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Wwwh&rblock com 7. Wwwh&rblock com   Costs You Can Deduct or Capitalize Table of Contents What's New Introduction Topics - This chapter discusses: Useful Items - You may want to see: Carrying Charges Research and Experimental CostsProduct. Wwwh&rblock com Costs not included. Wwwh&rblock com Intangible Drilling Costs Exploration CostsPartnerships and S corporations. Wwwh&rblock com Development Costs Circulation Costs Business Start-Up and Organizational Costs Reforestation Costs Retired Asset Removal Costs Barrier Removal CostsOther barrier removals. Wwwh&rblock com Film and Television Production Costs What's New Film and television productions costs. Wwwh&rblock com  The election to expense film and television production costs does not apply to productions that begin after December 31, 2013. Wwwh&rblock com See Film and Television Production Costs , later. Wwwh&rblock com Introduction This chapter discusses costs you can elect to deduct or capitalize. Wwwh&rblock com You generally deduct a cost as a current business expense by subtracting it from your income in either the year you incur it or the year you pay it. Wwwh&rblock com If you capitalize a cost, you may be able to recover it over a period of years through periodic deductions for amortization, depletion, or depreciation. Wwwh&rblock com When you capitalize a cost, you add it to the basis of property to which it relates. Wwwh&rblock com A partnership, corporation, estate, or trust makes the election to deduct or capitalize the costs discussed in this chapter except for exploration costs for mineral deposits. Wwwh&rblock com Each individual partner, shareholder, or beneficiary elects whether to deduct or capitalize exploration costs. Wwwh&rblock com You may be subject to the alternative minimum tax (AMT) if you deduct research and experimental, intangible drilling, exploration, development, circulation, or business organizational costs. Wwwh&rblock com For more information on the alternative minimum tax, see the instructions for the following forms. Wwwh&rblock com Form 6251, Alternative Minimum Tax—Individuals. Wwwh&rblock com Form 4626, Alternative Minimum Tax—Corporations. Wwwh&rblock com Topics - This chapter discusses: Carrying charges Research and experimental costs Intangible drilling costs Exploration costs Development costs Circulation costs Qualified disaster expenses Business start-up and organizational costs Reforestation costs Retired asset removal costs Barrier removal costs Film and television production costs Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets Form (and Instructions) 3468 Investment Credit 8826 Disabled Access Credit See chapter 12 for information about getting publications and forms. Wwwh&rblock com Carrying Charges Carrying charges include the taxes and interest you pay to carry or develop real property or to carry, transport, or install personal property. Wwwh&rblock com Certain carrying charges must be capitalized under the uniform capitalization rules. Wwwh&rblock com (For information on capitalization of interest, see chapter 4 . Wwwh&rblock com ) You can elect to capitalize carrying charges not subject to the uniform capitalization rules, but only if they are otherwise deductible. Wwwh&rblock com You can elect to capitalize carrying charges separately for each project you have and for each type of carrying charge. Wwwh&rblock com For unimproved and unproductive real property, your election is good for only 1 year. Wwwh&rblock com You must decide whether to capitalize carrying charges each year the property remains unimproved and unproductive. Wwwh&rblock com For other real property, your election to capitalize carrying charges remains in effect until construction or development is completed. Wwwh&rblock com For personal property, your election is effective until the date you install or first use it, whichever is later. Wwwh&rblock com How to make the election. Wwwh&rblock com   To make the election to capitalize a carrying charge, attach a statement to your original tax return for the year the election is to be effective indicating which charges you are electing to capitalize. Wwwh&rblock com However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Wwwh&rblock com Attach the statement to the amended return and write “Filed pursuant to section 301. Wwwh&rblock com 9100-2” on the statement. Wwwh&rblock com File the amended return at the same address you filed the original return. Wwwh&rblock com Research and Experimental Costs The costs of research and experimentation are generally capital expenses. Wwwh&rblock com However, you can elect to deduct these costs as a current business expense. Wwwh&rblock com Your election to deduct these costs is binding for the year it is made and for all later years unless you get IRS approval to make a change. Wwwh&rblock com If you meet certain requirements, you may elect to defer and amortize research and experimental costs. Wwwh&rblock com For information on electing to defer and amortize these costs, see Research and Experimental Costs in chapter 8. Wwwh&rblock com Research and experimental costs defined. Wwwh&rblock com   Research and experimental costs are reasonable costs you incur in your trade or business for activities intended to provide information that would eliminate uncertainty about the development or improvement of a product. Wwwh&rblock com Uncertainty exists if the information available to you does not establish how to develop or improve a product or the appropriate design of a product. Wwwh&rblock com Whether costs qualify as research and experimental costs depends on the nature of the activity to which the costs relate rather than on the nature of the product or improvement being developed or the level of technological advancement. Wwwh&rblock com      The costs of obtaining a patent, including attorneys' fees paid or incurred in making and perfecting a patent application, are research and experimental costs. Wwwh&rblock com However, costs paid or incurred to obtain another's patent are not research and experimental costs. Wwwh&rblock com Product. Wwwh&rblock com   The term “product” includes any of the following items. Wwwh&rblock com Formula. Wwwh&rblock com Invention. Wwwh&rblock com Patent. Wwwh&rblock com Pilot model. Wwwh&rblock com Process. Wwwh&rblock com Technique. Wwwh&rblock com Property similar to the items listed above. Wwwh&rblock com It also includes products used by you in your trade or business or held for sale, lease, or license. Wwwh&rblock com Costs not included. Wwwh&rblock com   Research and experimental costs do not include expenses for any of the following activities. Wwwh&rblock com Advertising or promotions. Wwwh&rblock com Consumer surveys. Wwwh&rblock com Efficiency surveys. Wwwh&rblock com Management studies. Wwwh&rblock com Quality control testing. Wwwh&rblock com Research in connection with literary, historical, or similar projects. Wwwh&rblock com The acquisition of another's patent, model, production, or process. Wwwh&rblock com When and how to elect. Wwwh&rblock com   You make the election to deduct research and experimental costs by deducting them on your tax return for the year in which you first pay or incur research and experimental costs. Wwwh&rblock com If you do not make the election to deduct research and experimental costs in the first year in which you pay or incur the costs, you can deduct the costs in a later year only with approval from the IRS. Wwwh&rblock com Deducting or Amortizing Research and Experimentation Costs IF you . Wwwh&rblock com . Wwwh&rblock com . Wwwh&rblock com THEN . Wwwh&rblock com . Wwwh&rblock com . Wwwh&rblock com Elect to deduct research and experimental costs as a current business expense Deduct all research and experimental costs in the first year you pay or incur the costs and all later years. Wwwh&rblock com Do not deduct research and experimental costs as a current business expense If you meet the requirements, amortize them over at least 60 months, starting with the month you first receive an economic benefit from the research. Wwwh&rblock com See Research and Experimental Costs in chapter 8. Wwwh&rblock com Research credit. Wwwh&rblock com   If you pay or incur qualified research expenses, you may be able to take the research credit. Wwwh&rblock com For more information see Form 6765, Credit for Increasing Research Activities and its instructions. Wwwh&rblock com Intangible Drilling Costs The costs of developing oil, gas, or geothermal wells are ordinarily capital expenditures. Wwwh&rblock com You can usually recover them through depreciation or depletion. Wwwh&rblock com However, you can elect to deduct intangible drilling costs (IDCs) as a current business expense. Wwwh&rblock com These are certain drilling and development costs for wells in the United States in which you hold an operating or working interest. Wwwh&rblock com You can deduct only costs for drilling or preparing a well for the production of oil, gas, or geothermal steam or hot water. Wwwh&rblock com You can elect to deduct only the costs of items with no salvage value. Wwwh&rblock com These include wages, fuel, repairs, hauling, and supplies related to drilling wells and preparing them for production. Wwwh&rblock com Your cost for any drilling or development work done by contractors under any form of contract is also an IDC. Wwwh&rblock com However, see Amounts paid to contractor that must be capitalized , later. Wwwh&rblock com You can also elect to deduct the cost of drilling exploratory bore holes to determine the location and delineation of offshore hydrocarbon deposits if the shaft is capable of conducting hydrocarbons to the surface on completion. Wwwh&rblock com It does not matter whether there is any intent to produce hydrocarbons. Wwwh&rblock com If you do not elect to deduct your IDCs as a current business expense, you can elect to deduct them over the 60-month period beginning with the month they were paid or incurred. Wwwh&rblock com Amounts paid to contractor that must be capitalized. Wwwh&rblock com   Amounts paid to a contractor must be capitalized if they are either: Amounts properly allocable to the cost of depreciable property, or Amounts paid only out of production or proceeds from production if these amounts are depletable income to the recipient. Wwwh&rblock com How to make the election. Wwwh&rblock com   You elect to deduct IDCs as a current business expense by taking the deduction on your income tax return for the first tax year you have eligible costs. Wwwh&rblock com No formal statement is required. Wwwh&rblock com If you file Schedule C (Form 1040), enter these costs under “Other expenses. Wwwh&rblock com ”   For oil and gas wells, your election is binding for the year it is made and for all later years. Wwwh&rblock com For geothermal wells, your election can be revoked by the filing of an amended return on which you do not take the deduction. Wwwh&rblock com You can file the amended return for the year up to the normal time of expiration for filing a claim for credit or refund, generally, within 3 years after the date you filed the original return or within 2 years after the date you paid the tax, whichever is later. Wwwh&rblock com Energy credit for costs of geothermal wells. Wwwh&rblock com   If you capitalize the drilling and development costs of geothermal wells that you place in service during the tax year, you may be able to claim a business energy credit. Wwwh&rblock com See the Instructions for Form 3468 for more information. Wwwh&rblock com Nonproductive well. Wwwh&rblock com   If you capitalize your IDCs, you have another option if the well is nonproductive. Wwwh&rblock com You can deduct the IDCs of the nonproductive well as an ordinary loss. Wwwh&rblock com You must indicate and clearly state your election on your tax return for the year the well is completed. Wwwh&rblock com Once made, the election for oil and gas wells is binding for all later years. Wwwh&rblock com You can revoke your election for a geothermal well by filing an amended return that does not claim the loss. Wwwh&rblock com Costs incurred outside the United States. Wwwh&rblock com   You cannot deduct as a current business expense all the IDCs paid or incurred for an oil, gas, or geothermal well located outside the United States. Wwwh&rblock com However, you can elect to include the costs in the adjusted basis of the well to figure depletion or depreciation. Wwwh&rblock com If you do not make this election, you can deduct the costs over the 10-year period beginning with the tax year in which you paid or incurred them. Wwwh&rblock com These rules do not apply to a nonproductive well. Wwwh&rblock com Exploration Costs The costs of determining the existence, location, extent, or quality of any mineral deposit are ordinarily capital expenditures if the costs lead to the development of a mine. Wwwh&rblock com You recover these costs through depletion as the mineral is removed from the ground. Wwwh&rblock com However, you can elect to deduct domestic exploration costs paid or incurred before the beginning of the development stage of the mine (except those for oil and gas wells). Wwwh&rblock com How to make the election. Wwwh&rblock com   You elect to deduct exploration costs by taking the deduction on your income tax return, or on an amended income tax return, for the first tax year for which you wish to deduct the costs paid or incurred during the tax year. Wwwh&rblock com Your return must adequately describe and identify each property or mine, and clearly state how much is being deducted for each one. Wwwh&rblock com The election applies to the tax year you make this election and all later tax years. Wwwh&rblock com Partnerships and S corporations. Wwwh&rblock com   Each partner, not the partnership, elects whether to capitalize or to deduct that partner's share of exploration costs. Wwwh&rblock com Each shareholder, not the S corporation, elects whether to capitalize or to deduct that shareholder's share of exploration costs. Wwwh&rblock com Reduced corporate deductions for exploration costs. Wwwh&rblock com   A corporation (other than an S corporation) can deduct only 70% of its domestic exploration costs. Wwwh&rblock com It must capitalize the remaining 30% of costs and amortize them over the 60-month period starting with the month the exploration costs are paid or incurred. Wwwh&rblock com A corporation may also elect to capitalize and amortize mining exploration costs over a 10-year period. Wwwh&rblock com For more information on this method of amortization, see Internal Revenue Code section 59(e). Wwwh&rblock com   The 30% the corporation capitalizes cannot be added to its basis in the property to figure cost depletion. Wwwh&rblock com However, the amount amortized is treated as additional depreciation and is subject to recapture as ordinary income on a disposition of the property. Wwwh&rblock com See Section 1250 Property under Depreciation Recapture in chapter 3 of Publication 544. Wwwh&rblock com   These rules also apply to the deduction of development costs by corporations. Wwwh&rblock com See Development Costs , later. Wwwh&rblock com Recapture of exploration expenses. Wwwh&rblock com   When your mine reaches the producing stage, you must recapture any exploration costs you elected to deduct. Wwwh&rblock com Use either of the following methods. Wwwh&rblock com Method 1—Include the deducted costs in gross income for the tax year the mine reaches the producing stage. Wwwh&rblock com Your election must be clearly indicated on the return. Wwwh&rblock com Increase your adjusted basis in the mine by the amount included in income. Wwwh&rblock com Generally, you must elect this recapture method by the due date (including extensions) of your return. Wwwh&rblock com However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Wwwh&rblock com Make the election on your amended return and write “Filed pursuant to section 301. Wwwh&rblock com 9100-2” on the form where you are including the income. Wwwh&rblock com File the amended return at the same address you filed the original return. Wwwh&rblock com Method 2—Do not claim any depletion deduction for the tax year the mine reaches the producing stage and any later tax years until the depletion you would have deducted equals the exploration costs you deducted. Wwwh&rblock com   You also must recapture deducted exploration costs if you receive a bonus or royalty from mine property before it reaches the producing stage. Wwwh&rblock com Do not claim any depletion deduction for the tax year you receive the bonus or royalty and any later tax years until the depletion you would have deducted equals the exploration costs you deducted. Wwwh&rblock com   Generally, if you dispose of the mine before you have fully recaptured the exploration costs you deducted, recapture the balance by treating all or part of your gain as ordinary income. Wwwh&rblock com Under these circumstances, you generally treat as ordinary income all of your gain if it is less than your adjusted exploration costs with respect to the mine. Wwwh&rblock com If your gain is more than your adjusted exploration costs, treat as ordinary income only a part of your gain, up to the amount of your adjusted exploration costs. Wwwh&rblock com Foreign exploration costs. Wwwh&rblock com   If you pay or incur exploration costs for a mine or other natural deposit located outside the United States, you cannot deduct all the costs in the current year. Wwwh&rblock com You can elect to include the costs (other than for an oil, gas, or geothermal well) in the adjusted basis of the mineral property to figure cost depletion. Wwwh&rblock com (Cost depletion is discussed in chapter 9 . Wwwh&rblock com ) If you do not make this election, you must deduct the costs over the 10-year period beginning with the tax year in which you pay or incur them. Wwwh&rblock com These rules also apply to foreign development costs. Wwwh&rblock com Development Costs You can deduct costs paid or incurred during the tax year for developing a mine or any other natural deposit (other than an oil or gas well) located in the United States. Wwwh&rblock com These costs must be paid or incurred after the discovery of ores or minerals in commercially marketable quantities. Wwwh&rblock com Development costs also include depreciation on improvements used in the development of ores or minerals and costs incurred for you by a contractor. Wwwh&rblock com Development costs do not include the costs for the acquisition or improvement of depreciable property. Wwwh&rblock com Instead of deducting development costs in the year paid or incurred, you can elect to treat the cost as deferred expenses and deduct them ratably as the units of produced ores or minerals benefited by the expenses are sold. Wwwh&rblock com This election applies each tax year to expenses paid or incurred in that year. Wwwh&rblock com Once made, the election is binding for the year and cannot be revoked for any reason. Wwwh&rblock com How to make the election. Wwwh&rblock com   The election to deduct development costs ratably as the ores or minerals are sold must be made for each mine or other natural deposit by a clear indication on your return or by a statement filed with the IRS office where you file your return. Wwwh&rblock com Generally, you must make the election by the due date of the return (including extensions). Wwwh&rblock com However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Wwwh&rblock com Clearly indicate the election on your amended return and write “Filed pursuant to section 301. Wwwh&rblock com 9100-2. Wwwh&rblock com ” File the amended return at the same address you filed the original return. Wwwh&rblock com Foreign development costs. Wwwh&rblock com   The rules discussed earlier for foreign exploration costs apply to foreign development costs. Wwwh&rblock com Reduced corporate deductions for development costs. Wwwh&rblock com   The rules discussed earlier for reduced corporate deductions for exploration costs also apply to corporate deductions for development costs. Wwwh&rblock com Circulation Costs A publisher can deduct as a current business expense the costs of establishing, maintaining, or increasing the circulation of a newspaper, magazine, or other periodical. Wwwh&rblock com For example, a publisher can deduct the cost of hiring extra employees for a limited time to get new subscriptions through telephone calls. Wwwh&rblock com Circulation costs are deductible even if they normally would be capitalized. Wwwh&rblock com This rule does not apply to the following costs that must be capitalized. Wwwh&rblock com The purchase of land or depreciable property. Wwwh&rblock com The acquisition of circulation through the purchase of any part of the business of another publisher of a newspaper, magazine, or other periodical, including the purchase of another publisher's list of subscribers. Wwwh&rblock com Other treatment of circulation costs. Wwwh&rblock com   If you do not want to deduct circulation costs as a current business expense, you can elect one of the following ways to recover these costs. Wwwh&rblock com Capitalize all circulation costs that are properly chargeable to a capital account (see chapter 1 ). Wwwh&rblock com Amortize circulation costs over the 3-year period beginning with the tax year they were paid or incurred. Wwwh&rblock com How to make the election. Wwwh&rblock com   You elect to capitalize circulation costs by attaching a statement to your return for the first tax year the election applies. Wwwh&rblock com Your election is binding for the year it is made and for all later years, unless you get IRS approval to revoke it. Wwwh&rblock com Business Start-Up and Organizational Costs Business start-up and organizational costs are generally capital expenditures. Wwwh&rblock com However, you can elect to deduct up to $5,000 of business start-up and $5,000 of organizational costs paid or incurred after October 22, 2004. Wwwh&rblock com The $5,000 deduction is reduced by the amount your total start-up or organizational costs exceed $50,000. Wwwh&rblock com Any remaining costs must be amortized. Wwwh&rblock com For information about amortizing start-up and organizational costs, see chapter 8 . Wwwh&rblock com Start-up costs include any amounts paid or incurred in connection with creating an active trade or business or investigating the creation or acquisition of an active trade or business. Wwwh&rblock com Organizational costs include the costs of creating a corporation. Wwwh&rblock com For more information on start-up and organizational costs, see chapter 8 . Wwwh&rblock com How to make the election. Wwwh&rblock com   You elect to deduct the start-up or organizational costs by claiming the deduction on your income tax return (filed by the due date including extensions) for the tax year in which the active trade or business begins. Wwwh&rblock com However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Wwwh&rblock com Clearly indicate the election on your amended return and write “Filed pursuant to section 301. Wwwh&rblock com 9100-2. Wwwh&rblock com ” File the amended return at the same address you filed the original return. Wwwh&rblock com The election applies when computing taxable income for the current tax year and all subsequent years. Wwwh&rblock com Reforestation Costs Reforestation costs are generally capital expenditures. Wwwh&rblock com However, you can elect to deduct up to $10,000 ($5,000 if married filing separately; $0 for a trust) of qualifying reforestation costs paid or incurred after October 22, 2004, for each qualified timber property. Wwwh&rblock com The remaining costs can be amortized over an 84-month period. Wwwh&rblock com For information about amortizing reforestation costs, see chapter 8 . Wwwh&rblock com Qualifying reforestation costs are the direct costs of planting or seeding for forestation or reforestation. Wwwh&rblock com Qualified timber property is property that contains trees in significant commercial quantities. Wwwh&rblock com See chapter 8 for more information on qualifying reforestation costs and qualified timber property. Wwwh&rblock com If you elect to deduct qualified reforestation costs, create and maintain separate timber accounts for each qualified timber property and include all reforestation costs and the dates each was applied. Wwwh&rblock com Do not include this qualified timber property in any account (for example, depletion block) for which depletion is allowed. Wwwh&rblock com How to make the election. Wwwh&rblock com   You elect to deduct qualifying reforestation costs by claiming the deduction on your timely filed income tax return (including extensions) for the tax year the expenses were paid or incurred. Wwwh&rblock com If Form T (Timber), Forest Activities Schedule, is required, complete Part IV of Form T. Wwwh&rblock com If Form T is not required, attach a statement containing the following information for each qualified timber property for which an election is being made. Wwwh&rblock com The unique stand identification numbers. Wwwh&rblock com The total number of acres reforested during the tax year. Wwwh&rblock com The nature of the reforestation treatments. Wwwh&rblock com The total amounts of qualified reforestation expenditures eligible to be amortized or deducted. Wwwh&rblock com   If you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Wwwh&rblock com Clearly indicate the election on your amended return and write “Filed pursuant to section 301. Wwwh&rblock com 9100-2. Wwwh&rblock com ” File the amended return at the same address you filed the original return. Wwwh&rblock com The election applies when computing taxable income for the current tax year and all subsequent years. Wwwh&rblock com   For additional information on reforestation costs, see chapter 8 . Wwwh&rblock com Recapture. Wwwh&rblock com   This deduction may have to be recaptured as ordinary income under section 1245 when you sell or otherwise dispose of the property that would have received an addition to basis if you had not elected to deduct the expenditure. Wwwh&rblock com For more information on recapturing the deduction, see Depreciation Recapture in Publication 544. Wwwh&rblock com Retired Asset Removal Costs If you retire and remove a depreciable asset in connection with the installation or production of a replacement asset, you can deduct the costs of removing the retired asset. Wwwh&rblock com However, if you replace a component (part) of a depreciable asset, capitalize the removal costs if the replacement is an improvement and deduct the costs if the replacement is a repair. Wwwh&rblock com Barrier Removal Costs The cost of an improvement to a business asset is normally a capital expense. Wwwh&rblock com However, you can elect to deduct the costs of making a facility or public transportation vehicle more accessible to and usable by those who are disabled or elderly. Wwwh&rblock com You must own or lease the facility or vehicle for use in connection with your trade or business. Wwwh&rblock com A facility is all or any part of buildings, structures, equipment, roads, walks, parking lots, or similar real or personal property. Wwwh&rblock com A public transportation vehicle is a vehicle, such as a bus or railroad car, that provides transportation service to the public (including service for your customers, even if you are not in the business of providing transportation services). Wwwh&rblock com You cannot deduct any costs that you paid or incurred to completely renovate or build a facility or public transportation vehicle or to replace depreciable property in the normal course of business. Wwwh&rblock com Deduction limit. Wwwh&rblock com   The most you can deduct as a cost of removing barriers to the disabled and the elderly for any tax year is $15,000. Wwwh&rblock com However, you can add any costs over this limit to the basis of the property and depreciate these excess costs. Wwwh&rblock com Partners and partnerships. Wwwh&rblock com   The $15,000 limit applies to a partnership and also to each partner in the partnership. Wwwh&rblock com A partner can allocate the $15,000 limit in any manner among the partner's individually incurred costs and the partner's distributive share of partnership costs. Wwwh&rblock com If the partner cannot deduct the entire share of partnership costs, the partnership can add any costs not deducted to the basis of the improved property. Wwwh&rblock com   A partnership must be able to show that any amount added to basis was not deducted by the partner and that it was over a partner's $15,000 limit (as determined by the partner). Wwwh&rblock com If the partnership cannot show this, it is presumed that the partner was able to deduct the distributive share of the partnership's costs in full. Wwwh&rblock com Example. Wwwh&rblock com Emilio Azul's distributive share of ABC partnership's deductible expenses for the removal of architectural barriers was $14,000. Wwwh&rblock com Emilio had $12,000 of similar expenses in his sole proprietorship. Wwwh&rblock com He elected to deduct $7,000 of them. Wwwh&rblock com Emilio allocated the remaining $8,000 of the $15,000 limit to his share of ABC's expenses. Wwwh&rblock com Emilio can add the excess $5,000 of his own expenses to the basis of the property used in his business. Wwwh&rblock com Also, if ABC can show that Emilio could not deduct $6,000 ($14,000 – $8,000) of his share of the partnership's expenses because of how Emilio applied the limit, ABC can add $6,000 to the basis of its property. Wwwh&rblock com Qualification standards. Wwwh&rblock com   You can deduct your costs as a current expense only if the barrier removal meets the guidelines and requirements issued by the Architectural and Transportation Barriers Compliance Board under the Americans with Disabilities Act (ADA) of 1990. Wwwh&rblock com You can view the Americans with Disabilities Act at www. Wwwh&rblock com ada. Wwwh&rblock com gov/pubs/ada. Wwwh&rblock com htm. Wwwh&rblock com   The following is a list of some architectural barrier removal costs that can be deducted. Wwwh&rblock com Ground and floor surfaces. Wwwh&rblock com Walks. Wwwh&rblock com Parking lots. Wwwh&rblock com Ramps. Wwwh&rblock com Entrances. Wwwh&rblock com Doors and doorways. Wwwh&rblock com Stairs. Wwwh&rblock com Floors. Wwwh&rblock com Toilet rooms. Wwwh&rblock com Water fountains. Wwwh&rblock com Public telephones. Wwwh&rblock com Elevators. Wwwh&rblock com Controls. Wwwh&rblock com Signage. Wwwh&rblock com Alarms. Wwwh&rblock com Protruding objects. Wwwh&rblock com Symbols of accessibility. Wwwh&rblock com You can find the ADA guidelines and requirements for architectural barrier removal at www. Wwwh&rblock com usdoj. Wwwh&rblock com gov/crt/ada/reg3a. Wwwh&rblock com html. Wwwh&rblock com   The costs for removal of transportation barriers from rail facilities, buses, and rapid and light rail vehicles are deductible. Wwwh&rblock com You can find the guidelines and requirements for transportation barrier removal at www. Wwwh&rblock com fta. Wwwh&rblock com dot. Wwwh&rblock com gov. Wwwh&rblock com   Also, you can access the ADA website at www. Wwwh&rblock com ada. Wwwh&rblock com gov for additional information. Wwwh&rblock com Other barrier removals. Wwwh&rblock com   To be deductible, expenses of removing any barrier not covered by the above standards must meet all three of the following tests. Wwwh&rblock com The removed barrier must be a substantial barrier to access or use of a facility or public transportation vehicle by persons who have a disability or are elderly. Wwwh&rblock com The removed barrier must have been a barrier for at least one major group of persons who have a disability or are elderly (such as people who are blind, deaf, or wheelchair users). Wwwh&rblock com The barrier must be removed without creating any new barrier that significantly impairs access to or use of the facility or vehicle by a major group of persons who have a disability or are elderly. Wwwh&rblock com How to make the election. Wwwh&rblock com   If you elect to deduct your costs for removing barriers to the disabled or the elderly, claim the deduction on your income tax return (partnership return for partnerships) for the tax year the expenses were paid or incurred. Wwwh&rblock com Identify the deduction as a separate item. Wwwh&rblock com The election applies to all the qualifying costs you have during the year, up to the $15,000 limit. Wwwh&rblock com If you make this election, you must maintain adequate records to support your deduction. Wwwh&rblock com   For your election to be valid, you generally must file your return by its due date, including extensions. Wwwh&rblock com However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Wwwh&rblock com Clearly indicate the election on your amended return and write “Filed pursuant to section 301. Wwwh&rblock com 9100-2. Wwwh&rblock com ” File the amended return at the same address you filed the original return. Wwwh&rblock com Your election is irrevocable after the due date, including extensions, of your return. Wwwh&rblock com Disabled access credit. Wwwh&rblock com   If you make your business accessible to persons with disabilities and your business is an eligible small business, you may be able to claim the disabled access credit. Wwwh&rblock com If you choose to claim the credit, you must reduce the amount you deduct or capitalize by the amount of the credit. Wwwh&rblock com   For more information, see Form 8826, Disabled Access Credit. Wwwh&rblock com Film and Television Production Costs Film and television production costs are generally capital expenses. Wwwh&rblock com However, you can elect to deduct costs paid or incurred for certain productions commencing before January 1, 2014. Wwwh&rblock com For more information, see section 181 of the Internal Revenue Code and the related Treasury Regulations. Wwwh&rblock com Prev  Up  Next   Home   More Online Publications
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Wwwh&rblock com Publication 3920 - Main Contents Table of Contents Tax ForgivenessYears Eligible for Tax Forgiveness Amount of Tax Forgiven Refund of Taxes Paid How To Claim Tax Forgiveness Payments to SurvivorsSeptember 11th Victim Compensation Fund of 2001 Qualified Disaster Relief Payments Disability Payments Death Benefits Canceled Debt Payments to Survivors of Public Safety Officers Postponed Tax DeadlinesCovered area. Wwwh&rblock com Disaster Area Losses Estate Tax Reduction Structured Settlement Factoring Transactions Illustrated Worksheets B and C Additional Worksheets How To Get Tax Help Tax Forgiveness The IRS will forgive the federal income tax liabilities of decedents who died as a result of the Oklahoma City attack, September 11 attacks, and anthrax attacks. Wwwh&rblock com Income tax is forgiven for these decedents whether they were killed in an attack or in rescue or recovery operations. Wwwh&rblock com Any forgiven tax liability owed to the IRS will not have to be paid. Wwwh&rblock com Any forgiven tax liability that has already been paid will be refunded. Wwwh&rblock com (See Refund of Taxes Paid, later. Wwwh&rblock com ) To determine the amount of tax to be forgiven, read Years Eligible for Tax Forgiveness first. Wwwh&rblock com Then read Amount of Tax Forgiven. Wwwh&rblock com Decedents whose total forgiven tax liability for all eligible years is less than $10,000 are entitled to $10,000 minimum relief. Wwwh&rblock com Even decedents who were not required to file tax returns for the eligible tax years are entitled to $10,000 minimum relief. Wwwh&rblock com See Minimum Amount of Relief later under Amount of Tax Forgiven. Wwwh&rblock com Years Eligible for Tax Forgiveness The following paragraphs explain which years are eligible for tax forgiveness. Wwwh&rblock com Oklahoma City attack. Wwwh&rblock com   For those who died from this attack, income tax is forgiven for 1994 and all later years up to and including the year of death. Wwwh&rblock com Example 1. Wwwh&rblock com A man was killed in the bombing of the federal building in Oklahoma City on April 19, 1995. Wwwh&rblock com His income tax is forgiven for 1994 and 1995. Wwwh&rblock com Example 2. Wwwh&rblock com A woman was wounded while walking outside the federal building in Oklahoma City on April 19, 1995. Wwwh&rblock com She subsequently died of her wounds in 1996. Wwwh&rblock com Her income tax is forgiven for 1994, 1995, and 1996. Wwwh&rblock com September 11 attacks and anthrax attacks. Wwwh&rblock com   For those who die from these attacks, income tax is forgiven for 2000 and all later years up to and including the year of death. Wwwh&rblock com Example 1. Wwwh&rblock com A Pentagon employee died in the September 11 attack. Wwwh&rblock com Her income tax is forgiven for 2000 and 2001. Wwwh&rblock com Example 2. Wwwh&rblock com A visitor to the World Trade Center died in 2002 of wounds he sustained in the September 11 attack. Wwwh&rblock com His income tax liability is forgiven for 2000, 2001, and 2002. Wwwh&rblock com Amount of Tax Forgiven The IRS will forgive the decedent's income tax liability for all years eligible for tax forgiveness. Wwwh&rblock com On a joint return, only the decedent's part of the joint income tax liability is eligible for forgiveness. Wwwh&rblock com To figure the tax to be forgiven, use the following worksheets. Wwwh&rblock com Use Worksheet A for any eligible year the decedent filed a return as single, married filing separately, head of household, or qualifying widow(er). Wwwh&rblock com Use Worksheet B for any eligible year the decedent filed a joint return. Wwwh&rblock com See the illustrated Worksheet B near the end of this publication. Wwwh&rblock com Do not complete Worksheet A or B if the decedent was not required to file tax returns for the eligible tax years. Wwwh&rblock com Instead, complete Worksheet C and file a return for the decedent's last tax year. Wwwh&rblock com See Minimum Amount of Relief, later. Wwwh&rblock com If you need assistance, call the IRS at 1–866–562–5227 Monday through Friday during the following times. Wwwh&rblock com In English–7 a. Wwwh&rblock com m. Wwwh&rblock com to 10 p. Wwwh&rblock com m. Wwwh&rblock com local time. Wwwh&rblock com In Spanish–8 a. Wwwh&rblock com m. Wwwh&rblock com to 9:30 p. Wwwh&rblock com m. Wwwh&rblock com local time. Wwwh&rblock com Both spouses died. Wwwh&rblock com   If both spouses died as a result of a terrorist attack and they filed a joint return for an eligible tax year, fill out Worksheet B for each spouse for that year. Wwwh&rblock com Do this to determine if each spouse qualifies for the minimum relief of $10,000 (discussed later under Minimum Amount of Relief). Wwwh&rblock com If you are certain that neither spouse's total forgiven tax liability for all eligible years is less than $10,000, skip Worksheet B. Wwwh&rblock com However, attach a computation of the forgiven tax liability to the final income tax return or amended tax return for each eligible year. Wwwh&rblock com The forgiven tax liability is the total tax shown on the joint return minus the taxes listed in the instructions for line 4 of Worksheet B. Wwwh&rblock com Residents of community property states. Wwwh&rblock com   If the decedent was domiciled in a community property state and the spouse reported half the community income on a separate return, the surviving spouse can get a refund of taxes paid on his or her share of the decedent's income for the eligible years. Wwwh&rblock com Also, all of the decedent's income taxes paid for the eligible years will be refunded to either the executor or administrator of the estate, or to the surviving spouse if there is no legal representative. Wwwh&rblock com Worksheet B. Wwwh&rblock com Figuring the Tax To Be Forgiven (For Decedents Who Filed a Joint Return)       (A) First Eligible Year (1994 or 2000) (B) Second Eligible Year (1995 or 2001) (C) Third Eligible Year (1996 or 2002) 1 Enter the years eligible for forgiveness. Wwwh&rblock com 1       2 Enter the decedent's taxable income. Wwwh&rblock com Figure taxable income as if a separate return had been filed. Wwwh&rblock com See the instructions. Wwwh&rblock com 2       3 Enter the decedent's total tax. Wwwh&rblock com See the instructions. Wwwh&rblock com 3       4 Enter the total, if any, of the decedent's taxes not eligible for forgiveness. Wwwh&rblock com See the instructions. Wwwh&rblock com 4       5 Subtract line 4 from line 3. Wwwh&rblock com 5       6 Enter the surviving spouse's taxable income. Wwwh&rblock com Figure taxable income as if a separate return had been filed. Wwwh&rblock com See the instructions. Wwwh&rblock com 6       7 Enter the surviving spouse's total tax. Wwwh&rblock com See the instructions. Wwwh&rblock com 7       8 Enter the total, if any, of the surviving spouse's taxes listed in the instructions for line 4. Wwwh&rblock com 8       9 Subtract line 8 from line 7. Wwwh&rblock com 9       10 Add lines 5 and 9. Wwwh&rblock com 10       11 Enter the total tax from the joint return. Wwwh&rblock com See Table 1 on page 5 for the line number for years before 2002. Wwwh&rblock com 11       12 Add lines 4 and 8. Wwwh&rblock com 12       13 Subtract line 12 from line 11. Wwwh&rblock com 13       14 Divide line 5 by line 10. Wwwh&rblock com Enter the result as a decimal. Wwwh&rblock com 14       15 Tax to be forgiven. Wwwh&rblock com Multiply line 13 by line 14 and enter the result. Wwwh&rblock com 15       Note. Wwwh&rblock com If the total of columns (A), (B), and (C) of line 15 (including any amounts shown on line 5 of Worksheet A) is less than $10,000, also complete Worksheet C. Wwwh&rblock com Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1. Wwwh&rblock com If filing Form 1040X for an eligible year, enter the amount from line 15 above on Form 1040X in column B of line 10 as a decrease in tax. Wwwh&rblock com The IRS will determine the amount to be refunded. Wwwh&rblock com Worksheet B. Wwwh&rblock com Figuring the Tax To Be Forgiven (For Decedents Who Filed a Joint Return)       (A) First Eligible Year (1994 or 2000) (B) Second Eligible Year (1995 or 2001) (C) Third Eligible Year (1996 or 2002) 1 Enter the years eligible for forgiveness. Wwwh&rblock com 1       2 Enter the decedent's taxable income. Wwwh&rblock com Figure taxable income as if a separate return had been filed. Wwwh&rblock com See the instructions. Wwwh&rblock com 2       3 Enter the decedent's total tax. Wwwh&rblock com See the instructions. Wwwh&rblock com 3       4 Enter the total, if any, of the decedent's taxes not eligible for forgiveness. Wwwh&rblock com See the instructions. Wwwh&rblock com 4       5 Subtract line 4 from line 3. Wwwh&rblock com 5       6 Enter the surviving spouse's taxable income. Wwwh&rblock com Figure taxable income as if a separate return had been filed. Wwwh&rblock com See the instructions. Wwwh&rblock com 6       7 Enter the surviving spouse's total tax. Wwwh&rblock com See the instructions. Wwwh&rblock com 7       8 Enter the total, if any, of the surviving spouse's taxes listed in the instructions for line 4. Wwwh&rblock com 8       9 Subtract line 8 from line 7. Wwwh&rblock com 9       10 Add lines 5 and 9. Wwwh&rblock com 10       11 Enter the total tax from the joint return. Wwwh&rblock com See Table 1 on page 5 for the line number for years before 2002. Wwwh&rblock com 11       12 Add lines 4 and 8. Wwwh&rblock com 12       13 Subtract line 12 from line 11. Wwwh&rblock com 13       14 Divide line 5 by line 10. Wwwh&rblock com Enter the result as a decimal. Wwwh&rblock com 14       15 Tax to be forgiven. Wwwh&rblock com Multiply line 13 by line 14 and enter the result. Wwwh&rblock com 15       Note. Wwwh&rblock com If the total of columns (A), (B), and (C) of line 15 (including any amounts shown on line 5 of Worksheet A) is less than $10,000, also complete Worksheet C. Wwwh&rblock com Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1. Wwwh&rblock com If filing Form 1040X for an eligible year, enter the amount from line 15 above on Form 1040X in column B of line 10 as a decrease in tax. Wwwh&rblock com The IRS will determine the amount to be refunded. Wwwh&rblock com Instructions for Worksheet B Table 1. Wwwh&rblock com Total Tax Line on Decedent's Return Note: Use this table to find the total tax line on the decedent's income tax return. Wwwh&rblock com * Form 1994 1995 1996 2000 2001 1040 Line 53 Line 54 Line 51 Line 57 Line 58 1040A Line 27 Line 28 Line 28 Line 35 File Form 1040 1040EZ Line 9 Line 10 Line 10 Line 10 TeleFile Tax Record ** Line E Line J Line K 1040NR Line 51 Line 52 Line 49 Line 54 Line 54 1040NR–EZ N/A Line 17 Line 17 Line 18 File Form 1040NR * Line numbers for the 2002 forms were not available when this publication went to print. Wwwh&rblock com ** File Form 4506 to get a transcript of the decedent's account. Wwwh&rblock com Table 1. Wwwh&rblock com Total Tax Line on Decedent's Return Note: Use this table to find the total tax line on the decedent's income tax return. Wwwh&rblock com * Form 1994 1995 1996 2000 2001 1040 Line 53 Line 54 Line 51 Line 57 Line 58 1040A Line 27 Line 28 Line 28 Line 35 File Form 1040 1040EZ Line 9 Line 10 Line 10 Line 10 TeleFile Tax Record ** Line E Line J Line K 1040NR Line 51 Line 52 Line 49 Line 54 Line 54 1040NR–EZ N/A Line 17 Line 17 Line 18 File Form 1040NR * Line numbers for the 2002 forms were not available when this publication went to print. Wwwh&rblock com ** File Form 4506 to get a transcript of the decedent's account. Wwwh&rblock com Lines 2 and 6. Wwwh&rblock com   Allocate income and deductions in the same manner they would have been allocated if the spouses had filed separate returns. Wwwh&rblock com   Allocate wages and salaries to the spouse who performed the services and received the Form W-2. Wwwh&rblock com Business and investment income (including capital gains) are generally allocated to the spouse who owned the business or investment that produced the income. Wwwh&rblock com Income from a jointly owned business or investment should be allocated equally between the spouses unless there is evidence that shows a different allocation is appropriate. Wwwh&rblock com   Allocate business deductions to the owner of the business. Wwwh&rblock com Allocate personal deductions (such as itemized deductions for mortgage interest and taxes) equally between the spouses unless there is evidence that shows a different allocation is appropriate. Wwwh&rblock com Lines 3 and 7. Wwwh&rblock com   Figure the total tax as if a separate return had been filed. Wwwh&rblock com The total tax is the tax that would have been entered on the tax return line shown in Table 1 if a separate return had been filed. Wwwh&rblock com When figuring the tax using the Tax Table or Tax Rate Schedule, use the “Married filing separately” column in the Tax Table or Tax Rate Schedule Y-2. Wwwh&rblock com   When figuring the total tax, allocate credits and other taxes, if any, in the same manner as they would have been allocated if the spouses had filed separate returns. Wwwh&rblock com If a credit would not have been allowed on a separate return, allocate the credit shown on the joint return between the spouses. Wwwh&rblock com Examples of credits generally not allowed on a separate return are the child and dependent care credit, credit for the elderly, adoption credit, education credits, and earned income credit. Wwwh&rblock com Line 4. Wwwh&rblock com   Enter the total, if any, of the following taxes. Wwwh&rblock com Self-employment tax. Wwwh&rblock com Social security and Medicare tax on tip income not reported to employer. Wwwh&rblock com Tax on excess contributions to IRAs, Coverdell education savings accounts (formerly Ed IRAs), or Archer MSAs (formerly medical savings accounts). Wwwh&rblock com Tax on excess accumulation in qualified retirement plans. Wwwh&rblock com Household employment taxes. Wwwh&rblock com Uncollected social security and Medicare or RRTA tax on tips or group-term life insurance. Wwwh&rblock com Tax on golden parachute payments. Wwwh&rblock com Minimum Amount of Relief The minimum amount of relief is $10,000. Wwwh&rblock com If the decedent's total forgiven tax liability for all eligible years is less than $10,000, the difference between $10,000 and the total forgiven tax liability for those years will be treated as a tax payment for the decedent's last tax year. Wwwh&rblock com The IRS will refund the difference as explained under Refund of Taxes Paid. Wwwh&rblock com Use Worksheet C to figure the additional tax payment. Wwwh&rblock com But first complete Worksheet A or B, unless the decedent was not required to file tax returns for the eligible tax years. Wwwh&rblock com Example 1. Wwwh&rblock com An individual who died in the September 11 attacks had an income tax liability of $-0- for 2000 and $6,400 for 2001. Wwwh&rblock com The $6,400 is eligible for forgiveness. Wwwh&rblock com The IRS will forgive $6,400 and treat the difference between $10,000 and $6,400 ($3,600) as a tax payment for 2001. Wwwh&rblock com Example 2. Wwwh&rblock com A child who died in the September 11 attacks had no (-0-) income tax liability for 2000 or 2001. Wwwh&rblock com The IRS will treat $10,000 as a tax payment for 2001. Wwwh&rblock com Income received after date of death. Wwwh&rblock com   Generally, income of the decedent received after the date of death must be reported on Form 1041 if the estate has gross income for the tax year of $600 or more. Wwwh&rblock com Examples are the final paycheck or dividends on stock owned by the decedent. Wwwh&rblock com However, this income is exempt from income tax and is not included on Form 1041 if it is received: After the date of the decedent's death, and Before the end of the decedent's tax year (determined without regard to death). Wwwh&rblock com Nonqualifying income. Wwwh&rblock com   The following income is not exempt from tax. Wwwh&rblock com The tax on it is not eligible for forgiveness. Wwwh&rblock com Deferred compensation that would have been payable if the death had occurred because of an event other than these attacks. Wwwh&rblock com Amounts that would not have been payable but for an action taken after September 11, 2001. Wwwh&rblock com The following are examples of nonqualifying income. Wwwh&rblock com Amounts payable from a qualified retirement plan or IRA to the beneficiary or estate of the decedent. Wwwh&rblock com Amounts payable only as death or survivor's benefits from pre-existing arrangements that would have been paid if the death had occurred for another reason. Wwwh&rblock com Income received as a result of adjustments made by the decedent's employer to a plan or arrangement to accelerate the vesting of restricted property or the payment of nonqualified deferred compensation after the date of the attack. Wwwh&rblock com Interest on savings bonds cashed by the beneficiary of the decedent. Wwwh&rblock com If you are responsible for the estate of a decedent, see Publication 559. Wwwh&rblock com Publication 559 discusses how to complete and file federal income tax returns and explains your responsibility to pay any taxes due. Wwwh&rblock com Instructions for lines 2–9 of Worksheet C. Wwwh&rblock com   The tax that would have been payable on the exempt income (discussed earlier) must be considered when determining whether a decedent is entitled to the $10,000 minimum relief. Wwwh&rblock com To figure the tax that would have been payable, you can use lines 2 through 9 of Worksheet C. Wwwh&rblock com Or, if special requirements are met, you can use the alternative computation instead. Wwwh&rblock com See Alternative computation, later. Wwwh&rblock com   You have to use lines 2–9 (or the alternative computation) to figure the tax that would have been payable even if Form 1041 was not required to be filed. Wwwh&rblock com Use Form 1041 to figure what the taxable income would be without including the exempt income. Wwwh&rblock com Then enter that taxable income (even if a negative number) on line 2 of Worksheet C (or line 1 of Worksheet D, Alternative Computation of Tax on Exempt Income (Line 9 of Worksheet C)). Wwwh&rblock com Alternative computation. Wwwh&rblock com   Instead of using lines 2–8 of Worksheet C to figure the tax on exempt income (line 9 of Worksheet C), you may be able to use Worksheet D. Wwwh&rblock com You can use Worksheet D to figure the tax on the exempt income payable by the estate and its beneficiaries only if both of the following requirements are met. Wwwh&rblock com The estate claimed an income distribution deduction on line 18 (Form 1041). Wwwh&rblock com Each beneficiary submits the information necessary to refigure the income tax payable on the exempt income received from the decedent's estate. Wwwh&rblock com If requirement (2) is met but requirement (1) is not, you can still use Worksheet D if: Form 1041 was not required because exempt income was received, and The estate would have claimed an income distribution deduction if the exempt income were taxable. Wwwh&rblock com If you use this alternative computation, skip lines 2–8 of Worksheet C and enter the amount from line 8 of Worksheet D on line 9 of Worksheet C. Wwwh&rblock com Complete the rest of Worksheet C to determine the additional payment allowed. Wwwh&rblock com Worksheet C. Wwwh&rblock com Amount Treated as Tax Payment for Decedent's Last Tax Year Caution: The decedent is entitled to minimum relief of $10,000. Wwwh&rblock com Complete this worksheet only if the total tax forgiven for all eligible years is less than $10,000. Wwwh&rblock com 1 Minimum relief amount. Wwwh&rblock com Note: Before completing lines 2–9, see Instructions for lines 2–9 of Worksheet C. Wwwh&rblock com 1 $10,000 2 Enter the taxable income from line 22 (Form 1041) 2       3 Enter the distribution deduction from line 18 (Form 1041) . Wwwh&rblock com 3       4 Add lines 2 and 3. Wwwh&rblock com 4       5 Enter exempt income received after death minus expenses allocable to exempt income. Wwwh&rblock com (See Income received after date of death on page 5. Wwwh&rblock com ) 5       6 Add lines 4 and 5. Wwwh&rblock com 6       7 Figure the tax on line 6 using Schedule G (Form 1041). Wwwh&rblock com 7       8 Figure the tax on line 4 using Schedule G (Form 1041). Wwwh&rblock com 8       9 Tax on exempt income. Wwwh&rblock com Subtract line 8 from line 7. Wwwh&rblock com 9       10 Enter the total of columns (A)–(C) from line 5 of Worksheet A or line 15 of Worksheet B. Wwwh&rblock com If the decedent was not required to file tax returns for the eligible tax years, enter -0-. Wwwh&rblock com 10       11 Add lines 9 and 10. Wwwh&rblock com 11   12 Additional payment allowed. Wwwh&rblock com If line 11 is $10,000 or more, enter -0- and stop here. Wwwh&rblock com No additional amount is allowed as a tax payment. Wwwh&rblock com Otherwise, subtract line 11 from line 1 and enter the result. Wwwh&rblock com 12   Note. Wwwh&rblock com The amount on line 12 is allowed as a tax payment for the decedent's last tax year (usually 1995 or 2001). Wwwh&rblock com Attach the computation of the additional payment allowed or a copy of this worksheet to the original or amended income tax return for the decedent's last tax year. Wwwh&rblock com If filing Form 1040, include the amount from line 12 above on the “Other payments” line of the form. Wwwh&rblock com Write "Sec. Wwwh&rblock com 692(d)(2) Payment" and the amount to the right of the entry space. Wwwh&rblock com Also indicate whether a Form 1041 is being filed for the decedent's estate. Wwwh&rblock com If filing Form 1040X, include the amount from line 12 above on Form 1040X on line 15, columns (B) and (C). Wwwh&rblock com Write “Sec. Wwwh&rblock com 692(d)(2) Payment” on the dotted line to the left of the entry space. Wwwh&rblock com Worksheet C. Wwwh&rblock com Amount Treated as Tax Payment for Decedent's Last Tax Year Caution: The decedent is entitled to minimum relief of $10,000. Wwwh&rblock com Complete this worksheet only if the total tax forgiven for all eligible years is less than $10,000. Wwwh&rblock com 1 Minimum relief amount. Wwwh&rblock com Note: Before completing lines 2–9, see Instructions for lines 2–9 of Worksheet C. Wwwh&rblock com 1 $10,000 2 Enter the taxable income from line 22 (Form 1041) 2       3 Enter the distribution deduction from line 18 (Form 1041) . Wwwh&rblock com 3       4 Add lines 2 and 3. Wwwh&rblock com 4       5 Enter exempt income received after death minus expenses allocable to exempt income. Wwwh&rblock com (See Income received after date of death on page 5. Wwwh&rblock com ) 5       6 Add lines 4 and 5. Wwwh&rblock com 6       7 Figure the tax on line 6 using Schedule G (Form 1041). Wwwh&rblock com 7       8 Figure the tax on line 4 using Schedule G (Form 1041). Wwwh&rblock com 8       9 Tax on exempt income. Wwwh&rblock com Subtract line 8 from line 7. Wwwh&rblock com 9       10 Enter the total of columns (A)–(C) from line 5 of Worksheet A or line 15 of Worksheet B. Wwwh&rblock com If the decedent was not required to file tax returns for the eligible tax years, enter -0-. Wwwh&rblock com 10       11 Add lines 9 and 10. Wwwh&rblock com 11   12 Additional payment allowed. Wwwh&rblock com If line 11 is $10,000 or more, enter -0- and stop here. Wwwh&rblock com No additional amount is allowed as a tax payment. Wwwh&rblock com Otherwise, subtract line 11 from line 1 and enter the result. Wwwh&rblock com 12   Note. Wwwh&rblock com The amount on line 12 is allowed as a tax payment for the decedent's last tax year (usually 1995 or 2001). Wwwh&rblock com Attach the computation of the additional payment allowed or a copy of this worksheet to the original or amended income tax return for the decedent's last tax year. Wwwh&rblock com If filing Form 1040, include the amount from line 12 above on the “Other payments” line of the form. Wwwh&rblock com Write "Sec. Wwwh&rblock com 692(d)(2) Payment" and the amount to the right of the entry space. Wwwh&rblock com Also indicate whether a Form 1041 is being filed for the decedent's estate. Wwwh&rblock com If filing Form 1040X, include the amount from line 12 above on Form 1040X on line 15, columns (B) and (C). Wwwh&rblock com Write “Sec. Wwwh&rblock com 692(d)(2) Payment” on the dotted line to the left of the entry space. Wwwh&rblock com Worksheet D. Wwwh&rblock com Alternative Computation of Tax on Exempt Income (Line 9 of Worksheet C) 1 Enter the taxable income from line 22 (Form 1041) 1   2 Enter exempt income received after death minus expenses allocable to exempt income. Wwwh&rblock com (See Income received after date of death on page 5. Wwwh&rblock com ) 2   3 Add lines 1 and 2 3   4 Figure the tax on line 3 using Schedule G (Form 1041). Wwwh&rblock com 4   5 Figure the tax on line 1 using Schedule G (Form 1041). Wwwh&rblock com 5   6 Estate's tax on exempt income. Wwwh&rblock com Subtract line 5 from line 4 6   7 Beneficiaries' tax on exempt income. Wwwh&rblock com Figure the total tax that would have been payable by all beneficiaries. Wwwh&rblock com Do this by including in each beneficiary's gross income the exempt income received from the decedent's estate and refiguring the income tax. Wwwh&rblock com Add the amounts by which each beneficiary's income tax is increased. Wwwh&rblock com 7   8 Add lines 6 and 7. Wwwh&rblock com Enter this amount on line 9 of Worksheet C. Wwwh&rblock com 8   Worksheet D. Wwwh&rblock com Alternative Computation of Tax on Exempt Income (Line 9 of Worksheet C) 1 Enter the taxable income from line 22 (Form 1041) 1   2 Enter exempt income received after death minus expenses allocable to exempt income. Wwwh&rblock com (See Income received after date of death on page 5. Wwwh&rblock com ) 2   3 Add lines 1 and 2 3   4 Figure the tax on line 3 using Schedule G (Form 1041). Wwwh&rblock com 4   5 Figure the tax on line 1 using Schedule G (Form 1041). Wwwh&rblock com 5   6 Estate's tax on exempt income. Wwwh&rblock com Subtract line 5 from line 4 6   7 Beneficiaries' tax on exempt income. Wwwh&rblock com Figure the total tax that would have been payable by all beneficiaries. Wwwh&rblock com Do this by including in each beneficiary's gross income the exempt income received from the decedent's estate and refiguring the income tax. Wwwh&rblock com Add the amounts by which each beneficiary's income tax is increased. Wwwh&rblock com 7   8 Add lines 6 and 7. Wwwh&rblock com Enter this amount on line 9 of Worksheet C. Wwwh&rblock com 8   Refund of Taxes Paid The IRS will refund the following forgiven income tax liabilities. Wwwh&rblock com Income tax liabilities that have been paid. Wwwh&rblock com Income tax liabilities treated as paid because the total tax liability for all years eligible for tax forgiveness is less than $10,000. Wwwh&rblock com See Minimum Amount of Relief, earlier. Wwwh&rblock com Example 1. Wwwh&rblock com A man who died in the September 11 attacks had an income tax liability of $7,500 for 2000 and $6,500 for 2001. Wwwh&rblock com The total, $14,000, is eligible for tax forgiveness. Wwwh&rblock com However, he paid only $13,000 of that amount. Wwwh&rblock com The IRS will refund the $13,000 paid. Wwwh&rblock com Example 2. Wwwh&rblock com A child who died in the September 11 attacks had no income tax liability for 2000 or 2001. Wwwh&rblock com The child qualifies for the minimum relief of $10,000. Wwwh&rblock com The $10,000 is treated as a tax payment for 2001 and will be refunded. Wwwh&rblock com Period for filing a claim for credit or refund. Wwwh&rblock com   To obtain a tax refund on a previously filed income tax return, file an amended return (Form 1040X or an amended Form 1041) within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever is later. Wwwh&rblock com For example, you have until April 15, 2004, to file an amended return on a 2000 Form 1040, 1040A, or 1040EZ that was filed by April 16, 2001, and for which the tax was paid when due. Wwwh&rblock com To obtain a refund on a return that has not been filed, file the return within 3 years of the original due date of the return. Wwwh&rblock com Extension of time for victims of Oklahoma City attack. Wwwh&rblock com   The period described above has been extended for victims of the Oklahoma City attack. Wwwh&rblock com Survivors and personal representatives of these victims have until January 22, 2003, to file an original or amended return. Wwwh&rblock com How To Claim Tax Forgiveness Use the following procedures to claim income tax forgiveness. Wwwh&rblock com Which Form To Use The form you use depends on whether an income tax return for the eligible year was already filed for the decedent. Wwwh&rblock com Return required but not yet filed. Wwwh&rblock com   File Form 1040 if the decedent was a U. Wwwh&rblock com S. Wwwh&rblock com citizen or resident. Wwwh&rblock com File Form 1040NR if the decedent was a nonresident alien. Wwwh&rblock com A nonresident alien is someone who is not a U. Wwwh&rblock com S. Wwwh&rblock com citizen or resident. Wwwh&rblock com Return required and already filed. Wwwh&rblock com   File a separate Form 1040X for each year you are claiming tax relief. Wwwh&rblock com Return not required and not filed. Wwwh&rblock com   File Form 1040 only for the year of death if the decedent was a U. Wwwh&rblock com S. Wwwh&rblock com citizen or resident. Wwwh&rblock com File Form 1040NR if the decedent was a nonresident alien. Wwwh&rblock com Return not required but already filed. Wwwh&rblock com   File Form 1040X only for the year of death. Wwwh&rblock com How to complete the returns. Wwwh&rblock com   Fill out Form 1040 or 1040NR according to its instructions but do not reduce the decedent's tax liability by any taxes that will be forgiven. Wwwh&rblock com Attach to each return a computation of the income tax to be forgiven or a copy of Worksheet A or B. Wwwh&rblock com If filing Form 1040 or Form 1040NR, also attach any Forms W–2. Wwwh&rblock com If the total forgiven tax liability for all eligible years is less than $10,000, attach to the decedent's final return a computation of the additional tax payment allowed or a copy of Worksheet C. Wwwh&rblock com Also, please write one of the following across the top of page 1 of each return. Wwwh&rblock com KITA—Oklahoma City KITA—9/11 KITA—Anthrax “KITA” means “killed in terrorist attack. Wwwh&rblock com ” Need a copy of a previously filed return?   You will find it easier to prepare Form 1040X if you have a copy of the decedent's previously filed tax return. Wwwh&rblock com If you need a copy, use Form 4506. Wwwh&rblock com The IRS will provide a free copy of the tax return if you write “DISASTER” in the top margin of Form 4506. Wwwh&rblock com Attach Letters Testamentary or other evidence to establish that you are authorized to act for the decedent's estate. Wwwh&rblock com Send Form 4506 to the address shown in the form instructions. Wwwh&rblock com Taxpayer identification number. Wwwh&rblock com   A taxpayer identification number must be furnished on the decedent's returns. Wwwh&rblock com This is usually the decedent's social security number (SSN). Wwwh&rblock com However, a nonresident alien who is not eligible to get an SSN should have an individual taxpayer identification number (ITIN). Wwwh&rblock com If the decedent was a nonresident alien, had neither an SSN nor an ITIN, and was not required to file a U. Wwwh&rblock com S. Wwwh&rblock com income tax return for any tax year, do not apply for an ITIN. Wwwh&rblock com You may claim a refund by filing Form 1040NR without an SSN or ITIN. Wwwh&rblock com Necessary Documents Please attach the following documents to the return or amended return. Wwwh&rblock com Proof of death. Wwwh&rblock com   Attach a copy of the death certificate. Wwwh&rblock com If the Department of Defense issued DD Form 1300, Report of Casualty, you can attach that form instead of the death certificate. Wwwh&rblock com Form 1310. Wwwh&rblock com   You must send Form 1310 with all returns and claims for refund, unless either of the following applies. Wwwh&rblock com You are a surviving spouse filing an original or amended joint return with the decedent. Wwwh&rblock com You are a personal representative filing an original Form 1040 or Form 1040NR for the decedent and a court certificate showing your appointment is attached to the return. Wwwh&rblock com A personal representative is an executor or administrator of a decedent's estate, as certified or appointed by the court. Wwwh&rblock com A copy of the decedent's will cannot be accepted as evidence that you are the personal representative. Wwwh&rblock com      If you have proof of death but do not have enough tax information to file a timely claim for a refund, file Form 1040X with Form 1310. Wwwh&rblock com Include a statement saying an amended return will be filed as soon as the necessary tax information is available. Wwwh&rblock com Where To File The IRS has set up a special office for processing returns and claims for tax forgiveness. Wwwh&rblock com Use one of the addresses shown below. Wwwh&rblock com Where you file the returns or claims depends on whether you use the U. Wwwh&rblock com S. Wwwh&rblock com Postal Service or a private delivery service. Wwwh&rblock com Please do not send these returns or claims to any of the addresses shown in the tax form instructions. Wwwh&rblock com U. Wwwh&rblock com S. Wwwh&rblock com Postal Service. Wwwh&rblock com   If you use the U. Wwwh&rblock com S. Wwwh&rblock com Postal Service, file these returns and claims at the following address. Wwwh&rblock com Internal Revenue Service P. Wwwh&rblock com O. Wwwh&rblock com Box 4053 Woburn, MA 01888 Private delivery service. Wwwh&rblock com   Private delivery services cannot deliver items to P. Wwwh&rblock com O. Wwwh&rblock com boxes. Wwwh&rblock com If you use a private delivery service, file these returns and claims at the following address. Wwwh&rblock com Internal Revenue Service Stop 661 310 Lowell St. Wwwh&rblock com Andover, MA 01810 Designated private delivery services. Wwwh&rblock com   You can use the following private delivery services to file these returns and claims. Wwwh&rblock com Airborne Express (Airborne): Overnight Air Express Service, Next Afternoon Service, and Second Day Service. Wwwh&rblock com DHL Worldwide Express (DHL): DHL “Same Day” Service, and DHL USA Overnight. Wwwh&rblock com Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, and FedEx 2Day. Wwwh&rblock com United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A. Wwwh&rblock com M. Wwwh&rblock com , UPS Worldwide Express Plus, and UPS Worldwide Express. Wwwh&rblock com The private delivery service can tell you how to get written proof of the mailing date. Wwwh&rblock com Payments to Survivors The following section discusses the tax treatment of certain amounts received by survivors. Wwwh&rblock com September 11th Victim Compensation Fund of 2001 Payments from the September 11th Victim Compensation Fund of 2001 are not included in income. Wwwh&rblock com Qualified Disaster Relief Payments Qualified disaster relief payments are not included in income. Wwwh&rblock com These payments are not subject to income tax, self-employment tax, or employment taxes (social security, Medicare, and federal unemployment taxes). Wwwh&rblock com No withholding applies to these payments. Wwwh&rblock com Qualified disaster relief payments include payments you receive (regardless of the source) after September 10, 2001, for the following expenses. Wwwh&rblock com Reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a terrorist attack. Wwwh&rblock com Reasonable and necessary expenses incurred for the repair or rehabilitation of a personal residence due to a terrorist attack. Wwwh&rblock com (A personal residence can be a rented residence or one you own. Wwwh&rblock com ) Reasonable and necessary expenses incurred for the repair or replacement of the contents of a personal residence due to a terrorist attack. Wwwh&rblock com Qualified disaster relief payments also include the following. Wwwh&rblock com Payments made by common carriers (for example, American Airlines and United Airlines regarding the September 11 attacks) because of death or physical injury incurred as a result of a terrorist attack. Wwwh&rblock com Amounts paid by a federal, state, or local government in connection with a terrorist attack to those affected by the attack. Wwwh&rblock com Qualified disaster relief payments do not include: Insurance or other reimbursements for expenses, or Income replacement payments, such as payments of lost wages, lost business income, or unemployment compensation. Wwwh&rblock com Disability Payments For tax years ending after September 10, 2001, disability payments for injuries incurred as a direct result of a terrorist attack directed against the United States (or its allies), whether outside or within the United States, are not included in income. Wwwh&rblock com Death Benefits Payments received by an individual or the estate of a decedent from the employer of an employee who died as a result of the Oklahoma City or September 11 terrorist attacks, or as a result of the anthrax attacks, are not included in income. Wwwh&rblock com Only the amount that exceeds the benefits that would have been payable if the death had occurred for a reason other than a terrorist or anthrax attack is excludable. Wwwh&rblock com However, the exclusion does apply to incidental death benefits paid under a qualified retirement plan even if these amounts would have been payable if the death had occurred for a reason other than a terrorist or anthrax attack. Wwwh&rblock com If you included death benefits in income on a previously filed return and they are now excludable under the above rule, file Form 1040X to amend that return. Wwwh&rblock com For information on the period for filing Form 1040X, see Period for filing claim for credit or refund earlier under Refund of Taxes Paid. Wwwh&rblock com If that period has expired, you are granted an extension. Wwwh&rblock com You have until January 22, 2003, to file Form 1040X to exclude the death benefits. Wwwh&rblock com On top of page 1 of Form 1040X, write “Extension of Limitations Under PL 107–134, sec. Wwwh&rblock com 102(b)(2). Wwwh&rblock com ” Canceled Debt Canceled debt is not included in your income (or the income of the estate) if: You (or the estate) were liable, or became liable, for the debt of a decedent, and The debt was canceled after September 10, 2001, and before January 1, 2002, because the decedent died as a result of the September 11 attacks or anthrax attacks. Wwwh&rblock com The lender is not required to report the canceled debt on Form 1099–C, Cancellation of Debt. Wwwh&rblock com Payments to Survivors of Public Safety Officers If you are a survivor of a public safety officer who died in the line of duty, certain amounts you receive are not included in income. Wwwh&rblock com Bureau of Justice Assistance payments. Wwwh&rblock com   If you are a surviving dependent of a public safety officer (law enforcement officer or firefighter) who died in the line of duty, do not include in your income the death benefit paid to you by the Bureau of Justice Assistance. Wwwh&rblock com Government plan annuity. Wwwh&rblock com   If you receive a survivor annuity as the child or spouse (or former spouse) of a public safety officer who was killed in the line of duty, you generally do not have to include it in income. Wwwh&rblock com This exclusion applies to the amount of the annuity based on the officer's service as a public safety officer. Wwwh&rblock com For this purpose, the term public safety officer includes police and law enforcement officers, firefighters, and rescue squad and ambulance crews. Wwwh&rblock com More information. Wwwh&rblock com   For more information, see Publication 559. Wwwh&rblock com Postponed Tax Deadlines The IRS may postpone for up to 1 year certain tax deadlines of taxpayers who are affected by a terrorist attack. Wwwh&rblock com The tax deadlines the IRS may postpone include those for filing income and employment tax returns, paying income and employment taxes, and making contributions to a traditional IRA or Roth IRA. Wwwh&rblock com If any tax deadline is postponed, the IRS will publicize the postponement in the affected area and publish a news release, revenue ruling, revenue procedure, notice, announcement, or other guidance in the Internal Revenue Bulletin (IRB). Wwwh&rblock com Affected taxpayers. Wwwh&rblock com   If the IRS postpones a tax deadline, the following taxpayers are eligible for the postponement. Wwwh&rblock com Any individual whose main home is located in a covered area (defined later). Wwwh&rblock com Any business entity or sole proprietor whose principal place of business is located in a covered area. Wwwh&rblock com Any individual, business entity, or sole proprietor whose records needed to meet a postponed deadline are maintained in a covered area. Wwwh&rblock com The main home or principal place of business does not have to be located in the covered area. Wwwh&rblock com Any estate or trust whose tax records necessary to meet a postponed tax deadline are maintained in a covered area. Wwwh&rblock com Any individual who is a relief worker affiliated with a recognized government or philanthropic organization and who is assisting in a covered area. Wwwh&rblock com The spouse on a joint return with a taxpayer who is eligible for postponements. Wwwh&rblock com Any other person determined by the IRS to be affected by a terrorist attack. Wwwh&rblock com Covered area. Wwwh&rblock com   This is an area in which a terrorist attack took place and in which the IRS has decided to postpone tax deadlines for up to 1 year. Wwwh&rblock com Abatement of interest. Wwwh&rblock com   The IRS may abate (forgive) the interest on any underpaid income tax for the length of any postponement. Wwwh&rblock com Disaster Area Losses If your property was damaged or destroyed as a result of the September 11 attacks, you can choose to deduct your disaster loss on your 2000 return (or amended return) rather than on your 2001 return. Wwwh&rblock com You must make this choice to deduct your loss on your 2000 return by the later of the following dates. Wwwh&rblock com The due date (without extensions) for filing your 2001 income tax return (April 15, 2002, if you are a calendar year taxpayer). Wwwh&rblock com The due date (with extensions) for the 2000 return. Wwwh&rblock com For more information about disaster area losses, see Publication 547. Wwwh&rblock com Estate Tax Reduction The federal estate tax is reduced for taxable estates of individuals who died as a result of the Oklahoma City attack, the September 11 attacks, and the anthrax attacks. Wwwh&rblock com The estate tax is computed using a new rate schedule on page 25 of the November 2001 revision of the instructions for Form 706. Wwwh&rblock com The estate tax is reduced by credits against the estate tax, including the unified credit and the state death tax credit. Wwwh&rblock com These credits may reduce or eliminate the estate tax due. Wwwh&rblock com A special rule extends until January 22, 2003, the period of time allowed to file a claim for a refund of estate taxes that have been paid. Wwwh&rblock com Recovery from the September 11th Victim Compensation Fund. Wwwh&rblock com   The value of claims for a decedent's pain and suffering is normally included in the gross estate. Wwwh&rblock com However, if the estate chooses to seek recovery from this fund, the IRS has determined that, in view of the unique circumstances of this situation and the high likelihood that such claims will be valued at a nominal or zero amount, the claims will be valued at zero for estate tax purposes. Wwwh&rblock com Thus, there are no federal estate tax consequences if an estate or beneficiary receives a recovery from this fund. Wwwh&rblock com Which estates must file a return. Wwwh&rblock com   For decedents dying in 2001, Form 706 must be filed by the executor for the estate of every U. Wwwh&rblock com S. Wwwh&rblock com citizen or resident whose gross estate, plus adjusted taxable gifts and specific exemption, is more than $675,000. Wwwh&rblock com Form 706 must be filed within 9 months after the date of decedent's death unless you receive an extension of time to file. Wwwh&rblock com Use Form 4768, Application for Extension of Time To File a Return and/or Pay U. Wwwh&rblock com S. Wwwh&rblock com Estate (and Generation-Skipping Transfer) Taxes, to apply for an extension. Wwwh&rblock com Where to file. Wwwh&rblock com   Returns on which the new rate schedule is used should be sent to the following address, which was not available when Form 706 went to print. Wwwh&rblock com Internal Revenue Service E & G Department/Stop 824T 201 W. Wwwh&rblock com Rivercenter Blvd. Wwwh&rblock com Covington, KY 41011 More information. Wwwh&rblock com   For more information on the federal estate tax, see the instructions for Form 706. Wwwh&rblock com Structured Settlement Factoring Transactions A person who acquires payment rights in a structured settlement arrangement after February 21, 2002, may be subject to a 40% excise tax unless the transfer of the payment rights was approved in advance in a qualified order. Wwwh&rblock com The excise tax is figured on the excess of the undiscounted amount of the payments being acquired over the total amount actually paid to acquire them. Wwwh&rblock com However, this tax will not apply to transactions entered into from February 22, 2002, to July 1, 2002, if certain requirements are met. Wwwh&rblock com For information about these requirements, see Internal Revenue Code section 5891. Wwwh&rblock com Worksheet B Illustrated. Wwwh&rblock com Figuring the Tax To Be Forgiven (For Decedents Who Filed a Joint Return)       (A) First Eligible Year (1994 or 2000) (B) Second Eligible Year (1995 or 2001) (C) Third Eligible Year (1996 or 2002) 1 Enter the years eligible for forgiveness. Wwwh&rblock com 1 2000 2001   2 Enter the decedent's taxable income. Wwwh&rblock com Figure taxable income as if a separate return had been filed. Wwwh&rblock com See the instructions. Wwwh&rblock com 2 $17,259 $14,295   3 Enter the decedent's total tax. Wwwh&rblock com See the instructions. Wwwh&rblock com 3 6,123 5,250   4 Enter the total, if any, of the decedent's taxes not eligible for forgiveness. Wwwh&rblock com See the instructions. Wwwh&rblock com 4 3,532 3,109   5 Subtract line 4 from line 3. Wwwh&rblock com 5 2,591 2,141   6 Enter the surviving spouse's taxable income. Wwwh&rblock com Figure taxable income as if a separate return had been filed. Wwwh&rblock com See the instructions for line 2. Wwwh&rblock com 6 29,025 29,850   7 Enter the surviving spouse's total tax. Wwwh&rblock com See the instructions. Wwwh&rblock com 7 5,277 5,391   8 Enter the total, if any, of the surviving spouse's taxes listed in the instructions for line 4. Wwwh&rblock com 8 0 0   9 Subtract line 8 from line 7. Wwwh&rblock com 9 5,277 5,391   10 Add lines 5 and 9. Wwwh&rblock com 10 7,868 7,532   11 Enter the total tax from the joint return. Wwwh&rblock com See Table 1 on page 5 for the line number for years before 2002. Wwwh&rblock com 11 10,789 9,728   12 Add lines 4 and 8. Wwwh&rblock com 12 3,532 3,109   13 Subtract line 12 from line 11. Wwwh&rblock com 13 7,257 6,619   14 Divide line 5 by line 10. Wwwh&rblock com Enter the result as a decimal. Wwwh&rblock com 14 . Wwwh&rblock com 329 . Wwwh&rblock com 284   15 Tax to be forgiven. Wwwh&rblock com Multiply line 13 by line 14 and enter the result. Wwwh&rblock com 15 $2,388 $1,880   Note. Wwwh&rblock com If the total of columns (A), (B), and (C) of line 15 (including any amounts shown on line 5 of Worksheet A) is less than $10,000, also complete Worksheet C. Wwwh&rblock com Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1. Wwwh&rblock com If filing Form 1040X for an eligible year, enter the amount from line 15 above on Form 1040X in column B of line 10 as a decrease in tax. Wwwh&rblock com The IRS will determine the amount to be refunded. Wwwh&rblock com Worksheet B Illustrated. Wwwh&rblock com Figuring the Tax To Be Forgiven (For Decedents Who Filed a Joint Return)       (A) First Eligible Year (1994 or 2000) (B) Second Eligible Year (1995 or 2001) (C) Third Eligible Year (1996 or 2002) 1 Enter the years eligible for forgiveness. Wwwh&rblock com 1 2000 2001   2 Enter the decedent's taxable income. Wwwh&rblock com Figure taxable income as if a separate return had been filed. Wwwh&rblock com See the instructions. Wwwh&rblock com 2 $17,259 $14,295   3 Enter the decedent's total tax. Wwwh&rblock com See the instructions. Wwwh&rblock com 3 6,123 5,250   4 Enter the total, if any, of the decedent's taxes not eligible for forgiveness. Wwwh&rblock com See the instructions. Wwwh&rblock com 4 3,532 3,109   5 Subtract line 4 from line 3. Wwwh&rblock com 5 2,591 2,141   6 Enter the surviving spouse's taxable income. Wwwh&rblock com Figure taxable income as if a separate return had been filed. Wwwh&rblock com See the instructions for line 2. Wwwh&rblock com 6 29,025 29,850   7 Enter the surviving spouse's total tax. Wwwh&rblock com See the instructions. Wwwh&rblock com 7 5,277 5,391   8 Enter the total, if any, of the surviving spouse's taxes listed in the instructions for line 4. Wwwh&rblock com 8 0 0   9 Subtract line 8 from line 7. Wwwh&rblock com 9 5,277 5,391   10 Add lines 5 and 9. Wwwh&rblock com 10 7,868 7,532   11 Enter the total tax from the joint return. Wwwh&rblock com See Table 1 on page 5 for the line number for years before 2002. Wwwh&rblock com 11 10,789 9,728   12 Add lines 4 and 8. Wwwh&rblock com 12 3,532 3,109   13 Subtract line 12 from line 11. Wwwh&rblock com 13 7,257 6,619   14 Divide line 5 by line 10. Wwwh&rblock com Enter the result as a decimal. Wwwh&rblock com 14 . Wwwh&rblock com 329 . Wwwh&rblock com 284   15 Tax to be forgiven. Wwwh&rblock com Multiply line 13 by line 14 and enter the result. Wwwh&rblock com 15 $2,388 $1,880   Note. Wwwh&rblock com If the total of columns (A), (B), and (C) of line 15 (including any amounts shown on line 5 of Worksheet A) is less than $10,000, also complete Worksheet C. Wwwh&rblock com Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1. Wwwh&rblock com If filing Form 1040X for an eligible year, enter the amount from line 15 above on Form 1040X in column B of line 10 as a decrease in tax. Wwwh&rblock com The IRS will determine the amount to be refunded. Wwwh&rblock com Illustrated Worksheets B and C A wife lost her husband in the September 11 attack on the World Trade Center. Wwwh&rblock com They filed a joint return for 2000 and the wife chose to file a joint return as a surviving spouse for 2001. Wwwh&rblock com The returns for 2000 and 2001 showed the following income, deductions, and tax liabilities. Wwwh&rblock com After the husband died, his estate received income of $4,000. Wwwh&rblock com Of that amount, $1,000 is net profit from Schedule C received before the end of 2001. Wwwh&rblock com This net profit is exempt from income tax as explained earlier under Income received after date of death. Wwwh&rblock com The wife files Form 1041 because the gross income of the estate for the tax year ($3,000) is $600 or more. Wwwh&rblock com To determine how much of the husband's tax liability for 2000 and 2001 is to be forgiven, the wife completes Worksheet B. Wwwh&rblock com She also completes Worksheet C because the forgiven tax liabilities for 2000 and 2001 (line 15 of Worksheet B) total less than $10,000. Wwwh&rblock com To claim tax relief for 2000, the wife files Form 1040X and attaches a copy of Worksheet B. Wwwh&rblock com To claim tax relief for 2001, she files Form 1040 and attaches copies of Worksheets B and C. Wwwh&rblock com   2000 2001 Wages (wife) $35,000 $36,000 Net profit from Schedule C, Profit or Loss From Business (husband) 25,000 22,000 Interest income (joint account) 1,000 1,100 Deduction for ½ of self-employment tax (husband) (1,766) (1,555) Standard deduction (7,350) (7,600) Personal exemptions (2) (5,600) (5,800) Taxable income $46,284 $44,145 Joint income tax liability $7,257 $6,619 Plus: Self-employment tax (husband) 3,532 3,109 Total tax liability $10,789 $9,728   2000 2001 Wages (wife) $35,000 $36,000 Net profit from Schedule C, Profit or Loss From Business (husband) 25,000 22,000 Interest income (joint account) 1,000 1,100 Deduction for ½ of self-employment tax (husband) (1,766) (1,555) Standard deduction (7,350) (7,600) Personal exemptions (2) (5,600) (5,800) Taxable income $46,284 $44,145 Joint income tax liability $7,257 $6,619 Plus: Self-employment tax (husband) 3,532 3,109 Total tax liability $10,789 $9,728 Worksheet C Illustrated. Wwwh&rblock com Amount Treated as Tax Payment for Decedent's Last Tax Year Caution: The decedent is entitled to minimum relief of $10,000. Wwwh&rblock com Complete this worksheet only if the total tax forgiven for all eligible years is less than $10,000. Wwwh&rblock com 1 Minimum relief amount. Wwwh&rblock com Note: Before completing lines 2–9, see Instructions for lines 2–9 of Worksheet C. Wwwh&rblock com 1 $10,000 2 Enter the taxable income from line 22 (Form 1041) 2 2,400     3 Enter the distribution deduction from line 18 (Form 1041) . Wwwh&rblock com 3 0     4 Add lines 2 and 3. Wwwh&rblock com 4 2,400     5 Enter exempt income received after death minus expenses allocable to exempt income. Wwwh&rblock com (See Income received after date of death on page 5. Wwwh&rblock com ) 5 1,000     6 Add lines 4 and 5. Wwwh&rblock com 6 3,400     7 Figure the tax on line 6 using Schedule G (Form 1041). Wwwh&rblock com 7 710     8 Figure the tax on line 4 using Schedule G (Form 1041). Wwwh&rblock com 8 435     9 Tax on exempt income. Wwwh&rblock com Subtract line 8 from line 7. Wwwh&rblock com 9 275     10 Enter the total of columns (A)–(C) from line 5 of Worksheet A or line 15 of Worksheet B. Wwwh&rblock com If the decedent was not required to file tax returns for the eligible tax years, enter -0-. Wwwh&rblock com 10 4,268     11 Add lines 9 and 10. Wwwh&rblock com 11 $4,543 12 Additional payment allowed. Wwwh&rblock com If line 11 is $10,000 or more, enter -0- and stop here. Wwwh&rblock com No additional amount is allowed as a tax payment. Wwwh&rblock com Otherwise, subtract line 11 from line 1 and enter the result. Wwwh&rblock com 12 $5,457 Note. Wwwh&rblock com The amount on line 12 is allowed as a tax payment for the decedent's last tax year (usually 1995 or 2001). Wwwh&rblock com Attach the computation of the additional payment allowed or a copy of this worksheet to the original or amended income tax return for the decedent's last tax year. Wwwh&rblock com If filing Form 1040, include the amount from line 12 above on the “Other payments” line of the form. Wwwh&rblock com Write "Sec. Wwwh&rblock com 692(d)(2) Payment" and the amount to the right of the entry space. Wwwh&rblock com Also indicate whether a Form 1041 is being filed for the decedent's estate. Wwwh&rblock com If filing Form 1040X, include the amount from line 12 above on Form 1040X on line 15, columns (B) and (C). Wwwh&rblock com Write “Sec. Wwwh&rblock com 692(d)(2) Payment” on the dotted line to the left of the entry space. Wwwh&rblock com Worksheet C Illustrated. Wwwh&rblock com Amount Treated as Tax Payment for Decedent's Last Tax Year Caution: The decedent is entitled to minimum relief of $10,000. Wwwh&rblock com Complete this worksheet only if the total tax forgiven for all eligible years is less than $10,000. Wwwh&rblock com 1 Minimum relief amount. Wwwh&rblock com Note: Before completing lines 2–9, see Instructions for lines 2–9 of Worksheet C. Wwwh&rblock com 1 $10,000 2 Enter the taxable income from line 22 (Form 1041) 2 2,400     3 Enter the distribution deduction from line 18 (Form 1041) . Wwwh&rblock com 3 0     4 Add lines 2 and 3. Wwwh&rblock com 4 2,400     5 Enter exempt income received after death minus expenses allocable to exempt income. Wwwh&rblock com (See Income received after date of death on page 5. Wwwh&rblock com ) 5 1,000     6 Add lines 4 and 5. Wwwh&rblock com 6 3,400     7 Figure the tax on line 6 using Schedule G (Form 1041). Wwwh&rblock com 7 710     8 Figure the tax on line 4 using Schedule G (Form 1041). Wwwh&rblock com 8 435     9 Tax on exempt income. Wwwh&rblock com Subtract line 8 from line 7. Wwwh&rblock com 9 275     10 Enter the total of columns (A)–(C) from line 5 of Worksheet A or line 15 of Worksheet B. Wwwh&rblock com If the decedent was not required to file tax returns for the eligible tax years, enter -0-. Wwwh&rblock com 10 4,268     11 Add lines 9 and 10. Wwwh&rblock com 11 $4,543 12 Additional payment allowed. Wwwh&rblock com If line 11 is $10,000 or more, enter -0- and stop here. Wwwh&rblock com No additional amount is allowed as a tax payment. Wwwh&rblock com Otherwise, subtract line 11 from line 1 and enter the result. Wwwh&rblock com 12 $5,457 Note. Wwwh&rblock com The amount on line 12 is allowed as a tax payment for the decedent's last tax year (usually 1995 or 2001). Wwwh&rblock com Attach the computation of the additional payment allowed or a copy of this worksheet to the original or amended income tax return for the decedent's last tax year. Wwwh&rblock com If filing Form 1040, include the amount from line 12 above on the “Other payments” line of the form. Wwwh&rblock com Write "Sec. Wwwh&rblock com 692(d)(2) Payment" and the amount to the right of the entry space. Wwwh&rblock com Also indicate whether a Form 1041 is being filed for the decedent's estate. Wwwh&rblock com If filing Form 1040X, include the amount from line 12 above on Form 1040X on line 15, columns (B) and (C). Wwwh&rblock com Write “Sec. Wwwh&rblock com 692(d)(2) Payment” on the dotted line to the left of the entry space. Wwwh&rblock com Additional Worksheets The following additional worksheets are provided for your convenience. Wwwh&rblock com Worksheet A. Wwwh&rblock com Figuring the Tax To Be Forgiven (For Decedents Who Filed a Return as Single, Married Filing Separately, Head of Household, or Qualifying Widow(er))         (A) First Eligible Year (1994 or 2000) (B) Second Eligible Year (1995 or 2001) (C) Third Eligible Year (1996 or 2002) 1 Enter the years eligible for tax forgiveness. Wwwh&rblock com 1       2 Enter the total tax from the decedent's income tax return. Wwwh&rblock com See Table 1 on page 5 for the line number for years before 2002. Wwwh&rblock com 2       3 Enter the following taxes, if any, shown on the decedent's income tax return. Wwwh&rblock com (These taxes are not eligible for forgiveness. Wwwh&rblock com )           a Self-employment tax. Wwwh&rblock com 3a         b Social security and Medicare tax on tip income not reported to employer. Wwwh&rblock com 3b         c Tax on excess contributions to IRAs, Coverdell education savings accounts (formerly Ed IRAs), or Archer MSAs (formerly medical savings accounts). Wwwh&rblock com 3c         d Tax on excess accumulation in qualified retirement plans. Wwwh&rblock com 3d         e Household employment taxes. Wwwh&rblock com 3e         f Uncollected social security and Medicare or RRTA tax on tips or group-term life insurance. Wwwh&rblock com 3f         g Tax on golden parachute payments. Wwwh&rblock com 3g       4 Add lines 3a through 3g. Wwwh&rblock com 4       5 Tax to be forgiven. Wwwh&rblock com Subtract line 4 from line 2. Wwwh&rblock com 5       Note. Wwwh&rblock com If the total of columns (A), (B), and (C) of line 5 (including any amounts shown on line 15 of Worksheet B) is less than $10,000, also complete Worksheet C. Wwwh&rblock com Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1. Wwwh&rblock com If filing Form 1040X for an eligible year, enter the amount from line 5 above on Form 1040X in column B of line 10 as a decrease in tax. Wwwh&rblock com The IRS will determine the amount to be refunded. Wwwh&rblock com Worksheet A. Wwwh&rblock com Figuring the Tax To Be Forgiven (For Decedents Who Filed a Return as Single, Married Filing Separately, Head of Household, or Qualifying Widow(er))         (A) First Eligible Year (1994 or 2000) (B) Second Eligible Year (1995 or 2001) (C) Third Eligible Year (1996 or 2002) 1 Enter the years eligible for tax forgiveness. Wwwh&rblock com 1       2 Enter the total tax from the decedent's income tax return. Wwwh&rblock com See Table 1 on page 5 for the line number for years before 2002. Wwwh&rblock com 2       3 Enter the following taxes, if any, shown on the decedent's income tax return. Wwwh&rblock com (These taxes are not eligible for forgiveness. Wwwh&rblock com )           a Self-employment tax. Wwwh&rblock com 3a         b Social security and Medicare tax on tip income not reported to employer. Wwwh&rblock com 3b         c Tax on excess contributions to IRAs, Coverdell education savings accounts (formerly Ed IRAs), or Archer MSAs (formerly medical savings accounts). Wwwh&rblock com 3c         d Tax on excess accumulation in qualified retirement plans. Wwwh&rblock com 3d         e Household employment taxes. Wwwh&rblock com 3e         f Uncollected social security and Medicare or RRTA tax on tips or group-term life insurance. Wwwh&rblock com 3f         g Tax on golden parachute payments. Wwwh&rblock com 3g       4 Add lines 3a through 3g. Wwwh&rblock com 4       5 Tax to be forgiven. Wwwh&rblock com Subtract line 4 from line 2. Wwwh&rblock com 5       Note. Wwwh&rblock com If the total of columns (A), (B), and (C) of line 5 (including any amounts shown on line 15 of Worksheet B) is less than $10,000, also complete Worksheet C. Wwwh&rblock com Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1. Wwwh&rblock com If filing Form 1040X for an eligible year, enter the amount from line 5 above on Form 1040X in column B of line 10 as a decrease in tax. Wwwh&rblock com The IRS will determine the amount to be refunded. Wwwh&rblock com Worksheet B. Wwwh&rblock com Figuring the Tax To Be Forgiven (For Decedents Who Filed a Joint Return)       (A) First Eligible Year (1994 or 2000) (B) Second Eligible Year (1995 or 2001) (C) Third Eligible Year (1996 or 2002) 1 Enter the years eligible for forgiveness. Wwwh&rblock com 1       2 Enter the decedent's taxable income. Wwwh&rblock com Figure taxable income as if a separate return had been filed. Wwwh&rblock com See the instructions. Wwwh&rblock com 2       3 Enter the decedent's total tax. Wwwh&rblock com See the instructions. Wwwh&rblock com 3       4 Enter the total, if any, of the decedent's taxes not eligible for forgiveness. Wwwh&rblock com See the instructions. Wwwh&rblock com 4       5 Subtract line 4 from line 3. Wwwh&rblock com 5       6 Enter the surviving spouse's taxable income. Wwwh&rblock com Figure taxable income as if a separate return had been filed. Wwwh&rblock com See the instructions. Wwwh&rblock com 6       7 Enter the surviving spouse's total tax. Wwwh&rblock com See the instructions. Wwwh&rblock com 7       8 Enter the total, if any, of the surviving spouse's taxes listed in the instructions for line 4. Wwwh&rblock com 8       9 Subtract line 8 from line 7. Wwwh&rblock com 9       10 Add lines 5 and 9. Wwwh&rblock com 10       11 Enter the total tax from the joint return. Wwwh&rblock com See Table 1 on page 5 for the line number for years before 2002. Wwwh&rblock com 11       12 Add lines 4 and 8. Wwwh&rblock com 12       13 Subtract line 12 from line 11. Wwwh&rblock com 13       14 Divide line 5 by line 10. Wwwh&rblock com Enter the result as a decimal. Wwwh&rblock com 14       15 Tax to be forgiven. Wwwh&rblock com Multiply line 13 by line 14 and enter the result. Wwwh&rblock com 15       Note. Wwwh&rblock com If the total of columns (A), (B), and (C) of line 15 (including any amounts shown on line 5 of Worksheet A) is less than $10,000, also complete Worksheet C. Wwwh&rblock com Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1. Wwwh&rblock com If filing Form 1040X for an eligible year, enter the amount from line 15 above on Form 1040X in column B of line 10 as a decrease in tax. Wwwh&rblock com The IRS will determine the amount to be refunded. Wwwh&rblock com Worksheet B. Wwwh&rblock com Figuring the Tax To Be Forgiven (For Decedents Who Filed a Joint Return)       (A) First Eligible Year (1994 or 2000) (B) Second Eligible Year (1995 or 2001) (C) Third Eligible Year (1996 or 2002) 1 Enter the years eligible for forgiveness. Wwwh&rblock com 1       2 Enter the decedent's taxable income. Wwwh&rblock com Figure taxable income as if a separate return had been filed. Wwwh&rblock com See the instructions. Wwwh&rblock com 2       3 Enter the decedent's total tax. Wwwh&rblock com See the instructions. Wwwh&rblock com 3       4 Enter the total, if any, of the decedent's taxes not eligible for forgiveness. Wwwh&rblock com See the instructions. Wwwh&rblock com 4       5 Subtract line 4 from line 3. Wwwh&rblock com 5       6 Enter the surviving spouse's taxable income. Wwwh&rblock com Figure taxable income as if a separate return had been filed. Wwwh&rblock com See the instructions. Wwwh&rblock com 6       7 Enter the surviving spouse's total tax. Wwwh&rblock com See the instructions. Wwwh&rblock com 7       8 Enter the total, if any, of the surviving spouse's taxes listed in the instructions for line 4. Wwwh&rblock com 8       9 Subtract line 8 from line 7. Wwwh&rblock com 9       10 Add lines 5 and 9. Wwwh&rblock com 10       11 Enter the total tax from the joint return. Wwwh&rblock com See Table 1 on page 5 for the line number for years before 2002. Wwwh&rblock com 11       12 Add lines 4 and 8. Wwwh&rblock com 12       13 Subtract line 12 from line 11. Wwwh&rblock com 13       14 Divide line 5 by line 10. Wwwh&rblock com Enter the result as a decimal. Wwwh&rblock com 14       15 Tax to be forgiven. Wwwh&rblock com Multiply line 13 by line 14 and enter the result. Wwwh&rblock com 15       Note. Wwwh&rblock com If the total of columns (A), (B), and (C) of line 15 (including any amounts shown on line 5 of Worksheet A) is less than $10,000, also complete Worksheet C. Wwwh&rblock com Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1. Wwwh&rblock com If filing Form 1040X for an eligible year, enter the amount from line 15 above on Form 1040X in column B of line 10 as a decrease in tax. Wwwh&rblock com The IRS will determine the amount to be refunded. Wwwh&rblock com Worksheet C. Wwwh&rblock com Amount Treated as Tax Payment for Decedent's Last Tax Year Caution: The decedent is entitled to minimum tax forgiveness of $10,000. Wwwh&rblock com Complete this worksheet only if the total tax forgiven for all eligible years is less than $10,000. Wwwh&rblock com 1 Minimum tax forgiveness. Wwwh&rblock com Note. Wwwh&rblock com Before completing lines 2–9, see Instructions for lines 2–9 of Worksheet C. Wwwh&rblock com 1 $10,000 2 Enter the taxable income from line 22 (Form 1041) 2       3 Enter the distribution deduction from line 18 (Form 1041) . Wwwh&rblock com 3       4 Add lines 2 and 3. Wwwh&rblock com 4       5 Enter exempt income received after death minus expenses allocable to exempt income. Wwwh&rblock com (See Income received after date of death on page 5. Wwwh&rblock com ) 5       6 Add lines 4 and 5. Wwwh&rblock com 6       7 Figure the tax on line 6 using Schedule G (Form 1041). Wwwh&rblock com 7       8 Figure the tax on line 4 using Schedule G (Form 1041). Wwwh&rblock com 8       9 Tax on exempt income. Wwwh&rblock com Subtract line 8 from line 7. Wwwh&rblock com 9       10 Enter the total of columns (A)–(C) from line 5 of Worksheet A or line 15 of Worksheet B. Wwwh&rblock com If the decedent was not required to file tax returns for the eligible tax years, enter -0-. Wwwh&rblock com 10       11 Add lines 9 and 10. Wwwh&rblock com 11   12 Additional payment allowed. Wwwh&rblock com If line 11 is $10,000 or more, enter -0- and stop here. Wwwh&rblock com No additional amount is allowed as a tax payment. Wwwh&rblock com Otherwise, subtract line 11 from line 1 and enter the result. Wwwh&rblock com 12   Note. Wwwh&rblock com The amount on line 12 is allowed as a tax payment for the decedent's last tax year (usually 1995 or 2001). Wwwh&rblock com Attach the computation of the additional payment allowed or a copy of this worksheet to the original or amended income tax return for the decedent's last tax year. Wwwh&rblock com If filing Form 1040, include the amount from line 12 above on the “Other payments” line of the form. Wwwh&rblock com Write "Sec. Wwwh&rblock com 692(d)(2) Payment" and the amount to the right of the entry space. Wwwh&rblock com Also indicate whether a Form 1041 is being filed for the decedent's estate. Wwwh&rblock com If filing Form 1040X, include the amount from line 12 above on Form 1040X on line 15, columns (B) and (C). Wwwh&rblock com Write “Sec. Wwwh&rblock com 692(d)(2) Payment” on the dotted line to the left of the entry space. Wwwh&rblock com Worksheet C. Wwwh&rblock com Amount Treated as Tax Payment for Decedent's Last Tax Year Caution: The decedent is entitled to minimum tax forgiveness of $10,000. Wwwh&rblock com Complete this worksheet only if the total tax forgiven for all eligible years is less than $10,000. Wwwh&rblock com 1 Minimum tax forgiveness. Wwwh&rblock com Note. Wwwh&rblock com Before completing lines 2–9, see Instructions for lines 2–9 of Worksheet C. Wwwh&rblock com 1 $10,000 2 Enter the taxable income from line 22 (Form 1041) 2       3 Enter the distribution deduction from line 18 (Form 1041) . Wwwh&rblock com 3       4 Add lines 2 and 3. Wwwh&rblock com 4       5 Enter exempt income received after death minus expenses allocable to exempt income. Wwwh&rblock com (See Income received after date of death on page 5. Wwwh&rblock com ) 5       6 Add lines 4 and 5. Wwwh&rblock com 6       7 Figure the tax on line 6 using Schedule G (Form 1041). Wwwh&rblock com 7       8 Figure the tax on line 4 using Schedule G (Form 1041). Wwwh&rblock com 8       9 Tax on exempt income. Wwwh&rblock com Subtract line 8 from line 7. Wwwh&rblock com 9       10 Enter the total of columns (A)–(C) from line 5 of Worksheet A or line 15 of Worksheet B. Wwwh&rblock com If the decedent was not required to file tax returns for the eligible tax years, enter -0-. Wwwh&rblock com 10       11 Add lines 9 and 10. Wwwh&rblock com 11   12 Additional payment allowed. Wwwh&rblock com If line 11 is $10,000 or more, enter -0- and stop here. Wwwh&rblock com No additional amount is allowed as a tax payment. Wwwh&rblock com Otherwise, subtract line 11 from line 1 and enter the result. Wwwh&rblock com 12   Note. Wwwh&rblock com The amount on line 12 is allowed as a tax payment for the decedent's last tax year (usually 1995 or 2001). Wwwh&rblock com Attach the computation of the additional payment allowed or a copy of this worksheet to the original or amended income tax return for the decedent's last tax year. Wwwh&rblock com If filing Form 1040, include the amount from line 12 above on the “Other payments” line of the form. Wwwh&rblock com Write "Sec. Wwwh&rblock com 692(d)(2) Payment" and the amount to the right of the entry space. Wwwh&rblock com Also indicate whether a Form 1041 is being filed for the decedent's estate. Wwwh&rblock com If filing Form 1040X, include the amount from line 12 above on Form 1040X on line 15, columns (B) and (C). Wwwh&rblock com Write “Sec. Wwwh&rblock com 692(d)(2) Payment” on the dotted line to the left of the entry space. Wwwh&rblock com How To Get Tax Help Special IRS assistance. Wwwh&rblock com   The IRS is providing special help for those affected by the terrorist attacks, as well as survivors and personal representatives of the victims. Wwwh&rblock com We have set up a special toll-free number for people who may have trouble filing or paying their taxes because they were affected by the terrorist attacks, or who have other tax issues related to the attacks. Wwwh&rblock com Call 1–866–562–5227 Monday through Friday In English–7 a. Wwwh&rblock com m. Wwwh&rblock com to 10 p. Wwwh&rblock com m. Wwwh&rblock com local time In Spanish–8 a. Wwwh&rblock com m. Wwwh&rblock com to 9:30 p. Wwwh&rblock com m. Wwwh&rblock com local time   The IRS web site at www. Wwwh&rblock com irs. Wwwh&rblock com gov has notices and other tax relief information. Wwwh&rblock com Check it periodically for any new guidance or to see if Congress has enacted new legislation. Wwwh&rblock com   Business taxpayers affected by the attacks can e-mail their questions to corp. Wwwh&rblock com disaster. Wwwh&rblock com relief@irs. Wwwh&rblock com gov. Wwwh&rblock com   For current information on Presidentially declared disaster areas, check the Federal Emergency Management Agency Web site at www. Wwwh&rblock com fema. Wwwh&rblock com gov. Wwwh&rblock com Other help from the IRS. Wwwh&rblock com   You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get more information from the IRS in several ways. Wwwh&rblock com By selecting the method that is best for you, you will have quick and easy access to tax help. Wwwh&rblock com Contacting your Taxpayer Advocate. Wwwh&rblock com   If you have attempted to deal with an IRS problem unsuccessfully, you should contact your Taxpayer Advocate. Wwwh&rblock com   The Taxpayer Advocate represents your interests and concerns within the IRS by protecting your rights and resolving problems that have not been fixed through normal channels. Wwwh&rblock com While Taxpayer Advocates cannot change the tax law or make a technical tax decision, they can clear up problems that resulted from previous contacts and ensure that your case is given a complete and impartial review. Wwwh&rblock com   To contact your Taxpayer Advocate: Call the Taxpayer Advocate at 1–877–777–4778. Wwwh&rblock com Call the IRS at 1–800–829–1040. Wwwh&rblock com Call, write, or fax the Taxpayer Advocate office in your area. Wwwh&rblock com Call 1–800–829–4059 if you are a TTY/TDD user. Wwwh&rblock com   For more information, see Publication 1546, The Taxpayer Advocate Service of the IRS. Wwwh&rblock com Free tax services. Wwwh&rblock com   To find out what services are available, get Publication 910, Guide to Free Tax Services. Wwwh&rblock com It contains a list of free tax publications and an index of tax topics. Wwwh&rblock com It also describes other free tax information services, including tax education and assistance programs and a list of TeleTax topics. Wwwh&rblock com Personal computer. Wwwh&rblock com With your personal computer and modem, you can access the IRS on the Internet at www. Wwwh&rblock com irs. Wwwh&rblock com gov. Wwwh&rblock com While visiting our web site, you can: Find answers to questions you may have. Wwwh&rblock com Download forms and publications or search for forms and pub