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Www Irs Gov Form1040ez

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Www Irs Gov Form1040ez

Www irs gov form1040ez 9. Www irs gov form1040ez   Depletion Table of Contents Introduction Topics - This chapter discusses: Who Can Claim Depletion? Mineral PropertyCost Depletion Percentage Depletion Oil and Gas Wells Mines and Geothermal Deposits Lessor's Gross Income TimberTimber units. Www irs gov form1040ez Depletion unit. Www irs gov form1040ez Introduction Depletion is the using up of natural resources by mining, drilling, quarrying stone, or cutting timber. Www irs gov form1040ez The depletion deduction allows an owner or operator to account for the reduction of a product's reserves. Www irs gov form1040ez There are two ways of figuring depletion: cost depletion and percentage depletion. Www irs gov form1040ez For mineral property, you generally must use the method that gives you the larger deduction. Www irs gov form1040ez For standing timber, you must use cost depletion. Www irs gov form1040ez Topics - This chapter discusses: Who can claim depletion Mineral property Timber Who Can Claim Depletion? If you have an economic interest in mineral property or standing timber, you can take a deduction for depletion. Www irs gov form1040ez More than one person can have an economic interest in the same mineral deposit or timber. Www irs gov form1040ez In the case of leased property, the depletion deduction is divided between the lessor and the lessee. Www irs gov form1040ez You have an economic interest if both the following apply. Www irs gov form1040ez You have acquired by investment any interest in mineral deposits or standing timber. Www irs gov form1040ez You have a legal right to income from the extraction of the mineral or cutting of the timber to which you must look for a return of your capital investment. Www irs gov form1040ez A contractual relationship that allows you an economic or monetary advantage from products of the mineral deposit or standing timber is not, in itself, an economic interest. Www irs gov form1040ez A production payment carved out of, or retained on the sale of, mineral property is not an economic interest. Www irs gov form1040ez Individuals, corporations, estates, and trusts who claim depletion deductions may be liable for alternative minimum tax. Www irs gov form1040ez Basis adjustment for depletion. Www irs gov form1040ez   You must reduce the basis of your property by the depletion allowed or allowable, whichever is greater. Www irs gov form1040ez Mineral Property Mineral property includes oil and gas wells, mines, and other natural deposits (including geothermal deposits). Www irs gov form1040ez For this purpose, the term “property” means each separate interest you own in each mineral deposit in each separate tract or parcel of land. Www irs gov form1040ez You can treat two or more separate interests as one property or as separate properties. Www irs gov form1040ez See section 614 of the Internal Revenue Code and the related regulations for rules on how to treat separate mineral interests. Www irs gov form1040ez There are two ways of figuring depletion on mineral property. Www irs gov form1040ez Cost depletion. Www irs gov form1040ez Percentage depletion. Www irs gov form1040ez Generally, you must use the method that gives you the larger deduction. Www irs gov form1040ez However, unless you are an independent producer or royalty owner, you generally cannot use percentage depletion for oil and gas wells. Www irs gov form1040ez See Oil and Gas Wells , later. Www irs gov form1040ez Cost Depletion To figure cost depletion you must first determine the following. Www irs gov form1040ez The property's basis for depletion. Www irs gov form1040ez The total recoverable units of mineral in the property's natural deposit. Www irs gov form1040ez The number of units of mineral sold during the tax year. Www irs gov form1040ez Basis for depletion. Www irs gov form1040ez   To figure the property's basis for depletion, subtract all the following from the property's adjusted basis. Www irs gov form1040ez Amounts recoverable through: Depreciation deductions, Deferred expenses (including deferred exploration and development costs), and Deductions other than depletion. Www irs gov form1040ez The residual value of land and improvements at the end of operations. Www irs gov form1040ez The cost or value of land acquired for purposes other than mineral production. Www irs gov form1040ez Adjusted basis. Www irs gov form1040ez   The adjusted basis of your property is your original cost or other basis, plus certain additions and improvements, and minus certain deductions such as depletion allowed or allowable and casualty losses. Www irs gov form1040ez Your adjusted basis can never be less than zero. Www irs gov form1040ez See Publication 551, Basis of Assets, for more information on adjusted basis. Www irs gov form1040ez Total recoverable units. Www irs gov form1040ez   The total recoverable units is the sum of the following. Www irs gov form1040ez The number of units of mineral remaining at the end of the year (including units recovered but not sold). Www irs gov form1040ez The number of units of mineral sold during the tax year (determined under your method of accounting, as explained next). Www irs gov form1040ez   You must estimate or determine recoverable units (tons, pounds, ounces, barrels, thousands of cubic feet, or other measure) of mineral products using the current industry method and the most accurate and reliable information you can obtain. Www irs gov form1040ez You must include ores and minerals that are developed, in sight, blocked out, or assured. Www irs gov form1040ez You must also include probable or prospective ores or minerals that are believed to exist based on good evidence. Www irs gov form1040ez But see Elective safe harbor for owners of oil and gas property , later. Www irs gov form1040ez Number of units sold. Www irs gov form1040ez   You determine the number of units sold during the tax year based on your method of accounting. Www irs gov form1040ez Use the following table to make this determination. Www irs gov form1040ez    IF you  use . Www irs gov form1040ez . Www irs gov form1040ez . Www irs gov form1040ez THEN the units sold during the year are . Www irs gov form1040ez . Www irs gov form1040ez . Www irs gov form1040ez The cash method of accounting The units sold for which you receive payment during the tax year (regardless of the year of sale). Www irs gov form1040ez An accrual method of accounting The units sold based on your inventories and method of accounting for inventory. Www irs gov form1040ez   The number of units sold during the tax year does not include any for which depletion deductions were allowed or allowable in earlier years. Www irs gov form1040ez Figuring the cost depletion deduction. Www irs gov form1040ez   Once you have figured your property's basis for depletion, the total recoverable units, and the number of units sold during the tax year, you can figure your cost depletion deduction by taking the following steps. Www irs gov form1040ez Step Action Result 1 Divide your property's basis for depletion by total recoverable units. Www irs gov form1040ez Rate per unit. Www irs gov form1040ez 2 Multiply the rate per unit by units sold during the tax year. Www irs gov form1040ez Cost depletion deduction. Www irs gov form1040ez You must keep accounts for the depletion of each property and adjust these accounts each year for units sold and depletion claimed. Www irs gov form1040ez Elective safe harbor for owners of oil and gas property. Www irs gov form1040ez   Instead of using the method described earlier to determine the total recoverable units, you can use an elective safe harbor. Www irs gov form1040ez If you choose the elective safe harbor, the total recoverable units equal 105% of a property's proven reserves (both developed and undeveloped). Www irs gov form1040ez For details, see Revenue Procedure 2004-19 on page 563 of Internal Revenue Bulletin 2004-10, available at www. Www irs gov form1040ez irs. Www irs gov form1040ez gov/pub/irs-irbs/irb04-10. Www irs gov form1040ez pdf. Www irs gov form1040ez   To make the election, attach a statement to your timely filed (including extensions) original return for the first tax year for which the safe harbor is elected. Www irs gov form1040ez The statement must indicate that you are electing the safe harbor provided by Revenue Procedure 2004-19. Www irs gov form1040ez The election, if made, is effective for the tax year in which it is made and all later years. Www irs gov form1040ez It cannot be revoked for the tax year in which it is elected, but may be revoked in a later year. Www irs gov form1040ez Once revoked, it cannot be re-elected for the next 5 years. Www irs gov form1040ez Percentage Depletion To figure percentage depletion, you multiply a certain percentage, specified for each mineral, by your gross income from the property during the tax year. Www irs gov form1040ez The rates to be used and other rules for oil and gas wells are discussed later under Independent Producers and Royalty Owners and under Natural Gas Wells . Www irs gov form1040ez Rates and other rules for percentage depletion of other specific minerals are found later in Mines and Geothermal Deposits . Www irs gov form1040ez Gross income. Www irs gov form1040ez   When figuring percentage depletion, subtract from your gross income from the property the following amounts. Www irs gov form1040ez Any rents or royalties you paid or incurred for the property. Www irs gov form1040ez The part of any bonus you paid for a lease on the property allocable to the product sold (or that otherwise gives rise to gross income) for the tax year. Www irs gov form1040ez A bonus payment includes amounts you paid as a lessee to satisfy a production payment retained by the lessor. Www irs gov form1040ez   Use the following fraction to figure the part of the bonus you must subtract. Www irs gov form1040ez No. Www irs gov form1040ez of units sold in the tax year Recoverable units from the property × Bonus Payments For oil and gas wells and geothermal deposits, more information about the definition of gross income from the property is under Oil and Gas Wells , later. Www irs gov form1040ez For other property, more information about the definition of gross income from the property is under Mines and Geothermal Deposits , later. Www irs gov form1040ez Taxable income limit. Www irs gov form1040ez   The percentage depletion deduction generally cannot be more than 50% (100% for oil and gas property) of your taxable income from the property figured without the depletion deduction and the domestic production activities deduction. Www irs gov form1040ez   Taxable income from the property means gross income from the property minus all allowable deductions (except any deduction for depletion or domestic production activities) attributable to mining processes, including mining transportation. Www irs gov form1040ez These deductible items include, but are not limited to, the following. Www irs gov form1040ez Operating expenses. Www irs gov form1040ez Certain selling expenses. Www irs gov form1040ez Administrative and financial overhead. Www irs gov form1040ez Depreciation. Www irs gov form1040ez Intangible drilling and development costs. Www irs gov form1040ez Exploration and development expenditures. Www irs gov form1040ez Deductible taxes (see chapter 5), but not taxes that you capitalize or take as a credit. Www irs gov form1040ez Losses sustained. Www irs gov form1040ez   The following rules apply when figuring your taxable income from the property for purposes of the taxable income limit. Www irs gov form1040ez Do not deduct any net operating loss deduction from the gross income from the property. Www irs gov form1040ez Corporations do not deduct charitable contributions from the gross income from the property. Www irs gov form1040ez If, during the year, you dispose of an item of section 1245 property that was used in connection with mineral property, reduce any allowable deduction for mining expenses by the part of any gain you must report as ordinary income that is allocable to the mineral property. Www irs gov form1040ez See section 1. Www irs gov form1040ez 613-5(b)(1) of the regulations for information on how to figure the ordinary gain allocable to the property. Www irs gov form1040ez Oil and Gas Wells You cannot claim percentage depletion for an oil or gas well unless at least one of the following applies. Www irs gov form1040ez You are either an independent producer or a royalty owner. Www irs gov form1040ez The well produces natural gas that is either sold under a fixed contract or produced from geopressured brine. Www irs gov form1040ez If you are an independent producer or royalty owner, see Independent Producers and Royalty Owners , next. Www irs gov form1040ez For information on the depletion deduction for wells that produce natural gas that is either sold under a fixed contract or produced from geopressured brine, see Natural Gas Wells , later. Www irs gov form1040ez Independent Producers and Royalty Owners If you are an independent producer or royalty owner, you figure percentage depletion using a rate of 15% of the gross income from the property based on your average daily production of domestic crude oil or domestic natural gas up to your depletable oil or natural gas quantity. Www irs gov form1040ez However, certain refiners, as explained next, and certain retailers and transferees of proven oil and gas properties, as explained next, cannot claim percentage depletion. Www irs gov form1040ez For information on figuring the deduction, see Figuring percentage depletion , later. Www irs gov form1040ez Refiners who cannot claim percentage depletion. Www irs gov form1040ez   You cannot claim percentage depletion if you or a related person refine crude oil and you and the related person refined more than 75,000 barrels on any day during the tax year based on average (rather than actual) daily refinery runs for the tax year. Www irs gov form1040ez The average daily refinery run is computed by dividing total refinery runs for the tax year by the total number of days in the tax year. Www irs gov form1040ez Related person. Www irs gov form1040ez   You and another person are related persons if either of you holds a significant ownership interest in the other person or if a third person holds a significant ownership interest in both of you. Www irs gov form1040ez For example, a corporation, partnership, estate, or trust and anyone who holds a significant ownership interest in it are related persons. Www irs gov form1040ez A partnership and a trust are related persons if one person holds a significant ownership interest in each of them. Www irs gov form1040ez For purposes of the related person rules, significant ownership interest means direct or indirect ownership of 5% or more in any one of the following. Www irs gov form1040ez The value of the outstanding stock of a corporation. Www irs gov form1040ez The interest in the profits or capital of a partnership. Www irs gov form1040ez The beneficial interests in an estate or trust. Www irs gov form1040ez Any interest owned by or for a corporation, partnership, trust, or estate is considered to be owned directly both by itself and proportionately by its shareholders, partners, or beneficiaries. Www irs gov form1040ez Retailers who cannot claim percentage depletion. Www irs gov form1040ez   You cannot claim percentage depletion if both the following apply. Www irs gov form1040ez You sell oil or natural gas or their by-products directly or through a related person in any of the following situations. Www irs gov form1040ez Through a retail outlet operated by you or a related person. Www irs gov form1040ez To any person who is required under an agreement with you or a related person to use a trademark, trade name, or service mark or name owned by you or a related person in marketing or distributing oil, natural gas, or their by-products. Www irs gov form1040ez To any person given authority under an agreement with you or a related person to occupy any retail outlet owned, leased, or controlled by you or a related person. Www irs gov form1040ez The combined gross receipts from sales (not counting resales) of oil, natural gas, or their by-products by all retail outlets taken into account in (1) are more than $5 million for the tax year. Www irs gov form1040ez   For the purpose of determining if this rule applies, do not count the following. Www irs gov form1040ez Bulk sales (sales in very large quantities) of oil or natural gas to commercial or industrial users. Www irs gov form1040ez Bulk sales of aviation fuels to the Department of Defense. Www irs gov form1040ez Sales of oil or natural gas or their by-products outside the United States if none of your domestic production or that of a related person is exported during the tax year or the prior tax year. Www irs gov form1040ez Related person. Www irs gov form1040ez   To determine if you and another person are related persons, see Related person under Refiners who cannot claim percentage depletion, earlier. Www irs gov form1040ez Sales through a related person. Www irs gov form1040ez   You are considered to be selling through a related person if any sale by the related person produces gross income from which you may benefit because of your direct or indirect ownership interest in the person. Www irs gov form1040ez   You are not considered to be selling through a related person who is a retailer if all the following apply. Www irs gov form1040ez You do not have a significant ownership interest in the retailer. Www irs gov form1040ez You sell your production to persons who are not related to either you or the retailer. Www irs gov form1040ez The retailer does not buy oil or natural gas from your customers or persons related to your customers. Www irs gov form1040ez There are no arrangements for the retailer to acquire oil or natural gas you produced for resale or made available for purchase by the retailer. Www irs gov form1040ez Neither you nor the retailer knows of or controls the final disposition of the oil or natural gas you sold or the original source of the petroleum products the retailer acquired for resale. Www irs gov form1040ez Transferees who cannot claim percentage depletion. Www irs gov form1040ez   You cannot claim percentage depletion if you received your interest in a proven oil or gas property by transfer after 1974 and before October 12, 1990. Www irs gov form1040ez For a definition of the term “transfer,” see section 1. Www irs gov form1040ez 613A-7(n) of the regulations. Www irs gov form1040ez For a definition of the term “interest in proven oil or gas property,” see section 1. Www irs gov form1040ez 613A-7(p) of the regulations. Www irs gov form1040ez Figuring percentage depletion. Www irs gov form1040ez   Generally, as an independent producer or royalty owner, you figure your percentage depletion by computing your average daily production of domestic oil or gas and comparing it to your depletable oil or gas quantity. Www irs gov form1040ez If your average daily production does not exceed your depletable oil or gas quantity, you figure your percentage depletion by multiplying the gross income from the oil or gas property (defined later) by 15%. Www irs gov form1040ez If your average daily production of domestic oil or gas exceeds your depletable oil or gas quantity, you must make an allocation as explained later under Average daily production. Www irs gov form1040ez   In addition, there is a limit on the percentage depletion deduction. Www irs gov form1040ez See Taxable income limit , later. Www irs gov form1040ez Average daily production. Www irs gov form1040ez   Figure your average daily production by dividing your total domestic production of oil or gas for the tax year by the number of days in your tax year. Www irs gov form1040ez Partial interest. Www irs gov form1040ez   If you have a partial interest in the production from a property, figure your share of the production by multiplying total production from the property by your percentage of interest in the revenues from the property. Www irs gov form1040ez   You have a partial interest in the production from a property if you have a net profits interest in the property. Www irs gov form1040ez To figure the share of production for your net profits interest, you must first determine your percentage participation (as measured by the net profits) in the gross revenue from the property. Www irs gov form1040ez To figure this percentage, you divide the income you receive for your net profits interest by the gross revenue from the property. Www irs gov form1040ez Then multiply the total production from the property by your percentage participation to figure your share of the production. Www irs gov form1040ez Example. Www irs gov form1040ez Javier Robles owns oil property in which Pablo Olmos owns a 20% net profits interest. Www irs gov form1040ez During the year, the property produced 10,000 barrels of oil, which Javier sold for $200,000. Www irs gov form1040ez Javier had expenses of $90,000 attributable to the property. Www irs gov form1040ez The property generated a net profit of $110,000 ($200,000 − $90,000). Www irs gov form1040ez Pablo received income of $22,000 ($110,000 × . Www irs gov form1040ez 20) for his net profits interest. Www irs gov form1040ez Pablo determined his percentage participation to be 11% by dividing $22,000 (the income he received) by $200,000 (the gross revenue from the property). Www irs gov form1040ez Pablo determined his share of the oil production to be 1,100 barrels (10,000 barrels × 11%). Www irs gov form1040ez Depletable oil or natural gas quantity. Www irs gov form1040ez   Generally, your depletable oil quantity is 1,000 barrels. Www irs gov form1040ez Your depletable natural gas quantity is 6,000 cubic feet multiplied by the number of barrels of your depletable oil quantity that you choose to apply. Www irs gov form1040ez If you claim depletion on both oil and natural gas, you must reduce your depletable oil quantity (1,000 barrels) by the number of barrels you use to figure your depletable natural gas quantity. Www irs gov form1040ez Example. Www irs gov form1040ez You have both oil and natural gas production. Www irs gov form1040ez To figure your depletable natural gas quantity, you choose to apply 360 barrels of your 1000-barrel depletable oil quantity. Www irs gov form1040ez Your depletable natural gas quantity is 2. Www irs gov form1040ez 16 million cubic feet of gas (360 × 6000). Www irs gov form1040ez You must reduce your depletable oil quantity to 640 barrels (1000 − 360). Www irs gov form1040ez If you have production from marginal wells, see section 613A(c)(6) of the Internal Revenue Code to figure your depletable oil or natural gas quantity. Www irs gov form1040ez Also, see Notice 2012-50, available at www. Www irs gov form1040ez irs. Www irs gov form1040ez gov/irb/2012–31_IRB/index. Www irs gov form1040ez html. Www irs gov form1040ez Business entities and family members. Www irs gov form1040ez   You must allocate the depletable oil or gas quantity among the following related persons in proportion to each entity's or family member's production of domestic oil or gas for the year. Www irs gov form1040ez Corporations, trusts, and estates if 50% or more of the beneficial interest is owned by the same or related persons (considering only persons that own at least 5% of the beneficial interest). Www irs gov form1040ez You and your spouse and minor children. Www irs gov form1040ez A related person is anyone mentioned in the related persons discussion under Nondeductible loss in chapter 2 of Publication 544, except that for purposes of this allocation, item (1) in that discussion includes only an individual, his or her spouse, and minor children. Www irs gov form1040ez Controlled group of corporations. Www irs gov form1040ez   Members of the same controlled group of corporations are treated as one taxpayer when figuring the depletable oil or natural gas quantity. Www irs gov form1040ez They share the depletable quantity. Www irs gov form1040ez A controlled group of corporations is defined in section 1563(a) of the Internal Revenue Code, except that, for this purpose, the stock ownership requirement in that definition is “more than 50%” rather than “at least 80%. Www irs gov form1040ez ” Gross income from the property. Www irs gov form1040ez   For purposes of percentage depletion, gross income from the property (in the case of oil and gas wells) is the amount you receive from the sale of the oil or gas in the immediate vicinity of the well. Www irs gov form1040ez If you do not sell the oil or gas on the property, but manufacture or convert it into a refined product before sale or transport it before sale, the gross income from the property is the representative market or field price (RMFP) of the oil or gas, before conversion or transportation. Www irs gov form1040ez   If you sold gas after you removed it from the premises for a price that is lower than the RMFP, determine gross income from the property for percentage depletion purposes without regard to the RMFP. Www irs gov form1040ez   Gross income from the property does not include lease bonuses, advance royalties, or other amounts payable without regard to production from the property. Www irs gov form1040ez Average daily production exceeds depletable quantities. Www irs gov form1040ez   If your average daily production for the year is more than your depletable oil or natural gas quantity, figure your allowance for depletion for each domestic oil or natural gas property as follows. Www irs gov form1040ez Figure your average daily production of oil or natural gas for the year. Www irs gov form1040ez Figure your depletable oil or natural gas quantity for the year. Www irs gov form1040ez Figure depletion for all oil or natural gas produced from the property using a percentage depletion rate of 15%. Www irs gov form1040ez Multiply the result figured in (3) by a fraction, the numerator of which is the result figured in (2) and the denominator of which is the result figured in (1). Www irs gov form1040ez This is your depletion allowance for that property for the year. Www irs gov form1040ez Taxable income limit. Www irs gov form1040ez   If you are an independent producer or royalty owner of oil and gas, your deduction for percentage depletion is limited to the smaller of the following. Www irs gov form1040ez 100% of your taxable income from the property figured without the deduction for depletion and the deduction for domestic production activities under section 199 of the Internal Revenue Code. Www irs gov form1040ez For a definition of taxable income from the property, see Taxable income limit , earlier, under Mineral Property. Www irs gov form1040ez 65% of your taxable income from all sources, figured without the depletion allowance, the deduction for domestic production activities, any net operating loss carryback, and any capital loss carryback. Www irs gov form1040ez You can carry over to the following year any amount you cannot deduct because of the 65%-of-taxable-income limit. Www irs gov form1040ez Add it to your depletion allowance (before applying any limits) for the following year. Www irs gov form1040ez Partnerships and S Corporations Generally, each partner or S corporation shareholder, and not the partnership or S corporation, figures the depletion allowance separately. Www irs gov form1040ez (However, see Electing large partnerships must figure depletion allowance , later. Www irs gov form1040ez ) Each partner or shareholder must decide whether to use cost or percentage depletion. Www irs gov form1040ez If a partner or shareholder uses percentage depletion, he or she must apply the 65%-of-taxable-income limit using his or her taxable income from all sources. Www irs gov form1040ez Partner's or shareholder's adjusted basis. Www irs gov form1040ez   The partnership or S corporation must allocate to each partner or shareholder his or her share of the adjusted basis of each oil or gas property held by the partnership or S corporation. Www irs gov form1040ez The partnership or S corporation makes the allocation as of the date it acquires the oil or gas property. Www irs gov form1040ez   Each partner's share of the adjusted basis of the oil or gas property generally is figured according to that partner's interest in partnership capital. Www irs gov form1040ez However, in some cases, it is figured according to the partner's interest in partnership income. Www irs gov form1040ez   The partnership or S corporation adjusts the partner's or shareholder's share of the adjusted basis of the oil and gas property for any capital expenditures made for the property and for any change in partnership or S corporation interests. Www irs gov form1040ez Recordkeeping. Www irs gov form1040ez Each partner or shareholder must separately keep records of his or her share of the adjusted basis in each oil and gas property of the partnership or S corporation. Www irs gov form1040ez The partner or shareholder must reduce his or her adjusted basis by the depletion allowed or allowable on the property each year. Www irs gov form1040ez The partner or shareholder must use that reduced adjusted basis to figure cost depletion or his or her gain or loss if the partnership or S corporation disposes of the property. Www irs gov form1040ez Reporting the deduction. Www irs gov form1040ez   Information that you, as a partner or shareholder, use to figure your depletion deduction on oil and gas properties is reported by the partnership or S corporation on Schedule K-1 (Form 1065) or on Schedule K-1 (Form 1120S). Www irs gov form1040ez Deduct oil and gas depletion for your partnership or S corporation interest on Schedule E (Form 1040). Www irs gov form1040ez The depletion deducted on Schedule E is included in figuring income or loss from rental real estate or royalty properties. Www irs gov form1040ez The instructions for Schedule E explain where to report this income or loss and whether you need to file either of the following forms. Www irs gov form1040ez Form 6198, At-Risk Limitations. Www irs gov form1040ez Form 8582, Passive Activity Loss Limitations. Www irs gov form1040ez Electing large partnerships must figure depletion allowance. Www irs gov form1040ez   An electing large partnership, rather than each partner, generally must figure the depletion allowance. Www irs gov form1040ez The partnership figures the depletion allowance without taking into account the 65-percent-of-taxable-income limit and the depletable oil or natural gas quantity. Www irs gov form1040ez Also, the adjusted basis of a partner's interest in the partnership is not affected by the depletion allowance. Www irs gov form1040ez   An electing large partnership is one that meets both the following requirements. Www irs gov form1040ez The partnership had 100 or more partners in the preceding year. Www irs gov form1040ez The partnership chooses to be an electing large partnership. Www irs gov form1040ez Disqualified persons. Www irs gov form1040ez   An electing large partnership does not figure the depletion allowance of its partners that are disqualified persons. Www irs gov form1040ez Disqualified persons must figure it themselves, as explained earlier. Www irs gov form1040ez   All the following are disqualified persons. Www irs gov form1040ez Refiners who cannot claim percentage depletion (discussed under Independent Producers and Royalty Owners , earlier). Www irs gov form1040ez Retailers who cannot claim percentage depletion (discussed under Independent Producers and Royalty Owners , earlier). Www irs gov form1040ez Any partner whose average daily production of domestic crude oil and natural gas is more than 500 barrels during the tax year in which the partnership tax year ends. Www irs gov form1040ez Average daily production is discussed earlier. Www irs gov form1040ez Natural Gas Wells You can use percentage depletion for a well that produces natural gas that is either Sold under a fixed contract, or Produced from geopressured brine. Www irs gov form1040ez Natural gas sold under a fixed contract. Www irs gov form1040ez   Natural gas sold under a fixed contract qualifies for a percentage depletion rate of 22%. Www irs gov form1040ez This is domestic natural gas sold by the producer under a contract that does not provide for a price increase to reflect any increase in the seller's tax liability because of the repeal of percentage depletion for gas. Www irs gov form1040ez The contract must have been in effect from February 1, 1975, until the date of sale of the gas. Www irs gov form1040ez Price increases after February 1, 1975, are presumed to take the increase in tax liability into account unless demonstrated otherwise by clear and convincing evidence. Www irs gov form1040ez Natural gas from geopressured brine. Www irs gov form1040ez   Qualified natural gas from geopressured brine is eligible for a percentage depletion rate of 10%. Www irs gov form1040ez This is natural gas that is both the following. Www irs gov form1040ez Produced from a well you began to drill after September 1978 and before 1984. Www irs gov form1040ez Determined in accordance with section 503 of the Natural Gas Policy Act of 1978 to be produced from geopressured brine. Www irs gov form1040ez Mines and Geothermal Deposits Certain mines, wells, and other natural deposits, including geothermal deposits, qualify for percentage depletion. Www irs gov form1040ez Mines and other natural deposits. Www irs gov form1040ez   For a natural deposit, the percentage of your gross income from the property that you can deduct as depletion depends on the type of deposit. Www irs gov form1040ez   The following is a list of the percentage depletion rates for the more common minerals. Www irs gov form1040ez DEPOSITS RATE Sulphur, uranium, and, if from deposits in the United States, asbestos, lead ore, zinc ore, nickel ore, and mica 22% Gold, silver, copper, iron ore, and certain oil shale, if from deposits in the United States 15% Borax, granite, limestone, marble, mollusk shells, potash, slate, soapstone, and carbon dioxide produced from a well 14% Coal, lignite, and sodium chloride 10% Clay and shale used or sold for use in making sewer pipe or bricks or used or sold for use as sintered or burned lightweight aggregates 7½% Clay used or sold for use in making drainage and roofing tile, flower pots, and kindred products, and gravel, sand, and stone (other than stone used or sold for use by a mine owner or operator as dimension or ornamental stone) 5%   You can find a complete list of minerals and their percentage depletion rates in section 613(b) of the Internal Revenue Code. Www irs gov form1040ez Corporate deduction for iron ore and coal. Www irs gov form1040ez   The percentage depletion deduction of a corporation for iron ore and coal (including lignite) is reduced by 20% of: The percentage depletion deduction for the tax year (figured without this reduction), minus The adjusted basis of the property at the close of the tax year (figured without the depletion deduction for the tax year). Www irs gov form1040ez Gross income from the property. Www irs gov form1040ez   For property other than a geothermal deposit or an oil or gas well, gross income from the property means the gross income from mining. Www irs gov form1040ez Mining includes all the following. Www irs gov form1040ez Extracting ores or minerals from the ground. Www irs gov form1040ez Applying certain treatment processes described later. Www irs gov form1040ez Transporting ores or minerals (generally, not more than 50 miles) from the point of extraction to the plants or mills in which the treatment processes are applied. Www irs gov form1040ez Excise tax. Www irs gov form1040ez   Gross income from mining includes the separately stated excise tax received by a mine operator from the sale of coal to compensate the operator for the excise tax the mine operator must pay to finance black lung benefits. Www irs gov form1040ez Extraction. Www irs gov form1040ez   Extracting ores or minerals from the ground includes extraction by mine owners or operators of ores or minerals from the waste or residue of prior mining. Www irs gov form1040ez This does not apply to extraction from waste or residue of prior mining by the purchaser of the waste or residue or the purchaser of the rights to extract ores or minerals from the waste or residue. Www irs gov form1040ez Treatment processes. Www irs gov form1040ez   The processes included as mining depend on the ore or mineral mined. Www irs gov form1040ez To qualify as mining, the treatment processes must be applied by the mine owner or operator. Www irs gov form1040ez For a listing of treatment processes considered as mining, see section 613(c)(4) of the Internal Revenue Code and the related regulations. Www irs gov form1040ez Transportation of more than 50 miles. Www irs gov form1040ez   If the IRS finds that the ore or mineral must be transported more than 50 miles to plants or mills to be treated because of physical and other requirements, the additional authorized transportation is considered mining and included in the computation of gross income from mining. Www irs gov form1040ez    If you wish to include transportation of more than 50 miles in the computation of gross income from mining, request an advance ruling from the IRS. Www irs gov form1040ez Include in the request the facts about the physical and other requirements that prevented the construction and operation of the plant within 50 miles of the point of extraction. Www irs gov form1040ez For more information about requesting an advance ruling, see Revenue Procedure 2013-1, available at www. Www irs gov form1040ez irs. Www irs gov form1040ez gov/irb/2013-01_IRB/ar11. Www irs gov form1040ez html. Www irs gov form1040ez Disposal of coal or iron ore. Www irs gov form1040ez   You cannot take a depletion deduction for coal (including lignite) or iron ore mined in the United States if both the following apply. Www irs gov form1040ez You disposed of it after holding it for more than 1 year. Www irs gov form1040ez You disposed of it under a contract under which you retain an economic interest in the coal or iron ore. Www irs gov form1040ez Treat any gain on the disposition as a capital gain. Www irs gov form1040ez Disposal to related person. Www irs gov form1040ez   This rule does not apply if you dispose of the coal or iron ore to one of the following persons. Www irs gov form1040ez A related person (as listed in chapter 2 of Publication 544). Www irs gov form1040ez A person owned or controlled by the same interests that own or control you. Www irs gov form1040ez Geothermal deposits. Www irs gov form1040ez   Geothermal deposits located in the United States or its possessions qualify for a percentage depletion rate of 15%. Www irs gov form1040ez A geothermal deposit is a geothermal reservoir of natural heat stored in rocks or in a watery liquid or vapor. Www irs gov form1040ez For percentage depletion purposes, a geothermal deposit is not considered a gas well. Www irs gov form1040ez   Figure gross income from the property for a geothermal steam well in the same way as for oil and gas wells. Www irs gov form1040ez See Gross income from the property , earlier, under Oil and Gas Wells. Www irs gov form1040ez Percentage depletion on a geothermal deposit cannot be more than 50% of your taxable income from the property. Www irs gov form1040ez Lessor's Gross Income In the case of leased property, the depletion deduction is divided between the lessor and the lessee. Www irs gov form1040ez A lessor's gross income from the property that qualifies for percentage depletion usually is the total of the royalties received from the lease. Www irs gov form1040ez Bonuses and advanced royalties. Www irs gov form1040ez   Bonuses and advanced royalties are payments a lessee makes before production to a lessor for the grant of rights in a lease or for minerals, gas, or oil to be extracted from leased property. Www irs gov form1040ez If you are the lessor, your income from bonuses and advanced royalties received is subject to an allowance for depletion, as explained in the next two paragraphs. Www irs gov form1040ez Figuring cost depletion. Www irs gov form1040ez   To figure cost depletion on a bonus, multiply your adjusted basis in the property by a fraction, the numerator of which is the bonus and the denominator of which is the total bonus and royalties expected to be received. Www irs gov form1040ez To figure cost depletion on advanced royalties, use the computation explained earlier under Cost Depletion , treating the number of units for which the advanced royalty is received as the number of units sold. Www irs gov form1040ez Figuring percentage depletion. Www irs gov form1040ez   In the case of mines, wells, and other natural deposits other than gas, oil, or geothermal property, you may use the percentage rates discussed earlier under Mines and Geothermal Deposits . Www irs gov form1040ez Any bonus or advanced royalty payments are generally part of the gross income from the property to which the rates are applied in making the calculation. Www irs gov form1040ez However, for oil, gas, or geothermal property, gross income does not include lease bonuses, advanced royalties, or other amounts payable without regard to production from the property. Www irs gov form1040ez Ending the lease. Www irs gov form1040ez   If you receive a bonus on a lease that ends or is abandoned before you derive any income from mineral extraction, include in income the depletion deduction you took. Www irs gov form1040ez Do this for the year the lease ends or is abandoned. Www irs gov form1040ez Also increase your adjusted basis in the property to restore the depletion deduction you previously subtracted. Www irs gov form1040ez   For advanced royalties, include in income the depletion claimed on minerals for which the advanced royalties were paid if the minerals were not produced before the lease ended. Www irs gov form1040ez Include this amount in income for the year the lease ends. Www irs gov form1040ez Increase your adjusted basis in the property by the amount you include in income. Www irs gov form1040ez Delay rentals. Www irs gov form1040ez   These are payments for deferring development of the property. Www irs gov form1040ez Since delay rentals are ordinary rent, they are ordinary income that is not subject to depletion. Www irs gov form1040ez These rentals can be avoided by either abandoning the lease, beginning development operations, or obtaining production. Www irs gov form1040ez Timber You can figure timber depletion only by the cost method. Www irs gov form1040ez Percentage depletion does not apply to timber. Www irs gov form1040ez Base your depletion on your cost or other basis in the timber. Www irs gov form1040ez Your cost does not include the cost of land or any amounts recoverable through depreciation. Www irs gov form1040ez Depletion takes place when you cut standing timber. Www irs gov form1040ez You can figure your depletion deduction when the quantity of cut timber is first accurately measured in the process of exploitation. Www irs gov form1040ez Figuring cost depletion. Www irs gov form1040ez   To figure your cost depletion allowance, you multiply the number of timber units cut by your depletion unit. Www irs gov form1040ez Timber units. Www irs gov form1040ez   When you acquire timber property, you must make an estimate of the quantity of marketable timber that exists on the property. Www irs gov form1040ez You measure the timber using board feet, log scale, cords, or other units. Www irs gov form1040ez If you later determine that you have more or less units of timber, you must adjust the original estimate. Www irs gov form1040ez   The term “timber property” means your economic interest in standing timber in each tract or block representing a separate timber account. Www irs gov form1040ez Depletion unit. Www irs gov form1040ez   You figure your depletion unit each year by taking the following steps. Www irs gov form1040ez Determine your cost or adjusted basis of the timber on hand at the beginning of the year. Www irs gov form1040ez Adjusted basis is defined under Cost Depletion in the discussion on Mineral Property. Www irs gov form1040ez Add to the amount determined in (1) the cost of any timber units acquired during the year and any additions to capital. Www irs gov form1040ez Figure the number of timber units to take into account by adding the number of timber units acquired during the year to the number of timber units on hand in the account at the beginning of the year and then adding (or subtracting) any correction to the estimate of the number of timber units remaining in the account. Www irs gov form1040ez Divide the result of (2) by the result of (3). Www irs gov form1040ez This is your depletion unit. Www irs gov form1040ez Example. Www irs gov form1040ez You bought a timber tract for $160,000 and the land was worth as much as the timber. Www irs gov form1040ez Your basis for the timber is $80,000. Www irs gov form1040ez Based on an estimated one million board feet (1,000 MBF) of standing timber, you figure your depletion unit to be $80 per MBF ($80,000 ÷ 1,000). Www irs gov form1040ez If you cut 500 MBF of timber, your depletion allowance would be $40,000 (500 MBF × $80). Www irs gov form1040ez When to claim depletion. Www irs gov form1040ez   Claim your depletion allowance as a deduction in the year of sale or other disposition of the products cut from the timber, unless you choose to treat the cutting of timber as a sale or exchange (explained below). Www irs gov form1040ez Include allowable depletion for timber products not sold during the tax year the timber is cut as a cost item in the closing inventory of timber products for the year. Www irs gov form1040ez The inventory is your basis for determining gain or loss in the tax year you sell the timber products. Www irs gov form1040ez Example. Www irs gov form1040ez The facts are the same as in the previous example except that you sold only half of the timber products in the cutting year. Www irs gov form1040ez You would deduct $20,000 of the $40,000 depletion that year. Www irs gov form1040ez You would add the remaining $20,000 depletion to your closing inventory of timber products. Www irs gov form1040ez Electing to treat the cutting of timber as a sale or exchange. Www irs gov form1040ez   You can elect, under certain circumstances, to treat the cutting of timber held for more than 1 year as a sale or exchange. Www irs gov form1040ez You must make the election on your income tax return for the tax year to which it applies. Www irs gov form1040ez If you make this election, subtract the adjusted basis for depletion from the fair market value of the timber on the first day of the tax year in which you cut it to figure the gain or loss on the cutting. Www irs gov form1040ez You generally report the gain as long-term capital gain. Www irs gov form1040ez The fair market value then becomes your basis for figuring your ordinary gain or loss on the sale or other disposition of the products cut from the timber. Www irs gov form1040ez For more information, see Timber in chapter 2 of Publication 544, Sales and Other Dispositions of Assets. Www irs gov form1040ez   You may revoke an election to treat the cutting of timber as a sale or exchange without IRS's consent. Www irs gov form1040ez The prior election (and revocation) is disregarded for purposes of making a subsequent election. Www irs gov form1040ez See Form T (Timber), Forest Activities Schedule, for more information. Www irs gov form1040ez Form T. Www irs gov form1040ez   Complete and attach Form T (Timber) to your income tax return if you claim a deduction for timber depletion, choose to treat the cutting of timber as a sale or exchange, or make an outright sale of timber. Www irs gov form1040ez Prev  Up  Next   Home   More Online Publications
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Affordable Care Act Tax Provisions for Other Organizations

The Affordable Care Act contains some tax provisions that are currently in effect and more that will be implemented going forward. 

Information specifically for insurers, including self-insured organizations, certain business types and tax exempt and government organizations is listed below.  More information will be added to this page as it becomes available. For information regarding your role as an employer, visit the Affordable Care Act Tax Provisions for Employers.

Tax Provisions for Insurers             

Tax Provisions for Miscellaneous Business Types

Tax Provisions for Tax Exempt and Government Organizations

e-file for ACA Report Filers

 

Page Last Reviewed or Updated: 14-Mar-2014

The Www Irs Gov Form1040ez

Www irs gov form1040ez Publication 516 - Introductory Material Table of Contents Future Developments What's New Reminders IntroductionOrdering forms and publications. Www irs gov form1040ez Tax questions. Www irs gov form1040ez Useful Items - You may want to see: Future Developments For the latest information about developments related to Publication 516, such as treaties effective after it was published, go to www. Www irs gov form1040ez irs. Www irs gov form1040ez gov/pub516. Www irs gov form1040ez What's New U. Www irs gov form1040ez S. Www irs gov form1040ez tax treaties and foreign tax laws. Www irs gov form1040ez  This publication has been expanded to cover U. Www irs gov form1040ez S. Www irs gov form1040ez tax treaties and compliance with foreign tax laws. Www irs gov form1040ez Reminders Combat zone participants. Www irs gov form1040ez  If you were a civilian who served in a combat zone or qualified hazardous duty area in support of the U. Www irs gov form1040ez S. Www irs gov form1040ez Armed Forces, you can get certain extensions of deadlines for filing tax returns, paying taxes, filing claims for refund, and doing certain other tax-related acts. Www irs gov form1040ez For details, see Publication 3, Armed Forces' Tax Guide. Www irs gov form1040ez Death due to terrorist or military action. Www irs gov form1040ez  U. Www irs gov form1040ez S. Www irs gov form1040ez income taxes are forgiven for a U. Www irs gov form1040ez S. Www irs gov form1040ez Government civilian employee who dies as a result of wounds or injuries incurred while employed by the U. Www irs gov form1040ez S. Www irs gov form1040ez Government. Www irs gov form1040ez The wounds or injuries must have been caused by terrorist or military action directed against the United States or its allies. Www irs gov form1040ez The taxes are forgiven for the deceased employee's tax years beginning with the year immediately before the year in which the wounds or injury occurred and ending with the year of death. Www irs gov form1040ez If the deceased government employee and the employee's spouse filed a joint return, only the decedent's part of the joint tax liability is forgiven. Www irs gov form1040ez For additional details, see Publication 559, Survivors, Executors, and Administrators. Www irs gov form1040ez Form 8938. Www irs gov form1040ez  If you had foreign financial assets in 2012, you may have to file Form 8938 with your return. Www irs gov form1040ez See Foreign Bank Accounts, later. Www irs gov form1040ez Introduction If you are a U. Www irs gov form1040ez S. Www irs gov form1040ez citizen working for the U. Www irs gov form1040ez S. Www irs gov form1040ez Government, including the foreign service, and you are stationed abroad, your income tax filing requirements are generally the same as those for citizens and residents living in the United States. Www irs gov form1040ez You are taxed on your worldwide income, even though you live and work abroad. Www irs gov form1040ez However, you may receive certain allowances and have certain expenses that you generally do not have while living in the United States. Www irs gov form1040ez This publication explains: Many of the allowances, reimbursements, and property sales you are likely to have, and whether you must report them as income on your tax return, and Many of the expenses you are likely to have, such as moving expenses and foreign taxes, and whether you can deduct them on your tax return. Www irs gov form1040ez U. Www irs gov form1040ez S. Www irs gov form1040ez possessions. Www irs gov form1040ez   This publication does not cover the rules that apply if you are stationed in American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, the Virgin Islands, or Puerto Rico. Www irs gov form1040ez That information is in Publication 570, Tax Guide for Individuals With Income From U. Www irs gov form1040ez S. Www irs gov form1040ez Possessions. Www irs gov form1040ez Comments and suggestions. Www irs gov form1040ez   We welcome your comments about this publication and your suggestions for future editions. Www irs gov form1040ez   You can write to us at the following address: Internal Revenue Service Business Forms and Publications Branch SE:W:CAR:MP:T:B 1111 Constitution Ave. Www irs gov form1040ez NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Www irs gov form1040ez Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Www irs gov form1040ez   You can email us at taxforms@irs. Www irs gov form1040ez gov. Www irs gov form1040ez Please put “Publications Comment” on the subject line. Www irs gov form1040ez You can also send us comments from www. Www irs gov form1040ez irs. Www irs gov form1040ez gov/formspubs/. Www irs gov form1040ez Select “Comment on Tax Forms and Publications” under “Information about. Www irs gov form1040ez ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Www irs gov form1040ez Ordering forms and publications. Www irs gov form1040ez   Visit www. Www irs gov form1040ez irs. Www irs gov form1040ez gov/formspubs/ to download forms and publications, call 1-800-829-3676, or write to the address below and receive a response within 10 days after your request is received. Www irs gov form1040ez Internal Revenue Service 1201 N. Www irs gov form1040ez Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Www irs gov form1040ez   If you have a tax question, check the information available on IRS. Www irs gov form1040ez gov or call 1-800-829-1040. Www irs gov form1040ez We cannot answer tax questions sent to either of the above addresses. Www irs gov form1040ez Useful Items - You may want to see: Publication 54 Tax Guide for U. Www irs gov form1040ez S. Www irs gov form1040ez Citizens and Resident Aliens Abroad 463 Travel, Entertainment, Gift, and Car Expenses 514 Foreign Tax Credit for Individuals 519 U. Www irs gov form1040ez S. Www irs gov form1040ez Tax Guide for Aliens 521 Moving Expenses 523 Selling Your Home Form (and Instructions) Schedule A (Form 1040) Itemized Deductions 1116 Foreign Tax Credit 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses 3903 Moving Expenses 4868 Application for Automatic Extension of Time To File U. Www irs gov form1040ez S. Www irs gov form1040ez Individual Income Tax Return 8938 Statement of Specified Foreign Financial Assets TD F 90-22. Www irs gov form1040ez 1 Report of Foreign Bank and Financial Accounts See How To Get Tax Help near the end of this publication, for information about getting these publications and forms. Www irs gov form1040ez Prev  Up  Next   Home   More Online Publications