. Who can file a 1040ez Easements The amount you receive for granting an easement is generally considered to be a sale of an interest in real property. Who can file a 1040ez It reduces the basis of the affected part of the property. Who can file a 1040ez If the amount received is more than the basis of the part of the property affected by the easement, reduce your basis in that part to zero and treat the excess as a recognized gain. Who can file a 1040ez Vehicle Credits Unless you elect not to claim the qualified plug-in electric vehicle credit, the alternative motor vehicle credit, or the qualified plug-in electric drive motor vehicle credit, you may have to reduce the basis of each qualified vehicle by certain amounts reported. Who can file a 1040ez For more information, see Form 8834, Qualified Plug-in Electric and Electric Vehicle Credit; Form 8910, Alternative Motor Vehicle Credit; Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit;and the related instructions. Who can file a 1040ez Gas-Guzzler Tax Decrease the basis in your car by the gas-guzzler (fuel economy) tax if you begin using the car within 1 year of the date of its first sale for ultimate use. Who can file a 1040ez This rule also applies to someone who later buys the car and begins using it not more than 1 year after the original sale for ultimate use. Who can file a 1040ez If the car is imported, the one-year period begins on the date of entry or withdrawal of the car from the warehouse if that date is later than the date of the first sale for ultimate use. Who can file a 1040ez Section 179 Deduction If you take the section 179 deduction for all or part of the cost of qualifying business property, decrease the basis of the property by the deduction. Who can file a 1040ez For more information about the section 179 deduction, see Publication 946. Who can file a 1040ez Exclusion of Subsidies for Energy Conservation Measures You can exclude from gross income any subsidy you received from a public utility company for the purchase or installation of any energy conservation measure for a dwelling unit. Who can file a 1040ez Reduce the basis of the property for which you received the subsidy by the excluded amount. Who can file a 1040ez For more information on this subsidy, see Publication 525. Who can file a 1040ez Depreciation Decrease the basis of property by the depreciation you deducted, or could have deducted, on your tax returns under the method of depreciation you chose. Who can file a 1040ez If you took less depreciation than you could have under the method chosen, decrease the basis by the amount you could have taken under that method. Who can file a 1040ez If you did not take a depreciation deduction, reduce the basis by the full amount of the depreciation you could have taken. Who can file a 1040ez Unless a timely election is made not to deduct the special depreciation allowance for property placed in service after September 10, 2001, decrease the property's basis by the special depreciation allowance you deducted or could have deducted. Who can file a 1040ez If you deducted more depreciation than you should have, decrease your basis by the amount equal to the depreciation you should have deducted plus the part of the excess depreciation you deducted that actually reduced your tax liability for the year. Who can file a 1040ez In decreasing your basis for depreciation, take into account the amount deducted on your tax returns as depreciation and any depreciation capitalized under the uniform capitalization rules. Who can file a 1040ez For information on figuring depreciation, see Publication 946. Who can file a 1040ez If you are claiming depreciation on a business vehicle, see Publication 463. Who can file a 1040ez If the car is not used more than 50% for business during the tax year, you may have to recapture excess depreciation. Who can file a 1040ez Include the excess depreciation in your gross income and add it to your basis in the property. Who can file a 1040ez For information on the computation of excess depreciation, see chapter 4 in Publication 463. Who can file a 1040ez Canceled Debt Excluded From Income If a debt you owe is canceled or forgiven, other than as a gift or bequest, you generally must include the canceled amount in your gross income for tax purposes. Who can file a 1040ez A debt includes any indebtedness for which you are liable or which attaches to property you hold. Who can file a 1040ez You can exclude canceled debt from income in the following situations. Who can file a 1040ez Debt canceled in a bankruptcy case or when you are insolvent, Qualified farm debt, and Qualified real property business debt (provided you are not a C corporation). Who can file a 1040ez If you exclude from income canceled debt under situation (1) or (2), you may have to reduce the basis of your depreciable and nondepreciable property. Who can file a 1040ez However, in situation (3), you must reduce the basis of your depreciable property by the excluded amount. Who can file a 1040ez For more information about canceled debt in a bankruptcy case or during insolvency, see Publication 908, Bankruptcy Tax Guide. Who can file a 1040ez For more information about canceled debt that is qualified farm debt, see chapter 3 in Publication 225. Who can file a 1040ez For more information about qualified real property business debt, see chapter 5 in Publication 334, Tax Guide for Small Business. Who can file a 1040ez Postponed Gain From Sale of Home If you postponed gain from the sale of your main home before May 7, 1997, you must reduce the basis of your new home by the postponed gain. Who can file a 1040ez For more information on the rules for the sale of a home, see Publication 523. Who can file a 1040ez Adoption Tax Benefits If you claim an adoption credit for the cost of improvements you added to the basis of your home, decrease the basis of your home by the credit allowed. Who can file a 1040ez This also applies to amounts you received under an employer's adoption assistance program and excluded from income. Who can file a 1040ez For more information Form 8839, Qualified Adoption Expenses. Who can file a 1040ez Employer-Provided Child Care If you are an employer, you can claim the employer-provided child care credit on amounts you paid or incurred to acquire, construct, rehabilitate, or expand property used as part of your qualified child care facility. Who can file a 1040ez You must reduce your basis in that property by the credit claimed. Who can file a 1040ez For more information, see Form 8882, Credit for Employer-Provided Child Care Facilities and Services. Who can file a 1040ez Adjustments to Basis Example In January 2005, you paid $80,000 for real property to be used as a factory. Who can file a 1040ez You also paid commissions of $2,000 and title search and legal fees of $600. Who can file a 1040ez You allocated the total cost of $82,600 between the land and the building—$10,325 for the land and $72,275 for the building. Who can file a 1040ez Immediately you spent $20,000 in remodeling the building before you placed it in service. Who can file a 1040ez You were allowed depreciation of $14,526 for the years 2005 through 2009. Who can file a 1040ez In 2008 you had a $5,000 casualty loss from a that was not covered by insurance on the building. Who can file a 1040ez You claimed a deduction for this loss. Who can file a 1040ez You spent $5,500 to repair the damages and extend the useful life of the building. Who can file a 1040ez The adjusted basis of the building on January 1, 2010, is figured as follows: Original cost of building including fees and commissions $72,275 Adjustments to basis:     Add:         Improvements 20,000   Repair of damages 5,500       $97,775 Subtract:       Depreciation $14,526     Deducted casualty loss 5,000 19,526 Adjusted basis on January 1, 2010 $78,249 The basis of the land, $10,325, remains unchanged. Who can file a 1040ez It is not affected by any of the above adjustments. Who can file a 1040ez Basis Other Than Cost There are many times when you cannot use cost as basis. Who can file a 1040ez In these cases, the fair market value or the adjusted basis of property may be used. Who can file a 1040ez Adjusted basis is discussed earlier. Who can file a 1040ez Fair market value (FMV). Who can file a 1040ez   FMV is the price at which property would change hands between a buyer and a seller, neither having to buy or sell, and both having reasonable knowledge of all necessary facts. Who can file a 1040ez Sales of similar property on or about the same date may be helpful in figuring the property's FMV. Who can file a 1040ez Property Received for Services If you receive property for services, include the property's FMV in income. Who can file a 1040ez The amount you include in income becomes your basis. Who can file a 1040ez If the services were performed for a price agreed on beforehand, it will be accepted as the FMV of the property if there is no evidence to the contrary. Who can file a 1040ez Bargain Purchases A bargain purchase is a purchase of an item for less than its FMV. Who can file a 1040ez If, as compensation for services, you purchase goods or other property at less than FMV, include the difference between the purchase price and the property's FMV in your income. Who can file a 1040ez Your basis in the property is its FMV (your purchase price plus the amount you include in income). Who can file a 1040ez If the difference between your purchase price and the FMV represents a qualified employee discount, do not include the difference in income. Who can file a 1040ez However, your basis in the property is still its FMV. Who can file a 1040ez See Employee Discounts in Publication 15-B. Who can file a 1040ez Restricted Property If you receive property for your services and the property is subject to certain restrictions, your basis in the property is its FMV when it becomes substantially vested unless you make the election discussed later. Who can file a 1040ez Property becomes substantially vested when your rights in the property or the rights of any person to whom you transfer the property are not subject to a substantial risk of forfeiture. Who can file a 1040ez There is substantial risk of forfeiture when the rights to full enjoyment of the property depend on the future performance of substantial services by any person. Who can file a 1040ez When the property becomes substantially vested, include the FMV, less any amount you paid for the property, in income. Who can file a 1040ez Example. Who can file a 1040ez Your employer gives you stock for services performed under the condition that you will have to return the stock unless you complete 5 years of service. Who can file a 1040ez The stock is under a substantial risk of forfeiture and is not substantially vested when you receive it. Who can file a 1040ez You do not report any income until you have completed the 5 years of service that satisfy the condition. Who can file a 1040ez Fair market value. Who can file a 1040ez   Figure the FMV of property you received without considering any restriction except one that by its terms will never end. Who can file a 1040ez Example. Who can file a 1040ez You received stock from your employer for services you performed. Who can file a 1040ez If you want to sell the stock while you are still employed, you must sell the stock to your employer at book value. Who can file a 1040ez At your retirement or death, you or your estate must offer to sell the stock to your employer at its book value. Who can file a 1040ez This is a restriction that by its terms will never end and you must consider it when you figure the FMV. Who can file a 1040ez Election. Who can file a 1040ez   You can choose to include in your gross income the FMV of the property at the time of transfer, less any amount you paid for it. Who can file a 1040ez If you make this choice, the substantially vested rules do not apply. Who can file a 1040ez Your basis is the amount you paid plus the amount you included in income. Who can file a 1040ez   See the discussion of Restricted Property in Publication 525 for more information. Who can file a 1040ez Taxable Exchanges A taxable exchange is one in which the gain is taxable or the loss is deductible. Who can file a 1040ez A taxable gain or deductible loss is also known as a recognized gain or loss. Who can file a 1040ez If you receive property in exchange for other property in a taxable exchange, the basis of property you receive is usually its FMV at the time of the exchange. Who can file a 1040ez A taxable exchange occurs when you receive cash or property not similar or related in use to the property exchanged. Who can file a 1040ez Example. Who can file a 1040ez You trade a tract of farm land with an adjusted basis of $3,000 for a tractor that has an FMV of $6,000. Who can file a 1040ez You must report a taxable gain of $3,000 for the land. Who can file a 1040ez The tractor has a basis of $6,000. Who can file a 1040ez Involuntary Conversions If you receive property as a result of an involuntary conversion, such as a casualty, theft, or condemnation, you can figure the basis of the replacement property you receive using the basis of the converted property. Who can file a 1040ez Similar or related property. Who can file a 1040ez   If you receive replacement property similar or related in service or use to the converted property, the replacement property's basis is the old property's basis on the date of the conversion. Who can file a 1040ez However, make the following adjustments. Who can file a 1040ez Decrease the basis by the following. Who can file a 1040ez Any loss you recognize on the conversion, and Any money you receive that you do not spend on similar property. Who can file a 1040ez Increase the basis by the following. Who can file a 1040ez Any gain you recognize on the conversion, and Any cost of acquiring the replacement property. Who can file a 1040ez Money or property not similar or related. Who can file a 1040ez   If you receive money or property not similar or related in service or use to the converted property, and you buy replacement property similar or related in service or use to the converted property, the basis of the new property is its cost decreased by the gain not recognized on the conversion. Who can file a 1040ez Example. Who can file a 1040ez The state condemned your property. Who can file a 1040ez The property had an adjusted basis of $26,000 and the state paid you $31,000 for it. Who can file a 1040ez You realized a gain of $5,000 ($31,000 − $26,000). Who can file a 1040ez You bought replacement property similar in use to the converted property for $29,000. Who can file a 1040ez You recognize a gain of $2,000 ($31,000 − $29,000), the unspent part of the payment from the state. Who can file a 1040ez Your gain not recognized is $3,000, the difference between the $5,000 realized gain and the $2,000 recognized gain. Who can file a 1040ez The basis of the new property is figured as follows: Cost of replacement property $29,000 Minus: Gain not recognized 3,000 Basis of the replacement property $26,000 Allocating the basis. Who can file a 1040ez   If you buy more than one piece of replacement property, allocate your basis among the properties based on their respective costs. Who can file a 1040ez Example. Who can file a 1040ez The state in the previous example condemned your unimproved real property and the replacement property you bought was improved real property with both land and buildings. Who can file a 1040ez Allocate the replacement property's $26,000 basis between land and buildings based on their respective costs. Who can file a 1040ez More information. Who can file a 1040ez   For more information about condemnations, see Involuntary Conversions in Publication 544. Who can file a 1040ez For more information about casualty and theft losses, see Publication 547. Who can file a 1040ez Nontaxable Exchanges A nontaxable exchange is an exchange in which you are not taxed on any gain and you cannot deduct any loss. Who can file a 1040ez If you receive property in a nontaxable exchange, its basis is usually the same as the basis of the property you transferred. Who can file a 1040ez A nontaxable gain or loss is also known as an unrecognized gain or loss. Who can file a 1040ez Like-Kind Exchanges The exchange of property for the same kind of property is the most common type of nontaxable exchange. Who can file a 1040ez To qualify as a like-kind exchange, you must hold for business or investment purposes both the property you transfer and the property you receive. Who can file a 1040ez There must also be an exchange of like-kind property. Who can file a 1040ez For more information, see Like-Kind Exchanges in Publication 544. Who can file a 1040ez The basis of the property you receive is the same as the basis of the property you gave up. Who can file a 1040ez Example. Who can file a 1040ez You exchange real estate (adjusted basis $50,000, FMV $80,000) held for investment for other real estate (FMV $80,000) held for investment. Who can file a 1040ez Your basis in the new property is the same as the basis of the old ($50,000). Who can file a 1040ez Exchange expenses. Who can file a 1040ez   Exchange expenses are generally the closing costs you pay. Who can file a 1040ez They include such items as brokerage commissions, attorney fees, deed preparation fees, etc. Who can file a 1040ez Add them to the basis of the like-kind property received. Who can file a 1040ez Property plus cash. Who can file a 1040ez   If you trade property in a like-kind exchange and also pay money, the basis of the property received is the basis of the property you gave up increased by the money you paid. Who can file a 1040ez Example. Who can file a 1040ez You trade in a truck (adjusted basis $3,000) for another truck (FMV $7,500) and pay $4,000. Who can file a 1040ez Your basis in the new truck is $7,000 (the $3,000 basis of the old truck plus the $4,000 paid). Who can file a 1040ez Special rules for related persons. Who can file a 1040ez   If a like-kind exchange takes place directly or indirectly between related persons and either party disposes of the property within 2 years after the exchange, the exchange no longer qualifies for like-kind exchange treatment. Who can file a 1040ez Each person must report any gain or loss not recognized on the original exchange. Who can file a 1040ez Each person reports it on the tax return filed for the year in which the later disposition occurs. Who can file a 1040ez If this rule applies, the basis of the property received in the original exchange will be its fair market value. Who can file a 1040ez   These rules generally do not apply to the following kinds of property dispositions. Who can file a 1040ez Dispositions due to the death of either related person, Involuntary conversions, and Dispositions in which neither the original exchange nor the subsequent disposition had as a main purpose the avoidance of federal income tax. Who can file a 1040ez Related persons. Who can file a 1040ez   Generally, related persons are ancestors, lineal descendants, brothers and sisters (whole or half), and a spouse. Who can file a 1040ez   For other related persons (for example, two corporations, an individual and a corporation, a grantor and fiduciary, etc. Who can file a 1040ez ), see Nondeductible Loss in chapter 2 of Publication 544. Who can file a 1040ez Exchange of business property. Who can file a 1040ez   Exchanging the assets of one business for the assets of another business is a multiple property exchange. Who can file a 1040ez For information on figuring basis, see Multiple Property Exchanges in chapter 1 of Publication 544. Who can file a 1040ez Partially Nontaxable Exchange A partially nontaxable exchange is an exchange in which you receive unlike property or money in addition to like property. Who can file a 1040ez The basis of the property you receive is the same as the basis of the property you gave up, with the following adjustments. Who can file a 1040ez Decrease the basis by the following amounts. Who can file a 1040ez Any money you receive, and Any loss you recognize on the exchange. Who can file a 1040ez Increase the basis by the following amounts. Who can file a 1040ez Any additional costs you incur, and Any gain you recognize on the exchange. Who can file a 1040ez If the other party to the exchange assumes your liabilities, treat the debt assumption as money you received in the exchange. Who can file a 1040ez Example. Who can file a 1040ez You traded a truck (adjusted basis $6,000) for a new truck (FMV $5,200) and $1,000 cash. Who can file a 1040ez You realized a gain of $200 ($6,200 − $6,000). Who can file a 1040ez This is the FMV of the truck received plus the cash minus the adjusted basis of the truck you traded ($5,200 + $1,000 – $6,000). Who can file a 1040ez You include all the gain in income (recognized gain) because the gain is less than the cash received. Who can file a 1040ez Your basis in the new truck is: Adjusted basis of old truck $6,000 Minus: Cash received (adjustment 1(a)) 1,000   $5,000 Plus: Gain recognized (adjustment 2(b)) 200 Basis of new truck $5,200 Allocation of basis. Who can file a 1040ez   Allocate the basis first to the unlike property, other than money, up to its FMV on the date of the exchange. Who can file a 1040ez The rest is the basis of the like property. Who can file a 1040ez Example. Who can file a 1040ez You had an adjusted basis of $15,000 in real estate you held for investment. Who can file a 1040ez You exchanged it for other real estate to be held for investment with an FMV of $12,500, a truck with an FMV of $3,000, and $1,000 cash. Who can file a 1040ez The truck is unlike property. Who can file a 1040ez You realized a gain of $1,500 ($16,500 − $15,000). Who can file a 1040ez This is the FMV of the real estate received plus the FMV of the truck received plus the cash minus the adjusted basis of the real estate you traded ($12,500 + $3,000 + $1,000 – $15,000). Who can file a 1040ez You include in income (recognize) all $1,500 of the gain because it is less than the FMV of the unlike property plus the cash received. Who can file a 1040ez Your basis in the properties you received is figured as follows. Who can file a 1040ez Adjusted basis of real estate transferred $15,000 Minus: Cash received (adjustment 1(a)) 1,000   $14,000 Plus: Gain recognized (adjustment 2(b)) 1,500 Total basis of properties received $15,500 Allocate the total basis of $15,500 first to the unlike property — the truck ($3,000). Who can file a 1040ez This is the truck's FMV. Who can file a 1040ez The rest ($12,500) is the basis of the real estate. Who can file a 1040ez Sale and Purchase If you sell property and buy similar property in two mutually dependent transactions, you may have to treat the sale and purchase as a single nontaxable exchange. Who can file a 1040ez Example. Who can file a 1040ez You are a salesperson and you use one of your cars 100% for business. Who can file a 1040ez You have used this car in your sales activities for 2 years and have depreciated it. Who can file a 1040ez Your adjusted basis in the car is $22,600 and its FMV is $23,100. Who can file a 1040ez You are interested in a new car, which sells for $28,000. Who can file a 1040ez If you trade your old car and pay $4,900 for the new one, your basis for depreciation for the new car would be $27,500 ($4,900 plus the $22,600 basis of your old car). Who can file a 1040ez However, you want a higher basis for depreciating the new car, so you agree to pay the dealer $28,000 for the new car if he will pay you $23,100 for your old car. Who can file a 1040ez Because the two transactions are dependent on each other, you are treated as having exchanged your old car for the new one and paid $4,900 ($28,000 − $23,100). Who can file a 1040ez Your basis for depreciating the new car is $27,500, the same as if you traded the old car. Who can file a 1040ez Partial Business Use of Property If you have property used partly for business and partly for personal use, and you exchange it in a nontaxable exchange for property to be used wholly or partly in your business, the basis of the property you receive is figured as if you had exchanged two properties. Who can file a 1040ez The first is an exchange of like-kind property. Who can file a 1040ez The second is personal-use property on which gain is recognized and loss is not recognized. Who can file a 1040ez First, figure your adjusted basis in the property as if you transferred two separate properties. Who can file a 1040ez Figure the adjusted basis of each part of the property by taking into account any adjustments to basis. Who can file a 1040ez Deduct the depreciation you took or could have taken from the adjusted basis of the business part. Who can file a 1040ez Then figure the amount realized for your property and allocate it to the business and nonbusiness parts of the property. Who can file a 1040ez The business part of the property is permitted to be exchanged tax free. Who can file a 1040ez However, you must recognize any gain from the exchange of the nonbusiness part. Who can file a 1040ez You are deemed to have received, in exchange for the nonbusiness part, an amount equal to its FMV on the date of the exchange. Who can file a 1040ez The basis of the property you acquired is the total basis of the property transferred (adjusted to the date of the exchange), increased by any gain recognized on the nonbusiness part. Who can file a 1040ez If the nonbusiness part of the property transferred is your main home, you may qualify to exclude from income all or part of the gain on that part. Who can file a 1040ez For more information, see Publication 523. Who can file a 1040ez Trade of car used partly in business. Who can file a 1040ez   If you trade in a car you used partly in your business for another car you will use in your business, your basis for depreciation of the new car is not the same as your basis for figuring a gain or loss on its sale. Who can file a 1040ez   For information on figuring your basis for depreciation, see Publication 463. Who can file a 1040ez Property Transferred From a Spouse The basis of property transferred to you or transferred in trust for your benefit by your spouse (or former spouse if the transfer is incident to divorce), is the same as your spouse's adjusted basis. Who can file a 1040ez However, adjust your basis for any gain recognized by your spouse or former spouse on property transferred in trust. Who can file a 1040ez This rule applies only to a transfer of property in trust in which the liabilities assumed, plus the liabilities to which the property is subject, are more than the adjusted basis of the property transferred. Who can file a 1040ez If the property transferred to you is a series E, series EE, or series I United States savings bond, the transferor must include in income the interest accrued to the date of transfer. Who can file a 1040ez Your basis in the bond immediately after the transfer is equal to the transferor's basis increased by the interest income includible in the transferor's income. Who can file a 1040ez For more information on these bonds, see Publication 550. Who can file a 1040ez At the time of the transfer, the transferor must give you the records necessary to determine the adjusted basis and holding period of the property as of the date of transfer. Who can file a 1040ez For more information, see Publication 504, Divorced or Separated Individuals. Who can file a 1040ez Property Received as a Gift To figure the basis of property you receive as a gift, you must know its adjusted basis (defined earlier) to the donor just before it was given to you, its FMV at the time it was given to you, and any gift tax paid on it. Who can file a 1040ez FMV Less Than Donor's Adjusted Basis If the FMV of the property at the time of the gift is less than the donor's adjusted basis, your basis depends on whether you have a gain or a loss when you dispose of the property. Who can file a 1040ez Your basis for figuring gain is the same as the donor's adjusted basis plus or minus any required adjustment to basis while you held the property. Who can file a 1040ez Your basis for figuring loss is its FMV when you received the gift plus or minus any required adjustment to basis while you held the property (see Adjusted Basis earlier). Who can file a 1040ez If you use the donor's adjusted basis for figuring a gain and get a loss, and then use the FMV for figuring a loss and have a gain, you have neither gain nor loss on the sale or disposition of the property. Who can file a 1040ez Example. Who can file a 1040ez You received an acre of land as a gift. Who can file a 1040ez At the time of the gift, the land had an FMV of $8,000. Who can file a 1040ez The donor's adjusted basis was $10,000. Who can file a 1040ez After you received the land, no events occurred to increase or decrease your basis. Who can file a 1040ez If you sell the land for $12,000, you will have a $2,000 gain because you must use the donor's adjusted basis ($10,000) at the time of the gift as your basis to figure gain. Who can file a 1040ez If you sell the land for $7,000, you will have a $1,000 loss because you must use the FMV ($8,000) at the time of the gift as your basis to figure a loss. Who can file a 1040ez If the sales price is between $8,000 and $10,000, you have neither gain nor loss. Who can file a 1040ez For instance, if the sales price was $9,000 and you tried to figure a gain using the donor's adjusted basis ($10,000), you would get a $1,000 loss. Who can file a 1040ez If you then tried to figure a loss using the FMV ($8,000), you would get a $1,000 gain. Who can file a 1040ez Business property. Who can file a 1040ez   If you hold the gift as business property, your basis for figuring any depreciation, depletion, or amortization deduction is the same as the donor's adjusted basis plus or minus any required adjustments to basis while you hold the property. Who can file a 1040ez FMV Equal to or More Than Donor's Adjusted Basis If the FMV of the property is equal to or greater than the donor's adjusted basis, your basis is the donor's adjusted basis at the time you received the gift. Who can file a 1040ez Increase your basis by all or part of any gift tax paid, depending on the date of the gift. Who can file a 1040ez Also, for figuring gain or loss from a sale or other disposition of the property, or for figuring depreciation, depletion, or amortization deductions on business property, you must increase or decrease your basis by any required adjustments to basis while you held the property. Who can file a 1040ez See Adjusted Basis earlier. Who can file a 1040ez Gift received before 1977. Who can file a 1040ez   If you received a gift before 1977, increase your basis in the gift (the donor's adjusted basis) by any gift tax paid on it. Who can file a 1040ez However, do not increase your basis above the FMV of the gift at the time it was given to you. Who can file a 1040ez Example 1. Who can file a 1040ez You were given a house in 1976 with an FMV of $21,000. Who can file a 1040ez The donor's adjusted basis was $20,000. Who can file a 1040ez The donor paid a gift tax of $500. Who can file a 1040ez Your basis is $20,500, the donor's adjusted basis plus the gift tax paid. Who can file a 1040ez Example 2. Who can file a 1040ez If, in Example 1, the gift tax paid had been $1,500, your basis would be $21,000. Who can file a 1040ez This is the donor's adjusted basis plus the gift tax paid, limited to the FMV of the house at the time you received the gift. Who can file a 1040ez Gift received after 1976. Who can file a 1040ez   If you received a gift after 1976, increase your basis in the gift (the donor's adjusted basis) by the part of the gift tax paid on it that is due to the net increase in value of the gift. Who can file a 1040ez Figure the increase by multiplying the gift tax paid by a fraction. Who can file a 1040ez The numerator of the fraction is the net increase in value of the gift and the denominator is the amount of the gift. Who can file a 1040ez   The net increase in value of the gift is the FMV of the gift less the donor's adjusted basis. Who can file a 1040ez The amount of the gift is its value for gift tax purposes after reduction by any annual exclusion and marital or charitable deduction that applies to the gift. Who can file a 1040ez For information on the gift tax, see Publication 950, Introduction to Estate and Gift Taxes. Who can file a 1040ez Example. Who can file a 1040ez In 2010, you received a gift of property from your mother that had an FMV of $50,000. Who can file a 1040ez Her adjusted basis was $20,000. Who can file a 1040ez The amount of the gift for gift tax purposes was $37,000 ($50,000 minus the $13,000 annual exclusion). Who can file a 1040ez She paid a gift tax of $9,000. Who can file a 1040ez Your basis, $27,290, is figured as follows: Fair market value $50,000 Minus: Adjusted basis 20,000 Net increase in value $30,000 Gift tax paid $9,000 Multiplied by ($30,000 ÷ $37,000) . Who can file a 1040ez 81 Gift tax due to net increase in value $7,290 Adjusted basis of property to your mother 20,000 Your basis in the property $27,290 Inherited Property Special rules apply to property acquired from a decedent who died in 2010. Who can file a 1040ez See Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010, for details. Who can file a 1040ez If you inherited property from a decedent who died before 2010, your basis in property you inherit from a decedent is generally one of the following. Who can file a 1040ez The FMV of the property at the date of the individual's death. Who can file a 1040ez The FMV on the alternate valuation date if the personal representative for the estate chooses to use alternate valuation. Who can file a 1040ez For information on the alternate valuation date, see the Instructions for Form 706. Who can file a 1040ez The value under the special-use valuation method for real property used in farming or a closely held business if chosen for estate tax purposes. Who can file a 1040ez This method is discussed later. Who can file a 1040ez The decedent's adjusted basis in land to the extent of the value excluded from the decedent's taxable estate as a qualified conservation easement. Who can file a 1040ez For information on a qualified conservation easement, see the Instructions for Form 706. Who can file a 1040ez If a federal estate tax return does not have to be filed, your basis in the inherited property is its appraised value at the date of death for state inheritance or transmission taxes. Who can file a 1040ez For more information, see the Instructions for Form 706. Who can file a 1040ez Appreciated property. Who can file a 1040ez   The above rule does not apply to appreciated property you receive from a decedent if you or your spouse originally gave the property to the decedent within 1 year before the decedent's death. Who can file a 1040ez Your basis in this property is the same as the decedent's adjusted basis in the property immediately before his or her death, rather than its FMV. Who can file a 1040ez Appreciated property is any property whose FMV on the day it was given to the decedent is more than its adjusted basis. Who can file a 1040ez Community Property In community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), husband and wife are each usually considered to own half the community property. Who can file a 1040ez When either spouse dies, the total value of the community property, even the part belonging to the surviving spouse, generally becomes the basis of the entire property. Who can file a 1040ez For this rule to apply, at least half the value of the community property interest must be includable in the decedent's gross estate, whether or not the estate must file a return. Who can file a 1040ez For example, you and your spouse owned community property that had a basis of $80,000. Who can file a 1040ez When your spouse died, half the FMV of the community interest was includible in your spouse's estate. Who can file a 1040ez The FMV of the community interest was $100,000. Who can file a 1040ez The basis of your half of the property after the death of your spouse is $50,000 (half of the $100,000 FMV). Who can file a 1040ez The basis of the other half to your spouse's heirs is also $50,000. Who can file a 1040ez For more information on community property, see Publication 555, Community Property. Who can file a 1040ez Property Held by Surviving Tenant The following example explains the rule for the basis of property held by a surviving tenant in joint tenancy or tenancy by the entirety. Who can file a 1040ez Example. Who can file a 1040ez John and Jim owned, as joint tenants with right of survivorship, business property they purchased for $30,000. Who can file a 1040ez John furnished two-thirds of the purchase price and Jim furnished one-third. Who can file a 1040ez Depreciation deductions allowed before John's death were $12,000. Who can file a 1040ez Under local law, each had a half interest in the income from the property. Who can file a 1040ez At the date of John's death, the property had an FMV of $60,000, two-thirds of which is includable in John's estate. Who can file a 1040ez Jim figures his basis in the property at the date of John's death as follows: Interest Jim bought with his own funds—1/3 of $30,000 cost $10,000   Interest Jim received on John's death—2/3 of $60,000 FMV 40,000 $50,000 Minus: ½ of $12,000 depreciation before John's death 6,000 Jim's basis at the date of John's death $44,000 If Jim had not contributed any part of the purchase price, his basis at the date of John's death would be $54,000. Who can file a 1040ez This is figured by subtracting from the $60,000 FMV, the $6,000 depreciation allocated to Jim's half interest before the date of death. Who can file a 1040ez If under local law Jim had no interest in the income from the property and he contributed no part of the purchase price, his basis at John's death would be $60,000, the FMV of the property. Who can file a 1040ez Qualified Joint Interest Include one-half of the value of a qualified joint interest in the decedent's gross estate. Who can file a 1040ez It does not matter how much each spouse contributed to the purchase price. Who can file a 1040ez Also, it does not matter which spouse dies first. Who can file a 1040ez A qualified joint interest is any interest in property held by husband and wife as either of the following. Who can file a 1040ez Tenants by the entirety, or Joint tenants with right of survivorship if husband and wife are the only joint tenants. Who can file a 1040ez Basis. Who can file a 1040ez   As the surviving spouse, your basis in property you owned with your spouse as a qualified joint interest is the cost of your half of the property with certain adjustments. Who can file a 1040ez Decrease the cost by any deductions allowed to you for depreciation and depletion. Who can file a 1040ez Increase the reduced cost by your basis in the half you inherited. Who can file a 1040ez Farm or Closely Held Business Under certain conditions, when a person dies the executor or personal representative of that person's estate can choose to value the qualified real property on other than its FMV. Who can file a 1040ez If so, the executor or personal representative values the qualified real property based on its use as a farm or its use in a closely held business. Who can file a 1040ez If the executor or personal representative chooses this method of valuation for estate tax purposes, that value is the basis of the property for the heirs. Who can file a 1040ez Qualified heirs should be able to get the necessary value from the executor or personal representative of the estate. Who can file a 1040ez Special-use valuation. Who can file a 1040ez   If you are a qualified heir who received special-use valuation property, your basis in the property is the estate's or trust's basis in that property immediately before the distribution. Who can file a 1040ez Increase your basis by any gain recognized by the estate or trust because of post-death appreciation. Who can file a 1040ez Post-death appreciation is the property's FMV on the date of distribution minus the property's FMV either on the date of the individual's death or the alternate valuation date. Who can file a 1040ez Figure all FMVs without regard to the special-use valuation. Who can file a 1040ez   You can elect to increase your basis in special-use valuation property if it becomes subject to the additional estate tax. Who can file a 1040ez This tax is assessed if, within 10 years after the death of the decedent, you transfer the property to a person who is not a member of your family or the property stops being used as a farm or in a closely held business. Who can file a 1040ez   To increase your basis in the property, you must make an irrevocable election and pay interest on the additional estate tax figured from the date 9 months after the decedent's death until the date of the payment of the additional estate tax. Who can file a 1040ez If you meet these requirements, increase your basis in the property to its FMV on the date of the decedent's death or the alternate valuation date. Who can file a 1040ez The increase in your basis is considered to have occurred immediately before the event that results in the additional estate tax. Who can file a 1040ez   You make the election by filing with Form 706-A a statement that does all of the following. Who can file a 1040ez Contains your name, address, and taxpayer identification number and those of the estate; Identifies the election as an election under section 1016(c) of the Internal Revenue Code; Specifies the property for which the election is made; and Provides any additional information required by the Instructions for Form 706-A. Who can file a 1040ez   For more information, see the Instructions for Form 706 and the Instructions for Form 706-A. Who can file a 1040ez Property Changed to Business or Rental Use If you hold property for personal use and then change it to business use or use it to produce rent, you must figure its basis for depreciation. Who can file a 1040ez An example of changing property held for personal use to business use would be renting out your former main home. Who can file a 1040ez Basis for depreciation. Who can file a 1040ez   The basis for depreciation is the lesser of the following amounts. Who can file a 1040ez The FMV of the property on the date of the change, or Your adjusted basis on the date of the change. Who can file a 1040ez Example. Who can file a 1040ez Several years ago you paid $160,000 to have your home built on a lot that cost $25,000. Who can file a 1040ez You paid $20,000 for permanent improvements to the house and claimed a $2,000 casualty loss deduction for damage to the house before changing the property to rental use last year. Who can file a 1040ez Because land is not depreciable, you include only the cost of the house when figuring the basis for depreciation. Who can file a 1040ez Your adjusted basis in the house when you changed its use was $178,000 ($160,000 + $20,000 − $2,000). Who can file a 1040ez On the same date, your property had an FMV of $180,000, of which $15,000 was for the land and $165,000 was for the house. Who can file a 1040ez The basis for figuring depreciation on the house is its FMV on the date of change ($165,000) because it is less than your adjusted basis ($178,000). Who can file a 1040ez Sale of property. Who can file a 1040ez   If you later sell or dispose of property changed to business or rental use, the basis of the property you use will depend on whether you are figuring gain or loss. Who can file a 1040ez Gain. Who can file a 1040ez   The basis for figuring a gain is your adjusted basis when you sell the property. Who can file a 1040ez Example. Who can file a 1040ez Assume the same facts as in the previous example except that you sell the property at a gain after being allowed depreciation deductions of $37,500. Who can file a 1040ez Your adjusted basis for figuring gain is $165,500 ($178,000 + $25,000 (land) − $37,500). Who can file a 1040ez Loss. Who can file a 1040ez   Figure the basis for a loss starting with the smaller of your adjusted basis or the FMV of the property at the time of the change to business or rental use. Who can file a 1040ez Then adjust this amount for the period after the change in the property's use, as discussed earlier under Adjusted Basis, to arrive at a basis for loss. Who can file a 1040ez Example. Who can file a 1040ez Assume the same facts as in the previous example, except that you sell the property at a loss after being allowed depreciation deductions of $37,500. Who can file a 1040ez In this case, you would start with the FMV on the date of the change to rental use ($180,000) because it is less than the adjusted basis of $203,000 ($178,000 + $25,000) on that date. Who can file a 1040ez Reduce that amount ($180,000) by the depreciation deductions to arrive at a basis for loss of $142,500 ($180,000 − $37,500). Who can file a 1040ez How To Get Tax Help You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get more information from the IRS in several ways. Who can file a 1040ez By selecting the method that is best for you, you will have quick and easy access to tax help. Who can file a 1040ez Contacting your Taxpayer Advocate. Who can file a 1040ez   The Taxpayer Advocate Service (TAS) is an independent organization within the IRS. Who can file a 1040ez We help taxpayers who are experiencing economic harm, such as not being able to provide necessities like housing, transportation, or food; taxpayers who are seeking help in resolving tax problems with the IRS; and those who believe that an IRS system or procedure is not working as it should. Who can file a 1040ez Here are seven things every taxpayer should know about TAS. Who can file a 1040ez TAS is your voice at the IRS. Who can file a 1040ez Our service is free, confidential, and tailored to meet your needs. Who can file a 1040ez You may be eligible for our help if you have tried to resolve your tax problem through normal IRS channels and have gotten nowhere, or you believe an IRS procedure just isn't working as it should. Who can file a 1040ez We help taxpayers whose problems are causing financial difficulty or significant cost, including the cost of professional representation. Who can file a 1040ez This includes businesses as well as individuals. Who can file a 1040ez Our employees know the IRS and how to navigate it. Who can file a 1040ez If you qualify for our help, we'll assign your case to an advocate who will listen to your problem, help you understand what needs to be done to resolve it, and stay with you every step of the way until your problem is resolved. Who can file a 1040ez We have at least one local taxpayer advocate in every state, the District of Columbia, and Puerto Rico. Who can file a 1040ez You can call your local advocate, whose number is in your phone book, in Publication 1546, Taxpayer Advocate Service—Your Voice at the IRS, and on our website at www. Who can file a 1040ez irs. Who can file a 1040ez gov/advocate. Who can file a 1040ez You can also call our toll-free line at 1-877-777-4778 or TTY/TDD 1-800-829-4059. Who can file a 1040ez You can learn about your rights and responsibilities as a taxpayer by visiting our online tax toolkit at www. Who can file a 1040ez taxtoolkit. Who can file a 1040ez irs. Who can file a 1040ez gov. Who can file a 1040ez You can get updates on hot tax topics by visiting our YouTube channel at www. Who can file a 1040ez youtube. Who can file a 1040ez com/tasnta and our Facebook page at www. Who can file a 1040ez facebook. Who can file a 1040ez com/YourVoiceAtIRS, or by following our tweets at www. Who can file a 1040ez twitter. Who can file a 1040ez com/YourVoiceAtIRS. Who can file a 1040ez Low Income Taxpayer Clinics (LITCs). Who can file a 1040ez   The Low Income Taxpayer Clinic program serves individuals who have a problem with the IRS and whose income is below a certain level. Who can file a 1040ez LITCs are independent from the IRS. Who can file a 1040ez Most LITCs can provide representation before the IRS or in court on audits, tax collection disputes, and other issues for free or a small fee. Who can file a 1040ez If an individual's native language is not English, some clinics can provide multilingual information about taxpayer rights and responsibilities. Who can file a 1040ez For more information, see Publication 4134, Low Income Taxpayer Clinic List. Who can file a 1040ez This publication is available at IRS. Who can file a 1040ez gov, by calling 1-800-TAX-FORM (1-800-829-3676), or at your local IRS office. Who can file a 1040ez Free tax services. Who can file a 1040ez   Publication 910, IRS Guide to Free Tax Services, is your guide to IRS services and resources. Who can file a 1040ez Learn about free tax information from the IRS, including publications, services, and education and assistance programs. Who can file a 1040ez The publication also has an index of over 100 TeleTax topics (recorded tax information) you can listen to on the telephone. Who can file a 1040ez The majority of the information and services listed in this publication are available to you free of charge. Who can file a 1040ez If there is a fee associated with a resource or service, it is listed in the publication. Who can file a 1040ez   Accessible versions of IRS published products are available on request in a variety of alternative formats for people with d
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Commissioner's Comments, Statements and Remarks

Written Testimony of IRS Commissioner John A. Koskinen before the House Oversight and Government Reform Committee on IRS Operations
March 26, 2014 — Commissioner Koskinen's written testimony before the House Oversight and Government Reform Committee on IRS operations.

Remarks of Acting Commissioner Werfel to the American Institute of Certified Public Accountants in Washington, DC
Nov. 5, 2013 — Prepared remarks of Acting Commissioner Danny Werfel to the American Institute of Certified Public Accountants in Washington, DC.

Oral Statement of Danny Werfel, Principal Deputy Commissioner, on the Affordable Care Act Before the House Ways and Means Committee
Aug. 1, 2013 — Principal Deputy Commissioner Danny Werfel gives an opening statement on the Affordable Care Act to the House Ways and Means Committee.

Prepared Remarks of Danny Werfel, Principal Deputy Commissioner, Before the 2013 IRS Nationwide Tax Forum
July 30, 2013 — IRS Principal Deputy Commissioner Danny Werfel speaks at a 2013 Nationwide Tax Forum taking place in Dallas, Tex.

Page Last Reviewed or Updated: 27-Mar-2014

The Who Can File A 1040ez

Who can file a 1040ez 1. Who can file a 1040ez   Fuel Taxes Table of Contents Definitions Information Returns Registration RequirementsAdditional information. Who can file a 1040ez Gasoline and Aviation GasolineTaxable Events Gasoline Blendstocks Diesel Fuel and KeroseneTaxable Events Dyed Diesel Fuel and Dyed Kerosene Alaska and Feedstocks Back-up Tax Diesel-Water Fuel Emulsion Kerosene for Use in AviationTaxable Events Liability For Tax Surtax on any liquid used in a fractional ownership program aircraft as fuel Certificate for Commercial Aviation and Exempt UsesExempt use. Who can file a 1040ez Reseller statement. Who can file a 1040ez Other Fuels (Including Alternative Fuels)Taxable Events Compressed Natural Gas (CNG)Taxable Events Fuels Used on Inland WaterwaysFishing vessels. Who can file a 1040ez Deep-draft ocean-going vessels. Who can file a 1040ez Passenger vessels. Who can file a 1040ez Ocean-going barges. Who can file a 1040ez State or local governments. Who can file a 1040ez Cellulosic or Second Generation Biofuel Not Used as Fuel Biodiesel Sold as But Not Used as Fuel Definitions Excise taxes are imposed on all the following fuels. Who can file a 1040ez Gasoline, including aviation gasoline and gasoline blendstocks. Who can file a 1040ez Diesel fuel, including dyed diesel fuel. Who can file a 1040ez Diesel-water fuel emulsion. Who can file a 1040ez Kerosene, including dyed kerosene and kerosene used in aviation. Who can file a 1040ez Other Fuels (including alternative fuels). Who can file a 1040ez Compressed natural gas (CNG). Who can file a 1040ez Fuels used in commercial transportation on inland waterways. Who can file a 1040ez Any liquid used in a fractional ownership program aircraft as fuel. Who can file a 1040ez The following terms are used throughout the discussion of fuel taxes. Who can file a 1040ez Other terms are defined in the discussion of the specific fuels to which they pertain. Who can file a 1040ez Agri-biodiesel. Who can file a 1040ez   Agri-biodiesel means biodiesel derived solely from virgin oils, including esters derived from virgin vegetable oils from corn, soybeans, sunflower seeds, cottonseeds, canola, crambe, rapeseeds, safflowers, flaxseeds, rice bran, mustard seeds, and camelina, and from animal fats. Who can file a 1040ez Approved terminal or refinery. Who can file a 1040ez   This is a terminal operated by a registrant that is a terminal operator or a refinery operated by a registrant that is a refiner. Who can file a 1040ez Biodiesel. Who can file a 1040ez   Biodiesel means the monoalkyl esters of long chain fatty acids derived from plant or animal matter that meet the registration requirements for fuels and fuel additives established by the Environmental Protection Agency (EPA) under section 211 of the Clean Air Act, and the requirements of the American Society of Testing Materials (ASTM) D6751. Who can file a 1040ez Blended taxable fuel. Who can file a 1040ez   This means any taxable fuel produced outside the bulk transfer/terminal system by mixing taxable fuel on which excise tax has been imposed and any other liquid on which excise tax has not been imposed. Who can file a 1040ez This does not include a mixture removed or sold during the calendar quarter if all such mixtures removed or sold by the blender contain less than 400 gallons of a liquid on which the tax has not been imposed. Who can file a 1040ez Blender. Who can file a 1040ez   This is the person that produces blended taxable fuel. Who can file a 1040ez Bulk transfer. Who can file a 1040ez   This is the transfer of taxable fuel by pipeline or vessel. Who can file a 1040ez Bulk transfer/terminal system. Who can file a 1040ez   This is the taxable fuel distribution system consisting of refineries, pipelines, vessels, and terminals. Who can file a 1040ez Fuel in the supply tank of any engine, or in any tank car, railcar, trailer, truck, or other equipment suitable for ground transportation is not in the bulk transfer/terminal system. Who can file a 1040ez Cellulosic biofuel. Who can file a 1040ez   Cellulosic biofuel means any liquid fuel produced from any lignocellulosic or hemicellulosic matter that is available on a renewable or recurring basis that meets the registration requirements for fuels and fuel additives established by the EPA under section 211 of the Clean Air Act. Who can file a 1040ez Cellulosic biofuel does not include any alcohol with a proof of less than 150 (without regard to denaturants). Who can file a 1040ez For fuels sold or used after December 31, 2009, cellulosic biofuel does not include fuel of which more than 4% (determined by weight) is any combination of water and sediment, fuel of which the ash content is more than 1%, or fuel that has an acid number greater than 25. Who can file a 1040ez Also see Second generation biofuel below. Who can file a 1040ez Diesel-water fuel emulsion. Who can file a 1040ez   A diesel-water fuel emulsion means an emulsion at least 14% of which is water. Who can file a 1040ez The emulsion additive used to produce the fuel must be registered by a United States manufacturer with the EPA under section 211 of the Clean Air Act as in effect on March 31, 2003. Who can file a 1040ez Dry lease aircraft exchange. Who can file a 1040ez   See later, under Surtax on any liquid used in a fractional ownership program aircraft as fuel. Who can file a 1040ez Enterer. Who can file a 1040ez   This is the importer of record (under customs law) for the taxable fuel. Who can file a 1040ez However, if the importer of record is acting as an agent, such as a customs broker, the person for whom the agent is acting is the enterer. Who can file a 1040ez If there is no importer of record, the owner at the time of entry into the United States is the enterer. Who can file a 1040ez Entry. Who can file a 1040ez   Taxable fuel is entered into the United States when it is brought into the United States and applicable customs law requires that it be entered for consumption, use, or warehousing. Who can file a 1040ez This does not apply to fuel brought into Puerto Rico (which is part of the U. Who can file a 1040ez S. Who can file a 1040ez customs territory), but does apply to fuel brought into the United States from Puerto Rico. Who can file a 1040ez Fractional ownership aircraft program and fractional program aircraft. Who can file a 1040ez   See later, under Surtax on any liquid used in a fractional ownership program aircraft as fuel. Who can file a 1040ez Measurement of taxable fuel. Who can file a 1040ez   Volumes of taxable fuel can be measured on the basis of actual volumetric gallons or gallons adjusted to 60 degrees Fahrenheit. Who can file a 1040ez Other fuels. Who can file a 1040ez   See Other Fuels (Including Alternative Fuels), later, and Alternative Fuel Credit and Alternative Fuel Mixture Credit in chapter 2. Who can file a 1040ez Pipeline operator. Who can file a 1040ez   This is the person that operates a pipeline within the bulk transfer/terminal system. Who can file a 1040ez Position holder. Who can file a 1040ez   This is the person that holds the inventory position in the taxable fuel in the terminal, as reflected in the records of the terminal operator. Who can file a 1040ez You hold the inventory position when you have a contractual agreement with the terminal operator for the use of the storage facilities and terminaling services for the taxable fuel. Who can file a 1040ez A terminal operator that owns taxable fuel in its terminal is a position holder. Who can file a 1040ez Rack. Who can file a 1040ez   This is a mechanism capable of delivering fuel into a means of transport other than a pipeline or vessel. Who can file a 1040ez Refiner. Who can file a 1040ez   This is any person that owns, operates, or otherwise controls a refinery. Who can file a 1040ez Refinery. Who can file a 1040ez   This is a facility used to produce taxable fuel and from which taxable fuel may be removed by pipeline, by vessel, or at a rack. Who can file a 1040ez However, this term does not include a facility where only blended fuel, and no other type of fuel, is produced. Who can file a 1040ez For this purpose, blended fuel is any mixture that would be blended taxable fuel if produced outside the bulk transfer/terminal system. Who can file a 1040ez Registrant. Who can file a 1040ez   This is a taxable fuel registrant (see Registration Requirements, later). Who can file a 1040ez Removal. Who can file a 1040ez   This is any physical transfer of taxable fuel. Who can file a 1040ez It also means any use of taxable fuel other than as a material in the production of taxable fuel or Other Fuels. Who can file a 1040ez However, taxable fuel is not removed when it evaporates or is otherwise lost or destroyed. Who can file a 1040ez Renewable diesel. Who can file a 1040ez   See Renewable Diesel Credits in chapter 2. Who can file a 1040ez Sale. Who can file a 1040ez   For taxable fuel not in a terminal, this is the transfer of title to, or substantial incidents of ownership in, taxable fuel to the buyer for money, services, or other property. Who can file a 1040ez For taxable fuel in a terminal, this is the transfer of the inventory position if the transferee becomes the position holder for that taxable fuel. Who can file a 1040ez Second generation biofuel. Who can file a 1040ez   This is any liquid fuel derived by, or from, qualified feedstocks, and meets the registration requirements for fuels and fuel additives established by the Environmental Protection Agency under section 211 of the Clean Air Act (42 U. Who can file a 1040ez S. Who can file a 1040ez C. Who can file a 1040ez 7545). Who can file a 1040ez It also includes certain liquid fuel which is derived by, or from, any cultivated algae, cyanobacteria, or lemna. Who can file a 1040ez It is not alcohol of less than 150 proof (disregard any added denaturants). Who can file a 1040ez See Form 6478 for more information. Who can file a 1040ez State. Who can file a 1040ez   This includes any state, any of its political subdivisions, the District of Columbia, and the American Red Cross. Who can file a 1040ez An Indian tribal government is treated as a state only if transactions involve the exercise of an essential tribal government function. Who can file a 1040ez Taxable fuel. Who can file a 1040ez   This means gasoline, diesel fuel, and kerosene. Who can file a 1040ez Terminal. Who can file a 1040ez   This is a storage and distribution facility supplied by pipeline or vessel, and from which taxable fuel may be removed at a rack. Who can file a 1040ez It does not include a facility at which gasoline blendstocks are used in the manufacture of products other than finished gasoline if no gasoline is removed from the facility. Who can file a 1040ez A terminal does not include any facility where finished gasoline, diesel fuel, or kerosene is stored if the facility is operated by a registrant and all such taxable fuel stored at the facility has been previously taxed upon removal from a refinery or terminal. Who can file a 1040ez Terminal operator. Who can file a 1040ez   This is any person that owns, operates, or otherwise controls a terminal. Who can file a 1040ez Throughputter. Who can file a 1040ez   This is any person that is a position holder or that owns taxable fuel within the bulk transfer/terminal system (other than in a terminal). Who can file a 1040ez Vessel operator. Who can file a 1040ez   This is the person that operates a vessel within the bulk transfer/terminal system. Who can file a 1040ez However, vessel does not include a deep draft ocean-going vessel. Who can file a 1040ez Information Returns Form 720-TO and Form 720-CS are information returns used to report monthly receipts and disbursements of liquid products. Who can file a 1040ez A liquid product is any liquid transported into storage at a terminal or delivered out of a terminal. Who can file a 1040ez For a list of products, see the product code table in the Instructions for Forms 720-TO and 720-CS. Who can file a 1040ez The returns are due the last day of the month following the month in which the transaction occurs. Who can file a 1040ez Generally, these returns can be filed on paper or electronically. Who can file a 1040ez For information on filing electronically, see Publication 3536, Motor Fuel Excise Tax EDI Guide. Who can file a 1040ez Publication 3536 is only available on the IRS website. Who can file a 1040ez Form 720-TO. Who can file a 1040ez   This information return is used by terminal operators to report receipts and disbursements of all liquid products to and from all approved terminals. Who can file a 1040ez Each terminal operator must file a separate form for each approved terminal. Who can file a 1040ez Form 720-CS. Who can file a 1040ez   This information return must be filed by bulk transport carriers (barges, vessels, and pipelines) who receive liquid product from an approved terminal or deliver liquid product to an approved terminal. Who can file a 1040ez Registration Requirements The following discussion applies to excise tax registration requirements for activities relating to fuels only. Who can file a 1040ez See Form 637 for other persons who must register and for more information about registration. Who can file a 1040ez Persons that are required to be registered. Who can file a 1040ez   You are required to be registered if you are a: Blender; Enterer; Pipeline operator; Position holder; Refiner; Terminal operator; Vessel operator; Producer or importer of alcohol, biodiesel, agri-biodiesel, and renewable diesel; or Producer of cellulosic or second generation biofuel. Who can file a 1040ez Persons that may register. Who can file a 1040ez   You may, but are not required to, register if you are a: Feedstock user, Industrial user, Throughputter that is not a position holder, Ultimate vendor, Diesel-water fuel emulsion producer, Credit card issuer, or Alternative fuel claimant. Who can file a 1040ez Ultimate vendors, credit card issuers, and alternative fuel claimants do not need to be registered to buy or sell fuel. Who can file a 1040ez However, they must be registered to file claims for certain sales and uses of fuel. Who can file a 1040ez See Form 637 for more information. Who can file a 1040ez Taxable fuel registrant. Who can file a 1040ez   This is an enterer, an industrial user, a refiner, a terminal operator, or a throughputter who received a Letter of Registration under the excise tax registration provisions and whose registration has not been revoked or suspended. Who can file a 1040ez The term registrant as used in the discussions of these fuels means a taxable fuel registrant. Who can file a 1040ez Additional information. Who can file a 1040ez   See the Form 637 instructions for the information you must submit when you apply for registration. Who can file a 1040ez Failure to register. Who can file a 1040ez   The penalty for failure to register if you must register, unless due to reasonable cause, is $10,000 for the initial failure, and then $1,000 each day thereafter you fail to register. Who can file a 1040ez Gasoline and Aviation Gasoline Gasoline. Who can file a 1040ez   Gasoline means all products commonly or commercially known or sold as gasoline with an octane rating of 75 or more that are suitable for use as a motor fuel. Who can file a 1040ez Gasoline includes any gasoline blend other than: Qualified ethanol and methanol fuel (at least 85 percent of the blend consists of alcohol produced from coal, including peat), Partially exempt ethanol and methanol fuel (at least 85 percent of the blend consists of alcohol produced from natural gas), or Denatured alcohol. Who can file a 1040ez Gasoline also includes gasoline blendstocks, discussed later. Who can file a 1040ez Aviation gasoline. Who can file a 1040ez   This means all special grades of gasoline suitable for use in aviation reciprocating engines and covered by ASTM specification D910 or military specification MIL-G-5572. Who can file a 1040ez Taxable Events The tax on gasoline is $. Who can file a 1040ez 184 per gallon. Who can file a 1040ez The tax on aviation gasoline is $. Who can file a 1040ez 194 per gallon. Who can file a 1040ez When used in a fractional ownership program aircraft, gasoline also is subject to a surtax of $. Who can file a 1040ez 141 per gallon. Who can file a 1040ez See Surtax on any liquid used in a fractional ownership program aircraft as fuel, later. Who can file a 1040ez Tax is imposed on the removal, entry, or sale of gasoline. Who can file a 1040ez Each of these events is discussed later. Who can file a 1040ez Also, see the special rules that apply to gasoline blendstocks, later. Who can file a 1040ez If the tax is paid on the gasoline in more than one event, a refund may be allowed for the “second” tax paid. Who can file a 1040ez See Refunds of Second Tax in chapter 2. Who can file a 1040ez Removal from terminal. Who can file a 1040ez   All removals of gasoline at a terminal rack are taxable. Who can file a 1040ez The position holder for that gasoline is liable for the tax. Who can file a 1040ez Two-party exchanges. Who can file a 1040ez   In a two-party exchange, the receiving person, not the delivering person, is liable for the tax imposed on the removal of taxable fuel from the terminal at the terminal rack. Who can file a 1040ez A two-party exchange means a transaction (other than a sale) where the delivering person and receiving person are both taxable fuel registrants and all of the following apply. Who can file a 1040ez The transaction includes a transfer from the delivering person, who holds the inventory position for the taxable fuel in the terminal as reflected in the records of the terminal operator. Who can file a 1040ez The exchange transaction occurs before or at the same time as removal across the rack by the receiving person. Who can file a 1040ez The terminal operator in its records treats the receiving person as the person that removes the product across the terminal rack for purposes of reporting the transaction on Form 720-TO. Who can file a 1040ez The transaction is subject to a written contract. Who can file a 1040ez Terminal operator's liability. Who can file a 1040ez   The terminal operator is jointly and severally liable for the tax if the position holder is a person other than the terminal operator and is not a registrant. Who can file a 1040ez   However, a terminal operator meeting all the following conditions at the time of the removal will not be liable for the tax. Who can file a 1040ez The terminal operator is a registrant. Who can file a 1040ez The terminal operator has an unexpired notification certificate (discussed later) from the position holder. Who can file a 1040ez The terminal operator has no reason to believe any information on the certificate is false. Who can file a 1040ez Removal from refinery. Who can file a 1040ez   The removal of gasoline from a refinery is taxable if the removal meets either of the following conditions. Who can file a 1040ez It is made by bulk transfer and the refiner, the owner of the gasoline immediately before the removal, or the operator of the pipeline or vessel is not a registrant. Who can file a 1040ez It is made at the refinery rack. Who can file a 1040ez The refiner is liable for the tax. Who can file a 1040ez Exception. Who can file a 1040ez   The tax does not apply to a removal of gasoline at the refinery rack if all the following requirements are met. Who can file a 1040ez The gasoline is removed from an approved refinery not served by pipeline (other than for receiving crude oil) or vessel. Who can file a 1040ez The gasoline is received at a facility operated by a registrant and located within the bulk transfer/terminal system. Who can file a 1040ez The removal from the refinery is by railcar. Who can file a 1040ez The same person operates the refinery and the facility at which the gasoline is received. Who can file a 1040ez Entry into the United States. Who can file a 1040ez   The entry of gasoline into the United States is taxable if the entry meets either of the following conditions. Who can file a 1040ez It is made by bulk transfer and the enterer or the operator of the pipeline or vessel is not a registrant. Who can file a 1040ez It is not made by bulk transfer. Who can file a 1040ez The enterer is liable for the tax. Who can file a 1040ez Importer of record's liability. Who can file a 1040ez   The importer of record is jointly and severally liable for the tax with the enterer if the importer of record is not the enterer of the taxable fuel and the enterer is not a taxable fuel registrant. Who can file a 1040ez   However, an importer of record meeting both of the following conditions at the time of the entry will not be liable for the tax. Who can file a 1040ez The importer of record has an unexpired notification certificate (discussed later) from the enterer. Who can file a 1040ez The importer of record has no reason to believe any information in the certificate is false. Who can file a 1040ez Customs bond. Who can file a 1040ez   The customs bond will not be charged for the tax imposed on the entry of the gasoline if at the time of entry the surety has an unexpired notification certificate from the enterer and has no reason to believe any information in the certificate is false. Who can file a 1040ez Removal from a terminal by unregistered position holder or unregistered pipeline or vessel operator. Who can file a 1040ez   The removal by bulk transfer of gasoline from a terminal is taxable if the position holder for the gasoline or the operator of the pipeline or vessel is not a registrant. Who can file a 1040ez The position holder is liable for the tax. Who can file a 1040ez The terminal operator is jointly and severally liable for the tax if the position holder is a person other than the terminal operator. Who can file a 1040ez However, see Terminal operator's liability under Removal from terminal, earlier, for an exception. Who can file a 1040ez Bulk transfers not received at approved terminal or refinery. Who can file a 1040ez   The removal by bulk transfer of gasoline from a terminal or refinery, or the entry of gasoline by bulk transfer into the United States, is taxable if the following conditions apply. Who can file a 1040ez No tax was previously imposed (as discussed earlier) on any of the following events. Who can file a 1040ez The removal from the refinery. Who can file a 1040ez The entry into the United States. Who can file a 1040ez The removal from a terminal by an unregistered position holder. Who can file a 1040ez Upon removal from the pipeline or vessel, the gasoline is not received at an approved terminal or refinery (or at another pipeline or vessel). Who can file a 1040ez   The owner of the gasoline when it is removed from the pipeline or vessel is liable for the tax. Who can file a 1040ez However, an owner meeting all the following conditions at the time of the removal will not be liable for the tax. Who can file a 1040ez The owner is a registrant. Who can file a 1040ez The owner has an unexpired notification certificate (discussed later) from the operator of the terminal or refinery where the gasoline is received. Who can file a 1040ez The owner has no reason to believe any information on the certificate is false. Who can file a 1040ez The operator of the facility where the gasoline is received is liable for the tax if the owner meets these conditions. Who can file a 1040ez The operator is jointly and severally liable if the owner does not meet these conditions. Who can file a 1040ez Sales to unregistered person. Who can file a 1040ez   The sale of gasoline located within the bulk transfer/terminal system to a person that is not a registrant is taxable if tax was not previously imposed under any of the events discussed earlier. Who can file a 1040ez   The seller is liable for the tax. Who can file a 1040ez However, a seller meeting all the following conditions at the time of the sale will not be liable for the tax. Who can file a 1040ez   The seller is a registrant. Who can file a 1040ez The seller has an unexpired notification certificate (discussed later) from the buyer. Who can file a 1040ez The seller has no reason to believe any information on the certificate is false. Who can file a 1040ez The buyer of the gasoline is liable for the tax if the seller meets these conditions. Who can file a 1040ez The buyer is jointly and severally liable if the seller does not meet these conditions. Who can file a 1040ez Exception. Who can file a 1040ez   The tax does not apply to a sale if all of the following apply. Who can file a 1040ez The buyer's principal place of business is not in the United States. Who can file a 1040ez The sale occurs as the fuel is delivered into a transport vessel with a capacity of at least 20,000 barrels of fuel. Who can file a 1040ez The seller is a registrant and the exporter of record. Who can file a 1040ez The fuel was exported. Who can file a 1040ez Removal or sale of blended gasoline. Who can file a 1040ez   The removal or sale of blended gasoline by the blender is taxable. Who can file a 1040ez See Blended taxable fuel under Definitions, earlier. Who can file a 1040ez   The blender is liable for the tax. Who can file a 1040ez The tax is figured on the number of gallons not previously subject to the tax on gasoline. Who can file a 1040ez   Persons who blend alcohol with gasoline to produce an alcohol fuel mixture outside the bulk transfer/terminal system must pay the gasoline tax on the volume of alcohol in the mixture. Who can file a 1040ez See Form 720 to report this tax. Who can file a 1040ez You also must be registered with the IRS as a blender. Who can file a 1040ez See Form 637. Who can file a 1040ez   However, if an untaxed liquid is sold as taxed taxable fuel and that untaxed liquid is used to produce blended taxable fuel, the person that sold the untaxed liquid is jointly and severally liable for the tax imposed on the blender's sale or removal of the blended taxable fuel. Who can file a 1040ez Notification certificate. Who can file a 1040ez   The notification certificate is used to notify a person of the registration status of the registrant. Who can file a 1040ez A copy of the registrant's letter of registration cannot be used as a notification certificate. Who can file a 1040ez A model notification certificate is shown in the Appendix as Model Certificate C. Who can file a 1040ez A notification certificate must contain all information necessary to complete the model. Who can file a 1040ez   The certificate may be included as part of any business records normally used for a sale. Who can file a 1040ez A certificate expires on the earlier of the date the registrant provides a new certificate, or the date the recipient of the certificate is notified that the registrant's registration has been revoked or suspended. Who can file a 1040ez The registrant must provide a new certificate if any information on a certificate has changed. Who can file a 1040ez Additional persons liable. Who can file a 1040ez   When the person liable for the tax willfully fails to pay the tax, joint and several liability for the tax is imposed on: Any officer, employee, or agent of the person who is under a duty to ensure the payment of the tax and who willfully fails to perform that duty, or Anyone who willfully causes the person to fail to pay the tax. Who can file a 1040ez Gasoline Blendstocks Gasoline blendstocks may be subject to $. Who can file a 1040ez 001 per gallon LUST tax as discussed below. Who can file a 1040ez Gasoline includes gasoline blendstocks. Who can file a 1040ez The previous discussions apply to these blendstocks. Who can file a 1040ez However, if certain conditions are met, the removal, entry, or sale of gasoline blendstocks are taxed at $. Who can file a 1040ez 001 per gallon or are not subject to the excise tax. Who can file a 1040ez Blendstocks. Who can file a 1040ez   Gasoline blendstocks are: Alkylate, Butane, Butene, Catalytically cracked gasoline, Coker gasoline, Ethyl tertiary butyl ether (ETBE), Hexane, Hydrocrackate, Isomerate, Methyl tertiary butyl ether (MTBE), Mixed xylene (not including any separated isomer of xylene), Natural gasoline, Pentane, Pentane mixture, Polymer gasoline, Raffinate, Reformate, Straight-run gasoline, Straight-run naphtha, Tertiary amyl methyl ether (TAME), Tertiary butyl alcohol (gasoline grade) (TBA), Thermally cracked gasoline, and Toluene. Who can file a 1040ez   However, gasoline blendstocks do not include any product that cannot be used without further processing in the production of finished gasoline. Who can file a 1040ez Not used to produce finished gasoline. Who can file a 1040ez   Gasoline blendstocks not used to produce finished gasoline are not taxable (other than LUST) if the following conditions are met. Who can file a 1040ez Removals and entries not connected to sale. Who can file a 1040ez   Nonbulk removals and entries are not taxable if the person otherwise liable for the tax (position holder, refiner, or enterer) is a registrant. Who can file a 1040ez Removals and entries connected to sale. Who can file a 1040ez   Nonbulk removals and entries are not taxable if the person otherwise liable for the tax (position holder, refiner, or enterer) is a registrant, and at the time of the sale, meets the following requirements. Who can file a 1040ez The person has an unexpired certificate (discussed later) from the buyer. Who can file a 1040ez The person has no reason to believe any information in the certificate is false. Who can file a 1040ez Sales after removal or entry. Who can file a 1040ez   The sale of a gasoline blendstock that was not subject to tax on its nonbulk removal or entry, as discussed earlier, is taxable. Who can file a 1040ez The seller is liable for the tax. Who can file a 1040ez However, the sale is not taxable if, at the time of the sale, the seller meets the following requirements. Who can file a 1040ez The seller has an unexpired certificate (discussed next) from the buyer. Who can file a 1040ez The seller has no reason to believe any information in the certificate is false. Who can file a 1040ez Certificate of buyer. Who can file a 1040ez   The certificate from the buyer certifies the gasoline blendstocks will not be used to produce finished gasoline. Who can file a 1040ez The certificate may be included as part of any business records normally used for a sale. Who can file a 1040ez A model certificate is shown in the Appendix as Model Certificate D. Who can file a 1040ez The certificate must contain all information necessary to complete the model. Who can file a 1040ez   A certificate expires on the earliest of the following dates. Who can file a 1040ez The date 1 year after the effective date (not earlier than the date signed) of the certificate. Who can file a 1040ez The date a new certificate is provided to the seller. Who can file a 1040ez The date the seller is notified that the buyer's right to provide a certificate has been withdrawn. Who can file a 1040ez The buyer must provide a new certificate if any information on a certificate has changed. Who can file a 1040ez   The IRS may withdraw the buyer's right to provide a certificate if that buyer uses the gasoline blendstocks in the production of finished gasoline or resells the blendstocks without getting a certificate from its buyer. Who can file a 1040ez Received at approved terminal or refinery. Who can file a 1040ez   The nonbulk removal or entry of gasoline blendstocks received at an approved terminal or refinery is not taxable if the person otherwise liable for the tax (position holder, refiner, or enterer) meets all the following requirements. Who can file a 1040ez The person is a registrant. Who can file a 1040ez The person has an unexpired notification certificate (discussed earlier) from the operator of the terminal or refinery where the gasoline blendstocks are received. Who can file a 1040ez The person has no reason to believe any information on the certificate is false. Who can file a 1040ez Bulk transfers to registered industrial user. Who can file a 1040ez   The removal of gasoline blendstocks from a pipeline or vessel is not taxable (other than LUST) if the blendstocks are received by a registrant that is an industrial user. Who can file a 1040ez An industrial user is any person that receives gasoline blendstocks by bulk transfer for its own use in the manufacture of any product other than finished gasoline. Who can file a 1040ez Credits or Refunds. Who can file a 1040ez   A credit or refund of the gasoline tax may be allowable if gasoline is used for a nontaxable purpose or exempt use. Who can file a 1040ez For more information, see chapter 2. Who can file a 1040ez Diesel Fuel and Kerosene Generally, diesel fuel and kerosene are taxed in the same manner as gasoline (discussed earlier). Who can file a 1040ez However, special rules (discussed later) apply to dyed diesel fuel and dyed kerosene, and to undyed diesel fuel and undyed kerosene sold or used in Alaska for certain nontaxable uses and undyed kerosene used for a feedstock purpose. Who can file a 1040ez Diesel fuel means: Any liquid that without further processing or blending is suitable for use as a fuel in a diesel-powered highway vehicle or train, and Transmix. Who can file a 1040ez A liquid is suitable for this use if the liquid has practical and commercial fitness for use in the propulsion engine of a diesel-powered highway vehicle or diesel-powered train. Who can file a 1040ez A liquid may possess this practical and commercial fitness even though the specified use is not the predominant use of the liquid. Who can file a 1040ez However, a liquid does not possess this practical and commercial fitness solely by reason of its possible or rare use as a fuel in the propulsion engine of a diesel-powered highway vehicle or diesel-powered train. Who can file a 1040ez Diesel fuel does not include gasoline, kerosene, excluded liquid, No. Who can file a 1040ez 5 and No. Who can file a 1040ez 6 fuel oils covered by ASTM specification D396, or F-76 (Fuel Naval Distillate) covered by military specification MIL-F-16884. Who can file a 1040ez An excluded liquid is either of the following. Who can file a 1040ez A liquid that contains less than 4% normal paraffins. Who can file a 1040ez A liquid with all the following properties. Who can file a 1040ez Distillation range of 125 degrees Fahrenheit or less. Who can file a 1040ez Sulfur content of 10 ppm or less. Who can file a 1040ez Minimum color of +27 Saybolt. Who can file a 1040ez Transmix means a by-product of refined products created by the mixing of different specification products during pipeline transportation. Who can file a 1040ez Kerosene. Who can file a 1040ez   This means any of the following liquids. Who can file a 1040ez One of the two grades of kerosene (No. Who can file a 1040ez 1-K and No. Who can file a 1040ez 2-K) covered by ASTM specification D3699. Who can file a 1040ez Kerosene-type jet fuel covered by ASTM specification D1655 or military specification MIL-DTL-5624T (Grade JP-5) or MIL-DTL-83133E (Grade JP-8). Who can file a 1040ez See Kerosene for Use in Aviation, later. Who can file a 1040ez   However, kerosene does not include excluded liquid, discussed earlier. Who can file a 1040ez   Kerosene also includes any liquid that would be described above but for the presence of a dye of the type used to dye kerosene for a nontaxable use. Who can file a 1040ez Diesel-powered highway vehicle. Who can file a 1040ez   This is any self-propelled vehicle designed to carry a load over public highways (whether or not also designed to perform other functions) and propelled by a diesel-powered engine. Who can file a 1040ez Specially designed mobile machinery for nontransportation functions and vehicles specially designed for off-highway transportation are generally not considered diesel-powered highway vehicles. Who can file a 1040ez For more information about these vehicles and for information about vehicles not considered highway vehicles, see Off-Highway Business Use (No. Who can file a 1040ez 2) in chapter 2. Who can file a 1040ez Diesel-powered train. Who can file a 1040ez   This is any diesel-powered equipment or machinery that rides on rails. Who can file a 1040ez The term includes a locomotive, work train, switching engine, and track maintenance machine. Who can file a 1040ez Taxable Events The tax on diesel fuel and kerosene is $. Who can file a 1040ez 244 per gallon. Who can file a 1040ez It is imposed on the removal, entry, or sale of diesel fuel and kerosene. Who can file a 1040ez Each of these events is discussed later. Who can file a 1040ez Only the $. Who can file a 1040ez 001 LUST tax applies to dyed diesel fuel and dyed kerosene, discussed later. Who can file a 1040ez If the tax is paid on the diesel fuel or kerosene in more than one event, a refund may be allowed for the “second” tax paid. Who can file a 1040ez See Refunds of Second Tax in chapter 2. Who can file a 1040ez Use in certain intercity and local buses. Who can file a 1040ez   Dyed diesel fuel and dyed kerosene cannot be used in certain intercity and local buses. Who can file a 1040ez A claim for $. Who can file a 1040ez 17 per gallon may be made by the registered ultimate vendor (under certain conditions) or the ultimate purchaser for undyed diesel fuel or undyed kerosene sold for use in certain intercity or local buses. Who can file a 1040ez An intercity or local bus is a bus engaged in furnishing (for compensation) passenger land transportation available to the general public. Who can file a 1040ez The bus must be engaged in one of the following activities. Who can file a 1040ez Scheduled transportation along regular routes regardless of the size of the bus. Who can file a 1040ez Nonscheduled transportation if the seating capacity of the bus is at least 20 adults (not including the driver). Who can file a 1040ez A bus is available to the general public if the bus is available for hire to more than a limited number of persons, groups, or organizations. Who can file a 1040ez Removal from terminal. Who can file a 1040ez   All removals of diesel fuel and kerosene at a terminal rack are taxable. Who can file a 1040ez The position holder for that fuel is liable for the tax. Who can file a 1040ez Two-party exchanges. Who can file a 1040ez   In a two-party exchange, the receiving person, not the delivering person, is liable for the tax imposed on the removal of taxable fuel from the terminal at the terminal rack. Who can file a 1040ez A two-party exchange means a transaction (other than a sale) where the delivering person and receiving person are both taxable fuel registrants and all of the following apply. Who can file a 1040ez The transaction includes a transfer from the delivering person, who holds the inventory position for the taxable fuel in the terminal as reflected in the records of the terminal operator. Who can file a 1040ez The exchange transaction occurs before or at the same time as completion of removal across the rack by the receiving person. Who can file a 1040ez The terminal operator in its records treats the receiving person as the person that removes the product across the terminal rack for purposes of reporting the transaction on Form 720-TO. Who can file a 1040ez The transaction is subject to a written contract. Who can file a 1040ez Terminal operator's liability. Who can file a 1040ez   The terminal operator is jointly and severally liable for the tax if the terminal operator provides any person with any bill of lading, shipping paper, or similar document indicating that diesel fuel or kerosene is dyed (discussed later). Who can file a 1040ez   The terminal operator is jointly and severally liable for the tax if the position holder is a person other than the terminal operator and is not a registrant. Who can file a 1040ez However, a terminal operator will not be liable for the tax in this situation if, at the time of the removal, the following conditions are met. Who can file a 1040ez The terminal operator is a registrant. Who can file a 1040ez The terminal operator has an unexpired notification certificate (discussed under Gasoline) from the position holder. Who can file a 1040ez The terminal operator has no reason to believe any information on the certificate is false. Who can file a 1040ez Removal from refinery. Who can file a 1040ez   The removal of diesel fuel or kerosene from a refinery is taxable if the removal meets either of the following conditions. Who can file a 1040ez It is made by bulk transfer and the refiner, the owner of the fuel immediately before the removal, or the operator of the pipeline or vessel is not a registrant. Who can file a 1040ez It is made at the refinery rack. Who can file a 1040ez The refiner is liable for the tax. Who can file a 1040ez Exception. Who can file a 1040ez   The tax does not apply to a removal of diesel fuel or kerosene at the refinery rack if all the following conditions are met. Who can file a 1040ez The diesel fuel or kerosene is removed from an approved refinery not served by pipeline (other than for receiving crude oil) or vessel. Who can file a 1040ez The diesel fuel or kerosene is received at a facility operated by a registrant and located within the bulk transfer/terminal system. Who can file a 1040ez The removal from the refinery is by: Railcar and the same person operates the refinery and the facility at which the diesel fuel or kerosene is received, or For diesel fuel only, a trailer or semi-trailer used exclusively to transport the diesel fuel from a refinery (described in (1)) to a facility (described in (2)) less than 20 miles from the refinery. Who can file a 1040ez Entry into the United States. Who can file a 1040ez   The entry of diesel fuel or kerosene into the United States is taxable if the entry meets either of the following conditions. Who can file a 1040ez It is made by bulk transfer and the enterer or the operator of the pipeline or vessel is not a registrant. Who can file a 1040ez It is not made by bulk transfer. Who can file a 1040ez The enterer is liable for the tax. Who can file a 1040ez Importer of record's liability. Who can file a 1040ez   The importer of record is jointly and severally liable for the tax with the enterer if the importer of record is not the enterer of the taxable fuel and the enterer is not a taxable fuel registrant. Who can file a 1040ez   However, an importer of record meeting both of the following conditions at the time of the entry will not be liable for the tax. Who can file a 1040ez The importer of record has an unexpired notification certificate (discussed under Gasoline) from the enterer. Who can file a 1040ez The importer of record has no reason to believe any information in the certificate is false. Who can file a 1040ez Customs bond. Who can file a 1040ez   The customs bond will not be charged for the tax imposed on the entry of the diesel fuel or kerosene if at the time of entry the surety has an unexpired notification certificate from the enterer and has no reason to believe any information in the certificate is false. Who can file a 1040ez Removal from a terminal by unregistered position holder or unregistered pipeline or vessel operator. Who can file a 1040ez   The removal by bulk transfer of diesel fuel or kerosene from a terminal is taxable if the position holder for that fuel or the operator of the pipeline or vessel is not a registrant. Who can file a 1040ez The position holder is liable for the tax. Who can file a 1040ez The terminal operator is jointly and severally liable for the tax if the position holder is a person other than the terminal operator. Who can file a 1040ez However, see Terminal operator's liability under Removal from terminal, earlier, for an exception. Who can file a 1040ez Bulk transfers not received at approved terminal or refinery. Who can file a 1040ez   The removal by bulk transfer of diesel fuel or kerosene from a terminal or refinery or the entry of diesel fuel or kerosene by bulk transfer into the United States is taxable if the following conditions apply. Who can file a 1040ez No tax was previously imposed (as discussed earlier) on any of the following events. Who can file a 1040ez The removal from the refinery. Who can file a 1040ez The entry into the United States. Who can file a 1040ez The removal from a terminal by an unregistered position holder. Who can file a 1040ez Upon removal from the pipeline or vessel, the diesel fuel or kerosene is not received at an approved terminal or refinery (or at another pipeline or vessel). Who can file a 1040ez   The owner of the diesel fuel or kerosene when it is removed from the pipeline or vessel is liable for the tax. Who can file a 1040ez However, an owner meeting all the following conditions at the time of the removal will not be liable for the tax. Who can file a 1040ez The owner is a registrant. Who can file a 1040ez The owner has an unexpired notification certificate (discussed under Gasoline) from the operator of the terminal or refinery where the diesel fuel or kerosene is received. Who can file a 1040ez The owner has no reason to believe any information on the certificate is false. Who can file a 1040ez The operator of the facility where the diesel fuel or kerosene is received is liable for the tax if the owner meets these conditions. Who can file a 1040ez The operator is jointly and severally liable if the owner does not meet these conditions. Who can file a 1040ez Sales to unregistered person. Who can file a 1040ez   The sale of diesel fuel or kerosene located within the bulk transfer/terminal system to a person that is not a registrant is taxable if tax was not previously imposed under any of the events discussed earlier. Who can file a 1040ez   The seller is liable for the tax. Who can file a 1040ez However, a seller meeting all the following conditions at the time of the sale will not be liable for the tax. Who can file a 1040ez The seller is a registrant. Who can file a 1040ez The seller has an unexpired notification certificate (discussed under Gasoline) from the buyer. Who can file a 1040ez The seller has no reason to believe any information on the certificate is false. Who can file a 1040ez The buyer of the diesel fuel or kerosene is liable for the tax if the seller meets these conditions. Who can file a 1040ez The buyer is jointly and severally liable if the seller does not meet these conditions. Who can file a 1040ez Exception. Who can file a 1040ez   The tax does not apply to a sale if all of the following apply. Who can file a 1040ez The buyer's principal place of business is not in the United States. Who can file a 1040ez The sale occurs as the fuel is delivered into a transport vessel with a capacity of at least 20,000 barrels of fuel. Who can file a 1040ez The seller is a registrant and the exporter of record. Who can file a 1040ez The fuel was exported. Who can file a 1040ez Removal or sale of blended diesel fuel or kerosene. Who can file a 1040ez   The removal or sale of blended diesel fuel or blended kerosene by the blender is taxable. Who can file a 1040ez Blended taxable fuel produced using biodiesel is subject to the tax. Who can file a 1040ez See Blended taxable fuel under Definitions, earlier. Who can file a 1040ez   The blender is liable for the tax. Who can file a 1040ez The tax is figured on the number of gallons not previously subject to the tax. Who can file a 1040ez   Persons who blend biodiesel with undyed diesel fuel to produce and sell or use a biodiesel mixture outside the bulk transfer/terminal system must pay the diesel fuel tax on the volume of biodiesel in the mixture. Who can file a 1040ez Generally, the biodiesel mixture must be diesel fuel (defined earlier). Who can file a 1040ez See Form 720 to report this tax. Who can file a 1040ez You also must be registered by the IRS as a blender. Who can file a 1040ez See Form 637 for more information. Who can file a 1040ez   However, if an untaxed liquid is sold as taxable fuel and that untaxed liquid is used to produce blended taxable fuel, the person that sold the untaxed liquid is jointly and severally liable for the tax imposed on the blender's sale or removal of the blended taxable fuel. Who can file a 1040ez Additional persons liable. Who can file a 1040ez   When the person liable for the tax willfully fails to pay the tax, joint and several liability for the tax applies to: Any officer, employee, or agent of the person who is under a duty to ensure the payment of the tax and who willfully fails to perform that duty; or Anyone who willfully causes the person to fail to pay the tax. Who can file a 1040ez Credits or Refunds. Who can file a 1040ez   A credit or refund is allowable for the tax on undyed diesel fuel or undyed kerosene used for a nontaxable use. Who can file a 1040ez For more information, see chapter 2. Who can file a 1040ez Dyed Diesel Fuel and Dyed Kerosene Dyed diesel fuel and dyed kerosene are subject to $. Who can file a 1040ez 001 per gallon LUST tax as discussed below, unless the fuel is for export. Who can file a 1040ez The excise tax is not imposed on the removal, entry, or sale of diesel fuel or kerosene (other than the LUST tax) if all the following tests are met. Who can file a 1040ez The person otherwise liable for tax (for example, the position holder) is a registrant. Who can file a 1040ez In the case of a removal from a terminal, the terminal is an approved terminal. Who can file a 1040ez The diesel fuel or kerosene satisfies the dyeing requirements (described next). Who can file a 1040ez Dyeing requirements. Who can file a 1040ez   Diesel fuel or kerosene satisfies the dyeing requirements only if it satisfies the following requirements. Who can file a 1040ez It contains the dye Solvent Red 164 (and no other dye) at a concentration spectrally equivalent to at least 3. Who can file a 1040ez 9 pounds of the solid dye standard Solvent Red 26 per thousand barrels of fuel or any dye of a type and in a concentration that has been approved by the Commissioner. Who can file a 1040ez Is indelibly dyed by mechanical injection. Who can file a 1040ez See section 6 of Notice 2005-80 for transition rules that apply until final regulations are issued by the IRS. Who can file a 1040ez Notice required. Who can file a 1040ez   A legible and conspicuous notice stating either: DYED DIESEL FUEL, NONTAXABLE USE ONLY, PENALTY FOR TAXABLE USE or DYED KEROSENE, NONTAXABLE USE ONLY, PENALTY FOR TAXABLE USE must be: Provided by the terminal operator to any person that receives dyed diesel fuel or dyed kerosene at a terminal rack of that operator, and Posted by a seller on any retail pump or other delivery facility where it sells dyed diesel fuel or dyed kerosene for use by its buyer. Who can file a 1040ez   The notice under item (1) must be provided by the time of the removal and must appear on all shipping papers, bills of lading, and similar documents accompanying the removal of the fuel. Who can file a 1040ez   Any seller that fails to post the required notice under item (2) is presumed to know that the fuel will be used for a taxable use (a use other than a nontaxable use listed later). Who can file a 1040ez That seller is subject to the penalty described next. Who can file a 1040ez Penalty. Who can file a 1040ez   A penalty is imposed on a person if any of the following situations apply. Who can file a 1040ez Any dyed fuel is sold or held for sale by the person for a use the person knows or has reason to know is not a nontaxable use of the fuel. Who can file a 1040ez Any dyed fuel is held for use or used by the person for a use other than a nontaxable use and the person knew, or had reason to know, that the fuel was dyed. Who can file a 1040ez The person willfully alters, chemically or otherwise, or attempts to so alter, the strength or composition of any dye in dyed fuel. Who can file a 1040ez The person has knowledge that a dyed fuel that has been altered, as described in (3) above, sells or holds for sale such fuel for any use for which the person knows or has reason to know is not a nontaxable use of the fuel. Who can file a 1040ez   The penalty is the greater of $1,000 or $10 per gallon of the dyed diesel fuel or dyed kerosene involved. Who can file a 1040ez After the first violation, the $1,000 portion of the penalty increases depending on the number of violations. Who can file a 1040ez   This penalty is in addition to any tax imposed on the fuel. Who can file a 1040ez   If the penalty is imposed, each officer, employee, or agent of a business entity who willfully participated in any act giving rise to the penalty is jointly and severally liable with that entity for the penalty. Who can file a 1040ez   There is no administrative appeal or review allowed for the third and subsequent penalty imposed by section 6715 on any person except for: Fraud or a mistake in the chemical analysis, or Mathematical calculation of the penalty. Who can file a 1040ez   If you are liable for the penalty, you may also be liable for the back-up tax, discussed later. Who can file a 1040ez However, the penalty applies only to dyed diesel fuel and dyed kerosene, while the back-up tax may apply to other fuels. Who can file a 1040ez The penalty may apply if the fuel is held for sale or use for a taxable use while the back-up tax does not apply unless the fuel is delivered into a fuel supply tank. Who can file a 1040ez Exception to penalty. Who can file a 1040ez   The penalty under item (3) will not apply in any of the following situations. Who can file a 1040ez Diesel fuel or kerosene meeting the dyeing requirements (described earlier) is blended with any undyed liquid and the resulting product meets the dyeing requirements. Who can file a 1040ez Diesel fuel or kerosene meeting the dyeing requirements (described earlier) is blended with any other liquid (other than diesel fuel or kerosene) that contains the type and amount of dye required to meet the dyeing requirements. Who can file a 1040ez The alteration or attempted alteration occurs in an exempt area of Alaska. Who can file a 1040ez See Removal for sale or use in Alaska, later. Who can file a 1040ez Diesel fuel or kerosene meeting the dyeing requirements (described earlier) is blended with diesel fuel or kerosene not meeting the dyeing requirements and the blending occurs as part of a nontaxable use (other than export), discussed later. Who can file a 1040ez Alaska and Feedstocks Tax of $. Who can file a 1040ez 001 per gallon is imposed on: Undyed diesel fuel or undyed kerosene sold or used in Alaska for certain nontaxable uses (see Later sales on page 10). Who can file a 1040ez Undyed kerosene used for feedstock purposes. Who can file a 1040ez Removal for sale or use in Alaska. Who can file a 1040ez   No tax is imposed on the removal, entry, or sale of diesel fuel or kerosene in Alaska for ultimate sale or use in certain areas of Alaska for certain nontaxable uses. Who can file a 1040ez The removal or entry of any diesel fuel or kerosene is not taxed if all the following requirements are satisfied. Who can file a 1040ez The person otherwise liable for the tax (position holder, refiner, or enterer): Is a registrant, Can show satisfactory evidence of the nontaxable nature of the transaction, and Has no reason to believe the evidence is false. Who can file a 1040ez In the case of a removal from a terminal, the terminal is an approved terminal. Who can file a 1040ez The owner of the fuel immediately after the removal or entry holds the fuel for its own use in a nontaxable use (discussed later) or is a qualified dealer. Who can file a 1040ez   If all three of the requirements above are not met, then tax is imposed at $. Who can file a 1040ez 244 per gallon. Who can file a 1040ez   A qualified dealer is any person that holds a qualified dealer license from the state of Alaska or has been registered by the IRS as a qualified retailer. Who can file a 1040ez Satisfactory evidence may include copies of qualified dealer licenses or exemption certificates obtained for state tax purposes. Who can file a 1040ez Later sales. Who can file a 1040ez   The excise tax applies to diesel fuel or kerosene sold by a qualified dealer after the removal or entry. Who can file a 1040ez The tax is imposed at the time of the sale and the qualified dealer is liable for the tax. Who can file a 1040ez However, the sale is not taxable (other than the LUST tax at $. Who can file a 1040ez 001 per gallon) if all the following requirements are met. Who can file a 1040ez The fuel is sold in Alaska for certain nontaxable uses. Who can file a 1040ez The buyer buys the fuel for its own use in a nontaxable use or is a qualified dealer. Who can file a 1040ez The seller can show satisfactory evidence of the nontaxable nature of the transaction and has no reason to believe the evidence is false. Who can file a 1040ez Feedstock purposes. Who can file a 1040ez   The $. Who can file a 1040ez 001 per gallon LUST tax is imposed on the removal or entry of undyed kerosene if all the following conditions are met. Who can file a 1040ez The person otherwise liable for tax (position holder, refiner, or enterer) is a registrant. Who can file a 1040ez In the case of a removal from a terminal, the terminal is an approved terminal. Who can file a 1040ez Either: The person otherwise liable for tax uses the kerosene for a feedstock purpose, or The kerosene is sold for use by the buyer for a feedstock purpose and, at the time of the sale, the person otherwise liable for tax has an unexpired certificate (described later) from the buyer and has no reason to believe any information on the certificate is false. Who can file a 1040ez   If all of the requirements above are not met, then tax is imposed at $. Who can file a 1040ez 244 per gallon. Who can file a 1040ez   Kerosene is used for a feedstock purpose when it is used for nonfuel purposes in the manufacture or production of any substance other than gasoline, diesel fuel, or Other Fuels. Who can file a 1040ez For example, kerosene is used for a feedstock purpose when it is used as an ingredient in the production of paint, but is not used for a feedstock purpose when it is used to power machinery at a factory where paint is produced. Who can file a 1040ez A feedstock user is a person that uses kerosene for a feedstock purpose. Who can file a 1040ez A registered feedstock user is a person that has been registered by the IRS as a feedstock user. Who can file a 1040ez See Registration Requirements, earlier. Who can file a 1040ez Later sales. Who can file a 1040ez   The excise tax ($. Who can file a 1040ez 244 per gallon) applies to kerosene sold for use by the buyer for a feedstock purpose (item (3)(b) above) if the buyer in that sale later sells the kerosene. Who can file a 1040ez The tax is imposed at the time of the later sale and that seller is liable for the tax. Who can file a 1040ez Certificate. Who can file a 1040ez   The certificate from the buyer certifies the buyer is a registered feedstock user and the kerosene will be used by the buyer for a feedstock purpose. Who can file a 1040ez The certificate may be included as part of any business records normally used for a sale. Who can file a 1040ez A model certificate is shown in the Appendix as Model Certificate G. Who can file a 1040ez Your certificate must contain all information necessary to complete the model. Who can file a 1040ez   A certificate expires on the earliest of the following dates. Who can file a 1040ez The date 1 year after the effective date (not earlier than the date signed) of the certificate. Who can file a 1040ez The date the seller is provided a new certificate or notice that the current certificate is invalid. Who can file a 1040ez The date the seller is notified the buyer's registration has been revoked or suspended. Who can file a 1040ez   The buyer must provide a new certificate if any information on a certificate has changed. Who can file a 1040ez Back-up Tax Tax is imposed on the delivery of any of the following into the fuel supply tank of a diesel-powered highway vehicle. Who can file a 1040ez Any dyed diesel fuel or dyed kerosene for other than a nontaxable use. Who can file a 1040ez Any undyed diesel fuel or undyed kerosene on which a credit or refund (for fuel used for a nontaxable purpose) has been allowed. Who can file a 1040ez Any liquid other than gasoline, diesel fuel, or kerosene. Who can file a 1040ez Generally, this back-up tax is imposed at a rate of $. Who can file a 1040ez 244 per gallon. Who can file a 1040ez Liability for tax. Who can file a 1040ez   Generally, the operator of the vehicle into which the fuel is delivered is liable for the tax. Who can file a 1040ez In addition, the seller of the diesel fuel or kerosene is jointly and severally liable for the tax if the seller knows or has reason to know that the fuel will be used for other than a nontaxable use. Who can file a 1040ez Exemptions from the back-up tax. Who can file a 1040ez   The back-up tax does not apply to a delivery of diesel fuel or kerosene for uses 1, 2, 6, 7, 12, 13, 14, and 15 listed under Definitions of Nontaxable Uses in chapter 2. Who can file a 1040ez   In addition, since the back-up tax is imposed only on the delivery into the fuel supply tank of a diesel-powered vehicle or train, the tax does not apply to diesel fuel or kerosene used as heating oil or in stationary engines. Who can file a 1040ez Diesel-Water Fuel Emulsion Diesel-water fuel emulsion means diesel fuel at least 14% of which is water and for which the emulsion additive is registered by a United States manufacturer with the EPA under section 211 of the Clean Air Act as in effect on March 31, 2003. Who can file a 1040ez A reduced tax rate of $. Who can file a 1040ez 198 per gallon is imposed on a diesel-water fuel emulsion. Who can file a 1040ez To be eligible for the reduced rate, the person who sells, removes, or uses the diesel-water fuel emulsion must be registered by the IRS. Who can file a 1040ez If the diesel-water fuel emulsion does not meet the requirements above, or if the person who sells, removes, or uses the fuel is not registered, the diesel-water fuel emulsion is taxed at $. Who can file a 1040ez 244 per gallon. Who can file a 1040ez Credits or refunds. Who can file a 1040ez   The allowance for a credit or refund on a diesel-water fuel emulsion is discussed in chapter 2. Who can file a 1040ez Kerosene for Use in Aviation Taxable Events Generally, kerosene is taxed at $. Who can file a 1040ez 244 per gallon unless a reduced rate applies (see Diesel Fuel and Kerosene, earlier). Who can file a 1040ez For kerosene removed directly from a terminal into the fuel tank of an aircraft for use in noncommercial aviation, the tax rate is $. Who can file a 1040ez 219. Who can file a 1040ez The rate of $. Who can file a 1040ez 219 also applies if kerosene is removed into any aircraft from a qualified refueler truck, tanker, or tank wagon that is loaded with the kerosene from a terminal that is located within an airport. Who can file a 1040ez The airport terminal does not need to be a secured airport terminal for this rate to apply. Who can file a 1040ez However, the refueler truck, tanker, or tank wagon must meet the requirements discussed under Certain refueler trucks, tankers, and tank wagons, treated as terminals, later. Who can file a 1040ez For kerosene removed directly into the fuel tank of an aircraft for use in commercial aviation, the rate of tax is $. Who can file a 1040ez 044 per gallon. Who can file a 1040ez For kerosene removed into an aircraft from a qualified refueler truck, tanker, or tank wagon, the $. Who can file a 1040ez 044 rate applies only if the truck, tanker, or tank wagon is loaded at a terminal that is located in a secured area of the airport. Who can file a 1040ez See Terminal located within a secured area of an airport, later. Who can file a 1040ez In addition, the operator must provide the position holder with a certificate similar to Model Certificate K in the Appendix. Who can file a 1040ez For kerosene removed directly into the fuel tank of an aircraft for a use exempt from tax under section 4041(c) (such as use in an aircraft for the exclusive use of a state or local government), the rate of tax is $. Who can file a 1040ez 001. Who can file a 1040ez There is no tax on kerosene removed directly into the fuel tank of an aircraft for use in foreign trade. Who can file a 1040ez The kerosene must be removed from a qualifying refueler truck, tanker, or tank wagon loaded at a terminal located within a secured area of an airport. Who can file a 1040ez See Terminal located within a secured area of an airport, later. Who can file a 1040ez In addition, the operator must provide the position holder with a certificate similar to Model Certificate K in the Appendix. Who can file a 1040ez The position holder is liable for the $. Who can file a 1040ez 001 per gallon tax. Who can file a 1040ez For kerosene removed directly from a terminal into the fuel tank of an fractional ownership program aircraft after March 31, 2012, a surtax of $. Who can file a 1040ez 141 per gallon applies. Who can file a 1040ez Certain refueler trucks, tankers, and tank wagons treated as terminals. Who can file a 1040ez   For purposes of the tax imposed on kerosene for use in aviation removed directly into the fuel tank of an aircraft for use in commercial aviation, certain refueler trucks, tankers, and tank wagons are treated as part of a terminal if the following conditions are met. Who can file a 1040ez Such terminal is located within an area of an airport. Who can file a 1040ez Any kerosene for use in aviation that is loaded in a refueler truck, tanker, or tank wagon at a terminal is for delivery into aircraft at the airport in which the terminal is located. Who can file a 1040ez Except in exigent circumstances, such as those identified in Notice 2005-80, no vehicle registered for highway use is loaded with kerosene for use in aviation at the terminal. Who can file a 1040ez The refueler truck, tanker, or tank wagon meets the following requirements: Has storage tanks, hose, and coupling equipment designed and used for fueling aircraft, Is not registered for highway use, and Is operated by the terminal operator or a person that makes a daily accounting to the terminal operator of each delivery of fuel from the refueler truck, tanker, or tank wagon. Who can file a 1040ez Information reporting will be required by terminal operators regarding this provision. Who can file a 1040ez Until the format of this information reporting is issued, taxpayers are required to retain records regarding the daily accounting, but are not required to report such information. Who can file a 1040ez Terminal located within a secured area of an airport. Who can file a 1040ez   See Notice 2005-4 and Notice 2005-80 for the list of terminals located within a secured area of an airport. Who can file a 1040ez This list refers to fueling operations at airport terminals as it applies to the federal excise tax on kerosene for use in aviation, and has nothing to do with the general security of airports either included or not included in the list. Who can file a 1040ez Liability For Tax If the kerosene is removed directly into the fuel tank of an aircraft for use in commercial aviation, the operator of the aircraft in commercial aviation is liable for the tax on the removal at the rate of $. Who can file a 1040ez 044 per gallon. Who can file a 1040ez However, the position holder is liable for the LUST tax for kerosene for use in aviation removed directly into the fuel tank of an aircraft for use exempt from tax under section 4041(c) (except foreign trade). Who can file a 1040ez For example, for kerosene removed directly into the aircraft for use in military aircraft, the position holder is liable for the tax. Who can file a 1040ez For the aircraft operator to be liable for the tax $. Who can file a 1040ez 044 rate, the position holder must meet the following requirements: Is a taxable fuel registrant, Has an unexpired certificate (a model certificate is shown in the Appendix as Model Certificate K) from the operator of the aircraft, and Has no reason to believe any of the information in the certificate is false. Who can file a 1040ez Commercial aviation. Who can file a 1040ez   Commercial aviation is any use of an aircraft in the business of transporting persons or property by air for pay. Who can file a 1040ez However, commercial aviation does not include any of the following uses. Who can file a 1040ez Any use exclusively for the purpose of skydiving. Who can file a 1040ez Certain air transportation by seaplane. Who can file a 1040ez See Seaplanes under Transportation of Persons by Air in chapter 4. Who can file a 1040ez Any use of an aircraft owned or leased by a member of an affiliated group and unavailable for hire by nonmembers. Who can file a 1040ez For more information, see Aircraft used by affiliated corporations under Special Rules on Transportation Taxes in chapter 4. Who can file a 1040ez Any use of an aircraft that has a maximum certificated takeoff weight of 6,000 pounds or less, unless the aircraft is operated on an established line. Who can file a 1040ez For more information, see Small aircraft under Special Rules on Transportation Taxes in chapter 4. Who can file a 1040ez Any use where the surtax on fuel used in a fractional ownership program aircraft is imposed. Who can file a 1040ez See Surtax on any liquid used in a fractional ownership program aircraft as fuel below. Who can file a 1040ez Surtax on any liquid used in a fractional ownership program aircraft as fuel Fuel used in a fractional ownership program aircraft (as defined below) after March 31, 2012, is subject to a surtax of $. Who can file a 1040ez 141 per gallon. Who can file a 1040ez The fractional ownership program manager is liable for the tax. Who can file a 1040ez The surtax applies in addition to any other taxes imposed on the removal, entry, use, or sale of the fuel. Who can file a 1040ez If the surtax is imposed, the following air transportation taxes do not apply. Who can file a 1040ez Transportation of persons by air. Who can file a 1040ez Transportation of property by air. Who can file a 1040ez Use of international air travel facilities. Who can file a 1040ez These taxes are described under Air Transportation Taxes, later. Who can file a 1040ez A fractional ownership program aircraft flight is considered noncommercial aviation, for the rules for kerosene used in noncommercial aviation, see Kerosene for Use in Aviation above. Who can file a 1040ez Fractional ownership aircraft program    is a program under which:  A single fractional ownership program manager provides fractional ownership program management services on behalf of the fractional owners; There are one or more fractional owners per fractional program aircraft, with at least one fractional program aircraft having more than one owner; For at least two fractional program aircraft, none of the ownership interests in the aircraft are less than the minimum fractional ownership interest or held by the program manager; There exists a dry-lease aircraft exchange arrangement among all of the fractional owners; and There are multi-year program agreements covering the fractional ownership, fractional ownership program management services, and dry-lease aircraft exchange aspects of the program. Who can file a 1040ez Fractional program aircraft. Who can file a 1040ez   Any aircraft that, in any fractional ownership aircraft program, is listed as a fractional program aircraft in the management specifications issued to the manager of such program by Federal Aviation Administration under subpart K of part 91 title 14, Code of Federal Regulations, and is registered in the U. Who can file a 1040ez S. Who can file a 1040ez   Fractional program aircraft are not considered used for transportation of a qualified fractional owner, or on account of such qualified fractional owner when they are used for flight demonstration, maintenance or crew training. Who can file a 1040ez In such situations, the flight is not commercial aviation. Who can file a 1040ez Instead, the tax on the fuel used in the flight is imposed at the non-commercial aviation rate. Who can file a 1040ez Fractional owner. Who can file a 1040ez   Any person owning any interest (including the entire interest) in a fractional program aircraft. Who can file a 1040ez Dry lease aircraft exchange. Who can file a 1040ez   An agreement, documented by the written program agreements, under which the fractional program aircraft are available, on an as-needed basis without crew, to each fractional owner. Who can file a 1040ez Special rule relating to deadhead service. Who can file a 1040ez   A fractional program aircraft will not be considered to be used on account of a qualified fractional owner when it is used in deadhead service and a person other than a qualified fractional owner is separately charged for such service. Who can file a 1040ez More information. Who can file a 1040ez   See section 4043 for more information on the surtax. Who can file a 1040ez Certificate for Commercial Aviation and Exempt Uses A certificate is required from the aircraft operator: To support aircraft operator liability for tax on removal of kerosene for use in aviation directly into the fuel tank of an aircraft in commercial aviation, or For exempt uses. Who can file a 1040ez Certificate. Who can file a 1040ez   The certificate may be included as part of any business records normally used for a sale. Who can file a 1040ez See Model Certificate K in the Appendix. Who can file a 1040ez   A certificate expires on the earliest of the following dates. Who can file a 1040ez The date 1 year after the effective date (not earlier than the date signed) of the certificate. Who can file a 1040ez The date the buyer provides the seller a new certificate or notice that the current certificate is invalid. Who can file a 1040ez The date the IRS or the buyer notifies the seller that the buyer's right to provide a certificate has been withdrawn. Who can file a 1040ez   The buyer must provide a new certificate if any information on a certificate has changed. Who can file a 1040ez   The IRS may withdraw the buyer's right to provide a certificate if the buyer uses the kerosene for use in aviation to which a certificate relates other than as stated in the certificate. Who can file a 1040ez Exempt use. Who can file a 1040ez   The rate on kerosene for use in aviation is $. Who can file a 1040ez 001 (LUST tax) if it is removed from any refinery or terminal directly into the fuel tank of an aircraft for an exempt use. Who can file a 1040ez An exempt use includes kerosene for the exclusive use of a state or local government. Who can file a 1040ez There is no tax on kerosene removed directly into the fuel tank of an aircraft for use in foreign trade. Who can file a 1040ez Flash title transaction. Who can file a 1040ez   A position holder is not liable for tax if, among other conditions, it obtains a certificate (described above) from the operator of the aircraft into which the kerosene is delivered. Who can file a 1040ez In a “flash title transaction” the position holder sells the kerosene to a wholesale distributor (reseller) that in turn sells the kerosene to the aircraft operator as the kerosene is being removed from a terminal into the fuel tank of an aircraft. Who can file a 1040ez In this case, the position holder will be treated as having a certificate from the operator of the aircraft if: The aircraft operator puts the reseller's name, address, and EIN on the certificate in place of the position holder's information; and The reseller provides the position holder with a statement of the kerosene reseller. Who can file a 1040ez Reseller statement. Who can file a 1040ez   This is a statement that is signed under penalties of perjury by a person with authority to bind the reseller; is provided at the bottom or on the back of the certificate (or in an attached document); and contains: The reseller's name, address, and EIN; The position holder's name, address, and EIN; and A statement that the reseller has no reason to believe that any information in the accompanying aircraft operator's certificate is false. Who can file a 1040ez Credits or Refunds. Who can file a 1040ez   A claim may be made by the ultimate purchaser (the operator) for taxed kerosene for use in aviation used in commercial aviation (other than foreign trade) and noncommercial aviation (other than nonexempt, noncommercial aviation and exclusive use by a state, political subdivision of a state, or the District of Columbia). Who can file a 1040ez A claim may be made by a registered ultimate vendor for certain sales. Who can file a 1040ez For more information, see chapter 2. Who can file a 1040ez Other Fuels (Including Alternative Fuels) Other Fuels means any liquid except gas oil, fuel oil, or any product taxable under section 4081. Who can file a 1040ez Other Fuels include alternative fuels. Who can file a 1040ez Alternative fuels are: Liquefied petroleum gas (LPG), “P Series” fuels, Compressed natural gas (CNG) (discussed later), Liquefied hydrogen, Any liquid fuel derived from coal (including peat) through the Fischer-Tropsch process, Liquid fuel derived from biomass, Liquefied natural gas (LNG), and Liquefied gas derived from biomass. Who can file a 1040ez Liquefied petroleum gas includes propane, butane, pentane, or mixtures of those products. Who can file a 1040ez Qualified methanol and ethanol fuels. Who can file a 1040ez   Qualified ethanol and methanol means any liquid at least 85 percent of which consists of alcohol produced from coal, including peat. Who can file a 1040ez The tax rates are listed in the Instructions for Form 720. Who can file a 1040ez Partially exempt methanol and ethanol fuels. Who can file a 1040ez   A reduced tax rate applies to these fuels. Who can file a 1040ez Partially exempt ethanol and methanol means any liquid at least 85 percent of which consists of alcohol produced from natural gas. Who can file a 1040ez The tax rates are listed in the Instructions for Form 720. Who can file a 1040ez Motor vehicles. Who can file a 1040ez   Motor vehicles include all types of vehicles, whether or not registered (or required to be registered) for highway use, that have both the following characteristics. Who can file a 1040ez They are propelled by a motor. Who can file a 1040ez They are designed for carrying or towing loads from one place to another, regardless of the type of material or load carried or t