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Who Can Use 1040ez Form

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Who Can Use 1040ez Form

Who can use 1040ez form Publication 925 - Main Content Table of Contents Passive Activity LimitsWho Must Use These Rules? Passive Activity Loss Passive Activity Credit Publicly Traded Partnership Excess Farm Loss Passive Activities Activities That Are Not Passive Activities Passive Activity Income and Deductions Grouping Your Activities Recharacterization of Passive Income Dispositions How To Report Your Passive Activity Loss Comprehensive ExampleGeneral Information At-Risk LimitsWho Is Affected? Activities Covered by the At-Risk Rules At-Risk Amounts Amounts Not At Risk Reductions of Amounts At Risk Recapture Rule How To Get Tax HelpLow Income Taxpayer Clinics Passive Activity Limits Who Must Use These Rules? The passive activity rules apply to: Individuals, Estates, Trusts (other than grantor trusts), Personal service corporations, and Closely held corporations. Who can use 1040ez form Even though the rules do not apply to grantor trusts, partnerships, and S corporations directly, they do apply to the owners of these entities. Who can use 1040ez form For information about personal service corporations and closely held corporations, including definitions and how the passive activity rules apply to these corporations, see Form 8810 and its instructions. Who can use 1040ez form Before applying the passive activity limits, you must first determine the amount of the deductions disallowed under the basis, excess farm loss, or at-risk rules. Who can use 1040ez form See Passive Activity Deductions, later. Who can use 1040ez form Passive Activity Loss Generally, the passive activity loss for the tax year is not allowed. Who can use 1040ez form However, there is a special allowance under which some or all of your passive activity loss may be allowed. Who can use 1040ez form See Special $25,000 allowance , later. Who can use 1040ez form Definition of passive activity loss. Who can use 1040ez form    Generally, your passive activity loss for the tax year is the excess of your passive activity deductions over your passive activity gross income. Who can use 1040ez form See Passive Activity Income and Deductions , later. Who can use 1040ez form   For a closely held corporation, the passive activity loss is the excess of passive activity deductions over the sum of passive activity gross income and net active income. Who can use 1040ez form For details on net active income, see the Instructions for Form 8810. Who can use 1040ez form For the definition of passive activity gross income, see Passive Activity Income , later. Who can use 1040ez form For the definition of passive activity deductions, see Passive Activity Deductions , later. Who can use 1040ez form Identification of Disallowed Passive Activity Deductions If all or a part of your passive activity loss is disallowed for the tax year, you may need to allocate the disallowed passive activity loss among different passive activities and among different deductions within a passive activity. Who can use 1040ez form Allocation of disallowed passive activity loss among activities. Who can use 1040ez form   If all or any part of your passive activity loss is disallowed for the tax year, a ratable portion of the loss (if any) from each of your passive activities is disallowed. Who can use 1040ez form The ratable portion of a loss from an activity is computed by multiplying the passive activity loss that is disallowed for the tax year by the fraction obtained by dividing: The loss from the activity for the tax year; by The sum of the losses for the tax year from all activities having losses for the tax year. Who can use 1040ez form Use Worksheet 5 of Form 8582 to figure the ratable portion of the loss from each activity that is disallowed. Who can use 1040ez form Loss from an activity. Who can use 1040ez form   The term “loss from an activity” means: The amount by which the passive activity deductions (defined later) from the activity for the tax year exceed the passive activity gross income (defined later) from the activity for the tax year; reduced by Any part of such amount that is allowed under the Special $25,000 Allowance , later. Who can use 1040ez form   If your passive activity gross income from significant participation passive activities (defined later) for the tax year is more than your passive activity deductions from those activities for the tax year, those activities shall be treated, solely for purposes of figuring your loss from the activity, as a single activity that does not have a loss for such taxable year. Who can use 1040ez form See Significant Participation Passive Activities , later. Who can use 1040ez form Example. Who can use 1040ez form John Pine holds interests in three passive activities, A, B, and C. Who can use 1040ez form The gross income and deductions from these activities for the taxable year are as follows:   A B C Total Gross income $7,000 $4,000 $12,000 $23,000 Deductions (16,000) (20,000) (8,000) (44,000)           Net income (loss) ($9,000) ($16,000) $4,000 ($21,000)   John Pine’s $21,000 passive activity loss for the taxable year is disallowed. Who can use 1040ez form Therefore, a ratable portion of the losses from activities A and B is disallowed. Who can use 1040ez form He figures the disallowed portion of each loss as follows: A: $21,000 x $9,000/$25,000 $7,560 B: $21,000 x $16,000/$25,000 13,440     Total $21,000 Allocation within loss activities. Who can use 1040ez form   If all or any part of your loss from an activity is disallowed under Allocation of disallowed passive activity loss among activities for the tax year, a ratable portion of each of your passive activity deductions (defined later), other than an excluded deduction (defined below) from such activity is disallowed. Who can use 1040ez form The ratable portion of a passive activity deduction is the amount of the disallowed portion of the loss from the activity for the tax year multiplied by the fraction obtained by dividing: The amount of such deduction; by The sum of all of your passive activity deductions (other than excluded deductions) from that activity from the tax year. Who can use 1040ez form Excluded deductions. Who can use 1040ez form    “Excluded deduction” means any passive activity deduction that is taken into account in computing your net income from an item of property for a taxable year in which an amount of the taxpayer's gross income from such item of property is treated as not from a passive activity. Who can use 1040ez form See Recharacterization of Passive Income , later. Who can use 1040ez form Separately identified deductions. Who can use 1040ez form   In identifying the deductions from an activity that are disallowed, you do not need to account separately for a deduction unless such deduction may, if separately taken into account, result in an income tax liability for any tax year different from that which would result were such deduction not taken into account separately. Who can use 1040ez form   Use Form 8582, Worksheet 7, for any activity if you have passive activity deductions for that activity that must be separately identified. Who can use 1040ez form   Deductions that must be accounted for separately include (but are not limited to) the following deductions. Who can use 1040ez form Deductions that arise in a rental real estate activity in tax years in which you actively participate in such activity. Who can use 1040ez form See Active participation , later. Who can use 1040ez form Deductions that arise in a rental real estate activity in tax years in which you do not actively participate in such activity. Who can use 1040ez form See Active participation , later. Who can use 1040ez form Losses from sales or exchanges of capital assets. Who can use 1040ez form Section 1231 losses. Who can use 1040ez form See Section 1231 Gains and Losses in Publication 544, Sales and Other Disposition of Assets, for more information. Who can use 1040ez form Carryover of Disallowed Deductions In the case of an activity with respect to which any deductions or credits are disallowed for a taxable year (the loss activity), the disallowed deductions are allocated among your activities for the next tax year in a manner that reasonably reflects the extent to which each activity continues the loss activity. Who can use 1040ez form The disallowed deductions or credits allocated to an activity under the preceding sentence are treated as deductions or credits from the activity for the next tax year. Who can use 1040ez form For more information, see Regulations section 1. Who can use 1040ez form 469-1(f)(4). Who can use 1040ez form Passive Activity Credit Generally, the passive activity credit for the tax year is disallowed. Who can use 1040ez form The passive activity credit is the amount by which the sum of all your credits subject to the passive activity rules exceed your regular tax liability allocable to all passive activities for the tax year. Who can use 1040ez form Credits that are included in figuring the general business credit are subject to the passive activity rules. Who can use 1040ez form See the Instructions for Form 8582-CR for more information. Who can use 1040ez form Publicly Traded Partnership You must apply the rules in this part separately to your income or loss from a passive activity held through a publicly traded partnership (PTP). Who can use 1040ez form You also must apply the limit on passive activity credits separately to your credits from a passive activity held through a PTP. Who can use 1040ez form You can offset deductions from passive activities of a PTP only against income or gain from passive activities of the same PTP. Who can use 1040ez form Likewise, you can offset credits from passive activities of a PTP only against the tax on the net passive income from the same PTP. Who can use 1040ez form This separate treatment rule also applies to a regulated investment company holding an interest in a PTP for the items attributable to that interest. Who can use 1040ez form For more information on how to apply the passive activity loss rules to PTPs, and on how to apply the limit on passive activity credits to PTPs, see Publicly Traded Partnerships (PTPs) in the Instructions for Forms 8582 and 8582-CR, respectively. Who can use 1040ez form Excess Farm Loss If you receive an applicable subsidy for any tax year and you have an excess farm loss for the tax year, special rules apply. Who can use 1040ez form These rules do not apply to C corporations. Who can use 1040ez form For information, see the Instructions for Schedule F (Form 1040), Profit or Loss From Farming. Who can use 1040ez form Passive Activities There are two kinds of passive activities. Who can use 1040ez form Trade or business activities in which you do not materially participate during the year. Who can use 1040ez form Rental activities, even if you do materially participate in them, unless you are a real estate professional. Who can use 1040ez form Material participation in a trade or business is discussed later, under Activities That Are Not Passive Activities . Who can use 1040ez form Treatment of former passive activities. Who can use 1040ez form   A former passive activity is an activity that was a passive activity in any earlier tax year, but is not a passive activity in the current tax year. Who can use 1040ez form You can deduct a prior year's unallowed loss from the activity up to the amount of your current year net income from the activity. Who can use 1040ez form Treat any remaining prior year unallowed loss like you treat any other passive loss. Who can use 1040ez form   In addition, any prior year unallowed passive activity credits from a former passive activity offset the allocable part of your current year tax liability. Who can use 1040ez form The allocable part of your current year tax liability is that part of this year's tax liability that is allocable to the current year net income from the former passive activity. Who can use 1040ez form You figure this after you reduce your net income from the activity by any prior year unallowed loss from that activity (but not below zero). Who can use 1040ez form Trade or Business Activities A trade or business activity is an activity that: Involves the conduct of a trade or business (that is, deductions would be allowable under section 162 of the Internal Revenue Code if other limitations, such as the passive activity rules, did not apply), Is conducted in anticipation of starting a trade or business, or Involves research or experimental expenditures that are deductible under Internal Revenue Code section 174 (or that would be deductible if you chose to deduct rather than capitalize them). Who can use 1040ez form A trade or business activity does not include a rental activity or the rental of property that is incidental to an activity of holding the property for investment. Who can use 1040ez form You generally report trade or business activities on Schedule C, C-EZ, F, or in Part II or III of Schedule E. Who can use 1040ez form Rental Activities A rental activity is a passive activity even if you materially participated in that activity, unless you materially participated as a real estate professional. Who can use 1040ez form See Real Estate Professional under Activities That Are Not Passive Activities, later. Who can use 1040ez form An activity is a rental activity if tangible property (real or personal) is used by customers or held for use by customers, and the gross income (or expected gross income) from the activity represents amounts paid (or to be paid) mainly for the use of the property. Who can use 1040ez form It does not matter whether the use is under a lease, a service contract, or some other arrangement. Who can use 1040ez form Exceptions. Who can use 1040ez form   Your activity is not a rental activity if any of the following apply. Who can use 1040ez form The average period of customer use of the property is 7 days or less. Who can use 1040ez form You figure the average period of customer use by dividing the total number of days in all rental periods by the number of rentals during the tax year. Who can use 1040ez form If the activity involves renting more than one class of property, multiply the average period of customer use of each class by a fraction. Who can use 1040ez form The numerator of the fraction is the gross rental income from that class of property and the denominator is the activity's total gross rental income. Who can use 1040ez form The activity's average period of customer use will equal the sum of the amounts for each class. Who can use 1040ez form The average period of customer use of the property, as figured in (1) above, is 30 days or less and you provide significant personal services with the rentals. Who can use 1040ez form Significant personal services include only services performed by individuals. Who can use 1040ez form To determine if personal services are significant, all relevant facts and circumstances are taken into consideration, including the frequency of the services, the type and amount of labor required to perform the services, and the value of the services relative to the amount charged for use of the property. Who can use 1040ez form Significant personal services do not include the following. Who can use 1040ez form Services needed to permit the lawful use of the property, Services to repair or improve property that would extend its useful life for a period substantially longer than the average rental, and Services that are similar to those commonly provided with long-term rentals of real estate, such as cleaning and maintenance of common areas or routine repairs. Who can use 1040ez form You provide extraordinary personal services in making the rental property available for customer use. Who can use 1040ez form Services are extraordinary personal services if they are performed by individuals and the customers' use of the property is incidental to their receipt of the services. Who can use 1040ez form The rental is incidental to a nonrental activity. Who can use 1040ez form The rental of property is incidental to an activity of holding property for investment if the main purpose of holding the property is to realize a gain from its appreciation and the gross rental income from the property is less than 2% of the smaller of the property's unadjusted basis or fair market value. Who can use 1040ez form The unadjusted basis of property is its cost not reduced by depreciation or any other basis adjustment. Who can use 1040ez form The rental of property is incidental to a trade or business activity if all of the following apply. Who can use 1040ez form You own an interest in the trade or business activity during the year. Who can use 1040ez form The rental property was used mainly in that trade or business activity during the current year, or during at least 2 of the 5 preceding tax years. Who can use 1040ez form Your gross rental income from the property is less than 2% of the smaller of its unadjusted basis or fair market value. Who can use 1040ez form Lodging provided to an employee or the employee's spouse or dependents is incidental to the activity or activities in which the employee performs services if the lodging is furnished for the employer's convenience. Who can use 1040ez form You customarily make the rental property available during defined business hours for nonexclusive use by various customers. Who can use 1040ez form You provide the property for use in a nonrental activity in your capacity as an owner of an interest in the partnership, S corporation, or joint venture conducting that activity. Who can use 1040ez form    If you meet any of the exceptions listed above, see the instructions for Form 8582 for information about how to report any income or loss from the activity. Who can use 1040ez form Special $25,000 allowance. Who can use 1040ez form   If you or your spouse actively participated in a passive rental real estate activity, the amount of the passive activity loss that is disallowed is decreased and you therefore can deduct up to $25,000 of loss from the activity from your nonpassive income. Who can use 1040ez form This special allowance is an exception to the general rule disallowing the passive activity loss. Who can use 1040ez form Similarly, you can offset credits from the activity against the tax on up to $25,000 of nonpassive income after taking into account any losses allowed under this exception. Who can use 1040ez form   If you are married, filing a separate return, and lived apart from your spouse for the entire tax year, your special allowance cannot be more than $12,500. Who can use 1040ez form If you lived with your spouse at any time during the year and are filing a separate return, you cannot use the special allowance to reduce your nonpassive income or tax on nonpassive income. Who can use 1040ez form   The maximum special allowance is reduced if your modified adjusted gross income exceeds certain amounts. Who can use 1040ez form See Phaseout rule , later. Who can use 1040ez form Example. Who can use 1040ez form Kate, a single taxpayer, has $70,000 in wages, $15,000 income from a limited partnership, a $26,000 loss from rental real estate activities in which she actively participated, and is not subject to the modified adjusted gross income phaseout rule. Who can use 1040ez form She can use $15,000 of her $26,000 loss to offset her $15,000 passive income from the partnership. Who can use 1040ez form She actively participated in her rental real estate activities, so she can use the remaining $11,000 rental real estate loss to offset $11,000 of her nonpassive income (wages). Who can use 1040ez form Commercial revitalization deduction (CRD). Who can use 1040ez form   The special allowance must first be applied to losses from rental real estate activities figured without the CRD. Who can use 1040ez form Any remaining part of the special allowance is available for the CRD from the rental real estate activities and is not subject to the active participation rules or the phaseout based on modified adjusted gross income. Who can use 1040ez form You cannot claim a CRD for a building placed in service after December 31, 2009. Who can use 1040ez form Active participation. Who can use 1040ez form   Active participation is not the same as material participation (defined later). Who can use 1040ez form Active participation is a less stringent standard than material participation. Who can use 1040ez form For example, you may be treated as actively participating if you make management decisions in a significant and bona fide sense. Who can use 1040ez form Management decisions that count as active participation include approving new tenants, deciding on rental terms, approving expenditures, and similar decisions. Who can use 1040ez form   Only individuals can actively participate in rental real estate activities. Who can use 1040ez form However, a decedent's estate is treated as actively participating for its tax years ending less than 2 years after the decedent's death, if the decedent would have satisfied the active participation requirement for the activity for the tax year the decedent died. Who can use 1040ez form   A decedent's qualified revocable trust can also be treated as actively participating if both the trustee and the executor (if any) of the estate choose to treat the trust as part of the estate. Who can use 1040ez form The choice applies to tax years ending after the decedent's death and before: 2 years after the decedent's death if no estate tax return is required, or 6 months after the estate tax liability is finally determined if an estate tax return is required. Who can use 1040ez form   The choice is irrevocable and cannot be made later than the due date for the estate's first income tax return (including any extensions). Who can use 1040ez form   Limited partners are not treated as actively participating in a partnership's rental real estate activities. Who can use 1040ez form   You are not treated as actively participating in a rental real estate activity unless your interest in the activity (including your spouse's interest) was at least 10% (by value) of all interests in the activity throughout the year. Who can use 1040ez form   Active participation is not required to take the low-income housing credit, the rehabilitation investment credit, or CRD from rental real estate activities. Who can use 1040ez form Example. Who can use 1040ez form Mike, a single taxpayer, had the following income and loss during the tax year: Salary $42,300 Dividends 300 Interest 1,400 Rental loss (4,000) The rental loss came from a house Mike owned. Who can use 1040ez form He advertised and rented the house to the current tenant himself. Who can use 1040ez form He also collected the rents and did the repairs or hired someone to do them. Who can use 1040ez form Even though the rental loss is a loss from a passive activity, Mike can use the entire $4,000 loss to offset his other income because he actively participated. Who can use 1040ez form Phaseout rule. Who can use 1040ez form   The maximum special allowance of $25,000 ($12,500 for married individuals filing separate returns and living apart at all times during the year) is reduced by 50% of the amount of your modified adjusted gross income that is more than $100,000 ($50,000 if you are married filing separately). Who can use 1040ez form If your modified adjusted gross income is $150,000 or more ($75,000 or more if you are married filing separately), you generally cannot use the special allowance. Who can use 1040ez form    Modified adjusted gross income for this purpose is your adjusted gross income figured without the following. Who can use 1040ez form Taxable social security and tier 1 railroad retirement benefits. Who can use 1040ez form Deductible contributions to individual retirement accounts (IRAs) and section 501(c)(18) pension plans. Who can use 1040ez form The exclusion from income of interest from qualified U. Who can use 1040ez form S. Who can use 1040ez form savings bonds used to pay qualified higher education expenses. Who can use 1040ez form The exclusion from income of amounts received from an employer's adoption assistance program. Who can use 1040ez form Passive activity income or loss included on Form 8582. Who can use 1040ez form Any rental real estate loss allowed because you materially participated in the rental activity as a Real Estate Professional (as discussed later, under Activities That Are Not Passive Activities). Who can use 1040ez form Any overall loss from a publicly traded partnership (see Publicly Traded Partnerships (PTPs) in the instructions for Form 8582). Who can use 1040ez form The deduction for the employer-equivalent portion of self-employment tax. Who can use 1040ez form The deduction for domestic production activities. Who can use 1040ez form The deduction allowed for interest on student loans. Who can use 1040ez form The deduction for qualified tuition and related expenses. Who can use 1040ez form Example. Who can use 1040ez form During 2013, John was unmarried and was not a real estate professional. Who can use 1040ez form For 2013, he had $120,000 in salary and a $31,000 loss from his rental real estate activities in which he actively participated. Who can use 1040ez form His modified adjusted gross income is $120,000. Who can use 1040ez form When he files his 2013 return, he can deduct only $15,000 of his passive activity loss. Who can use 1040ez form He must carry over the remaining $16,000 passive activity loss to 2014. Who can use 1040ez form He figures his deduction and carryover as follows: Adjusted gross income, modified as required $120,000       Minus amount not subject to phaseout 100,000 Amount subject to phaseout rule $20,000 Multiply by 50% × 50% Required reduction to special allowance $10,000 Maximum special allowance $25,000 Minus required reduction (see above) 10,000 Adjusted special allowance $15,000 Passive loss from rental real estate $31,000 Deduction allowable/Adjusted  special allowance (see above) 15,000       Amount that must be carried forward $16,000 Exceptions to the phaseout rules. Who can use 1040ez form   A higher phaseout range applies to rehabilitation investment credits from rental real estate activities. Who can use 1040ez form For those credits, the phaseout of the $25,000 special allowance starts when your modified adjusted gross income exceeds $200,000 ($100,000 if you are a married individual filing a separate return and living apart at all times during the year). Who can use 1040ez form   There is no phaseout of the $25,000 special allowance for low-income housing credits or for the CRD. Who can use 1040ez form Ordering rules. Who can use 1040ez form   If you have more than one of the exceptions to the phaseout rules in the same tax year, you must apply the $25,000 phaseout against your passive activity losses and credits in the following order. Who can use 1040ez form The portion of passive activity losses not attributable to the CRD. Who can use 1040ez form The portion of passive activity losses attributable to the CRD. Who can use 1040ez form The portion of passive activity credits attributable to credits other than the rehabilitation and low-income housing credits. Who can use 1040ez form The portion of passive activity credits attributable to the rehabilitation credit. Who can use 1040ez form The portion of passive activity credits attributable to the low-income housing credit. Who can use 1040ez form Activities That Are Not Passive Activities The following are not passive activities. Who can use 1040ez form Trade or business activities in which you materially participated for the tax year. Who can use 1040ez form A working interest in an oil or gas well which you hold directly or through an entity that does not limit your liability (such as a general partner interest in a partnership). Who can use 1040ez form It does not matter whether you materially participated in the activity for the tax year. Who can use 1040ez form However, if your liability was limited for part of the year (for example, you converted your general partner interest to a limited partner interest during the year) and you had a net loss from the well for the year, some of your income and deductions from the working interest may be treated as passive activity gross income and passive activity deductions. Who can use 1040ez form  See Temporary Regulations section 1. Who can use 1040ez form 469-1T(e)(4)(ii). Who can use 1040ez form The rental of a dwelling unit that you also used for personal purposes during the year for more than the greater of 14 days or 10% of the number of days during the year that the home was rented at a fair rental. Who can use 1040ez form An activity of trading personal property for the account of those who own interests in the activity. Who can use 1040ez form See Temporary Regulations section 1. Who can use 1040ez form 469-1T(e)(6). Who can use 1040ez form Rental real estate activities in which you materially participated as a real estate professional. Who can use 1040ez form See Real Estate Professional , later. Who can use 1040ez form You should not enter income and losses from these activities on Form 8582. Who can use 1040ez form Instead, enter them on the forms or schedules you would normally use. Who can use 1040ez form Material Participation A trade or business activity is not a passive activity if you materially participated in the activity. Who can use 1040ez form Material participation tests. Who can use 1040ez form    You materially participated in a trade or business activity for a tax year if you satisfy any of the following tests. Who can use 1040ez form You participated in the activity for more than 500 hours. Who can use 1040ez form Your participation was substantially all the participation in the activity of all individuals for the tax year, including the participation of individuals who did not own any interest in the activity. Who can use 1040ez form You participated in the activity for more than 100 hours during the tax year, and you participated at least as much as any other individual (including individuals who did not own any interest in the activity) for the year. Who can use 1040ez form The activity is a significant participation activity, and you participated in all significant participation activities for more than 500 hours. Who can use 1040ez form A significant participation activity is any trade or business activity in which you participated for more than 100 hours during the year and in which you did not materially participate under any of the material participation tests, other than this test. Who can use 1040ez form See Significant Participation Passive Activities , under Recharacterization of Passive Income, later. Who can use 1040ez form You materially participated in the activity for any 5 (whether or not consecutive) of the 10 immediately preceding tax years. Who can use 1040ez form The activity is a personal service activity in which you materially participated for any 3 (whether or not consecutive) preceding tax years. Who can use 1040ez form An activity is a personal service activity if it involves the performance of personal services in the fields of health (including veterinary services), law, engineering, architecture, accounting, actuarial science, performing arts, consulting, or any other trade or business in which capital is not a material income-producing factor. Who can use 1040ez form Based on all the facts and circumstances, you participated in the activity on a regular, continuous, and substantial basis during the year. Who can use 1040ez form   You did not materially participate in the activity under test (7) if you participated in the activity for 100 hours or less during the year. Who can use 1040ez form Your participation in managing the activity does not count in determining whether you materially participated under this test if: Any person other than you received compensation for managing the activity, or Any individual spent more hours during the tax year managing the activity than you did (regardless of whether the individual was compensated for the management services). Who can use 1040ez form Participation. Who can use 1040ez form   In general, any work you do in connection with an activity in which you own an interest is treated as participation in the activity. Who can use 1040ez form Work not usually performed by owners. Who can use 1040ez form   You do not treat the work you do in connection with an activity as participation in the activity if both of the following are true. Who can use 1040ez form The work is not work that is customarily done by the owner of that type of activity. Who can use 1040ez form One of your main reasons for doing the work is to avoid the disallowance of any loss or credit from the activity under the passive activity rules. Who can use 1040ez form Participation as an investor. Who can use 1040ez form   You do not treat the work you do in your capacity as an investor in an activity as participation unless you are directly involved in the day-to-day management or operations of the activity. Who can use 1040ez form Work you do as an investor includes: Studying and reviewing financial statements or reports on operations of the activity, Preparing or compiling summaries or analyses of the finances or operations of the activity for your own use, and Monitoring the finances or operations of the activity in a nonmanagerial capacity. Who can use 1040ez form Spouse's participation. Who can use 1040ez form   Your participation in an activity includes your spouse's participation. Who can use 1040ez form This applies even if your spouse did not own any interest in the activity and you and your spouse do not file a joint return for the year. Who can use 1040ez form Proof of participation. Who can use 1040ez form You can use any reasonable method to prove your participation in an activity for the year. Who can use 1040ez form You do not have to keep contemporaneous daily time reports, logs, or similar documents if you can establish your participation in some other way. Who can use 1040ez form For example, you can show the services you performed and the approximate number of hours spent by using an appointment book, calendar, or narrative summary. Who can use 1040ez form Limited partners. Who can use 1040ez form   If you owned an activity as a limited partner, you generally are not treated as materially participating in the activity. Who can use 1040ez form However, you are treated as materially participating in the activity if you met test (1), (5), or (6) under Material participation tests , discussed earlier, for the tax year. Who can use 1040ez form   You are not treated as a limited partner, however, if you also were a general partner in the partnership at all times during the partnership's tax year ending with or within your tax year (or, if shorter, during that part of the partnership's tax year in which you directly or indirectly owned your limited partner interest). Who can use 1040ez form Retired or disabled farmer and surviving spouse of a farmer. Who can use 1040ez form   If you are a retired or disabled farmer, you are treated as materially participating in a farming activity if you materially participated for 5 or more of the 8 years before your retirement or disability. Who can use 1040ez form Similarly, if you are a surviving spouse of a farmer, you are treated as materially participating in a farming activity if the real property used in the activity meets the estate tax rules for special valuation of farm property passed from a qualifying decedent, and you actively manage the farm. Who can use 1040ez form Corporations. Who can use 1040ez form   A closely held corporation or a personal service corporation is treated as materially participating in an activity only if one or more shareholders holding more than 50% by value of the outstanding stock of the corporation materially participate in the activity. Who can use 1040ez form   A closely held corporation can also satisfy the material participation standard by meeting the first two requirements for the qualifying business exception from the at-risk limits. Who can use 1040ez form See Special exception for qualified corporations under Activities Covered by the At-Risk Rules, later. Who can use 1040ez form Real Estate Professional Generally, rental activities are passive activities even if you materially participated in them. Who can use 1040ez form However, if you qualified as a real estate professional, rental real estate activities in which you materially participated are not passive activities. Who can use 1040ez form For this purpose, each interest you have in a rental real estate activity is a separate activity, unless you choose to treat all interests in rental real estate activities as one activity. Who can use 1040ez form See the Instructions for Schedule E (Form 1040), Supplemental Income and Loss, for information about making this choice. Who can use 1040ez form If you qualified as a real estate professional for 2013, report income or losses from rental real estate activities in which you materially participated as nonpassive income or losses, and complete line 43 of Schedule E (Form 1040). Who can use 1040ez form If you also have an unallowed loss from these activities from an earlier year when you did not qualify, see Treatment of former passive activities under Passive Activities, earlier. Who can use 1040ez form Qualifications. Who can use 1040ez form   You qualified as a real estate professional for the year if you met both of the following requirements. Who can use 1040ez form More than half of the personal services you performed in all trades or businesses during the tax year were performed in real property trades or businesses in which you materially participated. Who can use 1040ez form You performed more than 750 hours of services during the tax year in real property trades or businesses in which you materially participated. Who can use 1040ez form   Do not count personal services you performed as an employee in real property trades or businesses unless you were a 5% owner of your employer. Who can use 1040ez form You were a 5% owner if you owned (or are considered to have owned) more than 5% of your employer's outstanding stock, outstanding voting stock, or capital or profits interest. Who can use 1040ez form   If you file a joint return, do not count your spouse's personal services to determine whether you met the preceding requirements. Who can use 1040ez form However, you can count your spouse's participation in an activity in determining if you materially participated. Who can use 1040ez form Real property trades or businesses. Who can use 1040ez form   A real property trade or business is a trade or business that does any of the following with real property. Who can use 1040ez form Develops or redevelops it. Who can use 1040ez form Constructs or reconstructs it. Who can use 1040ez form Acquires it. Who can use 1040ez form Converts it. Who can use 1040ez form Rents or leases it. Who can use 1040ez form Operates or manages it. Who can use 1040ez form Brokers it. Who can use 1040ez form Closely held corporations. Who can use 1040ez form   A closely held corporation can qualify as a real estate professional if more than 50% of the gross receipts for its tax year came from real property trades or businesses in which it materially participated. Who can use 1040ez form Passive Activity Income and Deductions In figuring your net income or loss from a passive activity, take into account only passive activity income and passive activity deductions. Who can use 1040ez form Self-charged interest. Who can use 1040ez form   Certain self-charged interest income or deductions may be treated as passive activity gross income or passive activity deductions if the loan proceeds are used in a passive activity. Who can use 1040ez form   Generally, self-charged interest income and deductions result from loans between you and a partnership or S corporation in which you had a direct or indirect ownership interest. Who can use 1040ez form This includes both loans you made to the partnership or S corporation and loans the partnership or S corporation made to you. Who can use 1040ez form   It also includes loans from one partnership or S corporation to another partnership or S corporation if each owner in the borrowing entity has the same proportional ownership interest in the lending entity. Who can use 1040ez form    Exception. Who can use 1040ez form The self-charged interest rules do not apply to your interest in a partnership or S corporation if the entity made an election under Regulations section 1. Who can use 1040ez form 469-7(g) to avoid the application of these rules. Who can use 1040ez form For more details on the self-charged interest rules, see Regulations section 1. Who can use 1040ez form 469-7. Who can use 1040ez form Passive Activity Income Passive activity income includes all income from passive activities and generally includes gain from disposition of an interest in a passive activity or property used in a passive activity. Who can use 1040ez form Passive activity income does not include the following items. Who can use 1040ez form Income from an activity that is not a passive activity. Who can use 1040ez form These activities are discussed under Activities That Are Not Passive Activities , earlier. Who can use 1040ez form Portfolio income. Who can use 1040ez form This includes interest, dividends, annuities, and royalties not derived in the ordinary course of a trade or business. Who can use 1040ez form It includes gain or loss from the disposition of property that produces these types of income or that is held for investment. Who can use 1040ez form The exclusion for portfolio income does not apply to self-charged interest treated as passive activity income. Who can use 1040ez form For more information on self-charged interest, see Self-charged interest , earlier. Who can use 1040ez form Personal service income. Who can use 1040ez form This includes salaries, wages, commissions, self-employment income from trade or business activities in which you materially participated, deferred compensation, taxable social security and other retirement benefits, and payments from partnerships to partners for personal services. Who can use 1040ez form Income from positive section 481 adjustments allocated to activities other than passive activities. Who can use 1040ez form (Section 481 adjustments are adjustments that must be made due to changes in your accounting method. Who can use 1040ez form ) Income or gain from investments of working capital. Who can use 1040ez form Income from an oil or gas property if you treated any loss from a working interest in the property for any tax year beginning after 1986 as a nonpassive loss, as discussed in item (2) under Activities That Are Not Passive Activities , earlier. Who can use 1040ez form This also applies to income from other oil and gas property the basis of which is determined wholly or partly by the basis of the property in the preceding sentence. Who can use 1040ez form Any income from intangible property, such as a patent, copyright, or literary, musical, or artistic composition, if your personal efforts significantly contributed to the creation of the property. Who can use 1040ez form Any other income that must be treated as nonpassive income. Who can use 1040ez form See Recharacterization of Passive Income , later. Who can use 1040ez form Overall gain from any interest in a publicly traded partnership. Who can use 1040ez form See Publicly Traded Partnerships (PTPs) in the instructions for Form 8582. Who can use 1040ez form State, local, and foreign income tax refunds. Who can use 1040ez form Income from a covenant not to compete. Who can use 1040ez form Reimbursement of a casualty or theft loss included in gross income to recover all or part of a prior year loss deduction, if the loss deduction was not a passive activity deduction. Who can use 1040ez form Alaska Permanent Fund dividends. Who can use 1040ez form Cancellation of debt income, if at the time the debt is discharged the debt is not allocated to passive activities under the interest expense allocation rules. Who can use 1040ez form See chapter 4 of Publication 535, Business Expenses, for information about the rules for allocating interest. Who can use 1040ez form Disposition of property interests. Who can use 1040ez form   Gain on the disposition of an interest in property generally is passive activity income if, at the time of the disposition, the property was used in an activity that was a passive activity in the year of disposition. Who can use 1040ez form The gain generally is not passive activity income if, at the time of disposition, the property was used in an activity that was not a passive activity in the year of disposition. Who can use 1040ez form An exception to this general rule may apply if you previously used the property in a different activity. Who can use 1040ez form Exception for more than one use in the preceding 12 months. Who can use 1040ez form   If you used the property in more than one activity during the 12-month period before its disposition, you must allocate the gain between the activities on a basis that reasonably reflects the property's use during that period. Who can use 1040ez form Any gain allocated to a passive activity is passive activity income. Who can use 1040ez form   For this purpose, an allocation of the gain solely to the activity in which the property was mainly used during that period reasonably reflects the property's use if the fair market value of your interest in the property is not more than the lesser of: $10,000, or 10% of the total of the fair market value of your interest in the property and the fair market value of all other property used in that activity immediately before the disposition. Who can use 1040ez form Exception for substantially appreciated property. Who can use 1040ez form   The gain is passive activity income if the fair market value of the property at disposition was more than 120% of its adjusted basis and either of the following conditions applies. Who can use 1040ez form You used the property in a passive activity for 20% of the time you held your interest in the property. Who can use 1040ez form You used the property in a passive activity for the entire 24-month period before its disposition. Who can use 1040ez form If neither condition applies, the gain is not passive activity income. Who can use 1040ez form However, it is treated as portfolio income only if you held the property for investment for more than half of the time you held it in nonpassive activities. Who can use 1040ez form   For this purpose, treat property you held through a corporation (other than an S corporation) or other entity whose owners receive only portfolio income as property held in a nonpassive activity and as property held for investment. Who can use 1040ez form Also, treat the date you agree to transfer your interest for a fixed or determinable amount as the disposition date. Who can use 1040ez form   If you used the property in more than one activity during the 12-month period before its disposition, this exception applies only to the part of the gain allocated to a passive activity under the rules described in the preceding discussion. Who can use 1040ez form Disposition of property converted to inventory. Who can use 1040ez form   If you disposed of property that you had converted to inventory from its use in another activity (for example, you sold condominium units you previously held for use in a rental activity), a special rule may apply. Who can use 1040ez form Under this rule, you disregard the property's use as inventory and treat it as if it were still used in that other activity at the time of disposition. Who can use 1040ez form This rule applies only if you meet all of the following conditions. Who can use 1040ez form At the time of disposition, you held your interest in the property in a dealing activity (an activity that involves holding the property or similar property mainly for sale to customers in the ordinary course of a trade or business). Who can use 1040ez form Your other activities included a nondealing activity (an activity that does not involve holding similar property for sale to customers in the ordinary course of a trade or business) in which you used the property for more than 80% of the period you held it. Who can use 1040ez form You did not acquire or hold your interest in the property for the main purpose of selling it to customers in the ordinary course of a trade or business. Who can use 1040ez form Passive Activity Deductions Generally, a deduction is a passive activity deduction for a taxable year if and only if such deduction either: Arises in connection with the conduct of an activity that is a passive activity for the tax year; or Is treated as a deduction from an activity for the tax year because it was disallowed by the passive activity rules in the preceding year and carried forward to the tax year. Who can use 1040ez form For purposes of item (1), above, an item of deduction arises in the taxable year in which the item would be allowable as a deduction under the taxpayer's method of accounting if taxable income for all taxable years were determined without regard to the passive activity rules and without regard to the basis, excess farm loss, and at-risk limits. Who can use 1040ez form See Coordination with other limitations on deductions that apply before the passive activity rules , later. Who can use 1040ez form Passive activity deductions generally include losses from dispositions of property used in a passive activity at the time of the disposition and losses from a disposition of less than your entire interest in a passive activity. Who can use 1040ez form Exceptions. Who can use 1040ez form   Passive activity deductions do not include the following items. Who can use 1040ez form Deductions for expenses (other than interest expense) that are clearly and directly allocable to portfolio income. Who can use 1040ez form Qualified home mortgage interest, capitalized interest expenses, and other interest expenses (other than self-charged interest) properly allocable to passive activities. Who can use 1040ez form For more information on self-charged interest, see Self-charged interest under Passive Activity Income and Deductions, earlier. Who can use 1040ez form Losses from dispositions of property that produce portfolio income or property held for investment. Who can use 1040ez form State, local, and foreign income taxes. Who can use 1040ez form Miscellaneous itemized deductions that may be disallowed because of the 2%-of-adjusted-gross-income limit. Who can use 1040ez form Charitable contribution deductions. Who can use 1040ez form Net operating loss deductions. Who can use 1040ez form Percentage depletion carryovers for oil and gas wells. Who can use 1040ez form Capital loss carrybacks and carryovers. Who can use 1040ez form Items of deduction from a passive activity that are disallowed under the limits on deductions that apply before the passive activity rules. Who can use 1040ez form See Coordination with other limitations on deductions that apply before the passive activity rules , later. Who can use 1040ez form Deductions and losses that would have been allowed for tax years beginning before 1987 but for basis or at-risk limits. Who can use 1040ez form Net negative section 481 adjustments allocated to activities other than passive activities. Who can use 1040ez form (Section 481 adjustments are adjustments required due to changes in accounting methods. Who can use 1040ez form ) Casualty and theft losses, unless losses similar in cause and severity recur regularly in the activity. Who can use 1040ez form The deduction for the employer-equivalent portion of self-employment tax. Who can use 1040ez form Coordination with other limitations on deductions that apply before the passive activity rules. Who can use 1040ez form   An item of deduction from a passive activity that is disallowed for a tax year under the basis or at-risk limitations is not a passive activity deduction for the tax year. Who can use 1040ez form The following sections provide rules for figuring the extent to which items of deduction from a passive activity are disallowed for a tax year under the basis or at-risk limitations. Who can use 1040ez form Proration of deductions disallowed under basis limitations. Who can use 1040ez form   If any amount of your distributive share of a partnership's loss for the tax year is disallowed under the basis limitation, a ratable portion of your distributive share of each item of deduction or loss of the partnership is disallowed for the tax year. Who can use 1040ez form For this purpose, the ratable portion of an item of deduction or loss is the amount of such item multiplied by the fraction obtained by dividing: The amount of your distributive share of partnership loss that is disallowed for the taxable year; by The sum of your distributive shares of all items of deduction and loss of the partnership for the tax year. Who can use 1040ez form   If any amount of your pro rata share of an S corporation's loss for the tax year is disallowed under the basis limitation, a ratable portion of your pro rata share of each item of deduction or loss of the S corporation is disallowed for the tax year. Who can use 1040ez form For this purpose, the ratable portion of an item of deduction or loss is the amount of such item multiplied by the fraction obtained by dividing: The amount of your share of S corporation loss that is disallowed for the tax year; by The sum of your pro rata shares of all items of deduction and loss of the corporation for the tax year. Who can use 1040ez form Proration of deductions disallowed under at-risk limitation. Who can use 1040ez form   If any amount of your loss from an activity (as defined in Activities Covered by the At-Risk Rules , later) is disallowed under the at-risk rules for the tax year, a ratable portion of each item of deduction or loss from the activity is disallowed for the tax year. Who can use 1040ez form For this purpose, the ratable portion of an item of deduction or loss is the amount of such item multiplied by the fraction obtained by dividing: The amount of the loss from the activity that is disallowed for the tax year; by The sum of all deductions from the activity for the taxable year. Who can use 1040ez form Coordination of basis and at-risk limitations. Who can use 1040ez form   The portion of any item of deduction or loss that is disallowed for the tax year under the basis limitations is not taken into account for the taxable year in determining the loss from an activity (as defined in Activities Covered by the At-Risk Rules , later) for purposes of applying the at-risk rules. Who can use 1040ez form Separately identified items of deduction and loss. Who can use 1040ez form   In identifying the items of deduction and loss from an activity that are not disallowed under the basis and at-risk limitations (and that therefore may be treated as passive activity deductions), you need not account separately for any item of deduction or loss unless such item may, if separately taken into account, result in an income tax liability different from that which would result were such item of deduction or loss taken into account separately. Who can use 1040ez form   Items of deduction or loss that must be accounted for separately include (but are not limited to) items of deduction or loss that: Are attributable to separate activities. Who can use 1040ez form See Grouping Your Activities , later. Who can use 1040ez form Arise in a rental real estate activity in tax years in which you actively participate in such activity; Arise in a rental real estate activity in taxable years in which you do not actively participate in such activity; Arose in a taxable year beginning before 1987 and were not allowed for such taxable year under the basis or at-risk limitations; Are taken into account under section 613A(d) (relating to limitations on certain depletion deductions); Are taken into account under section 1211 (relating to the limitation on capital losses); Are taken into account under section 1231 (relating to property used in a trade or business and involuntary conversions). Who can use 1040ez form See Section 1231 Gains and Losses in Publication 544 for more information. Who can use 1040ez form Are attributable to pre-enactment interests in activities. Who can use 1040ez form See Regulations section 1. Who can use 1040ez form 469-11T(c). Who can use 1040ez form Grouping Your Activities You can treat one or more trade or business activities, or rental activities, as a single activity if those activities form an appropriate economic unit for measuring gain or loss under the passive activity rules. Who can use 1040ez form Grouping is important for a number of reasons. Who can use 1040ez form If you group two activities into one larger activity, you need only show material participation in the activity as a whole. Who can use 1040ez form But if the two activities are separate, you must show material participation in each one. Who can use 1040ez form On the other hand, if you group two activities into one larger activity and you dispose of one of the two, then you have disposed of only part of your entire interest in the activity. Who can use 1040ez form But if the two activities are separate and you dispose of one of them, then you have disposed of your entire interest in that activity. Who can use 1040ez form Grouping can also be important in determining whether you meet the 10% ownership requirement for actively participating in a rental real estate activity. Who can use 1040ez form Appropriate Economic Units Generally, to determine if activities form an appropriate economic unit, you must consider all the relevant facts and circumstances. Who can use 1040ez form You can use any reasonable method of applying the relevant facts and circumstances in grouping activities. Who can use 1040ez form The following factors have the greatest weight in determining whether activities form an appropriate economic unit. Who can use 1040ez form All of the factors do not have to apply to treat more than one activity as a single activity. Who can use 1040ez form The factors that you should consider are: The similarities and differences in the types of trades or businesses, The extent of common control, The extent of common ownership, The geographical location, and The interdependencies between or among activities, which may include the extent to which the activities: Buy or sell goods between or among themselves, Involve products or services that are generally provided together, Have the same customers, Have the same employees, or Use a single set of books and records to account for the activities. Who can use 1040ez form Example 1. Who can use 1040ez form John Jackson owns a bakery and a movie theater at a shopping mall in Baltimore and a bakery and movie theater in Philadelphia. Who can use 1040ez form Based on all the relevant facts and circumstances, there may be more than one reasonable method for grouping John's activities. Who can use 1040ez form For example, John may be able to group the movie theaters and the bakeries into: One activity, A movie theater activity and a bakery activity, A Baltimore activity and a Philadelphia activity, or Four separate activities. Who can use 1040ez form Example 2. Who can use 1040ez form Betty is a partner in ABC partnership, which sells nonfood items to grocery stores. Who can use 1040ez form Betty is also a partner in DEF (a trucking business). Who can use 1040ez form ABC and DEF are under common control. Who can use 1040ez form The main part of DEF's business is transporting goods for ABC. Who can use 1040ez form DEF is the only trucking business in which Betty is involved. Who can use 1040ez form Based on the rules of this section, Betty treats ABC's wholesale activity and DEF's trucking activity as a single activity. Who can use 1040ez form Consistency and disclosure requirement. Who can use 1040ez form   Generally, when you group activities into appropriate economic units, you may not regroup those activities in a later tax year. Who can use 1040ez form You must meet any disclosure requirements of the IRS when you first group your activities and when you add or dispose of any activities in your groupings. Who can use 1040ez form   However, if the original grouping is clearly inappropriate or there is a material change in the facts and circumstances that makes the original grouping clearly inappropriate, you must regroup the activities and comply with any disclosure requirements of the IRS. Who can use 1040ez form   See Disclosure Requirement , later. Who can use 1040ez form Regrouping by the IRS. Who can use 1040ez form   If any of the activities resulting from your grouping is not an appropriate economic unit and one of the primary purposes of your grouping (or failure to regroup) is to avoid the passive activity rules, the IRS may regroup your activities. Who can use 1040ez form Rental activities. Who can use 1040ez form   In general, you cannot group a rental activity with a trade or business activity. Who can use 1040ez form However, you can group them together if the activities form an appropriate economic unit and: The rental activity is insubstantial in relation to the trade or business activity, The trade or business activity is insubstantial in relation to the rental activity, or Each owner of the trade or business activity has the same ownership interest in the rental activity, in which case the part of the rental activity that involves the rental of items of property for use in the trade or business activity may be grouped with the trade or business activity. Who can use 1040ez form Example. Who can use 1040ez form Herbert and Wilma are married and file a joint return. Who can use 1040ez form Healthy Food, an S corporation, is a grocery store business. Who can use 1040ez form Herbert is Healthy Food's only shareholder. Who can use 1040ez form Plum Tower, an S corporation, owns and rents out the building. Who can use 1040ez form Wilma is Plum Tower's only shareholder. Who can use 1040ez form Plum Tower rents part of its building to Healthy Food. Who can use 1040ez form Plum Tower's grocery store rental business and Healthy Food's grocery business are not insubstantial in relation to each other. Who can use 1040ez form Herbert and Wilma file a joint return, so they are treated as one taxpayer for purposes of the passive activity rules. Who can use 1040ez form The same owner (Herbert and Wilma) owns both Healthy Food and Plum Tower with the same ownership interest (100% in each). Who can use 1040ez form If the grouping forms an appropriate economic unit, as discussed earlier, Herbert and Wilma can group Plum Tower's grocery store rental and Healthy Food's grocery business into a single trade or business activity. Who can use 1040ez form Grouping of real and personal property rentals. Who can use 1040ez form   In general, you cannot treat an activity involving the rental of real property and an activity involving the rental of personal property as a single activity. Who can use 1040ez form However, you can treat them as a single activity if you provide the personal property in connection with the real property or the real property in connection with the personal property. Who can use 1040ez form Certain activities may not be grouped. Who can use 1040ez form   In general, if you own an interest as a limited partner or a limited entrepreneur in one of the following activities, you may not group that activity with any other activity in another type of business. Who can use 1040ez form Holding, producing, or distributing motion picture films or video tapes. Who can use 1040ez form Farming. Who can use 1040ez form Leasing any section 1245 property (as defined in section 1245(a)(3) of the Internal Revenue Code). Who can use 1040ez form For a list of section 1245 property, see Section 1245 property under Activities Covered by the At-Risk Rules , later. Who can use 1040ez form Exploring for, or exploiting, oil and gas resources. Who can use 1040ez form Exploring for, or exploiting, geothermal deposits. Who can use 1040ez form   If you own an interest as a limited partner or a limited entrepreneur in an activity described in the list above, you may group that activity with another activity in the same type of business if the grouping forms an appropriate economic unit as discussed earlier. Who can use 1040ez form Limited entrepreneur. Who can use 1040ez form   A limited entrepreneur is a person who: Has an interest in an enterprise other than as a limited partner, and Does not actively participate in the management of the enterprise. Who can use 1040ez form Activities conducted through another entity. Who can use 1040ez form   A personal service corporation, closely held corporation, partnership, or S corporation must group its activities using the rules discussed in this section. Who can use 1040ez form Once the entity groups its activities, you, as the partner or shareholder of the entity, may group those activities (following the rules of this section): With each other, With activities conducted directly by you, or With activities conducted through other entities. Who can use 1040ez form    You may not treat activities grouped together by the entity as separate activities. Who can use 1040ez form Personal service and closely held corporations. Who can use 1040ez form   You may group an activity conducted through a personal service or closely held corporation with your other activities only to determine whether you materially or significantly participated in those other activities. Who can use 1040ez form See Material Participation , earlier, and Significant Participation Passive Activities , later. Who can use 1040ez form Publicly traded partnership (PTP). Who can use 1040ez form   You may not group activities conducted through a PTP with any other activity, including an activity conducted through another PTP. Who can use 1040ez form Partial dispositions. Who can use 1040ez form   If you dispose of substantially all of an activity during your tax year, you may treat the part disposed of as a separate activity. Who can use 1040ez form However, you can do this only if you can show with reasonable certainty: The amount of deductions and credits disallowed in prior years under the passive activity rules that is allocable to the part of the activity disposed of, and The amount of gross income and any other deductions and credits for the current tax year that is allocable to the part of the activity disposed of. Who can use 1040ez form Disclosure Requirement For tax years beginning after January 24, 2010, the following disclosure requirements for groupings apply. Who can use 1040ez form You are required to report certain changes to your groupings that occur during the tax year to the IRS. Who can use 1040ez form If you fail to report these changes, each trade or business activity or rental activity will be treated as a separate activity. Who can use 1040ez form You will be considered to have made a timely disclosure if you filed all affected income tax returns consistent with the claimed grouping and make the required disclosure on the income tax return for the year in which you first discovered the failure to disclose. Who can use 1040ez form If the IRS discovered the failure to disclose, you must have reasonable cause for not making the required disclosure. Who can use 1040ez form New grouping. Who can use 1040ez form   You must file a written statement with your original income tax return for the first tax year in which two or more activities are originally grouped into a single activity. Who can use 1040ez form The statement must provide the names, addresses, and employer identification numbers (EINs), if applicable, for the activities being grouped as a single activity. Who can use 1040ez form In addition, the statement must contain a declaration that the grouped activities make up an appropriate economic unit for the measurement of gain or loss under the passive activity rules. Who can use 1040ez form Addition to an existing grouping. Who can use 1040ez form   You must file a written statement with your original income tax return for the tax year in which you add a new activity to an existing group. Who can use 1040ez form The statement must provide the name, address, and EIN, if applicable, for the activity that is being added and for the activities in the existing group. Who can use 1040ez form In addition, the statement must contain a declaration that the activities make up an appropriate economic unit for the measurement of gain or loss under the passive activity rules. Who can use 1040ez form Regrouping. Who can use 1040ez form   You must file a written statement with your original income tax return for the tax year in which you regroup the activities. Who can use 1040ez form The statement must provide the names, addresses, and EINs, if applicable, for the activities that are being regrouped. Who can use 1040ez form If two or more activities are being regrouped into a single activity, the statement must contain a declaration that the regrouped activities make up an appropriate economic unit for the measurement of gain or loss under the passive activity rules. Who can use 1040ez form In addition, the statement must contain an explanation of the material change in the facts and circumstances that made the original grouping clearly inappropriate. Who can use 1040ez form Groupings by partnerships and S corporations. Who can use 1040ez form   Partnerships and S corporations are not subject to the rules for new grouping, addition to an existing grouping, or regrouping. Who can use 1040ez form Instead, they must comply with the disclosure instructions for grouping activities provided in their Form 1065, U. Who can use 1040ez form S. Who can use 1040ez form Return of Partnership Income, or Form 1120S, U. Who can use 1040ez form S. Who can use 1040ez form Income Tax Return for an S Corporation, whichever is applicable. Who can use 1040ez form   The partner or shareholder is not required to make a separate disclosure of the groupings disclosed by the entity unless the partner or shareholder: Groups together any of the activities that the entity does not group together, Groups the entity's activities with activities conducted directly by the partner or shareholder, or Groups an entity's activities with activities conducted through another entity. Who can use 1040ez form   A partner or shareholder may not treat activities grouped together by the entity as separate activities. Who can use 1040ez form Recharacterization of Passive Income Net income from the following passive activities may have to be recharacterized and excluded from passive activity income. Who can use 1040ez form Significant participation passive activities, Rental of property when less than 30% of the unadjusted basis of the property is subject to depreciation, Equity-financed lending activities, Rental of property incidental to development activities, Rental of property to nonpassive activities, and Licensing of intangible property by  pass-through entities. Who can use 1040ez form If you are engaged in or have an interest in one of these activities during the tax year (either directly or through a partnership or an S corporation), combine the income and losses from the activity to determine if you have a net loss or net income from that activity. Who can use 1040ez form If the result is a net loss, treat the income and losses the same as any other income or losses from that type of passive activity (trade or business activity or rental activity). Who can use 1040ez form If the result is net income, do not enter any of the income or losses from the activity or property on Form 8582 or its worksheets. Who can use 1040ez form Instead, enter income or losses on the form and schedules you normally use. Who can use 1040ez form However, see Significant Participation Passive Activities , later, if the activity is a significant participation passive activity and you also have a net loss from a different significant participation passive activity. Who can use 1040ez form Limit on recharacterized passive income. Who can use 1040ez form   The total amount that you treat as nonpassive income under the rules described later in this discussion for significant participation passive activities, rental of nondepreciable property, and equity-financed lending activities cannot exceed the greatest amount that you treat as nonpassive income under any one of these rules. Who can use 1040ez form Investment income and investment expense. Who can use 1040ez form   To figure your investment interest expense limitation on Form 4952, treat as investment income any net passive income recharacterized as nonpassive income from rental of nondepreciable property, equity-financed lending activity, or licensing of intangible property by a pass-through entity. Who can use 1040ez form Significant Participation Passive Activities A significant participation passive activity is any trade or business activity in which you participated for more than 100 hours during the tax year but did not materially participate. Who can use 1040ez form If your gross income from all significant participation passive activities is more than your deductions from those activities, a part of your net income from each significant participation passive activity is treated as nonpassive income. Who can use 1040ez form Corporations. Who can use 1040ez form   An activity of a personal service corporation or closely held corporation is a significant participation passive activity if both of the following statements are true. Who can use 1040ez form The corporation is not treated as materially participating in the activity for the year. Who can use 1040ez form One or more individuals, each of whom is treated as significantly participating in the activity, directly or indirectly hold (in total) more than 50% (by value) of the corporation's outstanding stock. Who can use 1040ez form Worksheet A. Who can use 1040ez form   Complete Worksheet A. Who can use 1040ez form Significant Participation Passive Activities , below, if you have income or losses from any significant participation activity. Who can use 1040ez form Begin by entering the name of each activity in the left column. Who can use 1040ez form Column (a). Who can use 1040ez form   Enter the number of hours you participated in each activity and total the column. Who can use 1040ez form   If the total is more than 500, do not complete Worksheet A or B. Who can use 1040ez form None of the activities are passive activities because you satisfy test 4 for material participation. Who can use 1040ez form (See Material participation tests , earlier. Who can use 1040ez form ) Report all the income and losses from these activities on the forms and schedules you normally use. Who can use 1040ez form Do not include the income and losses on Form 8582. Who can use 1040ez form Column (b). Who can use 1040ez form   Enter the net loss, if any, from the activity. Who can use 1040ez form Net loss from an activity means either: The activity's current year net loss (if any) plus prior year unallowed losses (if any), or The excess of prior year unallowed losses over the current year net income (if any). Who can use 1040ez form Enter -0- here if the prior year unallowed loss is the same as the current year net income. Who can use 1040ez form Column (c). Who can use 1040ez form   Enter net income (if any) from the activity. Who can use 1040ez form Net income means the excess of the current year's net income from the activity over any prior year unallowed losses from the activity. Who can use 1040ez form Column (d). Who can use 1040ez form   Combine amounts in the Totals row for columns (b) and (c) and enter the total net income or net loss in the Totals row of column (d). Who can use 1040ez form If column (d) is a net loss, skip Worksheet B, Significant Participation Activities With Net Income. Who can use 1040ez form Include the income and losses in Worksheet 3 of Form 8582 (or Worksheet 2 in the Form 88
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The Who Can Use 1040ez Form

Who can use 1040ez form Internal Revenue Bulletin:  2011-12  March 21, 2011  Rev. Who can use 1040ez form Proc. Who can use 1040ez form 2011-21 Table of Contents SECTION 1. Who can use 1040ez form PURPOSE SECTION 2. Who can use 1040ez form BACKGROUND SECTION 3. Who can use 1040ez form SCOPE SECTION 4. Who can use 1040ez form APPLICATION SECTION 5. Who can use 1040ez form EFFECTIVE DATE SECTION 6. Who can use 1040ez form EFFECT ON OTHER DOCUMENTS SECTION 7. Who can use 1040ez form DRAFTING INFORMATION SECTION 1. Who can use 1040ez form PURPOSE This revenue procedure provides: (1) limitations on depreciation deductions for owners of passenger automobiles first placed in service by the taxpayer during calendar year 2011, including separate tables of limitations on depreciation deductions for trucks and vans; (2) the amounts that must be included in income by lessees of passenger automobiles first leased by the taxpayer during calendar year 2011, including a separate table of inclusion amounts for lessees of trucks and vans; and (3) revised tables of depreciation limitations and lessee inclusion amounts for passenger automobiles that were first placed in service or first leased by the taxpayer, respectively, during 2010 and to which the 50 percent additional first year depreciation deduction under § 168(k)(1)(A) of the Internal Revenue Code or the 100 percent additional first year depreciation deduction under § 168(k)(5) applies. Who can use 1040ez form The tables detailing these depreciation limitations and lessee inclusion amounts reflect the automobile price inflation adjustments required by § 280F(d)(7). Who can use 1040ez form SECTION 2. Who can use 1040ez form BACKGROUND . Who can use 1040ez form 01 For owners of passenger automobiles, § 280F(a) imposes dollar limitations on the depreciation deduction for the year the taxpayer places the passenger automobile in service and for each succeeding year. Who can use 1040ez form For passenger automobiles placed in service after 1988, § 280F(d)(7) requires the Internal Revenue Service to increase the amounts allowable as depreciation deductions by a price inflation adjustment amount. Who can use 1040ez form The method of calculating this price inflation amount for trucks and vans placed in service in or after calendar year 2003 uses a different CPI “automobile component” (the “new trucks” component) than that used in the price inflation amount calculation for other passenger automobiles (the “new cars” component), resulting in somewhat higher depreciation deductions for trucks and vans. Who can use 1040ez form This change reflects the higher rate of price inflation for trucks and vans since 1988. Who can use 1040ez form . Who can use 1040ez form 02 Section 2022(a) of the Small Business Jobs Act of 2010, Pub. Who can use 1040ez form L. Who can use 1040ez form No. Who can use 1040ez form 111-240, 124 Stat. Who can use 1040ez form 2504 (September 27, 2010), extended the 50 percent additional first year depreciation deduction under § 168(k) to qualified property (as defined in § 168(k)(2)) acquired by the taxpayer after December 31, 2007, and before January 1, 2011, if no written binding contract for the acquisition of the property existed before January 1, 2008, and if the taxpayer places the property in service generally before January 1, 2011. Who can use 1040ez form Section 401(a) of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, Pub. Who can use 1040ez form L. Who can use 1040ez form No. Who can use 1040ez form 111-312, 124 Stat. Who can use 1040ez form 3296 (Dec. Who can use 1040ez form 17, 2010) (the “Act”) further extended the 50 percent additional first year depreciation deduction under § 168(k) to qualified property acquired by the taxpayer after December 31, 2007, and before January 1, 2013, if no written binding contract for the acquisition of the property existed before January 1, 2008, and if the taxpayer places the property in service generally before January 1, 2013. Who can use 1040ez form Section 401(b) of the Act further amended § 168(k) by adding § 168(k)(5). Who can use 1040ez form It allows a 100 percent additional first year depreciation deduction for qualified property acquired by a taxpayer after September 8, 2010, and before January 1, 2012, if the taxpayer places the property in service generally before January 1, 2012. Who can use 1040ez form Section 168(k)(2)(F)(i) increases the first year depreciation allowed under § 280F(a)(1)(A)(i) by $8,000 for passenger automobiles to which the additional first year depreciation deduction under § 168(k) (hereinafter, referred to as “§ 168(k) additional first year depreciation deduction”) applies. Who can use 1040ez form . Who can use 1040ez form 03 Section 168(k)(2)(D)(i) provides that the § 168(k) additional first year depreciation deduction does not apply to any property required to be depreciated under the alternative depreciation system of § 168(g), including property described in § 280F(b)(1). Who can use 1040ez form Section 168(k)(2)(D)(iii) permits a taxpayer to elect out of the § 168(k) additional first year depreciation deduction for any class of property. Who can use 1040ez form Section 168(k)(4), as amended by the Act, permits a corporation to elect to increase the alternative minimum tax (“AMT”) credit limitation under § 53(c), instead of claiming the § 168(k) additional first year depreciation deduction for all eligible qualified property placed in service after December 31, 2010, that is round 2 extension property (as defined in § 168(k)(4)(I)(iv). Who can use 1040ez form Accordingly, this revenue procedure provides tables for passenger automobiles for which the § 168(k) additional first year depreciation deduction applies. Who can use 1040ez form This revenue procedure also provides tables for passenger automobiles for which the § 168(k) additional first year depreciation deduction does not apply, either because taxpayer (1) purchased the passenger automobile used; (2) did not use the passenger automobile during 2011 more than 50 percent for business purposes; (3) elected out of the § 168(k) additional first year depreciation deduction pursuant to § 168(k)(2)(D)(iii); or (4) elected to increase the § 53 AMT credit limitation in lieu of claiming § 168(k) additional first year depreciation. Who can use 1040ez form . Who can use 1040ez form 04 Section 280F(c) requires a reduction in the deduction allowed to the lessee of a leased passenger automobile. Who can use 1040ez form The reduction must be substantially equivalent to the limitations on the depreciation deductions imposed on owners of passenger automobiles. Who can use 1040ez form Under § 1. Who can use 1040ez form 280F-7(a) of the Income Tax Regulations, this reduction requires a lessee to include in gross income an amount determined by applying a formula to the amount obtained from a table. Who can use 1040ez form One table applies to lessees of trucks and vans and another table applies to all other passenger automobiles. Who can use 1040ez form Each table shows inclusion amounts for a range of fair market values for each taxable year after the passenger automobile is first leased. Who can use 1040ez form SECTION 3. Who can use 1040ez form SCOPE . Who can use 1040ez form 01 The limitations on depreciation deductions in section 4. Who can use 1040ez form 01(2) of this revenue procedure apply to passenger automobiles (other than leased passenger automobiles) that are placed in service by the taxpayer in calendar year 2011, and continue to apply for each taxable year that the passenger automobile remains in service. Who can use 1040ez form . Who can use 1040ez form 02 The tables in section 4. Who can use 1040ez form 02 of this revenue procedure apply to leased passenger automobiles for which the lease term begins during calendar year 2011. Who can use 1040ez form Lessees of these passenger automobiles must use these tables to determine the inclusion amount for each taxable year during which the passenger automobile is leased. Who can use 1040ez form See Rev. Who can use 1040ez form Proc. Who can use 1040ez form 2006-18, 2006-1 C. Who can use 1040ez form B. Who can use 1040ez form 645, for passenger automobiles first leased during calendar year 2006; Rev. Who can use 1040ez form Proc. Who can use 1040ez form 2007-30, 2007-1 C. Who can use 1040ez form B. Who can use 1040ez form 1104, for passenger automobiles first leased during calendar year 2007; Rev. Who can use 1040ez form Proc. Who can use 1040ez form 2008-22, 2008-1 C. Who can use 1040ez form B. Who can use 1040ez form 658, for passenger automobiles first leased during calendar year 2008; Rev. Who can use 1040ez form Proc. Who can use 1040ez form 2009-24, 2009-1 C. Who can use 1040ez form B. Who can use 1040ez form 885, for passenger automobiles first leased during calendar year 2009; and Rev. Who can use 1040ez form Proc. Who can use 1040ez form 2010-18, 2010-1 C. Who can use 1040ez form B. Who can use 1040ez form 427, as amplified and modified by section 4. Who can use 1040ez form 03 of this revenue procedure, for passenger automobiles first leased during calendar year 2010. Who can use 1040ez form SECTION 4. Who can use 1040ez form APPLICATION . Who can use 1040ez form 01 Limitations on Depreciation Deductions for Certain Automobiles. Who can use 1040ez form (1) Amount of the inflation adjustment. Who can use 1040ez form (a) Passenger automobiles (other than trucks or vans). Who can use 1040ez form Under § 280F(d)(7)(B)(i), the automobile price inflation adjustment for any calendar year is the percentage (if any) by which the CPI automobile component for October of the preceding calendar year exceeds the CPI automobile component for October 1987. Who can use 1040ez form Section 280F(d)(7)(B)(ii) defines the term “CPI automobile component” as the automobile component of the Consumer Price Index for all Urban Consumers published by the Department of Labor. Who can use 1040ez form The new car component of the CPI was 115. Who can use 1040ez form 2 for October 1987 and 137. Who can use 1040ez form 880 for October 2010. Who can use 1040ez form The October 2010 index exceeded the October 1987 index by 22. Who can use 1040ez form 680. Who can use 1040ez form Therefore, the automobile price inflation adjustment for 2011 for passenger automobiles (other than trucks and vans) is 19. Who can use 1040ez form 69 percent (22. Who can use 1040ez form 680/115. Who can use 1040ez form 2 x 100%). Who can use 1040ez form The dollar limitations in § 280F(a) are multiplied by a factor of 0. Who can use 1040ez form 1969, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations applicable to passenger automobiles (other than trucks and vans) for calendar year 2011. Who can use 1040ez form This adjustment applies to all passenger automobiles (other than trucks and vans) that are first placed in service in calendar year 2011. Who can use 1040ez form (b) Trucks and vans. Who can use 1040ez form To determine the dollar limitations for trucks and vans first placed in service during calendar year 2011, the Service uses the new truck component of the CPI instead of the new car component. Who can use 1040ez form The new truck component of the CPI was 112. Who can use 1040ez form 4 for October 1987 and 142. Who can use 1040ez form 556 for October 2010. Who can use 1040ez form The October 2010 index exceeded the October 1987 index by 30. Who can use 1040ez form 156. Who can use 1040ez form Therefore, the automobile price inflation adjustment for 2011 for trucks and vans is 26. Who can use 1040ez form 83 percent (30. Who can use 1040ez form 156/112. Who can use 1040ez form 4 x 100%). Who can use 1040ez form The dollar limitations in § 280F(a) are multiplied by a factor of 0. Who can use 1040ez form 2683, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations for trucks and vans. Who can use 1040ez form This adjustment applies to all trucks and vans that are first placed in service in calendar year 2011. Who can use 1040ez form (2) Amount of the limitation. Who can use 1040ez form Tables 1 through 4 contain the dollar amount of the depreciation limitation for each taxable year for passenger automobiles a taxpayer places in service in calendar year 2011. Who can use 1040ez form Use Table 1 for a passenger automobile (other than a truck or van), and Table 2 for a truck or van, placed in service in calendar year 2011 for which the § 168(k) additional first year depreciation deduction applies. Who can use 1040ez form Use Table 3 for a passenger automobile (other than a truck or van), and Table 4 for a truck or van, placed in service in calendar year 2011 for which the § 168(k) additional first year depreciation deduction does not apply. Who can use 1040ez form The Service intends to issue additional guidance addressing the interaction between the 100 percent additional first year depreciation deduction and § 280F(a) for the taxable years subsequent to the first taxable year. Who can use 1040ez form REV. Who can use 1040ez form PROC. Who can use 1040ez form 2011-21 TABLE 1 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2011 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,060 2nd Tax Year $4,900 3rd Tax Year $2,950 Each Succeeding Year $1,775 REV. Who can use 1040ez form PROC. Who can use 1040ez form 2011-21 TABLE 2 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2011 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,260 2nd Tax Year $5,200 3rd Tax Year $3,150 Each Succeeding Year $1,875 REV. Who can use 1040ez form PROC. Who can use 1040ez form 2011-21 TABLE 3 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2011 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $3,060 2nd Tax Year $4,900 3rd Tax Year $2,950 Each Succeeding Year $1,775 REV. Who can use 1040ez form PROC. Who can use 1040ez form 2011-21 TABLE 4 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2011 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $3,260 2nd Tax Year $5,200 3rd Tax Year $3,150 Each Succeeding Year $1,875 . Who can use 1040ez form 02 Inclusions in Income of Lessees of Passenger Automobiles. Who can use 1040ez form A taxpayer must follow the procedures in § 1. Who can use 1040ez form 280F-7(a) for determining the inclusion amounts for passenger automobiles first leased in calendar year 2011. Who can use 1040ez form In applying these procedures, lessees of passenger automobiles other than trucks and vans should use Table 5 of this revenue procedure, while lessees of trucks and vans should use Table 6 of this revenue procedure. Who can use 1040ez form REV. Who can use 1040ez form PROC. Who can use 1040ez form 2011-21 TABLE 5 DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2011 Fair Market Value of Passenger Automobile Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & later $18,500 $19,000 3 8 11 13 16 19,000 19,500 4 9 13 15 18 19,500 20,000 4 10 15 17 20 20,000 20,500 5 11 16 19 23 20,500 21,000 5 12 18 21 25 21,000 21,500 6 13 19 24 26 21,500 22,000 6 14 21 26 29 22,000 23,000 7 16 23 29 32 23,000 24,000 8 18 27 32 37 24,000 25,000 9 20 30 36 42 25,000 26,000 10 23 33 40 46 26,000 27,000 11 25 36 44 51 27,000 28,000 12 27 40 48 55 28,000 29,000 13 29 43 52 60 29,000 30,000 14 31 47 55 65 30,000 31,000 15 34 49 60 69 31,000 32,000 16 36 53 63 73 32,000 33,000 17 38 56 68 77 33,000 34,000 18 40 60 71 82 34,000 35,000 19 42 63 75 87 35,000 36,000 20 45 66 79 91 36,000 37,000 21 47 69 83 96 37,000 38,000 22 49 73 87 100 38,000 39,000 23 51 76 91 105 39,000 40,000 24 53 80 94 110 40,000 41,000 25 56 82 99 114 41,000 42,000 26 58 86 102 119 42,000 43,000 27 60 89 107 123 43,000 44,000 28 62 93 110 128 44,000 45,000 29 64 96 114 133 45,000 46,000 30 67 98 119 137 46,000 47,000 31 69 102 122 141 47,000 48,000 32 71 105 127 145 48,000 49,000 33 73 109 130 150 49,000 50,000 34 76 111 134 155 50,000 51,000 35 78 115 138 159 51,000 52,000 36 80 118 142 164 52,000 53,000 37 82 122 146 168 53,000 54,000 38 84 125 150 173 54,000 55,000 39 87 128 153 178 55,000 56,000 40 89 131 158 182 56,000 57,000 41 91 135 161 187 57,000 58,000 42 93 138 166 191 58,000 59,000 43 95 142 169 196 59,000 60,000 44 98 144 174 200 60,000 62,000 46 101 149 179 207 62,000 64,000 48 105 156 187 216 64,000 66,000 50 109 163 195 225 66,000 68,000 52 114 169 203 234 68,000 70,000 54 118 176 211 243 70,000 72,000 56 123 182 218 253 72,000 74,000 58 127 189 226 262 74,000 76,000 60 132 195 234 270 76,000 78,000 62 136 202 242 279 78,000 80,000 64 140 209 250 288 80,000 85,000 67 148 220 264 304 85,000 90,000 72 159 237 283 327 90,000 95,000 77 170 253 303 350 95,000 100,000 82 181 269 323 372 100,000 110,000 90 198 293 352 406 110,000 120,000 100 220 326 391 452 120,000 130,000 110 242 359 430 497 130,000 140,000 120 264 392 469 543 140,000 150,000 130 286 424 509 588 150,000 160,000 140 308 457 548 633 160,000 170,000 150 330 490 587 679 170,000 180,000 160 352 523 626 724 180,000 190,000 170 374 555 666 769 190,000 200,000 180 396 588 705 815 200,000 210,000 190 418 621 744 860 210,000 220,000 200 440 654 784 904 220,000 230,000 210 462 687 823 950 230,000 240,000 220 484 719 863 995 240,000 And up 230 506 752 902 1,040 REV. Who can use 1040ez form PROC. Who can use 1040ez form 2011-21 TABLE 6 DOLLAR AMOUNTS FOR TRUCKS AND VANS WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2011 Fair Market Value of Truck or Van Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & later $19,000 $19,500 3 7 9 12 13 19,500 20,000 3 8 11 14 15 20,000 20,500 4 9 13 15 18 20,500 21,000 4 10 15 17 20 21,000 21,500 5 11 16 20 22 21,500 22,000 5 12 18 22 24 22,000 23,000 6 14 20 24 29 23,000 24,000 7 16 24 28 32 24,000 25,000 8 18 27 32 37 25,000 26,000 9 20 31 36 41 26,000 27,000 10 23 33 40 46 27,000 28,000 11 25 37 43 51 28,000 29,000 12 27 40 48 55 29,000 30,000 13 29 43 52 60 30,000 31,000 14 31 47 56 64 31,000 32,000 15 34 49 60 69 32,000 33,000 16 36 53 63 74 33,000 34,000 17 38 56 68 78 34,000 35,000 18 40 60 71 83 35,000 36,000 19 43 62 76 87 36,000 37,000 20 45 66 79 92 37,000 38,000 21 47 69 83 97 38,000 39,000 22 49 73 87 101 39,000 40,000 23 51 76 91 105 40,000 41,000 24 54 79 95 109 41,000 42,000 25 56 82 99 114 42,000 43,000 26 58 86 103 118 43,000 44,000 27 60 89 107 123 44,000 45,000 28 62 93 110 128 45,000 46,000 29 65 95 115 132 46,000 47,000 30 67 99 118 137 47,000 48,000 31 69 102 123 141 48,000 49,000 32 71 106 126 146 49,000 50,000 33 73 109 130 151 50,000 51,000 34 76 112 134 155 51,000 52,000 35 78 115 138 160 52,000 53,000 36 80 118 143 164 53,000 54,000 37 82 122 146 169 54,000 55,000 38 84 125 150 173 55,000 56,000 39 87 128 154 177 56,000 57,000 40 89 131 158 182 57,000 58,000 41 91 135 162 186 58,000 59,000 42 93 138 166 191 59,000 60,000 43 95 142 169 196 60,000 62,000 45 99 146 175 203 62,000 64,000 47 103 153 183 212 64,000 66,000 49 107 160 191 221 66,000 68,000 51 112 166 199 229 68,000 70,000 53 116 173 206 239 70,000 72,000 55 121 179 214 248 72,000 74,000 57 125 186 222 257 74,000 76,000 59 129 192 231 266 76,000 78,000 61 134 198 239 275 78,000 80,000 63 138 205 246 285 80,000 85,000 66 146 217 260 300 85,000 90,000 71 157 233 280 322 90,000 95,000 76 168 250 299 345 95,000 100,000 81 179 266 319 368 100,000 110,000 89 196 290 348 402 110,000 120,000 99 218 323 387 447 120,000 130,000 109 240 355 427 493 130,000 140,000 119 262 388 466 538 140,000 150,000 129 284 421 505 583 150,000 160,000 139 306 454 544 629 160,000 170,000 149 328 487 583 674 170,000 180,000 159 350 519 623 719 180,000 190,000 169 372 552 662 765 190,000 200,000 179 394 585 701 810 200,000 210,000 189 416 618 740 856 210,000 220,000 199 438 651 779 901 220,000 230,000 209 460 683 819 946 230,000 240,000 219 482 716 858 992 240,000 And up 229 504 749 897 1,037 . Who can use 1040ez form 03 Revised Amounts for Passenger Automobiles Placed in Service During 2010. Who can use 1040ez form (1) Calculation of the Revised Amount. Who can use 1040ez form The revised depreciation limits provided in this section 4. Who can use 1040ez form 03 were calculated by increasing the existing limitations on the first year allowance in Rev. Who can use 1040ez form Proc. Who can use 1040ez form 2010-18 by $8,000 as provided in § 168(k)(2)(F)(i). Who can use 1040ez form (2) Amount of the Revised Limitation. Who can use 1040ez form For passenger automobiles (that are not trucks or vans) placed in service by the taxpayer in calendar year 2010 for which the § 168(k) additional first year depreciation deduction applies, Table 7 of this revenue procedure contains the revised dollar amount of the depreciation limitations for each taxable year. Who can use 1040ez form For trucks or vans placed in service by the taxpayer in calendar year 2010 for which the § 168(k) additional first year depreciation deduction applies, Table 8 of this revenue procedure contains the revised dollar amount of the depreciation limitations for each taxable year. Who can use 1040ez form If the § 168(k) additional first year depreciation deduction does not apply to a passenger automobile placed in service by the taxpayer in calendar year 2010, the depreciation limitations for each taxable year in Tables 1 and 2 of Rev. Who can use 1040ez form Proc. Who can use 1040ez form 2010-18 apply. Who can use 1040ez form REV. Who can use 1040ez form PROC. Who can use 1040ez form 2011-21 TABLE 7 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2010 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,060 2nd Tax Year $4,900 3rd Tax Year $2,950 Each Succeeding Year $1,775 REV. Who can use 1040ez form PROC. Who can use 1040ez form 2011-21 TABLE 8 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2010 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,160 2nd Tax Year $5,100 3rd Tax Year $3,050 Each Succeeding Year $1,875 (3) Modification to lease inclusion amounts for 2010. Who can use 1040ez form The lease inclusion amounts in Tables 3 and 4 of Rev. Who can use 1040ez form Proc. Who can use 1040ez form 2010-18 are modified by striking the first four lines of the inclusion amounts in each table. Who can use 1040ez form Consequently, Table 3 of Rev. Who can use 1040ez form Proc. Who can use 1040ez form 2010-18 applies to passenger automobiles (other than trucks and vans) that are first leased by the taxpayer in calendar year 2010 with a fair market value over $18,500, and Table 4 of Rev. Who can use 1040ez form Proc. Who can use 1040ez form 2010-18 applies to trucks and vans that are first leased by the taxpayer in calendar year 2010 with a fair market value over $19,000. Who can use 1040ez form SECTION 5. Who can use 1040ez form EFFECTIVE DATE This revenue procedure, with the exception of section 4. Who can use 1040ez form 03, applies to passenger automobiles that a taxpayer first places in service or first leases during calendar year 2011. Who can use 1040ez form Section 4. Who can use 1040ez form 03 of this revenue procedure applies to passenger automobiles that a taxpayer first places in service or first leases during calendar year 2010. Who can use 1040ez form SECTION 6. Who can use 1040ez form EFFECT ON OTHER DOCUMENTS Rev. Who can use 1040ez form Proc. Who can use 1040ez form 2010-18 is amplified and modified. Who can use 1040ez form SECTION 7. Who can use 1040ez form DRAFTING INFORMATION The principal author of this revenue procedure is Bernard P. Who can use 1040ez form Harvey of the Office of Associate Chief Counsel (Income Tax & Accounting). Who can use 1040ez form For further information regarding this revenue procedure, contact Mr. Who can use 1040ez form Harvey at (202) 622-4930 (not a toll-free call). Who can use 1040ez form Prev  Up  Next   Home   More Internal Revenue Bulletins