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1040a Tax Table

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1040a Tax Table

1040a tax table 26. 1040a tax table   Car Expenses and Other Employee Business Expenses Table of Contents What's New Introduction Useful Items - You may want to see: Travel ExpensesTraveling Away From Home Tax Home Temporary Assignment or Job What Travel Expenses Are Deductible? Travel in the United States Travel Outside the United States Conventions Entertainment Expenses50% Limit What Entertainment Expenses Are Deductible? What Entertainment Expenses Are Not Deductible? Gift Expenses Transportation ExpensesArmed Forces reservists. 1040a tax table Parking fees. 1040a tax table Advertising display on car. 1040a tax table Car pools. 1040a tax table Hauling tools or instruments. 1040a tax table Union members' trips from a union hall. 1040a tax table Car Expenses RecordkeepingHow To Prove Expenses How Long To Keep Records and Receipts How To ReportGifts. 1040a tax table Statutory employees. 1040a tax table Reimbursements Completing Forms 2106 and 2106-EZ Special Rules What's New Standard mileage rate. 1040a tax table  For 2013, the standard mileage rate for the cost of operating your car for business use is 56½ cents per mile. 1040a tax table Car expenses and use of the standard mileage rate are explained under Transportation Expenses , later. 1040a tax table Depreciation limits on cars, trucks, and vans. 1040a tax table  For 2013, the first-year limit on the total section 179 deduction, special depreciation allowance, and depreciation deduction for cars remains at $11,160 ($3,160 if you elect not to claim the special depreciation allowance). 1040a tax table For trucks and vans the first-year limit remains at $11,360 ($3,360 if you elect not to claim the special depreciation allowance). 1040a tax table For more information, see Depreciation limits in Publication 463. 1040a tax table Introduction You may be able to deduct the ordinary and necessary business-related expenses you have for: Travel, Entertainment, Gifts, or Transportation. 1040a tax table An ordinary expense is one that is common and accepted in your trade or business. 1040a tax table A necessary expense is one that is helpful and appropriate for your business. 1040a tax table An expense does not have to be required to be considered necessary. 1040a tax table This chapter explains the following. 1040a tax table What expenses are deductible. 1040a tax table How to report your expenses on your return. 1040a tax table What records you need to prove your expenses. 1040a tax table How to treat any expense reimbursements you may receive. 1040a tax table Who does not need to use this chapter. 1040a tax table   If you are an employee, you will not need to read this chapter if all of the following are true. 1040a tax table You fully accounted to your employer for your work-related expenses. 1040a tax table You received full reimbursement for your expenses. 1040a tax table Your employer required you to return any excess reimbursement and you did so. 1040a tax table There is no amount shown with a code “L” in box 12 of your Form W-2, Wage and Tax Statement. 1040a tax table If you meet all of these conditions, there is no need to show the expenses or the reimbursements on your return. 1040a tax table See Reimbursements , later, if you would like more information on reimbursements and accounting to your employer. 1040a tax table    If you meet these conditions and your employer included reimbursements on your Form W-2 in error, ask your employer for a corrected Form W-2. 1040a tax table Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 535 Business Expenses Form (and Instructions) Schedule A (Form 1040) Itemized Deductions Schedule C (Form 1040) Profit or Loss From Business Schedule C-EZ (Form 1040) Net Profit From Business Schedule F (Form 1040) Profit or Loss From Farming Form 2106 Employee Business Expenses Form 2106-EZ Unreimbursed Employee Business Expenses Travel Expenses If you temporarily travel away from your tax home, you can use this section to determine if you have deductible travel expenses. 1040a tax table This section discusses: Traveling away from home, Tax home, Temporary assignment or job, and What travel expenses are deductible. 1040a tax table It also discusses the standard meal allowance, rules for travel inside and outside the United States, and deductible convention expenses. 1040a tax table Travel expenses defined. 1040a tax table   For tax purposes, travel expenses are the ordinary and necessary expenses (defined earlier) of traveling away from home for your business, profession, or job. 1040a tax table   You will find examples of deductible travel expenses in Table 26-1 . 1040a tax table Traveling Away From Home You are traveling away from home if: Your duties require you to be away from the general area of your tax home (defined later) substantially longer than an ordinary day's work, and You need to sleep or rest to meet the demands of your work while away from home. 1040a tax table This rest requirement is not satisfied by merely napping in your car. 1040a tax table You do not have to be away from your tax home for a whole day or from dusk to dawn as long as your relief from duty is long enough to get necessary sleep or rest. 1040a tax table Example 1. 1040a tax table You are a railroad conductor. 1040a tax table You leave your home terminal on a regularly scheduled round-trip run between two cities and return home 16 hours later. 1040a tax table During the run, you have 6 hours off at your turnaround point where you eat two meals and rent a hotel room to get necessary sleep before starting the return trip. 1040a tax table You are considered to be away from home. 1040a tax table Example 2. 1040a tax table You are a truck driver. 1040a tax table You leave your terminal and return to it later the same day. 1040a tax table You get an hour off at your turnaround point to eat. 1040a tax table Because you are not off to get necessary sleep and the brief time off is not an adequate rest period, you are not traveling away from home. 1040a tax table Members of the Armed Forces. 1040a tax table   If you are a member of the U. 1040a tax table S. 1040a tax table Armed Forces on a permanent duty assignment overseas, you are not traveling away from home. 1040a tax table You cannot deduct your expenses for meals and lodging. 1040a tax table You cannot deduct these expenses even if you have to maintain a home in the United States for your family members who are not allowed to accompany you overseas. 1040a tax table If you are transferred from one permanent duty station to another, you may have deductible moving expenses, which are explained in Publication 521, Moving Expenses. 1040a tax table    A naval officer assigned to permanent duty aboard a ship that has regular eating and living facilities has a tax home aboard ship for travel expense purposes. 1040a tax table Tax Home To determine whether you are traveling away from home, you must first determine the location of your tax home. 1040a tax table Generally, your tax home is your regular place of business or post of duty, regardless of where you maintain your family home. 1040a tax table It includes the entire city or general area in which your business or work is located. 1040a tax table If you have more than one regular place of business, your tax home is your main place of business. 1040a tax table See Main place of business or work , later. 1040a tax table If you do not have a regular or a main place of business because of the nature of your work, then your tax home may be the place where you regularly live. 1040a tax table See No main place of business or work , later. 1040a tax table If you do not have a regular or a main place of business or post of duty and there is no place where you regularly live, you are considered an itinerant (a transient) and your tax home is wherever you work. 1040a tax table As an itinerant, you cannot claim a travel expense deduction because you are never considered to be traveling away from home. 1040a tax table Main place of business or work. 1040a tax table   If you have more than one place of business or work, consider the following when determining which one is your main place of business or work. 1040a tax table The total time you ordinarily spend in each place. 1040a tax table The level of your business activity in each place. 1040a tax table Whether your income from each place is significant or insignificant. 1040a tax table Example. 1040a tax table You live in Cincinnati where you have a seasonal job for 8 months each year and earn $40,000. 1040a tax table You work the other 4 months in Miami, also at a seasonal job, and earn $15,000. 1040a tax table Cincinnati is your main place of work because you spend most of your time there and earn most of your income there. 1040a tax table No main place of business or work. 1040a tax table   You may have a tax home even if you do not have a regular or main place of business or work. 1040a tax table Your tax home may be the home where you regularly live. 1040a tax table Factors used to determine tax home. 1040a tax table   If you do not have a regular or main place of business or work, use the following three factors to determine where your tax home is. 1040a tax table You perform part of your business in the area of your main home and use that home for lodging while doing business in the area. 1040a tax table You have living expenses at your main home that you duplicate because your business requires you to be away from that home. 1040a tax table You have not abandoned the area in which both your historical place of lodging and your claimed main home are located; you have a member or members of your family living at your main home; or you often use that home for lodging. 1040a tax table   If you satisfy all three factors, your tax home is the home where you regularly live. 1040a tax table If you satisfy only two factors, you may have a tax home depending on all the facts and circumstances. 1040a tax table If you satisfy only one factor, you are an itinerant; your tax home is wherever you work and you cannot deduct travel expenses. 1040a tax table Example. 1040a tax table You are single and live in Boston in an apartment you rent. 1040a tax table You have worked for your employer in Boston for a number of years. 1040a tax table Your employer enrolls you in a 12-month executive training program. 1040a tax table You do not expect to return to work in Boston after you complete your training. 1040a tax table During your training, you do not do any work in Boston. 1040a tax table Instead, you receive classroom and on-the-job training throughout the United States. 1040a tax table You keep your apartment in Boston and return to it frequently. 1040a tax table You use your apartment to conduct your personal business. 1040a tax table You also keep up your community contacts in Boston. 1040a tax table When you complete your training, you are transferred to Los Angeles. 1040a tax table You do not satisfy factor (1) because you did not work in Boston. 1040a tax table You satisfy factor (2) because you had duplicate living expenses. 1040a tax table You also satisfy factor (3) because you did not abandon your apartment in Boston as your main home, you kept your community contacts, and you frequently returned to live in your apartment. 1040a tax table Therefore, you have a tax home in Boston. 1040a tax table Tax home different from family home. 1040a tax table   If you (and your family) do not live at your tax home (defined earlier), you cannot deduct the cost of traveling between your tax home and your family home. 1040a tax table You also cannot deduct the cost of meals and lodging while at your tax home. 1040a tax table See Example 1 . 1040a tax table   If you are working temporarily in the same city where you and your family live, you may be considered as traveling away from home. 1040a tax table See Example 2 . 1040a tax table Example 1. 1040a tax table You are a truck driver and you and your family live in Tucson. 1040a tax table You are employed by a trucking firm that has its terminal in Phoenix. 1040a tax table At the end of your long runs, you return to your home terminal in Phoenix and spend one night there before returning home. 1040a tax table You cannot deduct any expenses you have for meals and lodging in Phoenix or the cost of traveling from Phoenix to Tucson. 1040a tax table This is because Phoenix is your tax home. 1040a tax table Example 2. 1040a tax table Your family home is in Pittsburgh, where you work 12 weeks a year. 1040a tax table The rest of the year you work for the same employer in Baltimore. 1040a tax table In Baltimore, you eat in restaurants and sleep in a rooming house. 1040a tax table Your salary is the same whether you are in Pittsburgh or Baltimore. 1040a tax table Because you spend most of your working time and earn most of your salary in Baltimore, that city is your tax home. 1040a tax table You cannot deduct any expenses you have for meals and lodging there. 1040a tax table However, when you return to work in Pittsburgh, you are away from your tax home even though you stay at your family home. 1040a tax table You can deduct the cost of your round trip between Baltimore and Pittsburgh. 1040a tax table You can also deduct your part of your family's living expenses for meals and lodging while you are living and working in Pittsburgh. 1040a tax table Temporary Assignment or Job You may regularly work at your tax home and also work at another location. 1040a tax table It may not be practical to return to your tax home from this other location at the end of each work day. 1040a tax table Temporary assignment vs. 1040a tax table indefinite assignment. 1040a tax table   If your assignment or job away from your main place of work is temporary, your tax home does not change. 1040a tax table You are considered to be away from home for the whole period you are away from your main place of work. 1040a tax table You can deduct your travel expenses if they otherwise qualify for deduction. 1040a tax table Generally, a temporary assignment in a single location is one that is realistically expected to last (and does in fact last) for 1 year or less. 1040a tax table   However, if your assignment or job is indefinite, the location of the assignment or job becomes your new tax home and you cannot deduct your travel expenses while there. 1040a tax table An assignment or job in a single location is considered indefinite if it is realistically expected to last for more than 1 year, whether or not it actually lasts for more than 1 year. 1040a tax table   If your assignment is indefinite, you must include in your income any amounts you receive from your employer for living expenses, even if they are called travel allowances and you account to your employer for them. 1040a tax table You may be able to deduct the cost of relocating to your new tax home as a moving expense. 1040a tax table See Publication 521 for more information. 1040a tax table Exception for federal crime investigations or prosecutions. 1040a tax table   If you are a federal employee participating in a federal crime investigation or prosecution, you are not subject to the 1-year rule. 1040a tax table This means you may be able to deduct travel expenses even if you are away from your tax home for more than 1 year, provided you meet the other requirements for deductibility. 1040a tax table   For you to qualify, the Attorney General (or his or her designee) must certify that you are traveling: For the federal government, In a temporary duty status, and To investigate or prosecute, or provide support services for the investigation or prosecution of a federal crime. 1040a tax table Determining temporary or indefinite. 1040a tax table   You must determine whether your assignment is temporary or indefinite when you start work. 1040a tax table If you expect an assignment or job to last for 1 year or less, it is temporary unless there are facts and circumstances that indicate otherwise. 1040a tax table An assignment or job that is initially temporary may become indefinite due to changed circumstances. 1040a tax table A series of assignments to the same location, all for short periods but that together cover a long period, may be considered an indefinite assignment. 1040a tax table Going home on days off. 1040a tax table   If you go back to your tax home from a temporary assignment on your days off, you are not considered away from home while you are in your hometown. 1040a tax table You cannot deduct the cost of your meals and lodging there. 1040a tax table However, you can deduct your travel expenses, including meals and lodging, while traveling between your temporary place of work and your tax home. 1040a tax table You can claim these expenses up to the amount it would have cost you to stay at your temporary place of work. 1040a tax table   If you keep your hotel room during your visit home, you can deduct the cost of your hotel room. 1040a tax table In addition, you can deduct your expenses of returning home up to the amount you would have spent for meals had you stayed at your temporary place of work. 1040a tax table Probationary work period. 1040a tax table   If you take a job that requires you to move, with the understanding that you will keep the job if your work is satisfactory during a probationary period, the job is indefinite. 1040a tax table You cannot deduct any of your expenses for meals and lodging during the probationary period. 1040a tax table What Travel Expenses Are Deductible? Once you have determined that you are traveling away from your tax home, you can determine what travel expenses are deductible. 1040a tax table You can deduct ordinary and necessary expenses you have when you travel away from home on business. 1040a tax table The type of expense you can deduct depends on the facts and your circumstances. 1040a tax table Table 26-1 summarizes travel expenses you may be able to deduct. 1040a tax table You may have other deductible travel expenses that are not covered there, depending on the facts and your circumstances. 1040a tax table When you travel away from home on business, you should keep records of all the expenses you have and any advances you receive from your employer. 1040a tax table You can use a log, diary, notebook, or any other written record to keep track of your expenses. 1040a tax table The types of expenses you need to record, along with supporting documentation, are described in Table 26-2 , later. 1040a tax table Separating costs. 1040a tax table   If you have one expense that includes the costs of meals, entertainment, and other services (such as lodging or transportation), you must allocate that expense between the cost of meals and entertainment and the cost of other services. 1040a tax table You must have a reasonable basis for making this allocation. 1040a tax table For example, you must allocate your expenses if a hotel includes one or more meals in its room charge. 1040a tax table Travel expenses for another individual. 1040a tax table   If a spouse, dependent, or other individual goes with you (or your employee) on a business trip or to a business convention, you generally cannot deduct his or her travel expenses. 1040a tax table Employee. 1040a tax table   You can deduct the travel expenses of someone who goes with you if that person: Is your employee, Has a bona fide business purpose for the travel, and Would otherwise be allowed to deduct the travel expenses. 1040a tax table Business associate. 1040a tax table   If a business associate travels with you and meets the conditions in (2) and (3) above, you can deduct the travel expenses you have for that person. 1040a tax table A business associate is someone with whom you could reasonably expect to engage or deal in the active conduct of your business. 1040a tax table A business associate can be a current or prospective (likely to become) customer, client, supplier, employee, agent, partner, or professional advisor. 1040a tax table Bona fide business purpose. 1040a tax table   A bona fide business purpose exists if you can prove a real business purpose for the individual's presence. 1040a tax table Incidental services, such as typing notes or assisting in entertaining customers, are not enough to make the expenses deductible. 1040a tax table Example. 1040a tax table Jerry drives to Chicago on business and takes his wife, Linda, with him. 1040a tax table Linda is not Jerry's employee. 1040a tax table Linda occasionally types notes, performs similar services, and accompanies Jerry to luncheons and dinners. 1040a tax table The performance of these services does not establish that her presence on the trip is necessary to the conduct of Jerry's business. 1040a tax table Her expenses are not deductible. 1040a tax table Jerry pays $199 a day for a double room. 1040a tax table A single room costs $149 a day. 1040a tax table He can deduct the total cost of driving his car to and from Chicago, but only $149 a day for his hotel room. 1040a tax table If he uses public transportation, he can deduct only his fare. 1040a tax table Table 26-1. 1040a tax table Travel Expenses You Can Deduct This chart summarizes expenses you can deduct when you travel away from home for business purposes. 1040a tax table IF you have expenses for. 1040a tax table . 1040a tax table . 1040a tax table THEN you can deduct the cost of. 1040a tax table . 1040a tax table . 1040a tax table transportation travel by airplane, train, bus, or car between your home and your business destination. 1040a tax table If you were provided with a ticket or you are riding free as a result of a frequent traveler or similar program, your cost is zero. 1040a tax table If you travel by ship, see Luxury Water Travel and Cruise ships (under Conventions) in Publication 463 for additional rules and limits. 1040a tax table taxi, commuter bus, and airport limousine fares for these and other types of transportation that take you between: The airport or station and your hotel, and The hotel and the work location of your customers or clients, your business meeting place, or your temporary work location. 1040a tax table baggage and shipping sending baggage and sample or display material between your regular and temporary work locations. 1040a tax table car operating and maintaining your car when traveling away from home on business. 1040a tax table You can deduct actual expenses or the standard mileage rate as well as business-related tolls and parking. 1040a tax table If you rent a car while away from home on business, you can deduct only the business-use portion of the expenses. 1040a tax table lodging and meals your lodging and meals if your business trip is overnight or long enough that you need to stop for sleep or rest to properly perform your duties. 1040a tax table Meals include amounts spent for food, beverages, taxes, and related tips. 1040a tax table See Meals and Incidental Expenses for additional rules and limits. 1040a tax table cleaning dry cleaning and laundry. 1040a tax table telephone business calls while on your business trip. 1040a tax table This includes business communication by fax machine or other communication devices. 1040a tax table tips tips you pay for any expenses in this chart. 1040a tax table other other similar ordinary and necessary expenses related to your business travel. 1040a tax table These expenses might include transportation to or from a business meal, public stenographer's fees, computer rental fees, and operating and maintaining a house trailer. 1040a tax table Meals and Incidental Expenses You can deduct the cost of meals in either of the following situations. 1040a tax table It is necessary for you to stop for substantial sleep or rest to properly perform your duties while traveling away from home on business. 1040a tax table The meal is business-related entertainment. 1040a tax table Business-related entertainment is discussed under Entertainment Expenses , later. 1040a tax table The following discussion deals only with meals (and incidental expenses) that are not business-related entertainment. 1040a tax table Lavish or extravagant. 1040a tax table   You cannot deduct expenses for meals that are lavish or extravagant. 1040a tax table An expense is not considered lavish or extravagant if it is reasonable based on the facts and circumstances. 1040a tax table Expenses will not be disallowed merely because they are more than a fixed dollar amount or take place at deluxe restaurants, hotels, nightclubs, or resorts. 1040a tax table 50% limit on meals. 1040a tax table   You can figure your meal expenses using either of the following methods. 1040a tax table Actual cost. 1040a tax table The standard meal allowance. 1040a tax table Both of these methods are explained below. 1040a tax table But, regardless of the method you use, you generally can deduct only 50% of the unreimbursed cost of your meals. 1040a tax table   If you are reimbursed for the cost of your meals, how you apply the 50% limit depends on whether your employer's reimbursement plan was accountable or nonaccountable. 1040a tax table If you are not reimbursed, the 50% limit applies whether the unreimbursed meal expense is for business travel or business entertainment. 1040a tax table The 50% limit is explained later under Entertainment Expenses . 1040a tax table Accountable and nonaccountable plans are discussed later under Reimbursements . 1040a tax table Actual cost. 1040a tax table   You can use the actual cost of your meals to figure the amount of your expense before reimbursement and application of the 50% deduction limit. 1040a tax table If you use this method, you must keep records of your actual cost. 1040a tax table Standard meal allowance. 1040a tax table   Generally, you can use the “standard meal allowance” method as an alternative to the actual cost method. 1040a tax table It allows you to use a set amount for your daily meals and incidental expenses (M&IE), instead of keeping records of your actual costs. 1040a tax table The set amount varies depending on where and when you travel. 1040a tax table In this chapter, “standard meal allowance” refers to the federal rate for M&IE, discussed later under Amount of standard meal allowance . 1040a tax table If you use the standard meal allowance, you still must keep records to prove the time, place, and business purpose of your travel. 1040a tax table See Recordkeeping , later. 1040a tax table Incidental expenses. 1040a tax table   The term “incidental expenses” means fees and tips given to porters, baggage carriers, hotel staff, and staff on ships. 1040a tax table Incidental expenses do not include expenses for laundry, cleaning and pressing of clothing, lodging taxes, costs of telegrams or telephone calls, transportation between places of lodging or business and places where meals are taken, or the mailing cost of filing travel vouchers and paying employer-sponsored charge card billings. 1040a tax table Incidental expenses only method. 1040a tax table   You can use an optional method (instead of actual cost) for deducting incidental expenses only. 1040a tax table The amount of the deduction is $5 a day. 1040a tax table You can use this method only if you did not pay or incur any meal expenses. 1040a tax table You cannot use this method on any day that you use the standard meal allowance. 1040a tax table    Federal employees should refer to the Federal Travel Regulations at  www. 1040a tax table gsa. 1040a tax table gov. 1040a tax table Find “What GSA Offers” and click on “Regulations: FMR, FTR, & FAR” for Federal Travel Regulation (FTR) for changes affecting claims for reimbursement. 1040a tax table 50% limit may apply. 1040a tax table   If you use the standard meal allowance method for meal expenses and you are not reimbursed or you are reimbursed under a nonaccountable plan, you can generally deduct only 50% of the standard meal allowance. 1040a tax table If you are reimbursed under an accountable plan and you are deducting amounts that are more than your reimbursements, you can deduct only 50% of the excess amount. 1040a tax table The 50% limit is explained later under Entertainment Expenses . 1040a tax table Accountable and nonaccountable plans are discussed later under Reimbursements . 1040a tax table There is no optional standard lodging amount similar to the standard meal allowance. 1040a tax table Your allowable lodging expense deduction is your actual cost. 1040a tax table Who can use the standard meal allowance. 1040a tax table   You can use the standard meal allowance whether you are an employee or self-employed, and whether or not you are reimbursed for your traveling expenses. 1040a tax table   Use of the standard meal allowance for other travel. 1040a tax table    You can use the standard meal allowance to figure your meal expenses when you travel in connection with investment and other income-producing property. 1040a tax table You can also use it to figure your meal expenses when you travel for qualifying educational purposes. 1040a tax table You cannot use the standard meal allowance to figure the cost of your meals when you travel for medical or charitable purposes. 1040a tax table Amount of standard meal allowance. 1040a tax table   The standard meal allowance is the federal M&IE rate. 1040a tax table For travel in 2013, the daily rate for most small localities in the United States is $46. 1040a tax table   Most major cities and many other localities in the United States are designated as high-cost areas, qualifying for higher standard meal allowances. 1040a tax table You can find this information (organized by state) on the Internet at www. 1040a tax table gsa. 1040a tax table gov. 1040a tax table Click on “Per Diem Rates,” then select “2013” for the period January 1, 2013 – September 30, 2013, and select “2014” for the period October 1, 2013 – December 31, 2013. 1040a tax table However, you can apply the rates in effect before October 1, 2013, for expenses of all travel within the United States for 2013 instead of the updated rates. 1040a tax table You must consistently use either the rates for the first 9 months for all of 2013 or the updated rates for the period of October 1, 2013, through December 31, 2013. 1040a tax table   If you travel to more than one location in one day, use the rate in effect for the area where you stop for sleep or rest. 1040a tax table If you work in the transportation industry, however, see Special rate for transportation workers , later. 1040a tax table Standard meal allowance for areas outside the continental United States. 1040a tax table    The standard meal allowance rates above do not apply to travel in Alaska, Hawaii, or any other location outside the continental United States. 1040a tax table The Department of Defense establishes per diem rates for Alaska, Hawaii, Puerto Rico, American Samoa, Guam, Midway, the Northern Mariana Islands, the U. 1040a tax table S. 1040a tax table Virgin Islands, Wake Island, and other non-foreign areas outside the continental United States. 1040a tax table The Department of State establishes per diem rates for all other foreign areas. 1040a tax table    You can access per diem rates for non-foreign areas outside the continental United States at: www. 1040a tax table defensetravel. 1040a tax table dod. 1040a tax table mil/site/perdiemCalc. 1040a tax table cfm. 1040a tax table You can access all other foreign per diem rates at www. 1040a tax table state. 1040a tax table gov/travel/. 1040a tax table Click on “Travel Per Diem Allowances for Foreign Areas” under “Foreign Per Diem Rates,” to obtain the latest foreign per diem rates. 1040a tax table Special rate for transportation workers. 1040a tax table   You can use a special standard meal allowance if you work in the transportation industry. 1040a tax table You are in the transportation industry if your work: Directly involves moving people or goods by airplane, barge, bus, ship, train, or truck, and Regularly requires you to travel away from home and, during any single trip, usually involves travel to areas eligible for different standard meal allowance rates. 1040a tax table If this applies to you, you can claim a standard daily meal allowance of $59 ($65 for travel outside the continental United States). 1040a tax table   Using the special rate for transportation workers eliminates the need for you to determine the standard meal allowance for every area where you stop for sleep or rest. 1040a tax table If you choose to use the special rate for any trip, you must use the special rate (and not use the regular standard meal allowance rates) for all trips you take that year. 1040a tax table Travel for days you depart and return. 1040a tax table   For both the day you depart for and the day you return from a business trip, you must prorate the standard meal allowance (figure a reduced amount for each day). 1040a tax table You can do so by one of two methods. 1040a tax table Method 1: You can claim 3/4 of the standard meal allowance. 1040a tax table Method 2: You can prorate using any method that you consistently apply and that is in accordance with reasonable business practice. 1040a tax table Example. 1040a tax table Jen is employed in New Orleans as a convention planner. 1040a tax table In March, her employer sent her on a 3-day trip to Washington, DC, to attend a planning seminar. 1040a tax table She left her home in New Orleans at 10 a. 1040a tax table m. 1040a tax table on Wednesday and arrived in Washington, DC, at 5:30 p. 1040a tax table m. 1040a tax table After spending two nights there, she flew back to New Orleans on Friday and arrived back home at 8:00 p. 1040a tax table m. 1040a tax table Jen's employer gave her a flat amount to cover her expenses and included it with her wages. 1040a tax table Under Method 1, Jen can claim 2½ days of the standard meal allowance for Washington, DC: 3/4 of the daily rate for Wednesday and Friday (the days she departed and returned), and the full daily rate for Thursday. 1040a tax table Under Method 2, Jen could also use any method that she applies consistently and that is in accordance with reasonable business practice. 1040a tax table For example, she could claim 3 days of the standard meal allowance even though a federal employee would have to use Method 1 and be limited to only 2½ days. 1040a tax table Travel in the United States The following discussion applies to travel in the United States. 1040a tax table For this purpose, the United States includes only the 50 states and the District of Columbia. 1040a tax table The treatment of your travel expenses depends on how much of your trip was business related and on how much of your trip occurred within the United States. 1040a tax table See Part of Trip Outside the United States , later. 1040a tax table Trip Primarily for Business You can deduct all your travel expenses if your trip was entirely business related. 1040a tax table If your trip was primarily for business and, while at your business destination, you extended your stay for a vacation, made a personal side trip, or had other personal activities, you can deduct your business-related travel expenses. 1040a tax table These expenses include the travel costs of getting to and from your business destination and any business-related expenses at your business destination. 1040a tax table Example. 1040a tax table You work in Atlanta and take a business trip to New Orleans in May. 1040a tax table On your way home, you stop in Mobile to visit your parents. 1040a tax table You spend $1,996 for the 9 days you are away from home for travel, meals, lodging, and other travel expenses. 1040a tax table If you had not stopped in Mobile, you would have been gone only 6 days, and your total cost would have been $1,696. 1040a tax table You can deduct $1,696 for your trip, including the cost of round-trip transportation to and from New Orleans. 1040a tax table The deduction for your meals is subject to the 50% limit on meals mentioned earlier. 1040a tax table Trip Primarily for Personal Reasons If your trip was primarily for personal reasons, such as a vacation, the entire cost of the trip is a nondeductible personal expense. 1040a tax table However, you can deduct any expenses you have while at your destination that are directly related to your business. 1040a tax table A trip to a resort or on a cruise ship may be a vacation even if the promoter advertises that it is primarily for business. 1040a tax table The scheduling of incidental business activities during a trip, such as viewing videotapes or attending lectures dealing with general subjects, will not change what is really a vacation into a business trip. 1040a tax table Part of Trip Outside the United States If part of your trip is outside the United States, use the rules described later under Travel Outside the United States for that part of the trip. 1040a tax table For the part of your trip that is inside the United States, use the rules for travel in the United States. 1040a tax table Travel outside the United States does not include travel from one point in the United States to another point in the United States. 1040a tax table The following discussion can help you determine whether your trip was entirely within the United States. 1040a tax table Public transportation. 1040a tax table   If you travel by public transportation, any place in the United States where that vehicle makes a scheduled stop is a point in the United States. 1040a tax table Once the vehicle leaves the last scheduled stop in the United States on its way to a point outside the United States, you apply the rules under Travel Outside the United States . 1040a tax table Example. 1040a tax table You fly from New York to Puerto Rico with a scheduled stop in Miami. 1040a tax table You return to New York nonstop. 1040a tax table The flight from New York to Miami is in the United States, so only the flight from Miami to Puerto Rico is outside the United States. 1040a tax table Because there are no scheduled stops between Puerto Rico and New York, all of the return trip is outside the United States. 1040a tax table Private car. 1040a tax table   Travel by private car in the United States is travel between points in the United States, even when you are on your way to a destination outside the United States. 1040a tax table Example. 1040a tax table You travel by car from Denver to Mexico City and return. 1040a tax table Your travel from Denver to the border and from the border back to Denver is travel in the United States, and the rules in this section apply. 1040a tax table The rules under Travel Outside the United States apply to your trip from the border to Mexico City and back to the border. 1040a tax table Travel Outside the United States If any part of your business travel is outside the United States, some of your deductions for the cost of getting to and from your destination may be limited. 1040a tax table For this purpose, the United States includes only the 50 states and the District of Columbia. 1040a tax table How much of your travel expenses you can deduct depends in part upon how much of your trip outside the United States was business related. 1040a tax table See chapter 1 of Publication 463 for information on luxury water travel. 1040a tax table Travel Entirely for Business or Considered Entirely for Business You can deduct all your travel expenses of getting to and from your business destination if your trip is entirely for business or considered entirely for business. 1040a tax table Travel entirely for business. 1040a tax table   If you travel outside the United States and you spend the entire time on business activities, you can deduct all of your travel expenses. 1040a tax table Travel considered entirely for business. 1040a tax table   Even if you did not spend your entire time on business activities, your trip is considered entirely for business if you meet at least one of the following four exceptions. 1040a tax table Exception 1 - No substantial control. 1040a tax table   Your trip is considered entirely for business if you did not have substantial control over arranging the trip. 1040a tax table The fact that you control the timing of your trip does not, by itself, mean that you have substantial control over arranging your trip. 1040a tax table   You do not have substantial control over your trip if you: Are an employee who was reimbursed or paid a travel expense allowance, Are not related to your employer, and Are not a managing executive. 1040a tax table    “Related to your employer” is defined later in this chapter under Per Diem and Car Allowances . 1040a tax table   A “managing executive” is an employee who has the authority and responsibility, without being subject to the veto of another, to decide on the need for the business travel. 1040a tax table    A self-employed person generally has substantial control over arranging business trips. 1040a tax table Exception 2 - Outside United States no more than a week. 1040a tax table   Your trip is considered entirely for business if you were outside the United States for a week or less, combining business and nonbusiness activities. 1040a tax table One week means 7 consecutive days. 1040a tax table In counting the days, do not count the day you leave the United States, but do count the day you return to the United States. 1040a tax table Exception 3 - Less than 25% of time on personal activities. 1040a tax table   Your trip is considered entirely for business if: You were outside the United States for more than a week, and You spent less than 25% of the total time you were outside the United States on nonbusiness activities. 1040a tax table For this purpose, count both the day your trip began and the day it ended. 1040a tax table Exception 4 - Vacation not a major consideration. 1040a tax table   Your trip is considered entirely for business if you can establish that a personal vacation was not a major consideration, even if you have substantial control over arranging the trip. 1040a tax table Travel Primarily for Business If you travel outside the United States primarily for business but spend some of your time on nonbusiness activities, you generally cannot deduct all of your travel expenses. 1040a tax table You can only deduct the business portion of your cost of getting to and from your destination. 1040a tax table You must allocate the costs between your business and nonbusiness activities to determine your deductible amount. 1040a tax table These travel allocation rules are discussed in chapter 1 of Publication 463. 1040a tax table You do not have to allocate your travel expense deduction if you meet one of the four exceptions listed earlier under Travel considered entirely for business. 1040a tax table In those cases, you can deduct the total cost of getting to and from your destination. 1040a tax table Travel Primarily for Personal Reasons If you travel outside the United States primarily for vacation or for investment purposes, the entire cost of the trip is a nondeductible personal expense. 1040a tax table If you spend some time attending brief professional seminars or a continuing education program, you can deduct your registration fees and other expenses you have that are directly related to your business. 1040a tax table Conventions You can deduct your travel expenses when you attend a convention if you can show that your attendance benefits your trade or business. 1040a tax table You cannot deduct the travel expenses for your family. 1040a tax table If the convention is for investment, political, social, or other purposes unrelated to your trade or business, you cannot deduct the expenses. 1040a tax table Your appointment or election as a delegate does not, in itself, determine whether you can deduct travel expenses. 1040a tax table You can deduct your travel expenses only if your attendance is connected to your own trade or business. 1040a tax table Convention agenda. 1040a tax table   The convention agenda or program generally shows the purpose of the convention. 1040a tax table You can show your attendance at the convention benefits your trade or business by comparing the agenda with the official duties and responsibilities of your position. 1040a tax table The agenda does not have to deal specifically with your official duties and responsibilities; it will be enough if the agenda is so related to your position that it shows your attendance was for business purposes. 1040a tax table Conventions held outside the North American area. 1040a tax table    See chapter 1 of Publication 463 for information on conventions held outside the North American area. 1040a tax table Entertainment Expenses You may be able to deduct business-related entertainment expenses you have for entertaining a client, customer, or employee. 1040a tax table You can deduct entertainment expenses only if they are both ordinary and necessary (defined earlier in the Introduction ) and meet one of the following tests. 1040a tax table Directly-related test. 1040a tax table Associated test. 1040a tax table Both of these tests are explained in chapter 2 of Publication 463. 1040a tax table The amount you can deduct for entertainment expenses may be limited. 1040a tax table Generally, you can deduct only 50% of your unreimbursed entertainment expenses. 1040a tax table This limit is discussed next. 1040a tax table 50% Limit In general, you can deduct only 50% of your business-related meal and entertainment expenses. 1040a tax table (If you are subject to the Department of Transportation's “hours of service” limits, you can deduct 80% of your business-related meal and entertainment expenses. 1040a tax table See Individuals subject to “hours of service” limits , later. 1040a tax table ) The 50% limit applies to employees or their employers, and to self-employed persons (including independent contractors) or their clients, depending on whether the expenses are reimbursed. 1040a tax table Figure 26-A summarizes the general rules explained in this section. 1040a tax table The 50% limit applies to business meals or entertainment expenses you have while: Traveling away from home (whether eating alone or with others) on business, Entertaining customers at your place of business, a restaurant, or other location, or Attending a business convention or reception, business meeting, or business luncheon at a club. 1040a tax table Included expenses. 1040a tax table   Expenses subject to the 50% limit include: Taxes and tips relating to a business meal or entertainment activity, Cover charges for admission to a nightclub, Rent paid for a room in which you hold a dinner or cocktail party, and Amounts paid for parking at a sports arena. 1040a tax table However, the cost of transportation to and from a business meal or a business-related entertainment activity is not subject to the 50% limit. 1040a tax table Application of 50% limit. 1040a tax table   The 50% limit on meal and entertainment expenses applies if the expense is otherwise deductible and is not covered by one of the exceptions discussed later in this section. 1040a tax table   The 50% limit also applies to certain meal and entertainment expenses that are not business related. 1040a tax table It applies to meal and entertainment expenses incurred for the production of income, including rental or royalty income. 1040a tax table It also applies to the cost of meals included in deductible educational expenses. 1040a tax table When to apply the 50% limit. 1040a tax table   You apply the 50% limit after determining the amount that would otherwise qualify for a deduction. 1040a tax table You first have to determine the amount of meal and entertainment expenses that would be deductible under the other rules discussed in this chapter. 1040a tax table Example 1. 1040a tax table You spend $200 for a business-related meal. 1040a tax table If $110 of that amount is not allowable because it is lavish and extravagant, the remaining $90 is subject to the 50% limit. 1040a tax table Your deduction cannot be more than $45 (. 1040a tax table 50 × $90). 1040a tax table Example 2. 1040a tax table You purchase two tickets to a concert and give them to a client. 1040a tax table You purchased the tickets through a ticket agent. 1040a tax table You paid $200 for the two tickets, which had a face value of $80 each ($160 total). 1040a tax table Your deduction cannot be more than $80 (. 1040a tax table 50 × $160). 1040a tax table Exceptions to the 50% Limit Generally, business-related meal and entertainment expenses are subject to the 50% limit. 1040a tax table Figure 26-A can help you determine if the 50% limit applies to you. 1040a tax table Your meal or entertainment expense is not subject to the 50% limit if the expense meets one of the following exceptions. 1040a tax table Employee's reimbursed expenses. 1040a tax table   If you are an employee, you are not subject to the 50% limit on expenses for which your employer reimburses you under an accountable plan. 1040a tax table Accountable plans are discussed later under Reimbursements . 1040a tax table Individuals subject to “hours of service” limits. 1040a tax table   You can deduct a higher percentage of your meal expenses while traveling away from your tax home if the meals take place during or incident to any period subject to the Department of Transportation's “hours of service” limits. 1040a tax table The percentage is 80%. 1040a tax table   Individuals subject to the Department of Transportation's “hours of service” limits include the following persons. 1040a tax table Certain air transportation workers (such as pilots, crew, dispatchers, mechanics, and control tower operators) who are under Federal Aviation Administration regulations. 1040a tax table Interstate truck operators and bus drivers who are under Department of Transportation regulations. 1040a tax table Certain railroad employees (such as engineers, conductors, train crews, dispatchers, and control operations personnel) who are under Federal Railroad Administration regulations. 1040a tax table Certain merchant mariners who are under Coast Guard regulations. 1040a tax table Other exceptions. 1040a tax table   There are also exceptions for the self-employed, advertising expenses, selling meals or entertainment, and charitable sports events. 1040a tax table These are discussed in Publication 463. 1040a tax table Figure 26-A. 1040a tax table Does the 50% Limit Apply to Your Expenses? There are exceptions to these rules. 1040a tax table See Exceptions to the 50% Limit . 1040a tax table Please click here for the text description of the image. 1040a tax table Entertainment expenses: 50% limit What Entertainment Expenses Are Deductible? This section explains different types of entertainment expenses you may be able to deduct. 1040a tax table Entertainment. 1040a tax table    Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation. 1040a tax table Examples include entertaining guests at nightclubs; at social, athletic, and sporting clubs; at theaters; at sporting events; or on hunting, fishing, vacation, and similar trips. 1040a tax table A meal as a form of entertainment. 1040a tax table   Entertainment includes the cost of a meal you provide to a customer or client, whether the meal is a part of other entertainment or by itself. 1040a tax table A meal expense includes the cost of food, beverages, taxes, and tips for the meal. 1040a tax table To deduct an entertainment-related meal, you or your employee must be present when the food or beverages are provided. 1040a tax table You cannot claim the cost of your meal both as an entertainment expense and as a travel expense. 1040a tax table Separating costs. 1040a tax table   If you have one expense that includes the costs of entertainment and other services (such as lodging or transportation), you must allocate that expense between the cost of entertainment and the cost of other services. 1040a tax table You must have a reasonable basis for making this allocation. 1040a tax table For example, you must allocate your expenses if a hotel includes entertainment in its lounge on the same bill with your room charge. 1040a tax table Taking turns paying for meals or entertainment. 1040a tax table   If a group of business acquaintances take turns picking up each others' meal or entertainment checks without regard to whether any business purposes are served, no member of the group can deduct any part of the expense. 1040a tax table Lavish or extravagant expenses. 1040a tax table   You cannot deduct expenses for entertainment that are lavish or extravagant. 1040a tax table An expense is not considered lavish or extravagant if it is reasonable considering the facts and circumstances. 1040a tax table Expenses will not be disallowed just because they are more than a fixed dollar amount or take place at deluxe restaurants, hotels, nightclubs, or resorts. 1040a tax table Trade association meetings. 1040a tax table    You can deduct entertainment expenses that are directly related to, and necessary for, attending business meetings or conventions of certain exempt organizations if the expenses of your attendance are related to your active trade or business. 1040a tax table These organizations include business leagues, chambers of commerce, real estate boards, trade associations, and professional associations. 1040a tax table Entertainment tickets. 1040a tax table   Generally, you cannot deduct more than the face value of an entertainment ticket, even if you paid a higher price. 1040a tax table For example, you cannot deduct service fees you pay to ticket agencies or brokers or any amount over the face value of the tickets you pay to scalpers. 1040a tax table What Entertainment Expenses Are Not Deductible? This section explains different types of entertainment expenses you generally may not be able to deduct. 1040a tax table Club dues and membership fees. 1040a tax table   You cannot deduct dues (including initiation fees) for membership in any club organized for: Business, Pleasure, Recreation, or Other social purpose. 1040a tax table This rule applies to any membership organization if one of its principal purposes is either: To conduct entertainment activities for members or their guests, or To provide members or their guests with access to entertainment facilities. 1040a tax table   The purposes and activities of a club, not its name, will determine whether or not you can deduct the dues. 1040a tax table You cannot deduct dues paid to: Country clubs, Golf and athletic clubs, Airline clubs, Hotel clubs, and Clubs operated to provide meals under circumstances generally considered to be conducive to business discussions. 1040a tax table Entertainment facilities. 1040a tax table   Generally, you cannot deduct any expense for the use of an entertainment facility. 1040a tax table This includes expenses for depreciation and operating costs such as rent, utilities, maintenance, and protection. 1040a tax table   An entertainment facility is any property you own, rent, or use for entertainment. 1040a tax table Examples include a yacht, hunting lodge, fishing camp, swimming pool, tennis court, bowling alley, car, airplane, apartment, hotel suite, or home in a vacation resort. 1040a tax table Out-of-pocket expenses. 1040a tax table   You can deduct out-of-pocket expenses, such as for food and beverages, catering, gas, and fishing bait, that you provided during entertainment at a facility. 1040a tax table These are not expenses for the use of an entertainment facility. 1040a tax table However, these expenses are subject to the directly-related and associated tests and to the 50% Limit discussed earlier. 1040a tax table Additional information. 1040a tax table   For more information on entertainment expenses, including discussions of the directly-related and associated tests, see chapter 2 of Publication 463. 1040a tax table Gift Expenses If you give gifts in the course of your trade or business, you can deduct all or part of the cost. 1040a tax table This section explains the limits and rules for deducting the costs of gifts. 1040a tax table $25 limit. 1040a tax table   You can deduct no more than $25 for business gifts you give directly or indirectly to each person during your tax year. 1040a tax table A gift to a company that is intended for the eventual personal use or benefit of a particular person or a limited class of people will be considered an indirect gift to that particular person or to the individuals within that class of people who receive the gift. 1040a tax table   If you give a gift to a member of a customer's family, the gift is generally considered to be an indirect gift to the customer. 1040a tax table This rule does not apply if you have a bona fide, independent business connection with that family member and the gift is not intended for the customer's eventual use or benefit. 1040a tax table   If you and your spouse both give gifts, both of you are treated as one taxpayer. 1040a tax table It does not matter whether you have separate businesses, are separately employed, or whether each of you has an independent connection with the recipient. 1040a tax table If a partnership gives gifts, the partnership and the partners are treated as one taxpayer. 1040a tax table Incidental costs. 1040a tax table   Incidental costs, such as engraving on jewelry, or packaging, insuring, and mailing, are generally not included in determining the cost of a gift for purposes of the $25 limit. 1040a tax table   A cost is incidental only if it does not add substantial value to the gift. 1040a tax table For example, the cost of customary gift wrapping is an incidental cost. 1040a tax table However, the purchase of an ornamental basket for packaging fruit is not an incidental cost if the value of the basket is substantial compared to the value of the fruit. 1040a tax table Exceptions. 1040a tax table   The following items are not considered gifts for purposes of the $25 limit. 1040a tax table An item that costs $4 or less and: Has your name clearly and permanently imprinted on the gift, and Is one of a number of identical items you widely distribute. 1040a tax table Examples include pens, desk sets, and plastic bags and cases. 1040a tax table Signs, display racks, or other promotional material to be used on the business premises of the recipient. 1040a tax table Gift or entertainment. 1040a tax table   Any item that might be considered either a gift or entertainment generally will be considered entertainment. 1040a tax table However, if you give a customer packaged food or beverages you intend the customer to use at a later date, treat it as a gift. 1040a tax table    If you give a customer tickets to a theater performance or sporting event and you do not go with the customer to the performance or event, you have a choice. 1040a tax table You can treat the cost of the tickets as either a gift expense or an entertainment expense, whichever is to your advantage. 1040a tax table    If you go with the customer to the event, you must treat the cost of the tickets as an entertainment expense. 1040a tax table You cannot choose, in this case, to treat the cost of the tickets as a gift expense. 1040a tax table Transportation Expenses This section discusses expenses you can deduct for business transportation when you are not traveling away from home as defined earlier under Travel Expenses . 1040a tax table These expenses include the cost of transportation by air, rail, bus, taxi, etc. 1040a tax table , and the cost of driving and maintaining your car. 1040a tax table Transportation expenses include the ordinary and necessary costs of all of the following. 1040a tax table Getting from one workplace to another in the course of your business or profession when you are traveling within the area of your tax home. 1040a tax table (Tax home is defined earlier under Travel Expenses . 1040a tax table ) Visiting clients or customers. 1040a tax table Going to a business meeting away from your regular workplace. 1040a tax table Getting from your home to a temporary workplace when you have one or more regular places of work. 1040a tax table These temporary workplaces can be either within the area of your tax home or outside that area. 1040a tax table Transportation expenses do not include expenses you have while traveling away from home overnight. 1040a tax table Those expenses are travel expenses, discussed earlier. 1040a tax table However, if you use your car while traveling away from home overnight, use the rules in this section to figure your car expense deduction. 1040a tax table See Car Expenses , later. 1040a tax table Illustration of transportation expenses. 1040a tax table    Figure 26-B illustrates the rules for when you can deduct transportation expenses when you have a regular or main job away from your home. 1040a tax table You may want to refer to it when deciding whether you can deduct your transportation expenses. 1040a tax table Daily transportation expenses you incur while traveling from home to one or more regular places of business are generally nondeductible commuting expenses. 1040a tax table However, there are many exceptions for deducting transportation expenses, like whether your work location is temporary (inside or outside the metropolitan area), traveling for same trade or business, or if you have a home office. 1040a tax table Temporary work location. 1040a tax table   If you have one or more regular work locations away from your home and you commute to a temporary work location in the same trade or business, you can deduct the expenses of the daily round-trip transportation between your home and the temporary location, regardless of distance. 1040a tax table   If your employment at a work location is realistically expected to last (and does in fact last) for 1 year or less, the employment is temporary unless there are facts and circumstances that would indicate otherwise. 1040a tax table   If your employment at a work location is realistically expected to last for more than 1 year or if there is no realistic expectation that the employment will last for 1 year or less, the employment is not temporary, regardless of whether it actually lasts for more than 1 year. 1040a tax table   If employment at a work location initially is realistically expected to last for 1 year or less, but at some later date the employment is realistically expected to last more than 1 year, that employment will be treated as temporary (unless there are facts and circumstances that would indicate otherwise) until your expectation changes. 1040a tax table It will not be treated as temporary after the date you determine it will last more than 1 year. 1040a tax table   If the temporary work location is beyond the general area of your regular place of work and you stay overnight, you are traveling away from home. 1040a tax table You may have deductible travel expenses as discussed earlier in this chapter. 1040a tax table No regular place of work. 1040a tax table   If you have no regular place of work but ordinarily work in the metropolitan area where you live, you can deduct daily transportation costs between home and a temporary work site outside that metropolitan area. 1040a tax table   Generally, a metropolitan area includes the area within the city limits and the suburbs that are considered part of that metropolitan area. 1040a tax table   You cannot deduct daily transportation costs between your home and temporary work sites within your metropolitan area. 1040a tax table These are nondeductible commuting expenses. 1040a tax table Two places of work. 1040a tax table   If you work at two places in one day, whether or not for the same employer, you can deduct the expense of getting from one workplace to the other. 1040a tax table However, if for some personal reason you do not go directly from one location to the other, you cannot deduct more than the amount it would have cost you to go directly from the first location to the second. 1040a tax table   Transportation expenses you have in going between home and a part-time job on a day off from your main job are commuting expenses. 1040a tax table You cannot deduct them. 1040a tax table Armed Forces reservists. 1040a tax table   A meeting of an Armed Forces reserve unit is a second place of business if the meeting is held on a day on which you work at your regular job. 1040a tax table You can deduct the expense of getting from one workplace to the other as just discussed under Two places of work , earlier. 1040a tax table   You usually cannot deduct the expense if the reserve meeting is held on a day on which you do not work at your regular job. 1040a tax table In this case, your transportation generally is a nondeductible commuting expense. 1040a tax table However, you can deduct your transportation expenses if the location of the meeting is temporary and you have one or more regular places of work. 1040a tax table   If you ordinarily work in a particular metropolitan area but not at any specific location and the reserve meeting is held at a temporary location outside that metropolitan area, you can deduct your transportation expenses. 1040a tax table   If you travel away from home overnight to attend a guard or reserve meeting, you can deduct your travel expenses. 1040a tax table These expenses are discussed earlier under Travel Expenses . 1040a tax table   If you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you may be able to deduct some of your reserve-related travel costs as an adjustment to income rather than as an itemized deduction. 1040a tax table See Armed Forces reservists traveling more than 100 miles from home under Special Rules, later. 1040a tax table Commuting expenses. 1040a tax table   You cannot deduct the costs of taking a bus, trolley, subway, or taxi, or of driving a car between your home and your main or regular place of work. 1040a tax table These costs are personal commuting expenses. 1040a tax table You cannot deduct commuting expenses no matter how far your home is from your regular place of work. 1040a tax table You cannot deduct commuting expenses even if you work during the commuting trip. 1040a tax table Example. 1040a tax table You sometimes use your cell phone to make business calls while commuting to and from work. 1040a tax table Sometimes business associates ride with you to and from work, and you have a business discussion in the car. 1040a tax table These activities do not change the trip from personal to business. 1040a tax table You cannot deduct your commuting expenses. 1040a tax table Parking fees. 1040a tax table   Fees you pay to park your car at your place of business are nondeductible commuting expenses. 1040a tax table You can, however, deduct business-related parking fees when visiting a customer or client. 1040a tax table Advertising display on car. 1040a tax table   Putting display material that advertises your business on your car does not change the use of your car from personal use to business use. 1040a tax table If you use this car for commuting or other personal uses, you still cannot deduct your expenses for those uses. 1040a tax table Car pools. 1040a tax table   You cannot deduct the cost of using your car in a nonprofit car pool. 1040a tax table Do not include payments you receive from the passengers in your income. 1040a tax table These payments are considered reimbursements of your expenses. 1040a tax table However, if you operate a car pool for a profit, you must include payments from passengers in your income. 1040a tax table You can then deduct your car expenses (using the rules in this chapter). 1040a tax table Hauling tools or instruments. 1040a tax table   Hauling tools or instruments in your car while commuting to and from work does not make your car expenses deductible. 1040a tax table However, you can deduct any additional costs you have for hauling tools or instruments (such as for renting a trailer you tow with your car). 1040a tax table Union members' trips from a union hall. 1040a tax table   If you get your work assignments at a union hall and then go to your place of work, the costs of getting from the union hall to your place of work are nondeductible commuting expenses. 1040a tax table Although you need the union to get your work assignments, you are employed where you work, not where the union hall is located. 1040a tax table Office in the home. 1040a tax table   If you have an office in your home that qualifies as a principal place of business, you can deduct your daily transportation costs between your home and another work location in the same trade or business. 1040a tax table (See chapter 28 for information on determining if your home office qualifies as a principal place of business. 1040a tax table ) Figure 26-B. 1040a tax table When Are Transportation Expenses Deductible? Most employees and self-employed persons can use this chart. 1040a tax table (Do not use this chart if your home is your principal place of business. 1040a tax table See Office in the home . 1040a tax table ) Please click here for the text description of the image. 1040a tax table Figure 26-B. 1040a tax table Local Transportation Examples of deductible transportation. 1040a tax table   The following examples show when you can deduct transportation expenses based on the location of your work and your home. 1040a tax table Example 1. 1040a tax table You regularly work in an office in the city where you live. 1040a tax table Your employer sends you to a 1-week training session at a different office in the same city. 1040a tax table You travel directly from your home to the training location and return each day. 1040a tax table You can deduct the cost of your daily round-trip transportation between your home and the training location. 1040a tax table Example 2. 1040a tax table Your principal place of business is in your home. 1040a tax table You can deduct the cost of round-trip transportation between your qualifying home office and your client's or customer's place of business. 1040a tax table Example 3. 1040a tax table You have no regular office, and you do not have an office in your home. 1040a tax table In this case, the location of your first business contact inside the metropolitan area is considered your office. 1040a tax table Transportation expenses between your home and this first contact are nondeductible commuting expenses. 1040a tax table Transportation expenses between your last business contact and your home are also nondeductible commuting expenses. 1040a tax table While you cannot deduct the costs of these first and last trips, you can deduct the costs of going from one client or customer to another. 1040a tax table With no regular or home office, the costs of travel between two or more business contacts in a metropolitan area are deductible while the costs of travel between the home to (and from) business contacts are not deductible. 1040a tax table Car Expenses If you use your car for business purposes, you may be able to deduct car expenses. 1040a tax table You generally can use one of the two following methods to figure your deductible expenses. 1040a tax table Standard mileage rate. 1040a tax table Actual car expenses. 1040a tax table If you use actual car expenses to figure your deduction for a car you lease, there are rules that affect the amount of your lease payments you can deduct. 1040a tax table See Leasing a car under Actual Car Expenses, later. 1040a tax table In this chapter, “car” includes a van, pickup, or panel truck. 1040a tax table Rural mail carriers. 1040a tax table   If you are a rural mail carrier, you may be able to treat the amount of qualified reimbursement you received as the amount of your allowable expense. 1040a tax table Because the qualified reimbursement is treated as paid under an accountable plan, your employer should not include the amount of reimbursement in your income. 1040a tax table   If your vehicle expenses are more than the amount of your reimbursement, you can deduct the unreimbursed expenses as an itemized deduction on Schedule A (Form 1040). 1040a tax table You must complete Form 2106 and attach it to your Form 1040. 1040a tax table   A “qualified reimbursement” is the reimbursement you receive that meets both of the following conditions. 1040a tax table It is given as an equipment maintenance allowance (EMA) to employees of the U. 1040a tax table S. 1040a tax table Postal Service. 1040a tax table It is at the rate contained in the 1991 collective bargaining agreement. 1040a tax table Any later agreement cannot increase the qualified reimbursement amount by more than the rate of inflation. 1040a tax table See your employer for information on your reimbursement. 1040a tax table If you are a rural mail carrier and received a qualified reimbursement, you cannot use the standard mileage rate. 1040a tax table Standard Mileage Rate You may be able to use the standard mileage rate to figure the deductible costs of operating your car for business purposes. 1040a tax table For 2013, the standard mileage rate for business use is 56½ cents per mile. 1040a tax table If you use the standard mileage rate for a year, you cannot deduct your actual car expenses for that year, but see Parking fees and tolls, later. 1040a tax table You generally can use the standard mileage rate whether or not you are reimbursed and whether or not any reimbursement is more or less than the amount figured using the standard mileage rate. 1040a tax table See Reimbursements under How To Report, later. 1040a tax table Choosing the standard mileage rate. 1040a tax table   If you want to use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. 1040a tax table Then in later years, you can choose to use either the standard mileage rate or actual expenses. 1040a tax table   If you want to use the standard mileage rate for a car you lease, you must use it for the entire lease period. 1040a tax table   You must make the choice to use the standard mileage rate by the due date (including extensions) of your return. 1040a tax table You cannot revoke the choice. 1040a tax table However, in a later year, you can switch from the standard mileage rate to the actual expenses method. 1040a tax table If you change to the actual expenses method in a later year, but before your car is fully depreciated, you have to estimate the remaining useful life of the car and use straight line depreciation. 1040a tax table Example. 1040a tax table Larry is an employee who occasionally uses his own car for business purposes. 1040a tax table He purchased the car in 2011, but he did not claim any unreimburse
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The 1040a Tax Table

1040a tax table Internal Revenue Bulletin:  2009-36  September 8, 2009  Rev. 1040a tax table Proc. 1040a tax table 2009-37 Table of Contents SECTION 1. 1040a tax table PURPOSE SECTION 2. 1040a tax table BACKGROUND SECTION 3. 1040a tax table SCOPE SECTION 4. 1040a tax table ELECTION PROCEDURES SECTION 5. 1040a tax table REQUIRED INFORMATION STATEMENT SECTION 6. 1040a tax table EFFECTIVE DATE SECTION 7. 1040a tax table TRANSITION RULE SECTION 8. 1040a tax table PAPERWORK REDUCTION ACT DRAFTING INFORMATION SECTION 1. 1040a tax table PURPOSE . 1040a tax table 01 This revenue procedure provides the exclusive procedures for taxpayers to make an election to defer recognizing discharge of indebtedness income (“COD income”) under § 108(i) of the Internal Revenue Code. 1040a tax table . 1040a tax table 02 This revenue procedure also requires taxpayers making the § 108(i) election to provide additional information on returns beginning with the taxable year following the taxable year for which the taxpayer makes the election. 1040a tax table This revenue procedure describes the time and manner of providing this additional information. 1040a tax table . 1040a tax table 03 The Internal Revenue Service and Treasury Department intend to issue additional guidance under § 108(i) that may include regulations addressing matters in this revenue procedure. 1040a tax table Taxpayers should be aware that these regulations may be retroactive. 1040a tax table See § 7805(b)(2). 1040a tax table This revenue procedure may be modified to provide procedures consistent with additional guidance. 1040a tax table SECTION 2. 1040a tax table BACKGROUND . 1040a tax table 01 Section 108(i), Generally. 1040a tax table Section 108(i) was added to the Code by § 1231 of the American Recovery and Reinvestment Tax Act of 2009, Pub. 1040a tax table L. 1040a tax table No. 1040a tax table 111-5, 123 Stat. 1040a tax table 338. 1040a tax table In general, § 108(i) provides that, at the election of a taxpayer, COD income realized in connection with a reacquisition after December 31, 2008, and before January 1, 2011, of an applicable debt instrument is includible in gross income ratably over a 5-taxable-year inclusion period, beginning with the taxpayer’s fourth or fifth taxable year following the taxable year of the reacquisition. 1040a tax table Generally, if a taxpayer makes a § 108(i) election and reacquires (or is treated as reacquiring) the applicable debt instrument generating the COD income for a new debt instrument with original issue discount (“OID”), then interest deductions for this OID also are deferred, as provided in § 108(i)(2). 1040a tax table The OID deferral rule, however, does not apply if the amount of OID is less than a de minimis amount, as determined under § 1273(a)(3) and § 1. 1040a tax table 1273-1(d) of the Income Tax Regulations. 1040a tax table The OID deferral rule in § 108(i)(2) applies at the entity level for a pass-through entity. 1040a tax table For example, a partnership (and therefore its partners) may not deduct currently the OID described in § 108(i)(2)(A)(i). 1040a tax table A taxpayer must take into account any item of income or deduction deferred under § 108(i), and not previously taken into account, in the taxable year in which certain events occur (such as the liquidation of the taxpayer and upon other events specified in administrative guidance). 1040a tax table See § 108(i)(5)(D). 1040a tax table The rule regarding acceleration of deferred COD income and OID deductions also applies in the case of certain dispositions by persons holding ownership interests in pass-through entities. 1040a tax table Section 108(i)(5)(D)(ii). 1040a tax table For purposes of § 108(i), regulated investment companies (as defined in § 851(a)) and real estate investment trusts (as defined in § 856(a)) are not pass-through entities. 1040a tax table . 1040a tax table 02 Applicable Debt Instrument. 1040a tax table Section 108(i)(3)(A) defines the term “applicable debt instrument” to mean any debt instrument issued by a C corporation or by any other person in connection with the conduct of a trade or business by that person. 1040a tax table The term “debt instrument” means any bond, debenture, note, certificate, or any other instrument or contractual arrangement constituting indebtedness within the meaning of § 1275(a)(1). 1040a tax table Section 108(i)(3)(B). 1040a tax table For purposes of § 108(i), in the case of an intercompany obligation (as defined in § 1. 1040a tax table 1502-13(g)(2)(ii)), an applicable debt instrument includes only an instrument for which COD income is realized upon the instrument’s deemed satisfaction under § 1. 1040a tax table 1502-13(g)(5). 1040a tax table . 1040a tax table 03 Reacquisition. 1040a tax table Section 108(i)(4)(A) defines the term “reacquisition” to mean, with respect to any applicable debt instrument, any acquisition of the debt instrument by the debtor that issued (or is otherwise the obligor under) the debt instrument, or a person related to the debtor under § 108(e)(4). 1040a tax table The term “acquisition” includes an acquisition of the debt instrument for cash or other property, the exchange of the debt instrument for another debt instrument (including an exchange resulting from a modification of the debt instrument), the exchange of the debt instrument for corporate stock or a partnership interest, the contribution of the debt instrument to capital, and the complete forgiveness of the indebtedness by the holder of the debt instrument. 1040a tax table See § 108(i)(4)(B). 1040a tax table The term “acquisition” also includes an indirect acquisition within the meaning of § 1. 1040a tax table 108-2(c) if a direct acquisition of the debt instrument would qualify for an election under § 108(i). 1040a tax table For example, if a corporation acquires debt of a partnership that the partnership issued in connection with its trade or business, and the partnership and corporation become related within six months of the corporation’s acquisition of the debt, the indirect acquisition is an acquisition for which an election under § 108(i) may be made. 1040a tax table . 1040a tax table 04 General Requirements for the Section 108(i) Election. 1040a tax table Section 108(i)(5)(B) provides, in general, that a taxpayer makes the § 108(i) election by including a statement that clearly identifies the applicable debt instrument with the return of tax imposed for the taxable year in which the reacquisition of the instrument occurs. 1040a tax table (For purposes of this revenue procedure, a return of tax or income tax return includes an information return, and a taxpayer includes a person that files an information return. 1040a tax table ) The statement must include the amount of income to which § 108(i)(1) applies and other information the Service may prescribe. 1040a tax table Once made, a § 108(i) election is irrevocable and, except as provided in section 7 of this revenue procedure, may not be modified. 1040a tax table . 1040a tax table 05 Section 108(i) Elections Made by Pass-through Entities. 1040a tax table In the case of COD income realized by a pass-through entity from the reacquisition of an applicable debt instrument, the pass-through entity makes the § 108(i) election. 1040a tax table Section 108(i)(5)(B)(iii). 1040a tax table . 1040a tax table 06 Additional Information on Subsequent Years’ Returns. 1040a tax table Section 108(i)(7) authorizes the Service to issue guidance necessary or appropriate for applying § 108(i), including requiring reporting the election and other information on returns of tax for subsequent taxable years. 1040a tax table . 1040a tax table 07 Exclusivity. 1040a tax table Section 108(i)(5)(C) provides that if a taxpayer elects to apply § 108(i) to an applicable debt instrument, § 108(a)(1)(A), (B), (C), and (D) do not apply to COD income deferred under § 108(i). 1040a tax table . 1040a tax table 08 Allocation of Deferred COD Income on Partnership Indebtedness. 1040a tax table Section 4. 1040a tax table 04(3) of this revenue procedure describes how a partnership may elect under § 108(i) to defer a portion of the COD income realized from the reacquisition of an applicable debt instrument. 1040a tax table If a partnership elects to defer all or any portion of COD income realized from the reacquisition of an applicable debt instrument, all of the COD income with respect to that debt instrument, without regard to § 108(i), is allocated to the partners in the partnership immediately before the reacquisition in the manner in which the income would be included in the distributive shares of these partners under § 704 and the regulations thereunder, including § 1. 1040a tax table 704-1(b)(2)(iii). 1040a tax table Each partner’s share of this COD income is the partner’s COD income amount (“COD income amount”). 1040a tax table The partner’s COD income amount that is deferred under § 108(i) is the partner’s deferred amount (“deferred amount”). 1040a tax table The partner’s COD income amount that is not deferred and is included in the partner’s distributive share of partnership income for the taxable year of the partnership in which the reacquisition occurs is the partner’s included amount (“included amount”). 1040a tax table . 1040a tax table 09 Partner’s Deferred § 752 Amount. 1040a tax table A decrease in a partner’s share of a partnership liability resulting from the reacquisition of an applicable debt instrument that is not treated as a current distribution of money to the partner under § 752 by reason of § 108(i)(6) is the partner’s deferred § 752 amount (“deferred § 752 amount”). 1040a tax table A partner’s deferred § 752 amount may not exceed the lesser of (i) the partner’s deferred amount or (ii) gain that the partner would recognize in the year of reacquisition under § 731 as a result of the reacquisition absent § 108(i)(6). 1040a tax table To determine the amount of gain the partner would recognize under clause (ii) of the preceding sentence, the amount of any deemed distribution of money under § 752(b) resulting from the decrease in the partner’s share of a reacquired applicable debt instrument that is treated as an advance or draw of money under § 1. 1040a tax table 731-1(a)(1)(ii) is determined as if no COD income resulting from the reacquisition of the applicable debt instrument is deferred under § 108(i). 1040a tax table See Rev. 1040a tax table Rul. 1040a tax table 92-97, 1992-2 C. 1040a tax table B. 1040a tax table 124, and Rev. 1040a tax table Rul. 1040a tax table 94-4, 1994-1 C. 1040a tax table B. 1040a tax table 195. 1040a tax table A partner’s deferred § 752 amount is treated as a distribution of money to the partner under § 752 at the same time, and to the extent remaining in the same amount, as the partner recognizes the COD income deferred under § 108(i). 1040a tax table . 1040a tax table 10 Allocation of Deferred COD Income on S Corporation Indebtedness. 1040a tax table For purposes of § 108(i), an S corporation’s COD income deferred under § 108(i) is shared pro rata only among those shareholders that are shareholders of the S corporation immediately before the reacquisition transaction. 1040a tax table . 1040a tax table 11 Deferred COD Income, Earnings and Profits, and Alternative Minimum Taxable Income. 1040a tax table (1) In general. 1040a tax table The Service and Treasury Department intend to issue regulations regarding the computation of a corporation’s earnings and profits with respect to COD income and OID deductions that are deferred under § 108(i). 1040a tax table These regulations generally will provide that deferred COD income increases earnings and profits in the taxable year that it is realized and not in the taxable year or years that the deferred COD income is includible in gross income. 1040a tax table OID deductions deferred under § 108(i) generally will decrease earnings and profits in the taxable year or years in which the deduction would be allowed without regard to § 108(i). 1040a tax table COD income and OID deductions that are deferred increase or decrease adjusted current earnings under § 56(g)(4) in the taxable year or years that the income or deduction is includible or deductible in determining taxable income. 1040a tax table See § 1. 1040a tax table 56(g)-1(c)(1). 1040a tax table (2) Exceptions for certain special status corporations. 1040a tax table The Service and Treasury Department intend to issue regulations providing that in the case of regulated investment companies and real estate investment trusts, COD income deferred under § 108(i) generally increases earnings and profits in the taxable year or years in which the deferred COD income is includible in gross income and not in the year that the deferred COD income is realized. 1040a tax table OID deductions deferred under § 108(i) generally decrease earnings and profits in the taxable year or years that the deferred OID deductions are deductible. 1040a tax table . 1040a tax table 12 Extension of Time to Make Election. 1040a tax table Under § 301. 1040a tax table 9100-1 of the Procedure and Administration Regulations, the Service may grant an extension of time to make a regulatory election. 1040a tax table An election is a regulatory election if the due date is prescribed by regulation or other published guidance of general applicability. 1040a tax table Section 301. 1040a tax table 9100-2(a) provides an automatic 12-month extension from the due date for making certain regulatory elections. 1040a tax table SECTION 3. 1040a tax table SCOPE This revenue procedure applies to taxpayers that realize COD income from a reacquisition after December 31, 2008, and before January 1, 2011, of an applicable debt instrument, as provided in § 108(i). 1040a tax table SECTION 4. 1040a tax table ELECTION PROCEDURES . 1040a tax table 01 In General. 1040a tax table (1) A taxpayer within the scope of this revenue procedure makes the § 108(i) election by— (a) Attaching a statement meeting the requirements of section 4. 1040a tax table 05 of this revenue procedure to the taxpayer’s timely filed (including extensions) original federal income tax return for the taxable year in which the reacquisition of the applicable debt instrument occurs, and (b) If applicable, satisfying the additional requirements of section 4. 1040a tax table 07, 4. 1040a tax table 08, 4. 1040a tax table 09, or 4. 1040a tax table 10 of this revenue procedure. 1040a tax table (2) The Service grants an automatic extension of 12 months from the due date prescribed in section 4. 1040a tax table 01(1)(a) of this revenue procedure for making the § 108(i) election. 1040a tax table The rules that apply to an automatic extension under § 301. 1040a tax table 9100-2(a) apply to this automatic extension. 1040a tax table . 1040a tax table 02 Section 108(i) Elections Made by Members of Consolidated Groups. 1040a tax table The common parent of a consolidated group makes the § 108(i) election on behalf of all members of the group. 1040a tax table See § 1. 1040a tax table 1502-77(a). 1040a tax table . 1040a tax table 03 Aggregation Rule. 1040a tax table A taxpayer within the scope of this revenue procedure may treat two or more applicable debt instruments that are part of the same issue and that are reacquired during the same taxable year as one applicable debt instrument for purposes of this revenue procedure. 1040a tax table A pass-through entity may not treat two or more applicable debt instruments as one applicable debt instrument under this section 4. 1040a tax table 03 if the owners and their ownership interests in the pass-through entity immediately prior to the reacquisition of each applicable debt instrument are not identical. 1040a tax table . 1040a tax table 04 Partial Elections. 1040a tax table (1) A taxpayer within the scope of this revenue procedure may make an election for any portion of COD income realized from the reacquisition of any applicable debt instrument. 1040a tax table Thus, for example, if a taxpayer realizes $100 of COD income from the reacquisition of an applicable debt instrument, the taxpayer may elect under § 108(i)(1) to defer only $40 of the $100 of COD income. 1040a tax table The taxpayer may exclude from income the portion of COD income that the taxpayer does not elect to defer under § 108(i) ($60 in this example) under § 108(a)(1)(A), (B), (C), or (D), if applicable. 1040a tax table (2) A taxpayer is not required to make an election for the same portion of COD income arising from each applicable debt instrument that it reacquires, but may make an election for different portions of COD income arising from different applicable debt instruments (whether or not part of the same issue). 1040a tax table Thus, for example, if a taxpayer realizes $100 of COD income from the reacquisition of an applicable debt instrument (Instrument A) and $100 of COD income from the reacquisition of a different applicable debt instrument (Instrument B), the taxpayer may elect to defer all or a portion of the COD income associated with Instrument A and none or a different portion of the COD income associated with Instrument B. 1040a tax table (3) A partnership that elects to defer less than all of the COD income realized from the reacquisition of an applicable debt instrument may determine, in any manner, the portion, if any, of a partner’s COD income amount that is the partner’s deferred amount and the portion, if any, of a partner’s COD income amount that is the partner’s included amount. 1040a tax table Thus, for example, one partner’s deferred amount may be zero while another partner’s deferred amount may equal that partner’s COD income amount (or any portion thereof). 1040a tax table A partner may exclude from income the partner’s included amount under § 108(a)(1)(A), (B), (C), or (D), if applicable. 1040a tax table The provisions of this section 4. 1040a tax table 04(3) apply for purposes of § 108(i) only and are not intended as an interpretation of or a change to existing law under § 704. 1040a tax table . 1040a tax table 05 Contents of Election Statement. 1040a tax table A statement meets the requirements of this section 4. 1040a tax table 05 if the statement— (1) Label. 1040a tax table States “Section 108(i) Election” across the top. 1040a tax table (2) Required information. 1040a tax table Provides, for each applicable debt instrument the reacquisition of which generates COD income that the taxpayer is electing to defer under § 108(i)— (a) The name and taxpayer identification numbers, if any, of the issuer or issuers of the applicable debt instrument; (b) A general description of the applicable debt instrument (including the issue and maturity dates) and, in the case of any person other than a C corporation, a general description of the person’s trade or business to which the applicable debt instrument is connected; (c) A general description of the reacquisition transaction or transactions generating the COD income (including the date(s) of the transaction(s)); (d) The total amount of COD income for the applicable debt instrument that results from the reacquisition (in the case of a partnership, the aggregate of the partners’ COD income amounts) and a general description of the manner in which this amount is calculated; (e) The amount of COD income for the applicable debt instrument that the taxpayer is electing to defer under § 108(i); (f) In the case of a partnership, a list of partners that have a deferred amount, their identifying information and each partner’s deferred amount; and in the case of an S corporation, a list of shareholders with COD income deferred under § 108(i), their identifying information and each shareholder’s share of the S corporation’s deferred COD income; and (g) In cases in which a new debt instrument is issued or deemed issued in exchange for the applicable debt instrument (including exchanges under § 108(e)(4), § 108(i)(2)(B), and § 1. 1040a tax table 1001-3), the issuer’s name, the issuer’s taxpayer identification number, if any, a general description of the new debt instrument and whether the new debt instrument has OID, and if the new debt instrument has OID, a schedule of the OID that the issuer expects to accrue each taxable year on the instrument and the amount of OID that the issuer expects to defer under § 108(i)(2) each taxable year. 1040a tax table . 1040a tax table 06 Supplemental information. 1040a tax table The statement described in section 4. 1040a tax table 05 of this revenue procedure may specify for each applicable debt instrument an amount greater than the amount identified in section 4. 1040a tax table 05(2)(e) of this revenue procedure that the taxpayer elects to defer under § 108(i) in the event the Service subsequently concludes that the taxpayer understated the amount of COD income described in section 4. 1040a tax table 05(2)(d) of this revenue procedure. 1040a tax table This additional amount of COD income the taxpayer elects to defer may be described as the entire additional COD income, or as a percentage of any additional COD income. 1040a tax table If the taxpayer is a partnership, the partnership must specify each partner’s share of the partnership’s additional COD income that would be deferred (the partner’s additional deferred amount), which the partnership may describe for each partner as the partner’s entire share of the partnership’s additional COD income or as a percentage of the partner’s share of the partnership’s additional COD income. 1040a tax table If the taxpayer is an S corporation, the S corporation must specify each shareholder’s share of the S corporation’s additional COD income that would be deferred, which the S corporation may describe for each shareholder as the shareholder’s entire share of the S corporation’s additional COD income or as a percentage of the shareholder’s share of the S corporation’s additional COD income. 1040a tax table In the case of partnerships and S corporations, the additional COD income and the portion of additional COD income that would be deferred are allocated or determined as provided in sections 2. 1040a tax table 08, 2. 1040a tax table 10 and, if applicable, 4. 1040a tax table 04(3) of this revenue procedure, respectively, as if the additional COD income was realized. 1040a tax table . 1040a tax table 07 Additional Requirements for Certain Partnerships Making a § 108(i) Election. 1040a tax table The rules of this section 4. 1040a tax table 07 apply to partnerships other than partnerships described in section 4. 1040a tax table 10 of this revenue procedure. 1040a tax table (1) Information filing on Schedule K-1 (Form 1065 and Form 1065-B). 1040a tax table For the taxable year in which the § 108(i) election is made, the partnership must report on the Schedule K-1 (Form 1065 or Form 1065-B), Partner’s Share of Income, Deductions, Credits, etc. 1040a tax table , in the manner specified in the instructions to the forms, for each partner § 108(i) information on an aggregate basis for all applicable debt instruments for which a § 108(i) election is made. 1040a tax table Partnerships reporting § 108(i) information on the 2008 Schedule K-1 (Form 1065 or Form 1065-B) must report for each partner on an aggregate basis for all applicable debt instruments for which a § 108(i) election is made: (a) The partner’s deferred amount that the partner must include in income in the current taxable year under § 108(i)(1) or § 108(i)(5)(D)(i) or (ii), in box 11 (“other income”) using code F for Schedule K-1 (Form 1065) or in box 9 (“other”) using code U for Schedule K-1 (Form 1065-B); (b) The partner’s share of the partnership’s OID deduction deferred under § 108(i)(2)(A)(i) that is allowable as a deduction in the current taxable year under § 108(i)(2)(A)(ii) or § 108(i)(5)(D)(i) or (ii), in box 13 (“other deductions”) using code W for Schedule K-1 (Form 1065) or in box 9 (“other”) using code U for Schedule K-1 (Form 1065-B); (c) The partner’s deferred amount that has not been included in income in the current or prior taxable years, in box 20 (“other information”) using code X for Schedule K-1 (Form 1065) or in box 9 (“other”) using code U for Schedule K-1 (Form 1065-B); (d) The partner’s share of the partnership’s OID deduction deferred under § 108(i)(2)(A)(i) that has not been deducted in the current or prior taxable years, in box 20 (“other information”) using code X for Schedule K-1 (Form 1065) or in box 9 (“other”) using code U for Schedule K-1 (Form 1065-B); (e) The partner’s deferred § 752 amount that is treated as a distribution of money to the partner under § 752 in the current taxable year, in box 20 (“other information”) using code X for Schedule K-1 (Form 1065) or in box 9 (“other”) using code U for Schedule K-1 (Form 1065-B); and (f) The partner’s deferred § 752 amount remaining as of the end of the current taxable year, in box 20 (“other information”) using code X for Schedule K-1 (Form 1065) or in box 9 (“other”) using code U for Schedule K-1 (Form 1065-B). 1040a tax table (2) Election information statement provided to partners. 1040a tax table The partnership must attach to the Schedule K-1 (Form 1065 or Form 1065-B) provided to each partner for the taxable year in which the § 108(i) election is made a statement satisfying the requirements of this section 4. 1040a tax table 07(2). 1040a tax table The partnership should not attach these statements to the Schedules K-1 that are filed with the Service, but must retain these statements, and each partner must retain that partner’s statement, in their respective books and records. 1040a tax table A statement meets the requirements of this section 4. 1040a tax table 07(2) if the statement— (a) Label. 1040a tax table States “Section 108(i) Election Information Statement for Partners” across the top. 1040a tax table (b) Required information. 1040a tax table Clearly identifies for each applicable debt instrument to which an election under § 108(i) applies— (i) The partner’s COD income amount, the partner’s deferred amount, and the partner’s included amount; (ii) The partner’s deferred amount that the partner must include in income in the current taxable year under § 108(i)(5)(D)(i) or (ii); (iii) The partner’s share of the partnership’s OID deduction deferred under § 108(i)(2)(A)(i) in the current taxable year; (iv) The partner’s share of the partnership’s OID deduction deferred under § 108(i)(2)(A)(i) that is allowable as a deduction in the current taxable year under § 108(i)(5)(D)(i) or (ii); (v) The partner’s share of each liability of the partnership described in section 4. 1040a tax table 05(2)(g) of this revenue procedure; (vi) The partner’s share of the decrease in the partnership liability that results from the reacquisition of the applicable debt instrument; (vii) The partner’s share of the decrease in the partnership liability that results from the reacquisition of the applicable debt instrument that is treated as a distribution of money to the partner under § 752 in the current taxable year; (viii) The partner’s deferred § 752 amount as described in section 2. 1040a tax table 09 of this revenue procedure; (ix) The partner’s additional deferred amount as described in section 4. 1040a tax table 06 of this revenue procedure; and (x) The date of the reacquisition transaction generating the COD income. 1040a tax table (c) If a partner fails to provide the written statement required by section 4. 1040a tax table 07(3) of this revenue procedure, the partnership must indicate that the amounts described in section 4. 1040a tax table 07(2)(b)(vii) and (viii) of this revenue procedure cannot be calculated because the partner did not provide the information necessary to report these amounts. 1040a tax table (3) Partner reporting requirements. 1040a tax table The partnership must make reasonable efforts prior to making a § 108(i) election to secure from each partner with a deferred amount for which it does not have the information necessary to compute the partner’s basis in its partnership interest (and its deferred § 752 amount as described in section 2. 1040a tax table 09 of this revenue procedure) a written statement signed under penalties of perjury that includes this information. 1040a tax table Each partner with a deferred amount must provide this written statement to the partnership within 30 days of the date of request by the partnership. 1040a tax table A partner’s failure to comply with this reporting requirement does not invalidate the partnership’s election under § 108(i) for an applicable debt instrument only if the partnership makes reasonable efforts before making the § 108(i) election to obtain the written statement from the partner and otherwise complies with the requirements of section 4 of this revenue procedure. 1040a tax table If a partner provides its written statement under this section 4. 1040a tax table 07(3) after the partnership has provided to the partner the Section 108(i) Election Information Statement for Partners, the partnership must provide to the partner a revised Section 108(i) Election Information Statement for Partners reporting the information required under section 4. 1040a tax table 07(2)(b)(vii) and (viii) of this revenue procedure and report the partner’s deferred § 752 amount on the partner’s Schedule K-1 (Form 1065 or Form 1065-B) in subsequent taxable years. 1040a tax table . 1040a tax table 08 Additional Requirements for an S Corporation Making a § 108(i) Election. 1040a tax table (1) Information filing on Schedule K-1 (Form 1120S). 1040a tax table For the taxable year in which the § 108(i) election is made, the S corporation must report on the Schedule K-1 (Form 1120S), Shareholder’s Share of Income, Deductions, Credits, etc. 1040a tax table , in the manner specified in the instructions to the forms, for each shareholder § 108(i) information on an aggregate basis for all applicable debt instruments for which a § 108(i) election is made. 1040a tax table S corporations reporting § 108(i) information on the 2008 Schedule K-1 (Form 1120S) must report for each shareholder, on an aggregate basis for all applicable debt instruments for which a § 108(i) election is made, the shareholder’s share of the S corporation’s: (a) COD income deferred under § 108(i) that the shareholder must include in income in the current taxable year under § 108(i)(1) or § 108(i)(5)(D)(i) or (ii), in box 10 (“other income”) using code E; (b) OID deduction deferred under § 108(i)(2)(A)(i) that is allowable as a deduction in the current taxable year under § 108(i)(2)(A)(ii), or § 108(i)(5)(D)(i) or (ii), in box 12 (“other deductions”) using code S; (c) COD income deferred under § 108(i) that has not been included in income in the current or prior taxable years, in box 17 (“other information”) using code T; and (d) OID deduction deferred under § 108(i)(2)(A)(i) that has not been deducted in the current or prior taxable years, in box 17 (“other information”) using code T. 1040a tax table (2) Election information statement provided to shareholders. 1040a tax table The S corporation must attach to the Schedule K-1 (Form 1120S) provided to each shareholder for the taxable year in which the § 108(i) election is made, a statement satisfying the requirements of this section 4. 1040a tax table 08(2). 1040a tax table The S corporation should not attach these statements to the Schedules K-1 that are filed with the Service, but must retain these statements, and each shareholder must retain that shareholder’s statement, in their respective books and records. 1040a tax table A statement meets the requirements of this section 4. 1040a tax table 08(2) if the statement— (a) Label. 1040a tax table States “Section 108(i) Election Information Statement for Shareholders” across the top. 1040a tax table (b) Required information. 1040a tax table Clearly identifies for each applicable debt instrument to which an election under § 108(i) applies, the shareholder’s share of the S corporation’s— (i) COD income that the S corporation elects to defer under § 108(i); (ii) COD income deferred under § 108(i) that the shareholder must include in income in the current taxable year under § 108(i)(5)(D)(i) or (ii); (iii) OID deduction deferred under § 108(i)(2)(A)(i) in the current taxable year; (iv) OID deduction deferred under § 108(i)(2)(A)(i) that is allowable as a deduction in the current taxable year under § 108(i)(5)(D)(i) or (ii); and (v) Additional COD income that would be deferred as described in section 4. 1040a tax table 06 of this revenue procedure. 1040a tax table . 1040a tax table 09 Section 108(i) Elections Made on Behalf of Certain Foreign Corporations. 1040a tax table The controlling domestic shareholder(s) (or common parent of the controlling domestic shareholder(s), if applicable) of a controlled foreign corporation or a noncontrolled § 902 corporation not otherwise required to file a return of tax may make the § 108(i) election on behalf of the foreign corporation by satisfying the requirements of § 1. 1040a tax table 964-1(c)(3). 1040a tax table Each controlling domestic shareholder must attach a statement identifying the foreign corporation and satisfying the requirements of section 4. 1040a tax table 05 of this revenue procedure and, if applicable, section 4. 1040a tax table 06 of this revenue procedure, to its federal income tax return for the taxable year ending within or with the taxable year of the foreign corporation for which the § 108(i) election is made. 1040a tax table . 1040a tax table 10 Section 108(i) Elections Made By Certain Foreign Partnerships. 1040a tax table The rules of this section 4. 1040a tax table 10 apply to a foreign partnership making a § 108(i) election that is not otherwise required to file a federal partnership return (“nonfiling foreign partnership”). 1040a tax table See § 1. 1040a tax table 6031(a)-1(b). 1040a tax table (1) A nonfiling foreign partnership making the election must attach a statement satisfying the requirements of section 4. 1040a tax table 05 of this revenue procedure and, if applicable, section 4. 1040a tax table 06 of this revenue procedure, to a partnership return satisfying the requirements of § 1. 1040a tax table 6031(a)-1(b)(5) it files with the Service. 1040a tax table In addition, a nonfiling foreign partnership must include in the information required in section 4. 1040a tax table 05(2)(d) and (e) of this revenue procedure the aggregate amounts for all partners as well as the aggregate amounts for all U. 1040a tax table S. 1040a tax table persons (as defined in § 7701(a)(30)) and controlled foreign corporation(s) that are partners with deferred amounts in the nonfiling foreign partnership (“affected partners”). 1040a tax table (2) The nonfiling foreign partnership must make the election, in accordance with § 1. 1040a tax table 6031(a)-1(b)(5), by the date provided in section 4. 1040a tax table 01(1)(a) of this revenue procedure, as if it had a filing obligation for the taxable year in which the reacquisition of the applicable debt instrument occurs. 1040a tax table (3) For each affected partner, the partnership must file with the Service a Schedule K-1 (Form 1065) and report on the Schedule K-1 (Form 1065) for the affected partner as provided in section 4. 1040a tax table 07(1) of this revenue procedure. 1040a tax table Except for this § 108(i) information, the partnership need not complete Part III of the Schedule K-1 (Form 1065). 1040a tax table The partnership must provide a copy of the respective Schedule K-1 (Form 1065) to each affected partner and must also attach to the Schedule K-1 (Form 1065) provided to each affected partner a statement satisfying the requirements of section 4. 1040a tax table 07(2) of this revenue procedure by the date provided in section 4. 1040a tax table 01(1)(a) of this revenue procedure. 1040a tax table The partnership should not attach any statement described in section 4. 1040a tax table 07(2) of this revenue procedure to the Schedules K-1 that are filed with the Service. 1040a tax table However, the partnership must retain the statements provided to the affected partners, and each affected partner must retain that partner’s statement, in their respective books and records. 1040a tax table (4) The partnership and each affected partner must satisfy the requirements of section 4. 1040a tax table 07(3) of this revenue procedure. 1040a tax table . 1040a tax table 11 Protective § 108(i) Election. 1040a tax table (1) In general. 1040a tax table A taxpayer may make a protective election under § 108(i) for an applicable debt instrument if the taxpayer concludes that a particular transaction does not result in the realization of COD income, reports the transaction on its federal income tax return in a manner consistent with the taxpayer’s conclusion, and would be within the scope of this revenue procedure if the taxpayer’s conclusion were incorrect. 1040a tax table If the Service at any time determines the taxpayer’s conclusion that the particular transaction does not result in the realization of COD income is incorrect, the taxpayer’s protective election is treated as a valid, irrevocable election under § 108(i). 1040a tax table Thus, if a taxpayer makes a protective election, the Service subsequently may require the taxpayer to report COD income deferred pursuant to the valid and irrevocable protective election even if the statute of limitations has expired for the year in which the COD income was realized and the protective election was made. 1040a tax table A taxpayer makes a protective election by attaching a statement satisfying the requirements of this section 4. 1040a tax table 11(1) to the taxpayer’s original federal income tax return within the period described in section 4. 1040a tax table 01(1)(a) of this revenue procedure. 1040a tax table The taxpayer also must attach the election to its federal income tax return in each of the 8 or 9 taxable years, as applicable, following the taxable year of the election. 1040a tax table A statement meets the requirements of this section 4. 1040a tax table 11(1) if the statement— (a) States “Section 108(i) Protective Election” across the top; (b) Provides the information required under section 4. 1040a tax table 05(2)(a), (b), and (c) of this revenue procedure; (c) Provides that the amounts described in sections 4. 1040a tax table 05(2)(d) and (e) of this revenue procedure are zero; and (d) Provides the information described in section 4. 1040a tax table 06 of this revenue procedure. 1040a tax table (2) Statements provided to shareholders and partners. 1040a tax table (a) For each applicable debt instrument, a partnership or S corporation that makes a protective election must attach to the Schedule K-1 (Form 1065, Form 1065-B, or Form 1120S) it provides each of its partners or shareholders, as the case may be, for the taxable year in which the protective election is made a statement containing the information described in section 4. 1040a tax table 11(1)(b) of this revenue procedure (an S corporation need not provide its shareholders with the date(s) of the transaction(s) that would constitute the reacquisition transaction or transactions) and the partner’s or shareholder’s share of the additional COD income that would be deferred as described in section 4. 1040a tax table 11(1)(d) of this revenue procedure. 1040a tax table (b) The partnership or S corporation should not attach the statements described in this section 4. 1040a tax table 11(2) to the Schedules K-1 that are filed with the Service but must retain these statements, and each partner and shareholder must retain that partner’s or shareholder’s statement, in their respective books and records. 1040a tax table . 1040a tax table 12 Election-Year Reporting by Tiered Pass-Through Entities. 1040a tax table (1) A partnership required to file a U. 1040a tax table S. 1040a tax table partnership return other than under § 1. 1040a tax table 6031(a)-1(b)(5), or an S corporation, that receives a Schedule K-1 (Form 1065 or Form 1065-B) reflecting its share of any items listed in section 4. 1040a tax table 07(1) of this revenue procedure, must report on the Schedules K-1 (Form 1065, Form 1065-B, or Form 1120S) to its partners or shareholders, as the case may be, each partner’s or shareholder’s share of those items (an S corporation only reports to its shareholders the items described in section 4. 1040a tax table 07(1)(a) through (d) of this revenue procedure). 1040a tax table (2) If a partnership described in section 4. 1040a tax table 12(1) of this revenue procedure receives a statement described in sections 4. 1040a tax table 07(2) or 4. 1040a tax table 10(3) of this revenue procedure or this section 4. 1040a tax table 12(2), it must provide each of its partners a statement containing the partner’s share of each of the items listed on each statement received by the partnership, including the information described in section 4. 1040a tax table 07(2)(b)(x) of this revenue procedure. 1040a tax table If an S corporation receives a statement described in sections 4. 1040a tax table 07(2) or 4. 1040a tax table 10(3) of this revenue procedure or this section 4. 1040a tax table 12(2), it must provide each of its shareholders a statement containing the shareholder’s share of each of the items listed on each statement received by the S corporation that are described in section 4. 1040a tax table 07(2)(b)(i), (ii), (iii), (iv) and (ix) of this revenue procedure. 1040a tax table The partnership or S corporation must attach this statement or statements to the Schedule K-1 (Form 1065, Form 1065-B, or Form 1120S) that it provides to each of its partners or shareholders, as the case may be, for the taxable year of the partnership or S corporation. 1040a tax table The partnership or S corporation should not attach these statements to the Schedules K-1 that are filed with the Service but must retain these statements, and each partner and shareholder must retain that partner’s or shareholder’s statement, in their respective books and records. 1040a tax table (3) A partnership that receives a statement described in this section 4 identifying its COD income amount with respect to an applicable debt instrument must allocate its COD income amount, without regard to § 108(i), to the partners in the partnership immediately before the reacquisition transaction in the manner in which the income would be included in the distributive shares of these partners under § 704 and the regulations thereunder, including § 1. 1040a tax table 704-1(b)(2)(iii). 1040a tax table The partnership may determine in any manner the portion, if any, of a partner’s COD income amount that is the partner’s deferred amount and the portion, if any, of a partner’s COD income amount that is the partner’s included amount. 1040a tax table No partner’s deferred amount with respect to an applicable debt instrument may exceed its COD income amount with respect to the applicable debt instrument, and the aggregate of deferred amounts of its partners with respect to an applicable debt instrument must equal the partnership’s deferred amount with respect to the applicable debt instrument. 1040a tax table The partnership allocates amounts described in section 4. 1040a tax table 06 of this revenue procedure under this section 4. 1040a tax table 12(3) as if the additional COD income was realized. 1040a tax table (4) The deferred § 752 amount for partners in a partnership making a § 108(i) election is calculated only for the partnership’s direct partners. 1040a tax table No further adjustment to the deferred § 752 amount is made to reflect the basis or other attributes of partners that are indirect partners in the partnership. 1040a tax table (5) If an S corporation receives a statement described in this section 4 identifying its COD income amount, deferred amount, included amount or additional COD income that would be deferred with respect to an applicable debt instrument, these amounts are shared pro rata only among those shareholders that are shareholders in the S corporation immediately before the reacquisition transaction. 1040a tax table (6) This paragraph 4. 1040a tax table 12(6) provides the rules for Category 1 and Category 2 filers of Form 8865, Return of U. 1040a tax table S. 1040a tax table Persons With Respect to Certain Foreign Partnerships, as defined in the instructions for Form 8865, if the foreign partnership, for which the Category 1 or Category 2 filer has a filing requirement, receives a Schedule K-1 (Form 1065 or Form 1065-B) reflecting the partnership’s share of any items listed in section 4. 1040a tax table 07(1) of this revenue procedure, or a statement described in sections 4. 1040a tax table 07(2) or 4. 1040a tax table 10(3) of this revenue procedure (because the foreign partnership owns an interest directly or indirectly in another partnership in which an election was made under § 108(i) with respect to that foreign partnership’s distributive share from the other entity). 1040a tax table (a) For each partner for whom the Category 1 filer is required to complete a Schedule K-1 (Form 8865) (which includes the Category 1 filer itself), the Category 1 filer must: (i) Include the information described in section 4. 1040a tax table 07(1) of this revenue procedure in the Schedule K-1 (Form 8865) that the Category 1 filer files with the Service and completes for the partner; (ii) Produce a statement containing the partner’s share of the items listed on each statement received by the partnership; and (iii) Attach the statement described in section 4. 1040a tax table 12(6)(a)(ii) of this revenue procedure to each Schedule K-1 (Form 8865) that it is required to provide to a partner of the foreign partnership. 1040a tax table (b) A Category 2 filer must include its share of the information described in section 4. 1040a tax table 07(1) on the Schedule K-1 (Form 8865) that it is required to complete. 1040a tax table Category 2 filers also must complete a statement containing their share of the items listed on each statement received by the partnership. 1040a tax table (c) The Category 1 and Category 2 filers should not attach the statements described in sections 4. 1040a tax table 12(6)(a)(ii) and 4. 1040a tax table 12(6)(b) of this revenue procedure, respectively, to the Schedules K-1 that are filed with the Service. 1040a tax table However, Category 1 filers must retain the statements they complete and each partner must retain its own statement, in their respective books and records. 1040a tax table (7) If as a result of § 108(i)(5)(D)(ii), a partner of a partnership described in section 4. 1040a tax table 12(1) of this revenue procedure or a shareholder of an S corporation described in section 4. 1040a tax table 12(1) of this revenue procedure must recognize items deferred under § 108(i), the partnership or S corporation must report these items on the Schedule K-1 (Form 1065, Form 1065-B, or Form 1120S) and statements provided to the partner or shareholder pursuant to section 4. 1040a tax table 12(1) and (2) of this revenue procedure. 1040a tax table Similar rules apply to Category 1 and Category 2 filers (Form 8865) described in section 4. 1040a tax table 12(6) of this revenue procedure. 1040a tax table (8) The provisions of section 4. 1040a tax table 12(2), (3), (5) and (6) of this revenue procedure also apply to a statement received that is described in section 4. 1040a tax table 11(2) of this revenue procedure, except that the information that must be provided are those items described in section 4. 1040a tax table 11(1)(b) of this revenue procedure (an S corporation need not provide its shareholders with the date(s) of the transaction(s) that would constitute the reacquisition transaction or transactions) and the share of the partner or shareholder in the amounts described in section 4. 1040a tax table 11(1)(d) of this revenue procedure. 1040a tax table SECTION 5. 1040a tax table REQUIRED INFORMATION STATEMENT . 1040a tax table 01 Annual Information Statements. 1040a tax table Pursuant to § 108(i)(7)(B), a taxpayer that makes an election under § 108(i) (except for a protective election under section 4. 1040a tax table 11(1) of this revenue procedure) must attach a statement meeting the requirements of section 5. 1040a tax table 02 of this revenue procedure to its federal income tax return for each taxable year beginning with the taxable year following the taxable year for which the taxpayer makes the election and ending with the first taxable year in which all items deferred under § 108(i) have been recognized. 1040a tax table . 1040a tax table 02 Contents of Statement. 1040a tax table A statement meets the requirements of this section 5. 1040a tax table 02 if the statement— (1) Label. 1040a tax table States “Section 108(i) Information Statement” across the top; (2) Required information. 1040a tax table Clearly identifies for each applicable debt instrument to which an election under § 108(i) applies— (a) COD income deferred under § 108(i) that is included in income in the current taxable year under § 108(i)(1); (b) COD income deferred under § 108(i) that is included in income in the current taxable year under § 108(i)(5)(D), including a description and date of the acceleration event described in § 108(i)(5)(D); (c) COD income deferred under § 108(i) that has not been included in income in the current or prior taxable years (in the case of a partnership, the aggregate of the partners’ deferred amounts that have not been included in income in the current or prior taxable years, and in the case of an S corporation, the S corporation’s COD income deferred under § 108(i) that has not been included in income in the current or prior taxable years); (d) OID deduction deferred under § 108(i)(2)(A)(i) that is allowable as a deduction in the current taxable year under § 108(i)(2)(A)(ii); (e) OID deduction deferred under § 108(i)(2)(A)(i) that is allowable as a deduction in the current taxable year under § 108(i)(5)(D); and (f) OID deduction deferred under § 108(i)(2)(A)(i) that has not been deducted in the current or prior taxable years. 1040a tax table (3) Election attached. 1040a tax table Includes a copy of the election statement described in section 4. 1040a tax table 05 of this revenue procedure. 1040a tax table . 1040a tax table 03 Additional Annual Reporting Requirements for Certain Partnerships. 1040a tax table The rules of this section 5. 1040a tax table 03 apply to partnerships other than partnerships described in section 5. 1040a tax table 05 of this revenue procedure. 1040a tax table (1) In general. 1040a tax table A partnership that makes an election under § 108(i) (except for a protective election under section 4. 1040a tax table 11(1) of this revenue procedure) must attach to its federal income tax returns the statements required under section 5. 1040a tax table 01 of this revenue procedure. 1040a tax table In addition, for each taxable year in which a statement is required under section 5. 1040a tax table 01 of this revenue procedure, the partnership must report on the Schedule K-1 (Form 1065 or Form 1065-B) for each partner § 108(i) information in the manner described in section 4. 1040a tax table 07(1) of this revenue procedure. 1040a tax table (2) Annual information statements provided to partners. 1040a tax table The partnership must attach to the Schedule K-1 (Form 1065) provided to each partner for each taxable year in which a statement is required under section 5. 1040a tax table 01 of this revenue procedure, a statement meeting the requirements of this section 5. 1040a tax table 03(2). 1040a tax table The partnership should not attach these statements to the Schedules K-1 that are filed with the Service, but must retain these statements, and each partner must retain that partner’s statement, in their respective books and records. 1040a tax table A statement meets the requirements of this section 5. 1040a tax table 03(2) if the statement— (a) Label. 1040a tax table States “Section 108(i) Annual Information Statement for Partners” across the top of the statement. 1040a tax table (b) Required information. 1040a tax table Clearly identifies for each applicable debt instrument to which a § 108(i) election applies— (i) The partner’s deferred amount that has not been included in income as of the end of the prior taxable year; (ii) The partner’s deferred amount that the partner must include in income in the current taxable year under § 108(i)(1); (iii) The partner’s deferred amount that the partner must include in income in the current taxable year under § 108(i)(5)(D)(i) or (ii); (iv) The partner’s deferred amount that has not been included in income in the current or prior taxable years; (v) The partner’s share of the partnership’s OID deduction deferred under § 108(i)(2)(A)(i) in the current taxable year; (vi) The partner’s share of the partnership’s OID deduction deferred under § 108(i)(2)(A)(i) that is allowable as a deduction in the current taxable year under § 108(i)(2)(A)(ii); (vii) The partner’s share of the partnership’s OID deduction deferred under § 108(i)(2)(A)(i) that is allowable as a deduction in the current taxable year under § 108(i)(5)(D)(i) or (ii); (viii) The partner’s share of the partnership’s OID deduction deferred under § 108(i)(2)(A)(i) that has not been deducted in the current or prior taxable years; and (ix) The partner’s deferred § 752 amount that is treated as a distribution of money to the partner under § 752 in the current taxable year and any remaining deferred § 752 amount. 1040a tax table If a partner fails to provide the written statement required by section 4. 1040a tax table 07(3) of this revenue procedure, the partnership must indicate that the amounts described in this section 5. 1040a tax table 03(2)(b)(ix) cannot be calculated because the partner did not provide the information necessary to report these amounts. 1040a tax table . 1040a tax table 04 Additional Annual Reporting Requirements for an S Corporation. 1040a tax table (1) In general. 1040a tax table An S corporation that makes an election under § 108(i) (except for a protective election under section 4. 1040a tax table 11(1) of this revenue procedure) must attach to its federal income tax returns the statements required under section 5. 1040a tax table 01 of this revenue procedure. 1040a tax table In addition, for each taxable year in which a statement is required under section 5. 1040a tax table 01 of this revenue procedure, the S corporation must report on the Schedule K-1 (Form 1120S) for each shareholder § 108(i) information in the manner described in section 4. 1040a tax table 08(1) of this revenue procedure. 1040a tax table (2) Annual information statements provided to shareholders. 1040a tax table The S corporation must attach to the Schedule K-1 (Form 1120S) provided to each shareholder for each taxable year in which a statement is required under section 5. 1040a tax table 01 of this revenue procedure a statement meeting the requirements of this section 5. 1040a tax table 04(2). 1040a tax table The S corporation should not attach these statements to the Schedules K-1 that are filed with the Service, but must retain these statements, and each shareholder must retain that shareholder’s statement, in their respective books and records. 1040a tax table A statement meets the requirements of this section 5. 1040a tax table 04(2) if the statement— (a) Label. 1040a tax table States “Section 108(i) Annual Information Statement for Shareholders” across the top; (b) Required information. 1040a tax table Clearly identifies for each applicable debt instrument to which an election under § 108(i) applies, the shareholder’s share of the S corporation’s— (i) COD income deferred under § 108(i) that has not been included in income as of the end of the prior taxable year; (ii) COD income deferred under § 108(i) that the shareholder must include in income in the current taxable year under § 108(i)(1); (iii) COD income deferred under § 108(i) that the shareholder must include in income in the current taxable year under § 108(i)(5)(D)(i) or (ii); (iv) COD income deferred under § 108(i) that has not been included in income in the current or prior taxable years; (v) OID deduction deferred under § 108(i)(2)(A)(i) in the current taxable year; (vi) OID deduction deferred under § 108(i)(2)(A)(i) that is allowable as a deduction in the current taxable year under § 108(i)(2)(A)(ii); (vii) OID deduction deferred under § 108(i)(2)(A)(i) that is allowable as a deduction in the current taxable year under § 108(i)(5)(D)(i) or (ii); and (viii) OID deduction deferred under § 108(i)(2)(A)(i) that has not been deducted in the current or prior taxable years. 1040a tax table . 1040a tax table 05 Additional Annual Reporting Requirements for Certain Foreign Partnerships. 1040a tax table (1) The rules of this section 5. 1040a tax table 05 apply to nonfiling foreign partnerships. 1040a tax table (2) A nonfiling foreign partnership that makes an election under § 108(i) (except for a protective election under section 4. 1040a tax table 11(1) of this revenue procedure) must file federal income tax returns with the Service containing the information under § 1. 1040a tax table 6031(a)-1(b)(5) for each taxable year in which a statement is required by section 5. 1040a tax table 01 of this revenue procedure. 1040a tax table (3) The nonfiling foreign partnership must attach to its federal income tax returns the statements required under section 5. 1040a tax table 01 of this revenue procedure, but only for that portion of the COD income allocated to affected partners. 1040a tax table (4) For each taxable year in which a statement is required under section 5. 1040a tax table 01 of this revenue procedure, the nonfiling foreign partnership must provide each affected partner a Schedule K-1 (Form 1065) reporting § 108(i) information in the manner described in section 4. 1040a tax table 07(1) of this revenue procedure. 1040a tax table Except for this § 108(i) information, the partnership need not complete Part III of the Schedule K-1 (Form 1065). 1040a tax table The partnership must provide each affected partner with a copy of the Schedule K-1 (Form 1065) by the date provided in § 1. 1040a tax table 6031(b)-1T(b). 1040a tax table The partnership must attach the Schedules K-1 (Form 1065) to the federal income tax returns filed with the Service pursuant to section 5. 1040a tax table 05(2) of this revenue procedure. 1040a tax table (5) For each taxable year for which a statement is required under section 5. 1040a tax table 01 of this revenue procedure, the nonfiling foreign partnership must attach to each affected partner’s Schedule K-1 (Form 1065) a statement meeting the requirements of section 5. 1040a tax table 03(2) of this revenue procedure. 1040a tax table The partnership should not attach these statements to the Schedules K-1 that are filed with the Service, but must retain the statements, and each partner must retain that partner’s statement, in their respective books and records. 1040a tax table . 1040a tax table 06 Information Statements Made on Behalf of Certain Foreign Corporations. 1040a tax table Each controlling domestic shareholder must attach a statement identifying the foreign corporation and meeting the requirements of section 5. 1040a tax table 02 of this revenue procedure to the shareholder’s federal income tax return for each taxable year for which a statement is required under section 5. 1040a tax table 01 of this revenue procedure. 1040a tax table . 1040a tax table 07 Additional Annual Reporting Requirements for Tiered Pass-Through Entities. 1040a tax table (1) A partnership required to file a U. 1040a tax table S. 1040a tax table partnership return other than under § 1. 1040a tax table 6031(a)-1(b)(5), or an S corporation, that receives a Schedule K-1 (Form 1065 or Form 1065-B) described in the second sentence of section 5. 1040a tax table 03(1) of this revenue procedure reflecting its share of any § 108(i) information must report on the Schedules K-1 (Form 1065, Form 1065-B, or Form 1120S) to its partners or shareholders, as the case may be, each partner’s or shareholder’s share of those items (an S corporation only reports to its shareholders the items described in section 4. 1040a tax table 07(1)(a) through (d) of this revenue procedure). 1040a tax table (2) If a partnership described in section 5. 1040a tax table 07(1) of this revenue procedure receives a statement described in sections 5. 1040a tax table 03(2) or 5. 1040a tax table 05(5) of this revenue procedure or this section 5. 1040a tax table 07(2), it must provide each of its partners a statement containing the partner’s share of each of the items listed on each statement received by the partnership. 1040a tax table If an S corporation receives a statement described in sections 5. 1040a tax table 03(2) or 5. 1040a tax table 05(5) of this revenue procedure or this section 5. 1040a tax table 07(2), it must provide each of its shareholders a statement containing the shareholder’s share of each of the items listed on each statement received by the S corporation that are described in section 5. 1040a tax table 03(2)(b)(i) through (viii) of this revenue procedure. 1040a tax table The partnership or S corporation must attach the statement or statements to the Schedule K-1 (Form 1065 or Form 1065-B) or Schedule K-1 (Form 1120S) that is provided to each of its partners or shareholders, as the case may be, for the taxable year of the partnership or S corporation. 1040a tax table The partnership or S corporation should not attach these statements to the Schedules K-1 that are filed with the Service, but must retain these statements, and each partner and shareholder must retain that partner’s or shareholder’s statement, in their respective books and records. 1040a tax table (3) This paragraph 5. 1040a tax table 07(3) provides the rules for persons described in section 4. 1040a tax table 12(6) of this revenue procedure if the foreign partnership, for which the Category 1 or 2 filer has a filing requirement, receives a Schedule K-1 (Form 1065 or Form 1065-B) reflecting the partnership’s share of any items described in the second sentence of section 5. 1040a tax table 03(1) of this revenue procedure, or a statement described in sections 5. 1040a tax table 03(2) or 5. 1040a tax table 05(5) of this revenue procedure (because the foreign partnership owns an interest directly or indirectly in another partnership in which an election was made under § 108(i) with respect to that foreign partnership’s distributive share from the other entity). 1040a tax table (a) For each partner for whom the Category 1 filer is required to complete a Schedule K-1 (Form 8865) (which includes the Category 1 filer itself), the Category 1 filer must: (i) Include the information described in section 4. 1040a tax table 07(1) of this revenue procedure in the Schedule K-1 (Form 8865) that the Category 1 filer files with the Service and completes for the partner; (ii) Produce a statement containing the partner’s share of the items listed on each statement received by the partnership; and (iii) Attach the statement described in section 5. 1040a tax table 07(3)(a)(ii) of this revenue procedure to each Schedule K-1 (Form 8865) that it is required to provide to a partner of the foreign partnership. 1040a tax table (b) A Category 2 filer must include its share of the information described in section 4. 1040a tax table 07(1) on the Schedule K-1 (Form 8865) that it is required to complete. 1040a tax table Category 2 filers also must complete a statement containing their share of the items listed on each statement received by the partnership. 1040a tax table (c) The Category 1 and Category 2 filers should not attach the statements described in sections 5. 1040a tax table 07(3)(a)(ii) and 5. 1040a tax table 07(3)(b) of this revenue procedure, respectively, to the Schedules K-1 that are filed with the Service. 1040a tax table However, Category 1 filers must retain the statements they complete and each partner must retain its own statement, in their respective books and records. 1040a tax table (4) If as a result of § 108(i)(5)(D)(ii), a partner of a partnership described in section 5. 1040a tax table 07(1) of this revenue procedure or a shareholder of an S corporation described in section 5. 1040a tax table 07(1) of this revenue procedure must recognize items deferred under § 108(i), the partnership or S corporation must report these items on the Schedule K-1 (Form 1065, Form 1065-B, or Form 1120S) and statements provided to the partner or shareholder pursuant to section 5. 1040a tax table 07(1) and (2) of this revenue procedure. 1040a tax table Similar rules apply to Category 1 and Category 2 filers (Form 8865) described in section 4. 1040a tax table 12(6) of this revenue procedure. 1040a tax table SECTION 6. 1040a tax table EFFECTIVE DATE This revenue procedure is effective for reacquisitions of applicable debt instruments in taxable years ending after December 31, 2008. 1040a tax table SECTION 7. 1040a tax table TRANSITION RULE . 1040a tax table 01 Noncomplying Election. 1040a tax table Except as otherwise provided in this section 7. 1040a tax table 01, the Service will treat a § 108(i) election as effective if a taxpayer files an election with the taxpayer’s federal income tax return filed on or before September 16, 2009, using any reasonable procedure to make the election. 1040a tax table However, an election that does not comply with section 4 of this revenue procedure will not be effective unless the taxpayer on or before November 16, 2009, files an amended return for the taxable year of the election and complies with the requirements of section 4 of this revenue procedure. 1040a tax table . 1040a tax table 02 Modification of Election. 1040a tax table A taxpayer that files a § 108(i) election on or before September 16, 2009, may modify that election by filing an amended return on or before November 16, 2009 (for example, to modify the amount of COD income the taxpayer elects to defer). 1040a tax table To be effective, a modification of an election described in the preceding sentence must satisfy the requirements for an election described in section 4 of this revenue procedure. 1040a tax table . 1040a tax table 03 Notations. 1040a tax table A taxpayer that files the amended return on paper must write “Section 108(i) Election” on the top of the first page. 1040a tax table A taxpayer that files the amended return electronically should indicate “Section 108(i) Election” on the return. 1040a tax table See Publication 4163, Modernized e-File (MeF) Information for Authorized IRS e-file Providers for Business Returns Tax Year 2008 for more details. 1040a tax table SECTION 8. 1040a tax table PAPERWORK REDUCTION ACT The collection of information contained in this revenue procedure has been reviewed and approved by the Office of Management and Budget in accordance with the Paperwork Reduction Act (44 U. 1040a tax table S. 1040a tax table C. 1040a tax table 3507) under control number 1545-2147. 1040a tax table An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. 1040a tax table The collection of information in this revenue procedure is in sections 4, 5 and 7. 1040a tax table This information is required to determine the amount of income and deductions a taxpayer elects to defer and to track those amounts until the taxpayer has reported all deferred income and deductions on the taxpayer’s tax return. 1040a tax table This information will be used during examination to verify that a taxpayer has correctly deferred income and deductions. 1040a tax table The collection of information is required to obtain a benefit. 1040a tax table The likely respondents are C corporations, shareholders of S corporations, partners of partnerships, and other individuals engaged in a trade or business, that reacquire applicable debt instruments in 2009 or 2010. 1040a tax table The estimated total annual reporting burden is 300,000 hours. 1040a tax table The estimated annual burden per respondent varies from 1 to 8 hours, depending on individual circumstances, with an estimated average of 6 hours. 1040a tax table The estimated number of respondents is 50,000. 1040a tax table Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. 1040a tax table Generally, tax returns and return information are confidential, as required by § 6103. 1040a tax table DRAFTING INFORMATION The principal authors of this revenue procedure are Megan A. 1040a tax table Stoner of the Office of Associate Chief Counsel (Passthroughs & Special Industries) and Craig Wojay of the Office of Associate Chief Counsel (Income Tax & Accounting). 1040a tax table For further information regarding this revenue procedure, contact Megan A. 1040a tax table Stoner at (202) 622-3070 for questions involving partnerships and S corporations, William E. 1040a tax table Blanchard at (202) 622-3950 for questions involving OID, Ronald M. 1040a tax table Gootzeit at (202) 622-3860 for questions involving foreign entities, Robert Rhyne at (202) 622-7790 for questions involving earnings and profits and consolidated groups, and Craig Wojay at (202) 622-4920 for questions on § 108(i) generally (not toll-free calls). 1040a tax table Prev  Up  Next   Home   More Internal Revenue Bulletins