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1040ez 2009

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1040ez 2009

1040ez 2009 Index Symbols 1231 property sale, Sale of property interest. 1040ez 2009 401(k) plans, Elective Deferrals Excess contributions, Excess Contributions 403(b) plans, Elective Deferrals Limit for, Limit for tax-sheltered annuities. 1040ez 2009 457 plans, Elective Deferrals Limit for deferrals under, Limit for deferrals under section 457 plans. 1040ez 2009 501(c)(18)(D) plans, Elective Deferrals Contributions, Section 501(c)(18)(D) contributions. 1040ez 2009 501(c)(3) organizations, Student loans. 1040ez 2009 529 program, Qualified tuition program (QTP). 1040ez 2009 83(b) election, How to make the choice. 1040ez 2009 A Academic health centers Meals and lodging when teaching and research organization, Academic health center. 1040ez 2009 Accelerated death benefits, Accelerated Death Benefits Accident insurance, Accident or Health Plan Accidental death benefits, Accidental death benefits. 1040ez 2009 Accrual method taxpayers, Prepaid income. 1040ez 2009 Accrued leave payment At time of retirement or resignation, Accrued leave payment. 1040ez 2009 Disability retirement, Accrued leave payment. 1040ez 2009 Activity not for profit, Activity not for profit. 1040ez 2009 Adoption Employer assistance, Adoption Assistance Advance commissions, Miscellaneous Compensation Aircraft, Flights on employer-provided aircraft. 1040ez 2009 Airlines No-additional-cost services, No-Additional-Cost Services Valuation of flights on employer-provided aircraft, Flights on employer-provided aircraft. 1040ez 2009 Alaska Permanent Fund dividend, Alaska Permanent Fund dividend. 1040ez 2009 Alien status, waiver of, Waiver of alien status. 1040ez 2009 Aliens Nonresident, Nonresident aliens. 1040ez 2009 Alimony, Alimony. 1040ez 2009 Alternative minimum tax (AMT) Recoveries, refiguring of, Subject to alternative minimum tax. 1040ez 2009 Stock options, Alternative minimum tax (AMT). 1040ez 2009 Annuities Charitable gift, Charitable gift annuities. 1040ez 2009 Railroad retirement, Railroad retirement annuities. 1040ez 2009 Tax-sheltered, Limit for tax-sheltered annuities. 1040ez 2009 Archer MSAs, Archer MSA contributions. 1040ez 2009 , Medical savings accounts (Archer MSAs and Medicare Advantage MSAs). 1040ez 2009 Armed forces, Military Combat zone bonus, Veterans' benefits. 1040ez 2009 Disability, Disability. 1040ez 2009 Disability pensions, Military and Government Disability Pensions Health professions scholarship, Tuition Reduction Military action as cause of disability injuries, Terrorist attack or military action. 1040ez 2009 Qualified reservist distribution, Qualified reservist distribution (QRD). 1040ez 2009 Rehabilitative program payments, Veterans' benefits. 1040ez 2009 Retirement pay, Military retirement pay. 1040ez 2009 Veterans benefits, Veterans' benefits. 1040ez 2009 Assistance (see Tax help) Athletic facilities, employer-provided, Athletic Facilities Automobile (see Vehicle, employer-provided) Awards (see Damages from lawsuits) B Babysitting, Babysitting. 1040ez 2009 Back pay, award for, Back pay awards. 1040ez 2009 Backup withholding Barter exchange transactions, Backup withholding. 1040ez 2009 Bankruptcy Canceled debt not deemed to be income, Excluded debt. 1040ez 2009 Barter income, Bartering Below-market loans, Below-market loans. 1040ez 2009 Bequest for services, Bequest for services. 1040ez 2009 Bicycle, Transportation Fringe benefit, Qualified bicycle commuting. 1040ez 2009 Black lung benefit payments, Black lung benefit payments. 1040ez 2009 Bonuses, Bonuses and awards. 1040ez 2009 , Employee awards or bonuses. 1040ez 2009 Breach of contract Damages as income, Court awards and damages. 1040ez 2009 Bribes, Bribes. 1040ez 2009 Business expenses Reimbursements, Allowances and reimbursements. 1040ez 2009 Business income, Business and Investment Income, More information. 1040ez 2009 C Cafeteria plans, Cafeteria plans. 1040ez 2009 Campaign contributions, Campaign contributions. 1040ez 2009 Campus lodging, Qualified campus lodging. 1040ez 2009 , Moving Expense Reimbursements Cancellation of debt, Canceled Debts Cancellation of sales contracts, Canceled sales contract. 1040ez 2009 Capital gains Recoveries, Capital gains. 1040ez 2009 , Capital gains. 1040ez 2009 Capital gains or losses Employee stock option plans (ESOPs), Option granted at a discount. 1040ez 2009 Incentive stock options (ISOs), Incentive stock options (ISOs). 1040ez 2009 Sale of personal property, Sale of personal items. 1040ez 2009 Car (see Vehicle, employer-provided) Car pools, Car pools. 1040ez 2009 Cash or deferred arrangements (CODAs), Elective Deferrals Cash rebates, Cash rebates. 1040ez 2009 Casualty insurance Reimbursements from, Casualty insurance and other reimbursements. 1040ez 2009 Catch-up contributions, Catch-up contributions. 1040ez 2009 , Catch-up contributions. 1040ez 2009 Charitable gift annuities, Charitable gift annuities. 1040ez 2009 Child and Adult Care Food Program Payments to daycare providers, Food program payments to daycare providers. 1040ez 2009 Child support payments, Child support payments. 1040ez 2009 Childcare providers, Childcare providers. 1040ez 2009 , Food program payments to daycare providers. 1040ez 2009 Chronic illness, Chronically ill individual. 1040ez 2009 Accelerated death benefits paid to, Exclusion for chronic illness. 1040ez 2009 Citizens outside U. 1040ez 2009 S. 1040ez 2009 Exclusion of foreign income, Reminders Civil Rights Act of 1964, Title VII Back pay and damages for emotional distress under, Court awards and damages. 1040ez 2009 Clergy, Clergy Coal, Coal and iron ore. 1040ez 2009 Colleges and universities Faculty lodging, Faculty lodging. 1040ez 2009 Scholarships and fellowships, Scholarships and fellowships. 1040ez 2009 Commissions Advance, Miscellaneous Compensation Commuter highway vehicles, Transportation Compensation Employee, Employee Compensation Miscellaneous, Miscellaneous Compensation Unemployment, Unemployment compensation. 1040ez 2009 Workers', Workers' Compensation Compensatory damages, Other compensation. 1040ez 2009 , Court awards and damages. 1040ez 2009 Constructive receipt of income, Constructively received income. 1040ez 2009 Copyrights Infringement damages, Court awards and damages. 1040ez 2009 Royalties, Copyrights and patents. 1040ez 2009 Corporate directors, Corporate director. 1040ez 2009 Cost-of-living allowances, Government cost-of-living allowances. 1040ez 2009 Court awards, Court awards and damages. 1040ez 2009 (see also Damages from lawsuits) Credit card Insurance, Credit card insurance. 1040ez 2009 Credits Recoveries, refiguring of unused credits, Unused tax credits. 1040ez 2009 , Unused tax credits. 1040ez 2009 Currency transactions, foreign, Foreign currency transactions. 1040ez 2009 D Damages from lawsuits, Court awards and damages. 1040ez 2009 Back pay awards, Back pay awards. 1040ez 2009 Breach of contract, Court awards and damages. 1040ez 2009 Compensatory damages, Other compensation. 1040ez 2009 , Court awards and damages. 1040ez 2009 Emotional distress under Title VII, Civil Rights Act of 1964, Court awards and damages. 1040ez 2009 Punitive damages, Court awards and damages. 1040ez 2009 Daycare providers, Childcare providers. 1040ez 2009 (see also Childcare providers) Food program payments to, Food program payments to daycare providers. 1040ez 2009 De minimis benefits, De Minimis (Minimal) Benefits, Meals and Lodging Death benefits, Proceeds not received in installments. 1040ez 2009 (see also Life insurance) Accelerated, Accelerated Death Benefits Debts Canceled, Canceled Debts Excluded debt, Excluded debt. 1040ez 2009 Nonrecourse debts, Mortgage relief upon sale or other disposition. 1040ez 2009 Recourse, Mortgage relief upon sale or other disposition. 1040ez 2009 Stockholder's, Stockholder debt. 1040ez 2009 Deduction Costs of discrimination suits, Deduction for costs involved in unlawful discrimination suits. 1040ez 2009 Deferred compensation Nonqualified plans, Nonqualified deferred compensation plans. 1040ez 2009 , Nonqualified deferred compensation plans of nonqualified entities. 1040ez 2009 Dependent care benefits, Dependent Care Benefits Depletion allowance, Depletion. 1040ez 2009 Differential wage payments, Differential wage payments. 1040ez 2009 Armed forces, Differential wage payments. 1040ez 2009 Directors' fees, Corporate director. 1040ez 2009 Disability Military, Disability. 1040ez 2009 Pensions, Disability Pensions Workers' compensation, Disability pension. 1040ez 2009 Person with, Persons with disabilities. 1040ez 2009 Unemployment compensation, paid as substitute for, Types of unemployment compensation. 1040ez 2009 Disaster relief Disaster mitigation payments, Disaster mitigation payments. 1040ez 2009 Disaster Relief and Emergency Assistance Act Grants, Disaster relief grants. 1040ez 2009 Unemployment benefits, Unemployment Benefits Mitigation payments, Reminders Payments, Disaster relief payments. 1040ez 2009 Discounts Employee discounts, Employee Discounts Employee stock purchase plans, Option granted at a discount. 1040ez 2009 Mortgage loan for early payment, Discounted mortgage loan. 1040ez 2009 Dividends Restricted stock, Dividends received on restricted stock. 1040ez 2009 Divorced taxpayers Stock options exercised incident to divorce, Tax form. 1040ez 2009 Down payment assistance, Down payment assistance. 1040ez 2009 E Educational assistance Employer-provided, Educational Assistance Scholarships and fellowships, Scholarships and fellowships. 1040ez 2009 Educational institutions Faculty lodging, Faculty lodging. 1040ez 2009 Elderly persons Nutrition Program for the Elderly, Nutrition Program for the Elderly. 1040ez 2009 Tax Counseling for the Elderly, Volunteer tax counseling. 1040ez 2009 Election precinct officials, Election precinct official. 1040ez 2009 Elective deferrals, Elective Deferrals Catch-up contributions, Catch-up contributions. 1040ez 2009 , Catch-up contributions. 1040ez 2009 Excess annual additions, Excess Annual Additions Excess contributions, Excess Contributions Excess deferrals, Excess deferrals. 1040ez 2009 Increased limit for last 3 years prior to retirement age, Increased limit. 1040ez 2009 Limit on, Elective Deferrals Reporting by employer, Reporting by employer. 1040ez 2009 Emergency Homeowners' Loan Program, Hardest Hit Fund and Emergency Homeowners' Loan Program. 1040ez 2009 Emotional distress damages, Emotional distress. 1040ez 2009 Employee achievement awards, Employee achievement award. 1040ez 2009 Employee awards or bonuses, Employee awards or bonuses. 1040ez 2009 Employee compensation, Employee Compensation, Inherited property not substantially vested. 1040ez 2009 Fringe benefits, Fringe Benefits, Special valuation rules. 1040ez 2009 Restricted property, Restricted Property, Inherited property not substantially vested. 1040ez 2009 Retirement plan contributions, Retirement Plan Contributions Stock options, Stock Options, Statutory Stock Options Employee discounts, Employee Discounts Employee stock purchase plans, Statutory Stock Options, Employee stock purchase plan. 1040ez 2009 Employer, foreign, Foreign Employer Employer-owned life insurance, Employer-owned life insurance contract. 1040ez 2009 Employer-provided Educational assistance, Educational Assistance Vehicles, Employer-provided vehicles. 1040ez 2009 Employment Abroad, Employment abroad. 1040ez 2009 Agency fees, Employment agency fees. 1040ez 2009 Contracts Severance pay for cancellation of, Severance pay. 1040ez 2009 Endowment proceeds, Endowment Contract Proceeds Energy Assistance, Payments to reduce cost of winter energy. 1040ez 2009 Conservation Subsidies, Energy conservation subsidies. 1040ez 2009 Utility rebates, Utility rebates. 1040ez 2009 Estate income, Estate and trust income. 1040ez 2009 Estimated tax Unemployment compensation, Tax withholding. 1040ez 2009 Excess Annual additions, Excess Annual Additions Contributions, Excess Contributions Deferrals, Excess deferrals. 1040ez 2009 Expected inheritance, Expected inheritance. 1040ez 2009 Expenses paid by another, Expenses paid by another. 1040ez 2009 Exxon Valdez settlement, Exxon Valdez settlement income. 1040ez 2009 Eligible retirement plan, Contributions to eligible retirement plan. 1040ez 2009 Income averaging, Income averaging. 1040ez 2009 Legal expenses, Legal expenses. 1040ez 2009 Reporting requirement-statement, Statement. 1040ez 2009 F Faculty lodging, Faculty lodging. 1040ez 2009 Fair market value (FMV), Fair market value. 1040ez 2009 Stock options, Grant of option. 1040ez 2009 Farming Qualified farm debt, cancellation of, Excluded debt. 1040ez 2009 Federal employees Accrued leave payment, Accrued leave payment. 1040ez 2009 Cost-of-living allowances, Government cost-of-living allowances. 1040ez 2009 Disability pensions, Military and Government Disability Pensions Thrift Savings Plan for, Elective Deferrals Federal Employees Compensation Act (FECA) payments, Federal Employees' Compensation Act (FECA). 1040ez 2009 Federal income tax Refunds, Federal income tax refund. 1040ez 2009 Fees for services, Fees for services. 1040ez 2009 Financial counseling fees, Financial Counseling Fees Fellowships, Scholarships and fellowships. 1040ez 2009 FICA withholding Foreign employers, U. 1040ez 2009 S. 1040ez 2009 citizens working for in U. 1040ez 2009 S. 1040ez 2009 , Social security and Medicare taxes. 1040ez 2009 Paid by employer, Social security and Medicare taxes paid by employer. 1040ez 2009 Fiduciaries Fees for services, Fees for services. 1040ez 2009 , Personal representatives. 1040ez 2009 Financial counseling fees, Financial Counseling Fees (see also Retirement planning services) Fitness programs Employer-provided, Athletic Facilities Flights Employer-provided aircraft, Flights on employer-provided aircraft. 1040ez 2009 No-additional-cost services, No-Additional-Cost Services Food benefits Daycare providers, food program payments to, Food program payments to daycare providers. 1040ez 2009 Nutrition Program for the Elderly, Nutrition Program for the Elderly. 1040ez 2009 Foreign Currency transactions, Foreign currency transactions. 1040ez 2009 Employment, Foreign Employer Governments, employees of, Employees of international organizations or foreign governments. 1040ez 2009 Income, Reminders Service, Service-connected disability. 1040ez 2009 Form 1040 Excess contributions to elective deferrals, Excess Contributions Recoveries, Where to report. 1040ez 2009 Unemployment compensation, Unemployment Benefits Wages from Form W-2, Employee Compensation Form 1040 or 1040A, Schedule B Restricted stock dividends, Stock you chose to include in your income. 1040ez 2009 Form 1040, Schedule A Outplacement services, deduction for, Outplacement services. 1040ez 2009 Repayment of commissions paid in advance, Advance commissions and other earnings. 1040ez 2009 Form 1040, Schedule C Bartering, Bartering Childcare providers to use, Childcare providers. 1040ez 2009 Personal property rental, reporting income from, Reporting business income and expenses. 1040ez 2009 Royalties, Royalties Form 1040, Schedule C-EZ Bartering, Bartering Childcare Providers to use, Childcare providers. 1040ez 2009 Personal property rental, reporting income from, Reporting business income and expenses. 1040ez 2009 Royalties, Royalties Form 1040, Schedule D Stock options, Sale of the stock. 1040ez 2009 Stock options reported on, Statutory Stock Options Form 1040, Schedule E Partner's return, Partner's return. 1040ez 2009 Royalties, Royalties Form 1040A Recoveries, Where to report. 1040ez 2009 Unemployment compensation, Unemployment Benefits Wages from Form W-2, Employee Compensation Form 1040EZ Recoveries, Where to report. 1040ez 2009 Unemployment compensation, Unemployment Benefits Wages from Form W-2, Employee Compensation Form 1041 Estates and trusts, Estate and trust income. 1040ez 2009 Form 1041, Schedule K-1 Beneficiary's share of income, deductions, credits, etc. 1040ez 2009 , Estate and trust income. 1040ez 2009 Form 1065 Partnership return, Partnership return. 1040ez 2009 Form 1065, Schedule K-1 Partner's share of income, Schedule K-1 (Form 1065). 1040ez 2009 , Partnership Income Form 1098 Mortgage interest statement, Mortgage interest refund. 1040ez 2009 Form 1099-B Barter exchange transactions, Form 1099-B from barter exchange. 1040ez 2009 , Backup withholding. 1040ez 2009 Form 1099-C Cancellation of debt, Form 1099-C. 1040ez 2009 Form 1099-DIV Restricted stock dividends, Stock you chose to include in your income. 1040ez 2009 Form 1099-G State tax refunds, State tax refund. 1040ez 2009 Unemployment compensation, Unemployment Benefits Form 1099-MISC Services totaling $600 or more, Fees for services. 1040ez 2009 Stock options exercised incident to divorce, Tax form. 1040ez 2009 Form 1099-R Charitable gift annuities, Charitable gift annuities. 1040ez 2009 Excess annual additions, Excess Annual Additions Excess deferral amounts, Excess distributed to you. 1040ez 2009 Surrender of life insurance policy for cash, Surrender of policy for cash. 1040ez 2009 Form 1120-POL Political organizations, Campaign contributions. 1040ez 2009 Form 1120S S corporation return, S corporation return. 1040ez 2009 Form 1120S, Schedule K-1 Shareholder's share of income, credits, deductions, etc. 1040ez 2009 , Schedule K-1 (Form 1120S). 1040ez 2009 Form 2441 Child and dependent care expenses, Dependent Care Benefits Form 4255 Recapture of investment credit, Amounts Recovered for Credits Form 6251 Alternative minimum tax, Alternative minimum tax (AMT). 1040ez 2009 Form 8839 Adoption assistance, Adoption Assistance Form 8853 Accelerated death benefits, Form 8853. 1040ez 2009 Archer MSAs and long-term care insurance contracts, Archer MSA contributions. 1040ez 2009 Form 8919 Uncollected social security and Medicare tax on wages, Employee Compensation Form RRB-1099 Railroad retirement board payments, Form RRB-1099. 1040ez 2009 Form SSA-1099 Social security benefit statement, Form SSA-1099. 1040ez 2009 Form W-2 501(c)(18)(D) contributions, Section 501(c)(18)(D) contributions. 1040ez 2009 Accrued leave payment at time of retirement or resignation, Accrued leave payment. 1040ez 2009 Back pay awards, Back pay awards. 1040ez 2009 Bonuses or awards, Bonuses and awards. 1040ez 2009 Elective deferrals, reporting by employer, Reporting by employer. 1040ez 2009 Failure to receive from employer, Employee Compensation Fringe benefits reported on, Form W-2. 1040ez 2009 Stock options from employers, Tax form. 1040ez 2009 Wage and tax statement, Employee Compensation Form W-2G Gambling winnings, Form W-2G. 1040ez 2009 Form W-4V Unemployment compensation, voluntary withholding request, Tax withholding. 1040ez 2009 Form W-9 Request for taxpayer identification number, Backup withholding. 1040ez 2009 Foster care, Foster care providers. 1040ez 2009 Foster Grandparent Program, National Senior Service Corps programs. 1040ez 2009 Found property, Found property. 1040ez 2009 Free tax services, Free help with your tax return. 1040ez 2009 Fringe benefits, Fringe Benefits, Special valuation rules. 1040ez 2009 Accident and health insurance, Accident or Health Plan Adoption, employer assistance, Adoption Assistance Athletic facilities, Athletic Facilities Commuter highway vehicles, Transportation De minimis benefits, De Minimis (Minimal) Benefits, Meals and Lodging Dependent care benefits, Dependent Care Benefits Educational assistance, Educational Assistance Employee discounts, Employee Discounts Faculty lodging, Faculty lodging. 1040ez 2009 Financial counseling fees, Financial Counseling Fees Holiday gifts, Holiday gifts. 1040ez 2009 Meals and lodging, Meals and Lodging Moving expenses (see Moving expenses) No-additional-cost services, No-Additional-Cost Services Parking, Transportation Retirement planning (see Retirement planning services) Transit pass, Transportation, Transit pass. 1040ez 2009 Tuition reduction, Tuition Reduction Valuation of, Valuation of Fringe Benefits, Special valuation rules. 1040ez 2009 Vehicle, Employer-provided vehicles. 1040ez 2009 Working condition benefits, Working Condition Benefits Frozen deposits Interest on, Interest on frozen deposits. 1040ez 2009 G Gambling winnings and losses, Gambling winnings. 1040ez 2009 Gas Royalties from, Oil, gas, and minerals. 1040ez 2009 Gifts, Gifts and inheritances. 1040ez 2009 Holiday gifts from employer, Holiday gifts. 1040ez 2009 Government employees (see Federal employees; State employees) Grantor trusts, Grantor trust. 1040ez 2009 Group-term life insurance Worksheets, Figuring the taxable cost. 1040ez 2009 , Worksheet 1. 1040ez 2009 Figuring the Cost of Group-Term Life Insurance To Include in Income—Illustrated Gulf oil spill, Reminders, Gulf oil spill. 1040ez 2009 H HAMP Home affordable modification program Pay-for-performance success payments, Home Affordable Modification Program (HAMP). 1040ez 2009 Hardest Hit Fund Program, Hardest Hit Fund and Emergency Homeowners' Loan Program. 1040ez 2009 Health Flexible spending arrangement, Health flexible spending arrangement (health FSA). 1040ez 2009 Insurance, Accident or Health Plan Reimbursement arrangement, Health reimbursement arrangement (HRA). 1040ez 2009 Savings account, Health savings accounts (HSA). 1040ez 2009 Help (see Tax help) Highly compensated employees Excess contributions to elective deferrals, Excess Contributions Historic preservation grants, Historic preservation grants. 1040ez 2009 Hobby losses, Hobby losses. 1040ez 2009 Holding period requirement, Holding period requirement. 1040ez 2009 Holiday gifts, Holiday gifts. 1040ez 2009 Holocaust victims restitution, Holocaust victims restitution. 1040ez 2009 Home, sale of, Sale of home. 1040ez 2009 Host or hostess, Host or Hostess Hotels No-additional-cost services, No-Additional-Cost Services Housing (see Lodging) I Illegal activities, Illegal activities. 1040ez 2009 Incentive stock options (ISOs), Statutory Stock Options, Incentive stock options (ISOs). 1040ez 2009 Income Assigned, Assignment of income. 1040ez 2009 Business and investment, Business and Investment Income, More information. 1040ez 2009 Constructive receipt of, Constructively received income. 1040ez 2009 Estate and trust, Estate and trust income. 1040ez 2009 Foreign employers, Foreign Employer Illegal, Illegal activities. 1040ez 2009 Miscellaneous, Miscellaneous Income Other, Other Income Partnership, Partnership Income Prepaid, Prepaid income. 1040ez 2009 S corporation, S Corporation Income Indian fishing rights, Indian fishing rights. 1040ez 2009 Indian money account, Indian money account litigation settlement. 1040ez 2009 Individual retirement arrangements (IRAs) Deduction, Benefits may affect your IRA deduction. 1040ez 2009 Inherited IRA, Inherited pension or IRA. 1040ez 2009 Inheritance, Gifts and inheritances. 1040ez 2009 IRA, Inherited pension or IRA. 1040ez 2009 Property not substantially vested, Inherited property not substantially vested. 1040ez 2009 Injury benefits, Sickness and Injury Benefits, Reimbursement for medical care. 1040ez 2009 Insurance Credit card, Credit card insurance. 1040ez 2009 Health, Accident or Health Plan Life (see Life insurance) Long-term care (see Long-term care insurance) Interest Canceled debt including, Interest included in canceled debt. 1040ez 2009 Frozen deposits, Interest on frozen deposits. 1040ez 2009 Mortgage refunds, Mortgage interest refund. 1040ez 2009 Option on insurance, Interest option on insurance. 1040ez 2009 Recovery amounts, Interest on recovery. 1040ez 2009 Savings bond, Interest on qualified savings bonds. 1040ez 2009 State and local government obligations, Interest on state and local government obligations. 1040ez 2009 Interference with business operations Damages as income, Court awards and damages. 1040ez 2009 International organizations, employees of, Foreign Employer Interview expenses, Job interview expenses. 1040ez 2009 Investment counseling fees, Financial Counseling Fees (see also Retirement planning services) Investment income, Business and Investment Income, More information. 1040ez 2009 IRAs (see Individual retirement arrangements (IRAs)) Iron ore, Coal and iron ore. 1040ez 2009 Itemized deductions Limited, Itemized deductions limited. 1040ez 2009 Recoveries, Recoveries, Itemized Deduction Recoveries J Job interview expenses, Job interview expenses. 1040ez 2009 Joint returns Social security benefits or railroad retirement payments, Joint return. 1040ez 2009 Joint state/local tax return Recoveries, Joint state or local income tax return. 1040ez 2009 Jury duty pay, Jury duty. 1040ez 2009 K Kickbacks, Kickbacks. 1040ez 2009 L Labor unions Convention expenses, reimbursed, Reimbursed union convention expenses. 1040ez 2009 Dues, Union benefits and dues. 1040ez 2009 Strike and lockout benefits, Strike and lockout benefits. 1040ez 2009 Unemployment benefits paid from, Payments by a union. 1040ez 2009 Last day of tax year, income received on, Constructively received income. 1040ez 2009 Leave (see Accrued leave payment) Length-of-service awards, Employee achievement award. 1040ez 2009 Life insurance Employer-owned, Employer-owned life insurance contract. 1040ez 2009 Proceeds, Life Insurance Proceeds Surrender of policy for cash, Surrender of policy for cash. 1040ez 2009 Loans, Discounted mortgage loan. 1040ez 2009 (see also Mortgage) Below-market, Below-market loans. 1040ez 2009 Student, Student loans. 1040ez 2009 Lockout benefits, Strike and lockout benefits. 1040ez 2009 Lodging Campus lodging, Qualified campus lodging. 1040ez 2009 , Moving Expense Reimbursements Clergy, Housing Employer-paid or reimbursed, Meals and Lodging Faculty lodging, Faculty lodging. 1040ez 2009 Replacement housing payments, Replacement housing payments. 1040ez 2009 Long-term care insurance, Long-term care coverage. 1040ez 2009 , Long-Term Care Insurance Contracts Lotteries and raffles, Lotteries and raffles. 1040ez 2009 Lump-sum distributions Survivor benefits, Lump-sum payments. 1040ez 2009 M Manufacturer incentive payments, Manufacturer incentive payments. 1040ez 2009 Meals Employer-paid or reimbursed, Meals and Lodging Nutrition Program for the Elderly, Nutrition Program for the Elderly. 1040ez 2009 Medical Care reimbursements, Reimbursement for medical care. 1040ez 2009 Savings accounts, Medical savings accounts (Archer MSAs and Medicare Advantage MSAs). 1040ez 2009 Medicare Advantage MSAs, Medical savings accounts (Archer MSAs and Medicare Advantage MSAs). 1040ez 2009 Benefits, Medicare. 1040ez 2009 Tax paid by employer, Social security and Medicare taxes paid by employer. 1040ez 2009 Medicare tax (see Social security and Medicare taxes) Military (see Armed forces) Minerals Royalties from, Oil, gas, and minerals. 1040ez 2009 Miscellaneous Compensation, Miscellaneous Compensation Income, Miscellaneous Income Missing children, photographs of, Reminders Mortgage Assistance payment (under sec. 1040ez 2009 235 of National Housing Act), Mortgage assistance payments under section 235 of the National Housing Act. 1040ez 2009 Discounted loan, Discounted mortgage loan. 1040ez 2009 Interest refund, Mortgage interest refund. 1040ez 2009 Qualified principal residence indebtedness, Qualified principal residence indebtedness (QPRI). 1040ez 2009 Relief, Mortgage relief upon sale or other disposition. 1040ez 2009 Motor vehicle, employer-provided, Employer-provided vehicles. 1040ez 2009 Moving expenses Reimbursements, Allowances and reimbursements. 1040ez 2009 , Moving expense reimbursements. 1040ez 2009 MSAs (Medical savings accounts), Medical savings accounts (Archer MSAs and Medicare Advantage MSAs). 1040ez 2009 N National Health Service Corps Scholarship Program, Tuition Reduction National Oceanic and Atmospheric Administration, Service-connected disability. 1040ez 2009 National Senior Service Corps, National Senior Service Corps programs. 1040ez 2009 No-additional-cost services, No-Additional-Cost Services No-fault car insurance Disability benefits under, Other compensation. 1040ez 2009 Nobel prize, Pulitzer, Nobel, and similar prizes. 1040ez 2009 Nonrecourse debt, Mortgage relief upon sale or other disposition. 1040ez 2009 Nonstatutory stock options, Nonstatutory Stock Options Nontaxable income, Introduction Not-for-profit activities, Activity not for profit. 1040ez 2009 Notary fees, Notary public. 1040ez 2009 Notes received for services, Note received for services. 1040ez 2009 Nutrition Program for the Elderly, Nutrition Program for the Elderly. 1040ez 2009 O Oil Royalties from, Oil, gas, and minerals. 1040ez 2009 Old-age, survivors, and disability insurance benefits (OASDI), Old-age, survivors, and disability insurance benefits (OASDI). 1040ez 2009 Options, stock, Stock Options, Statutory Stock Options Outplacement services, Outplacement services. 1040ez 2009 Overseas work, Reminders P Parking fees Employer-paid or reimbursed, Transportation, Qualified parking. 1040ez 2009 Partner and partnership income, Partnership Income Patents Infringement damages, Court awards and damages. 1040ez 2009 Royalties, Copyrights and patents. 1040ez 2009 Peace Corps, Peace Corps. 1040ez 2009 Pensions Clergy, Pension. 1040ez 2009 Disability pensions, Disability Pensions Inherited pensions, Inherited pension or IRA. 1040ez 2009 Military, Military retirement pay. 1040ez 2009 Personal property Rental income and expense, Rents From Personal Property Sale of, Sale of personal items. 1040ez 2009 Personal representatives (see Fiduciaries) Prepaid income, Prepaid income. 1040ez 2009 Price reduced after purchase, Price reduced after purchase. 1040ez 2009 Prizes and awards, Bonuses and awards. 1040ez 2009 , Prizes and awards. 1040ez 2009 Achievement awards, Employee achievement award. 1040ez 2009 Employee awards or bonuses, Employee awards or bonuses. 1040ez 2009 Length-of-service awards, Employee achievement award. 1040ez 2009 Pulitzer, Nobel, and similar prizes, Pulitzer, Nobel, and similar prizes. 1040ez 2009 Safety achievement, Employee achievement award. 1040ez 2009 Scholarship prizes, Prizes. 1040ez 2009 Profit-sharing plan, Retirement and profit-sharing plans. 1040ez 2009 Public assistance benefits, Welfare and Other Public Assistance Benefits Public Health Service, Service-connected disability. 1040ez 2009 Public safety officers killed in line of duty, Public safety officer killed in the line of duty. 1040ez 2009 Public transportation passes, employer-provided, Transportation, Transit pass. 1040ez 2009 Publications (see Tax help) Pulitzer prize, Pulitzer, Nobel, and similar prizes. 1040ez 2009 Punitive damages, Court awards and damages. 1040ez 2009 Q Qualified joint venture, Reminders Qualified tuition program (QTP), Qualified tuition program (QTP). 1040ez 2009 R Raffles, Lotteries and raffles. 1040ez 2009 Railroad Retirement annuities, Railroad retirement annuities. 1040ez 2009 Retirement benefits, Social security and equivalent railroad retirement benefits. 1040ez 2009 Sick pay, Railroad sick pay. 1040ez 2009 Unemployment compensation benefits, Types of unemployment compensation. 1040ez 2009 Real estate Qualified real property business debt, cancellation of, Excluded debt. 1040ez 2009 Rebates Cash, Cash rebates. 1040ez 2009 Utility, Utility rebates. 1040ez 2009 Recovery of amounts previously deducted, Recoveries, Standard deduction for earlier years. 1040ez 2009 Itemized deductions, Recoveries, Itemized Deduction Recoveries Non-itemized deductions, Non-Itemized Deduction Recoveries Unused tax credits, refiguring of, Unused tax credits. 1040ez 2009 , Unused tax credits. 1040ez 2009 Refunds Federal income tax, Federal income tax refund. 1040ez 2009 Mortgage interest, Mortgage interest refund. 1040ez 2009 State tax, State tax refund. 1040ez 2009 Rehabilitative program payments, Veterans' benefits. 1040ez 2009 Reimbursements Business expenses, Allowances and reimbursements. 1040ez 2009 Casualty losses, Casualty insurance and other reimbursements. 1040ez 2009 Meals and lodging, Meals and Lodging Medical expenses, Reimbursement for medical care. 1040ez 2009 Moving expenses, Allowances and reimbursements. 1040ez 2009 , Moving expense reimbursements. 1040ez 2009 Related party transactions Stock option transfer, Transfer in non-arm's-length transaction. 1040ez 2009 Religious order members, Members of Religious Orders Rental income and expenses Personal property rental, Rents From Personal Property Reporting of, Reporting business income and expenses. 1040ez 2009 Repayments, Repayments, Year of deduction (or credit). 1040ez 2009 Repossession, Canceled sales contract. 1040ez 2009 Restricted property, Restricted Property, Inherited property not substantially vested. 1040ez 2009 Retired Senior Volunteer Program (RSVP), National Senior Service Corps programs. 1040ez 2009 Retirement Settlement, Reminders Retirement planning services, Financial Counseling Fees, Retirement Planning Services Retirement plans, Military retirement pay. 1040ez 2009 (see also Pensions) Automatic contribution arrangements, Qualified automatic contribution arrangements. 1040ez 2009 Contributions, Retirement Plan Contributions, Excess Annual Additions, Statutory Stock Options Elective deferrals (see Elective deferrals) Rewards, Rewards. 1040ez 2009 Roth contributions, Designated Roth contributions. 1040ez 2009 Royalties, Royalties S S corporations, S Corporation Income Safety achievement awards, Employee achievement award. 1040ez 2009 Salary reduction simplified employee pension plans (see SARSEPs) Sale of home, Sale of home. 1040ez 2009 Sales contracts Cancellation of, Canceled sales contract. 1040ez 2009 SARSEPs, Elective Deferrals Excess contributions, Excess Contributions Savings bonds, Interest on qualified savings bonds. 1040ez 2009 Savings incentive match plans for employees (see SIMPLE plans) Scholarships and fellowships, Scholarships and fellowships. 1040ez 2009 Self-employed persons U. 1040ez 2009 S. 1040ez 2009 citizens working for foreign employers in U. 1040ez 2009 S. 1040ez 2009 treated as, Social security and Medicare taxes. 1040ez 2009 Senior Companion Program, National Senior Service Corps programs. 1040ez 2009 Service Corps of Retired Executives (SCORE), Service Corps of Retired Executives (SCORE). 1040ez 2009 Severance pay, Severance pay. 1040ez 2009 Outplacement services, Outplacement services. 1040ez 2009 Sick pay, Sick pay. 1040ez 2009 Sickness and injury benefits, Sickness and Injury Benefits, Reimbursement for medical care. 1040ez 2009 SIMPLE plans, Elective Deferrals Limit for deferrals under, Limit for deferrals under SIMPLE plans. 1040ez 2009 Smallpox vaccine injuries, Smallpox vaccine injuries. 1040ez 2009 Social security and Medicare taxes Foreign employers, U. 1040ez 2009 S. 1040ez 2009 citizens working for in U. 1040ez 2009 S. 1040ez 2009 , Social security and Medicare taxes. 1040ez 2009 Paid by employer, Social security and Medicare taxes paid by employer. 1040ez 2009 Social security benefits, Social security and equivalent railroad retirement benefits. 1040ez 2009 Standard deduction Recoveries, Standard deduction limit. 1040ez 2009 , Standard deduction for earlier years. 1040ez 2009 State employees Unemployment benefits paid to, State employees. 1040ez 2009 State or local governments Interest on obligations of, Interest on state and local government obligations. 1040ez 2009 State or local taxes Refunds, State tax refund. 1040ez 2009 Statutory stock option holding period, Sale of the stock. 1040ez 2009 Stock appreciation rights, Stock appreciation rights. 1040ez 2009 Stock options, Stock Options, Statutory Stock Options Stock options, nonstatutory Exercise or transfer, Exercise or transfer of option. 1040ez 2009 Grant, Grant of option. 1040ez 2009 Sale, Sale of the stock. 1040ez 2009 Stock options, statutory Exercise, Exercise of option. 1040ez 2009 Grant, Grant of option. 1040ez 2009 Sale, Sale of the stock. 1040ez 2009 Stockholder debts, Stockholder debt. 1040ez 2009 Stolen property, Stolen property. 1040ez 2009 Strike benefits, Strike and lockout benefits. 1040ez 2009 Student loans Cancellation of debt, Student loans. 1040ez 2009 Substantial risk of forfeiture, Substantial risk of forfeiture. 1040ez 2009 Substantially vested property, Substantially vested. 1040ez 2009 Supplemental security income (SSI) payments, Social security and equivalent railroad retirement benefits. 1040ez 2009 Supplemental unemployment benefits, Supplemental unemployment benefits. 1040ez 2009 Surviving spouse Life insurance proceeds paid to, Surviving spouse. 1040ez 2009 Survivor benefits, Survivor Benefits T Tables and figures Group-term life insurance (Table 1), Group-Term Life Insurance Tax benefit rule, Tax benefit rule. 1040ez 2009 Tax Counseling for the Elderly, Volunteer tax counseling. 1040ez 2009 Tax help, How To Get Tax Help Tax-sheltered annuity plans (403(b) plans), Elective Deferrals Limit for, Limit for tax-sheltered annuities. 1040ez 2009 Terminal illness, Exclusion for terminal illness. 1040ez 2009 Terrorist attacks Disability payments for injuries from, Terrorist attack or military action. 1040ez 2009 Victims of, tax relief, Reminders Thrift Savings Plan, Elective Deferrals Title VII, Civil Rights Act of 1964 Back pay and damages for emotional distress under, Court awards and damages. 1040ez 2009 Tour guides, free tours for, Free tour. 1040ez 2009 Trade Act of 1974 Trade readjustment allowances under, Types of unemployment compensation. 1040ez 2009 , Repayment of benefits. 1040ez 2009 Transferable property, Transferable property. 1040ez 2009 Transit passes, Transportation, Transit pass. 1040ez 2009 Travel agencies Free tour to organizer of group of tourists, Free tour. 1040ez 2009 Travel and transportation expenses Free tours from travel agencies, Free tour. 1040ez 2009 Fringe benefits, Transportation Reimbursements, Allowances and reimbursements. 1040ez 2009 School children, transporting of, Transporting school children. 1040ez 2009 Trusts Grantor trusts, Grantor trust. 1040ez 2009 Income, Estate and trust income. 1040ez 2009 Tuition program, qualified (QTP), Qualified tuition program (QTP). 1040ez 2009 Tuition reduction, Tuition Reduction U Unemployment compensation, Unemployment Benefits Unions (see Labor unions) Unlawful discrimination suits Deduction for costs, Deduction for costs involved in unlawful discrimination suits. 1040ez 2009 V VA payments, VA payments. 1040ez 2009 Valuation Fringe benefits, Valuation of Fringe Benefits, Special valuation rules. 1040ez 2009 Stock options, Nonstatutory Stock Options Vehicle Commuter highway, Commuter highway vehicle. 1040ez 2009 Employer-provided, Employer-provided vehicles. 1040ez 2009 Veterans benefits, Veterans' benefits. 1040ez 2009 Disability compensation, Retroactive VA determination. 1040ez 2009 Retroactive VA determination, Retroactive VA determination. 1040ez 2009 Special statute of limitations. 1040ez 2009 , Special statute of limitations. 1040ez 2009 Viatical settlements, Viatical settlement. 1040ez 2009 Volunteer work, Volunteers Tax counseling (Volunteer Income Tax Assistance Program), Volunteer tax counseling. 1040ez 2009 Volunteers in Service to America (VISTA), Volunteers in Service to America (VISTA). 1040ez 2009 W W-2 form (see Form W-2) Welfare benefits, Welfare and Other Public Assistance Benefits Whistleblower, Whistleblower's award. 1040ez 2009 Winter energy payments, Payments to reduce cost of winter energy. 1040ez 2009 Withholding Barter exchange transactions, Backup withholding. 1040ez 2009 Unemployment compensation, Tax withholding. 1040ez 2009 Work-training programs, Work-training program. 1040ez 2009 Workers' compensation, Workers' Compensation Working condition benefits, Working Condition Benefits Worksheets Group-term life insurance (Worksheet 1), Figuring the taxable cost. 1040ez 2009 , Worksheet 1. 1040ez 2009 Figuring the Cost of Group-Term Life Insurance To Include in Income—Illustrated Prev  Up     Home   More Online 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U.S. Fleet Forces Command

U.S. Fleet Forces Command organizes, mans, trains, maintains, and equips Navy forces, and develops fleet readiness.

Contact the Agency or Department

Website: U.S. Fleet Forces Command

Address: Fleet Public Affairs (N00P)
1562 Mitscher Ave., Suite 250

Norfolk, VA 23551-2487

Phone Number: (757) 836-3644

The 1040ez 2009

1040ez 2009 4. 1040ez 2009   Unrelated Business Taxable Income Table of Contents IncomeExclusions Dues of Agricultural Organizations and Business Leagues DeductionsDirectly Connected Exploitation of Exempt Activity—Advertising Sales Modifications Partnership Income or Loss S Corporation Income or Loss Special Rules for Foreign Organizations Special Rules for Social Clubs, VEBAs, SUBs, and GLSOsIncome that is set aside. 1040ez 2009 Special Rules for Veterans' Organizations Income From Controlled OrganizationsAddition to tax for valuation misstatements. 1040ez 2009 Net unrelated income. 1040ez 2009 Net unrelated loss. 1040ez 2009 Control. 1040ez 2009 Income from property financed with qualified 501(c)(3) bonds. 1040ez 2009 Disposition of property received from taxable subsidiary and used in unrelated business. 1040ez 2009 Income From Debt-Financed Property Debt-Financed PropertyAcquisition Indebtedness Computation of Debt-Financed Income Deductions for Debt-Financed Property Allocation Rules How to Get Tax Help The term “unrelated business taxable income” generally means the gross income derived from any unrelated trade or business regularly conducted by the exempt organization, less the deductions directly connected with carrying on the trade or business. 1040ez 2009 If an organization regularly carries on two or more unrelated business activities, its unrelated business taxable income is the total of gross income from all such activities less the total allowable deductions attributable to all the activities. 1040ez 2009 In computing unrelated business taxable income, gross income and deductions are subject to the modifications and special rules explained in this chapter. 1040ez 2009 Whether a particular item of income or expense falls within any of these modifications or special rules must be determined by all the facts and circumstances in each specific case. 1040ez 2009 For example, if the organization received a payment termed rent that is in fact a return of profits by a person operating the property for the benefit of the organization, or that is a share of the profits retained by the organization as a partner or joint venturer, the payment is not within the income exclusion for rents, discussed later under Exclusions. 1040ez 2009 Income Generally, unrelated business income is taxable, but there are exclusions and special rules that must be considered when figuring the income. 1040ez 2009 Exclusions The following types of income (and deductions directly connected with the income) are generally excluded when figuring unrelated business taxable income. 1040ez 2009 Dividends, interest, annuities and other investment income. 1040ez 2009   All dividends, interest, annuities, payments with respect to securities loans, income from notional principal contracts, and other income from an exempt organization's ordinary and routine investments that the IRS determines are substantially similar to these types of income are excluded in computing unrelated business taxable income. 1040ez 2009 Exception for insurance activity income of a controlled foreign corporation. 1040ez 2009   This exclusion does not apply to income from certain insurance activities of an exempt organization's controlled foreign corporation. 1040ez 2009 The income is not excludable dividend income, but instead is unrelated business taxable income to the extent it would be so treated if the exempt organization had earned it directly. 1040ez 2009 Certain exceptions to this rule apply. 1040ez 2009 For more information, see section 512(b)(17). 1040ez 2009 Other exceptions. 1040ez 2009   This exclusion does not apply to unrelated debt-financed income (discussed under Income From Debt-Financed Property, later), to interest or annuities received from a controlled corporation (discussed under Income From Controlled Organizations, later). 1040ez 2009 Income from lending securities. 1040ez 2009   Payments received with respect to a security loan are excluded in computing unrelated business taxable income only if the loan is made under an agreement that:    Provides for the return to the exempt organization of securities identical to the securities loaned, Requires payments to the organization of amounts equivalent to all interest, dividends, and other distributions that the owner of the securities is entitled to receive during the period of the loan, Does not reduce the organization's risk of loss or opportunity for gain on the securities, Contains reasonable procedures to implement the obligation of the borrower to furnish collateral to the organization with a fair market value each business day during the period of the loan in an amount not less than the fair market value of the securities at the close of the preceding business day, and Permits the organization to terminate the loan upon notice of not more than 5 business days. 1040ez 2009   Payments with respect to securities loans include: Amounts in respect of dividends, interest, and other distributions, Fees based on the period of time the loan is in effect and the fair market value of the security during that period, Income from collateral security for the loan, and Income from the investment of collateral security. 1040ez 2009 The payments are considered to be from the securities loaned and not from collateral security or the investment of collateral security from the loans. 1040ez 2009 Any deductions that are directly connected with collateral security for the loan, or with the investment of collateral security, are considered deductions that are directly connected with the securities loaned. 1040ez 2009 Royalties. 1040ez 2009   Royalties, including overriding royalties, are excluded in computing unrelated business taxable income. 1040ez 2009   To be considered a royalty, a payment must relate to the use of a valuable right. 1040ez 2009 Payments for trademarks, trade names, or copyrights are ordinarily considered royalties. 1040ez 2009 Similarly, payments for the use of a professional athlete's name, photograph, likeness, or facsimile signature are ordinarily considered royalties. 1040ez 2009 However, royalties do not include payments for personal services. 1040ez 2009 Therefore, payments for personal appearances and interviews are not excluded as royalties and must be included in figuring unrelated business taxable income. 1040ez 2009   Unrelated business taxable income does not include royalty income received from licensees by an exempt organization that is the legal and beneficial owner of patents assigned to it by inventors for specified percentages of future royalties. 1040ez 2009   Mineral royalties are excluded whether measured by production or by gross or taxable income from the mineral property. 1040ez 2009 However, the exclusion does not apply to royalties that stem from an arrangement whereby the organization owns a working interest in a mineral property and is liable for its share of the development and operating costs under the terms of its agreement with the operator of the property. 1040ez 2009 To the extent they are not treated as loans under section 636 (relating to income tax treatment of mineral production payments), payments for mineral production are treated in the same manner as royalty payments for the purpose of computing unrelated business taxable income. 1040ez 2009 To the extent they are treated as loans, any payments for production that are the equivalent of interest are treated as interest and are excluded. 1040ez 2009 Exceptions. 1040ez 2009   This exclusion does not apply to debt-financed income (discussed under Income From Debt-Financed Property, later) or to royalties received from a controlled corporation (discussed under Income From Controlled Organizations, later). 1040ez 2009 Rents. 1040ez 2009   Rents from real property, including elevators and escalators, are excluded in computing unrelated business taxable income. 1040ez 2009 Rents from personal property are not excluded. 1040ez 2009 However, special rules apply to “mixed leases” of both real and personal property. 1040ez 2009 Mixed leases. 1040ez 2009   In a mixed lease, all of the rents are excluded if the rents attributable to the personal property are not more than 10% of the total rents under the lease, as determined when the personal property is first placed in service by the lessee. 1040ez 2009 If the rents attributable to personal property are more than 10% but not more than 50% of the total rents, only the rents attributable to the real property are excluded. 1040ez 2009 If the rents attributable to the personal property are more than 50% of the total rents, none of the rents are excludable. 1040ez 2009   Property is placed in service when the lessee first may use it under the terms of a lease. 1040ez 2009 For example, property subject to a lease entered into on November 1, for a term starting on January 1 of the next year, is considered placed in service on January 1, regardless of when the lessee first actually uses it. 1040ez 2009   If separate leases are entered into for real and personal property and the properties have an integrated use (for example, one or more leases for real property and another lease or leases for personal property to be used on the real property), all the leases will be considered as one lease. 1040ez 2009   The rent attributable to the personal property must be recomputed, and the treatment of the rents must be redetermined, if: The rent attributable to all the leased personal property increases by 100% or more because additional or substitute personal property is placed in service, or The lease is modified to change the rent charged (whether or not the amount of rented personal property changes). 1040ez 2009 Any change in the treatment of rents resulting from the recomputation is effective only for the period beginning with the event that caused the recomputation. 1040ez 2009 Exception for rents based on net profit. 1040ez 2009   The exclusion for rents does not apply if the amount of the rent depends on the income or profits derived by any person from the leased property, other than an amount based on a fixed percentage of the gross receipts or sales. 1040ez 2009 Exception for income from personal services. 1040ez 2009   Payment for occupying space when personal services are also rendered to the occupant does not constitute rent from real property. 1040ez 2009 Therefore, the exclusion does not apply to transactions such as renting hotel rooms, rooms in boarding houses or tourist homes, and space in parking lots or warehouses. 1040ez 2009 Other exceptions. 1040ez 2009   This exclusion does not apply to unrelated debt-financed income (discussed under Income From Debt-Financed Property, later), or to interest, annuities, royalties and rents received from a controlled corporation (discussed under Income From Controlled Organizations, later), investment income (dividends, interest, rents, etc. 1040ez 2009 ) received by organizations described in sections 501(c)(7), 501(c)(9), 501(c)(17), and 501(c)(20). 1040ez 2009 See Special Rules for Social Clubs, VEBAs, SUBs, and GLSOs, discussed later for more information. 1040ez 2009 Income from research. 1040ez 2009   A tax-exempt organization may exclude income from research grants or contracts from unrelated business taxable income. 1040ez 2009 However, the extent of the exclusion depends on the nature of the organization and the type of research. 1040ez 2009   Income from research for the United States, any of its agencies or instrumentalities, or a state or any of its political subdivisions is excluded when computing unrelated business taxable income. 1040ez 2009   For a college, university, or hospital, all income from research, whether fundamental or applied, is excluded in computing unrelated business taxable income. 1040ez 2009   When an organization is operated primarily to conduct fundamental research (as distinguished from applied research) and the results are freely available to the general public, all income from research performed for any person is excluded in computing unrelated business taxable income. 1040ez 2009   The term research, for this purpose, does not include activities of a type normally conducted as an incident to commercial or industrial operations, such as testing or inspecting materials or products, or designing or constructing equipment, buildings, etc. 1040ez 2009 In addition, the term fundamental research does not include research conducted for the primary purpose of commercial or industrial application. 1040ez 2009 Gains and losses from disposition of property. 1040ez 2009   Also excluded from unrelated business taxable income are gains or losses from the sale, exchange, or other disposition of property other than: Stock in trade or other property of a kind that would properly be includable in inventory if on hand at the close of the tax year, Property held primarily for sale to customers in the ordinary course of a trade or business, or Cutting of timber that an organization has elected to consider as a sale or exchange of the timber. 1040ez 2009   It should be noted that the last exception relates only to cut timber. 1040ez 2009 The sale, exchange, or other disposition of standing timber is excluded from the computation of unrelated business income, unless it constitutes property held for sale to customers in the ordinary course of business. 1040ez 2009 Lapse or termination of options. 1040ez 2009   Any gain from the lapse or termination of options to buy or sell securities is excluded from unrelated business taxable income. 1040ez 2009 The exclusion applies only if the option is written in connection with the exempt organization's investment activities. 1040ez 2009 Therefore, this exclusion is not available if the organization is engaged in the trade or business of writing options or the options are held by the organization as inventory or for sale to customers in the ordinary course of a trade or business. 1040ez 2009 Exception. 1040ez 2009   This exclusion does not apply to unrelated debt-financed income, discussed later under Income From Debt-Financed Property. 1040ez 2009 Gain or loss on disposition of certain brownfield property. 1040ez 2009   Gain or loss from the qualifying sale, exchange, or other disposition of a qualifying brownfield property (as defined in section 512(b)(19)(C)), which was acquired by the organization after December 31, 2005 and before January 1, 2011, is excluded from unrelated business taxable income and is excepted from the debt-financed rules for such property. 1040ez 2009 See sections 512(b)(19) and 514(b)(1)(E). 1040ez 2009 Income from services provided under federal license. 1040ez 2009   There is a further exclusion from unrelated business taxable income of income from a trade or business conducted by a religious order or by an educational organization maintained by the order. 1040ez 2009   This exclusion applies only if the following requirements are met. 1040ez 2009 The trade or business must have been operated by the order or by the institution before May 27, 1959. 1040ez 2009 The trade or business must provide services under a license issued by a federal regulatory agency. 1040ez 2009 More than 90% of the net income from the business for the tax year must be devoted to religious, charitable, or educational purposes that constitute the basis for the religious order's exemption. 1040ez 2009 The rates or other charges for these services must be fully competitive with the rates or other charges of similar taxable businesses. 1040ez 2009 Rates or other charges for these services will be considered as fully competitive if they are neither materially higher nor materially lower than the rates charged by similar businesses operating in the same general area. 1040ez 2009 Exception. 1040ez 2009    This exclusion does not apply to unrelated debt-financed income (discussed under Income From Debt-Financed Property, later). 1040ez 2009 Member income of mutual or cooperative electric companies. 1040ez 2009   Income of a mutual or cooperative electric company described in section 501(c)(12) which is treated as member income under subparagraph (H) of that section is excluded from unrelated business taxable income. 1040ez 2009 Dues of Agricultural Organizations and Business Leagues Dues received from associate members by organizations exempt under section 501(c)(5) or section 501(c)(6) may be treated as gross income from an unrelated trade or business if the associate member category exists for the principal purpose of producing unrelated business income. 1040ez 2009 For example, if an organization creates an associate member category solely to allow associate members to purchase insurance through the organization, the associate member dues may be unrelated business income. 1040ez 2009 Exception. 1040ez 2009   Associate member dues received by an agricultural or horticultural organization are not treated as gross income from an unrelated trade or business, regardless of their purpose, if they are not more than the annual limit. 1040ez 2009 The limit on dues paid by an associate member is $148 for 2011. 1040ez 2009   If the required annual dues are more than the limit, the entire amount is treated as income from an unrelated business unless the associate member category was formed or availed of for the principal purpose of furthering the organization's exempt purposes. 1040ez 2009 Deductions To qualify as allowable deductions in computing unrelated business taxable income, the expenses, depreciation, and similar items generally must be allowable income tax deductions that are directly connected with carrying on an unrelated trade or business. 1040ez 2009 They cannot be directly connected with excluded income. 1040ez 2009 For an exception to the “directly connected” requirement, see Charitable contributions deduction, under Modifications, later. 1040ez 2009 Directly Connected To be directly connected with the conduct of an unrelated business, deductions must have a proximate and primary relationship to carrying on that business. 1040ez 2009 For an exception, see Expenses attributable to exploitation of exempt activities, later. 1040ez 2009 Expenses attributable solely to unrelated business. 1040ez 2009   Expenses, depreciation, and similar items attributable solely to the conduct of an unrelated business are proximately and primarily related to that business and qualify for deduction to the extent that they are otherwise allowable income tax deductions. 1040ez 2009   For example, salaries of personnel employed full-time to conduct the unrelated business and depreciation of a building used entirely in the conduct of that business are deductible to the extent otherwise allowable. 1040ez 2009 Expenses attributable to dual use of facilities or personnel. 1040ez 2009   When facilities or personnel are used both to conduct exempt functions and to conduct an unrelated trade or business, expenses, depreciation, and similar items attributable to the facilities or personnel must be allocated between the two uses on a reasonable basis. 1040ez 2009 The part of an item allocated to the unrelated trade or business is proximately and primarily related to that business and is allowable as a deduction in computing unrelated business taxable income if the expense is otherwise an allowable income tax deduction. 1040ez 2009 Example 1. 1040ez 2009 A school recognized as a tax-exempt organization contracts with an individual to conduct a summer tennis camp. 1040ez 2009 The school provides the tennis courts, housing, and dining facilities. 1040ez 2009 The contracted individual hires the instructors, recruits campers, and provides supervision. 1040ez 2009 The income the school receives from this activity is from a dual use of the facilities and personnel. 1040ez 2009 The school, in computing its unrelated business taxable income, may deduct an allocable part of the expenses attributable to the facilities and personnel. 1040ez 2009 Example 2. 1040ez 2009 An exempt organization with gross income from an unrelated trade or business pays its president $90,000 a year. 1040ez 2009 The president devotes approximately 10% of his time to the unrelated business. 1040ez 2009 To figure the organization's unrelated business taxable income, a deduction of $9,000 ($90,000 × 10%) is allowed for the salary paid to its president. 1040ez 2009 Expenses attributable to exploitation of exempt activities. 1040ez 2009   Generally, expenses, depreciation, and similar items attributable to the conduct of an exempt activity are not deductible in computing unrelated business taxable income from an unrelated trade or business that exploits the exempt activity. 1040ez 2009 (See Exploitation of exempt functions under Not substantially related in chapter 3. 1040ez 2009 ) This is because they do not have a proximate and primary relationship to the unrelated trade or business, and therefore, they do not qualify as directly connected with that business. 1040ez 2009 Exception. 1040ez 2009   Expenses, depreciation, and similar items may be treated as directly connected with the conduct of the unrelated business if all the following statements are true. 1040ez 2009 The unrelated business exploits the exempt activity. 1040ez 2009 The unrelated business is a type normally conducted for profit by taxable organizations. 1040ez 2009 The exempt activity is a type normally conducted by taxable organizations in carrying on that type of business. 1040ez 2009 The amount treated as directly connected is the smaller of: The excess of these expenses, depreciation, and similar items over the income from, or attributable to, the exempt activity; or The gross unrelated business income reduced by all other expenses, depreciation, and other items that are actually directly connected. 1040ez 2009   The application of these rules to an advertising activity that exploits an exempt publishing activity is explained next. 1040ez 2009 Exploitation of Exempt Activity—Advertising Sales The sale of advertising in a periodical of an exempt organization that contains editorial material related to the accomplishment of the organization's exempt purpose is an unrelated business that exploits an exempt activity, the circulation and readership of the periodical. 1040ez 2009 Therefore, in addition to direct advertising costs, exempt activity costs (expenses, depreciation, and similar expenses attributable to the production and distribution of the editorial or readership content) can be treated as directly connected with the conduct of the advertising activity. 1040ez 2009 (See Expenses attributable to exploitation of exempt activities under Directly Connected, earlier. 1040ez 2009 ) Figuring unrelated business taxable income (UBTI). 1040ez 2009   The UBTI of an advertising activity is the amount shown in the following chart. 1040ez 2009 IF gross advertising income is . 1040ez 2009 . 1040ez 2009 . 1040ez 2009 THEN UBTI is . 1040ez 2009 . 1040ez 2009 . 1040ez 2009 More than direct advertising costs The excess advertising income, reduced (but not below zero) by the excess, if any, of readership costs over circulation income. 1040ez 2009 Equal to or less than direct advertising costs Zero. 1040ez 2009   • Circulation income and readership costs are not taken into account. 1040ez 2009   • Any excess advertising costs reduce (but not below zero) UBTI from any other unrelated business activity. 1040ez 2009   The terms used in the chart are explained in the following discussions. 1040ez 2009 Periodical Income Gross advertising income. 1040ez 2009   This is all the income from the unrelated advertising activities of an exempt organization periodical. 1040ez 2009 Circulation income. 1040ez 2009   This is all the income from the production, distribution, or circulation of an exempt organization's periodical (other than gross advertising income). 1040ez 2009 It includes all amounts from the sale or distribution of the readership content of the periodical, such as income from subscriptions. 1040ez 2009 It also includes allocable membership receipts if the right to receive the periodical is associated with a membership or similar status in the organization. 1040ez 2009 Allocable membership receipts. 1040ez 2009   This is the part of membership receipts (dues, fees, or other charges associated with membership) equal to the amount that would have been charged and paid for the periodical if: The periodical was published by a taxable organization, The periodical was published for profit, and The member was an unrelated party dealing with the taxable organization at arm's length. 1040ez 2009   The amount used to allocate membership receipts is the amount shown in the following chart. 1040ez 2009   For this purpose, the total periodical costs are the sum of the direct advertising costs and the readership costs, explained under Periodical Costs, later. 1040ez 2009 The cost of other exempt activities means the total expenses incurred by the organization in connection with its other exempt activities, not offset by any income earned by the organization from those activities. 1040ez 2009 IF . 1040ez 2009 . 1040ez 2009 . 1040ez 2009 THEN the amount used to allocate membership receipts is . 1040ez 2009 . 1040ez 2009 . 1040ez 2009 20% or more of the total circulation consists of sales to nonmembers The subscription price charged nonmembers. 1040ez 2009 The above condition does not apply, and 20% or more of the members pay reduced dues because they do not receive the periodical The reduction in dues for a member not receiving the periodical. 1040ez 2009 Neither of the above conditions applies The membership receipts multiplied by this fraction:   Total periodical costs Total periodical costs Plus Cost of other exempt activities Example 1. 1040ez 2009 U is an exempt scientific organization with 10,000 members who pay annual dues of $15. 1040ez 2009 One of U's activities is publishing a monthly periodical distributed to all of its members. 1040ez 2009 U also distributes 5,000 additional copies of its periodical to nonmembers, who subscribe for $10 a year. 1040ez 2009 Since the nonmember circulation of U's periodical represents one-third (more than 20%) of its total circulation, the subscription price charged to nonmembers is used to determine the part of U's membership receipts allocable to the periodical. 1040ez 2009 Thus, U's allocable membership receipts are $100,000 ($10 times 10,000 members), and U's total circulation income for the periodical is $150,000 ($100,000 from members plus $50,000 from sales to nonmembers). 1040ez 2009 Example 2. 1040ez 2009 Assume the same facts except that U sells only 500 copies of its periodical to nonmembers, at a price of $10 a year. 1040ez 2009 Assume also that U's members may elect not to receive the periodical, in which case their dues are reduced from $15 a year to $6 a year, and that only 3,000 members elect to receive the periodical and pay the full dues of $15 a year. 1040ez 2009 U's stated subscription price of $9 to members consistently results in an excess of total income (including gross advertising income) attributable to the periodical over total costs of the periodical. 1040ez 2009 Since the 500 copies of the periodical distributed to nonmembers represent only 14% of the 3,500 copies distributed, the $10 subscription price charged to nonmembers is not used to determine the part of membership receipts allocable to the periodical. 1040ez 2009 Instead, since 70% of the members elect not to receive the periodical and pay $9 less per year in dues, the $9 price is used to determine the subscription price charged to members. 1040ez 2009 Thus, the allocable membership receipts will be $9 a member, or $27,000 ($9 times 3,000 copies). 1040ez 2009 U's total circulation income is $32,000 ($27,000 plus the $5,000 from nonmember subscriptions). 1040ez 2009 Periodical Costs Direct advertising costs. 1040ez 2009   These are expenses, depreciation, and similar items of deduction directly connected with selling and publishing advertising in the periodical. 1040ez 2009   Examples of allowable deductions under this classification include agency commissions and other direct selling costs, such as transportation and travel expenses, office salaries, promotion and research expenses, and office overhead directly connected with the sale of advertising lineage in the periodical. 1040ez 2009 Also included are other deductions commonly classified as advertising costs under standard account classifications, such as artwork and copy preparation, telephone, telegraph, postage, and similar costs directly connected with advertising. 1040ez 2009   In addition, direct advertising costs include the part of mechanical and distribution costs attributable to advertising lineage. 1040ez 2009 For this purpose, the general account classifications of items includable in mechanical and distribution costs ordinarily employed in business-paper and consumer-publication accounting provide a guide for the computation. 1040ez 2009 Accordingly, the mechanical and distribution costs include the part of the costs and other expenses of composition, press work, binding, mailing (including paper and wrappers used for mailing), and bulk postage attributable to the advertising lineage of the publication. 1040ez 2009   In the absence of specific and detailed records, the part of mechanical and distribution costs attributable to the periodical's advertising lineage can be based on the ratio of advertising lineage to total lineage in the periodical, if this allocation is reasonable. 1040ez 2009 Readership costs. 1040ez 2009   These are all expenses, depreciation, and similar items that are directly connected with the production and distribution of the readership content of the periodical. 1040ez 2009 Costs partly attributable to other activities. 1040ez 2009   Deductions properly attributable to exempt activities other than publishing the periodical may not be allocated to the periodical. 1040ez 2009 When expenses are attributable both to the periodical and to the organization's other activities, an allocation must be made on a reasonable basis. 1040ez 2009 The method of allocation will vary with the nature of the item, but once adopted, should be used consistently. 1040ez 2009 Allocations based on dollar receipts from various exempt activities generally are not reasonable since receipts usually do not accurately reflect the costs associated with specific activities that an exempt organization conducts. 1040ez 2009 Consolidated Periodicals If an exempt organization publishes more than one periodical to produce income, it may treat all of them (but not less than all) as one in determining unrelated business taxable income from selling advertising. 1040ez 2009 It treats the gross income from all the periodicals, and the deductions directly connected with them, on a consolidated basis. 1040ez 2009 Consolidated treatment, once adopted, must be followed consistently and is binding. 1040ez 2009 This treatment can be changed only with the consent of the Internal Revenue Service. 1040ez 2009 An exempt organization's periodical is published to produce income if: The periodical generates gross advertising income to the organization equal to at least 25% of its readership costs, and Publishing the periodical is an activity engaged in for profit. 1040ez 2009 Whether the publication of a periodical is an activity engaged in for profit can be determined only by all the facts and circumstances in each case. 1040ez 2009 The facts and circumstances must show that the organization carries on the activity for economic profit, although there may not be a profit in a particular year. 1040ez 2009 For example, if an organization begins publishing a new periodical whose total costs exceed total income in the start-up years because of lack of advertising sales, that does not mean that the organization did not have as its objective an economic profit. 1040ez 2009 The organization may establish that it had this objective by showing it can reasonably expect advertising sales to increase, so that total income will exceed costs within a reasonable time. 1040ez 2009 Example. 1040ez 2009 Y, an exempt trade association, publishes three periodicals that it distributes to its members: a weekly newsletter, a monthly magazine, and a quarterly journal. 1040ez 2009 Both the monthly magazine and the quarterly journal contain advertising that accounts for gross advertising income equal to more than 25% of their respective readership costs. 1040ez 2009 Similarly, the total income attributable to each periodical has exceeded the total deductions attributable to each periodical for substantially all the years they have been published. 1040ez 2009 The newsletter carries no advertising and its annual subscription price is not intended to cover the cost of publication. 1040ez 2009 The newsletter is a service that Y distributes to all of its members in an effort to keep them informed of changes occurring in the business world. 1040ez 2009 It is not engaged in for profit. 1040ez 2009 Under these circumstances, Y may consolidate the income and deductions from the monthly and quarterly journals in computing its unrelated business taxable income. 1040ez 2009 It may not consolidate the income and deductions from the newsletter with the income and deductions of its other periodicals, since the newsletter is not published for the production of income. 1040ez 2009 Modifications Net operating loss deduction. 1040ez 2009   The net operating loss (NOL) deduction (as provided in section 172) is allowed in computing unrelated business taxable income. 1040ez 2009 However, the NOL for any tax year, the carrybacks and carryovers of NOLs, and the NOL deduction are determined without taking into account any amount of income or deduction that has been specifically excluded in computing unrelated business taxable income. 1040ez 2009 For example, a loss from an unrelated trade or business is not diminished because dividend income was received. 1040ez 2009   If this were not done, organizations would, in effect, be taxed on their exempt income, since unrelated business losses then would be offset by dividends, interest, and other excluded income. 1040ez 2009 This would reduce the loss that could be applied against unrelated business income of prior or future tax years. 1040ez 2009 Therefore, to preserve the immunity of exempt income, all NOL computations are limited to those items of income and deductions that affect the unrelated business taxable income. 1040ez 2009   In line with this concept, an NOL carryback or carryover is allowed only from a tax year for which the organization is subject to tax on unrelated business income. 1040ez 2009   For example, if an organization just became subject to the tax last year, its NOL for that year is not a carryback to a prior year when it had no unrelated business taxable income, nor is its NOL carryover to succeeding years reduced by the related income of those prior years. 1040ez 2009   However, in determining the span of years for which an NOL may be carried back or forward, the tax years for which the organization is not subject to the tax on unrelated business income are counted. 1040ez 2009 For example, if an organization was subject to the tax for 2009 and had an NOL for that year, the last tax year to which any part of that loss may be carried over is 2029, regardless of whether the organization was subject to the unrelated business income tax in any of the intervening years. 1040ez 2009   For more details on the NOL deduction, including property eligible for an extended carryback period, see sections 172 and 1400N, Publication 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts, and Publication 4492-B, Information for Affected Taxpayers in the Midwestern Disaster Areas. 1040ez 2009 Charitable contributions deduction. 1040ez 2009   An exempt organization is allowed to deduct its charitable contributions in computing its unrelated business taxable income whether or not the contributions are directly connected with the unrelated business. 1040ez 2009   To be deductible, the contribution must be paid to another qualified organization. 1040ez 2009 For example, an exempt university that operates an unrelated business may deduct a contribution made to another university for educational work, but may not claim a deduction for contributions of amounts spent for carrying out its own educational program. 1040ez 2009   For purposes of the deduction, a distribution by a trust made under the trust instrument to a beneficiary, which itself is a qualified organization, is treated the same as a contribution. 1040ez 2009 Deduction limits. 1040ez 2009   An exempt organization that is subject to the unrelated business income tax at corporate rates is allowed a deduction for charitable contributions up to 10% of its unrelated business taxable income computed without regard to the deduction for contributions. 1040ez 2009 See the Instructions for Form 990-T for more information. 1040ez 2009    An exempt trust that is subject to the unrelated business income tax at trust rates generally is allowed a deduction for charitable contributions in the same amounts as allowed for individuals. 1040ez 2009 However, the limit on the deduction is determined in relation to the trust's unrelated business taxable income computed without regard to the deduction, rather than in relation to adjusted gross income. 1040ez 2009   Contributions in excess of the limits just described may be carried over to the next 5 tax years. 1040ez 2009 A contribution carryover is not allowed, however, to the extent that it increases an NOL carryover. 1040ez 2009 Suspension of deduction limits for farmers and ranchers. 1040ez 2009   The limitations discussed above are temporarily suspended for certain qualified conservation contributions of property used in agriculture or livestock production. 1040ez 2009 See the Instructions for Form 990-T for details. 1040ez 2009 Specific deduction. 1040ez 2009   In computing unrelated business taxable income, a specific deduction of $1,000 is allowed. 1040ez 2009 However, the specific deduction is not allowed in computing an NOL or the NOL deduction. 1040ez 2009   Generally, the deduction is limited to $1,000 regardless of the number of unrelated businesses in which the organization is engaged. 1040ez 2009 Exception. 1040ez 2009   An exception is provided in the case of a diocese, province of a religious order, or a convention or association of churches that may claim a specific deduction for each parish, individual church, district, or other local unit. 1040ez 2009 In these cases, the specific deduction for each local unit is limited to the lower of: $1,000, or Gross income derived from an unrelated trade or business regularly conducted by the local unit. 1040ez 2009   This exception applies only to parishes, districts, or other local units that are not separate legal entities, but are components of a larger entity (diocese, province, convention, or association) filing Form 990-T. 1040ez 2009 The parent organization must file a return reporting the unrelated business gross income and related deductions of all units that are not separate legal entities. 1040ez 2009 The local units cannot file separate returns. 1040ez 2009 However, each local unit that is separately incorporated must file its own return and cannot include, or be included with, any other entity. 1040ez 2009 See Title-holding corporations in chapter 1 for a discussion of the only situation in which more than one legal entity may be included on the same Form 990-T. 1040ez 2009 Example. 1040ez 2009 X is an association of churches and is divided into local units A, B, C, and D. 1040ez 2009 Last year, A, B, C, and D derived gross income of, respectively, $1,200, $800, $1,500, and $700 from unrelated businesses that they regularly conduct. 1040ez 2009 X may claim a specific deduction of $1,000 with respect to A, $800 with respect to B, $1,000 with respect to C, and $700 with respect to D. 1040ez 2009 Partnership Income or Loss An organization may have unrelated business income or loss as a member of a partnership, rather than through direct business dealings with the public. 1040ez 2009 If so, it must treat its share of the partnership income or loss as if it had conducted the business activity in its own capacity as a corporation or trust. 1040ez 2009 No distinction is made between limited and general partners. 1040ez 2009 The organization is required to notify the partnership of its tax-exempt status. 1040ez 2009 Thus, if an organization is a member of a partnership regularly engaged in a trade or business that is an unrelated trade or business with respect to the organization, the organization must include in its unrelated business taxable income its share of the partnership's gross income from the unrelated trade or business (whether or not distributed), and the deductions attributable to it. 1040ez 2009 The partnership income and deductions to be included in the organization's unrelated business taxable income are figured the same way as any income and deductions from an unrelated trade or business conducted directly by the organization. 1040ez 2009 The partnership is required to provide the organization this information on Schedule K-1. 1040ez 2009 Example. 1040ez 2009 An exempt educational organization is a partner in a partnership that operates a factory. 1040ez 2009 The partnership also holds stock in a corporation. 1040ez 2009 The exempt organization must include its share of the gross income from operating the factory in its unrelated business taxable income but may exclude its share of any dividends the partnership received from the corporation. 1040ez 2009 Different tax years. 1040ez 2009   If the exempt organization and the partnership of which it is a member have different tax years, the partnership items that enter into the computation of the organization's unrelated business taxable income must be based on the income and deductions of the partnership for the partnership's tax year that ends within or with the organization's tax year. 1040ez 2009 S Corporation Income or Loss An organization that owns S corporation stock must take into account its share of the S corporation's income, deductions, or losses in figuring unrelated business taxable income, regardless of the actual source or nature of the income, deductions, and losses. 1040ez 2009 For example, the organization's share of the S corporation's interest and dividend income will be taxable, even though interest and dividends are normally excluded from unrelated business taxable income. 1040ez 2009 The organization must also take into account its gain or loss on the sale or other disposition of the S corporation stock in figuring unrelated business taxable income. 1040ez 2009 Special Rules for Foreign Organizations The unrelated business taxable income of a foreign organization exempt from tax under section 501(a) consists of the organization's: Unrelated business taxable income derived from sources within the United States but not effectively connected with the conduct of a trade or business within the United States, and Unrelated business taxable income effectively connected with the conduct of a trade or business within the United States, whether or not this income is derived from sources within the United States. 1040ez 2009 To determine whether income realized by a foreign organization is derived from sources within the United States or is effectively connected with the conduct of a trade or business within the United States, see sections 861 through 865 and the related regulations. 1040ez 2009 Special Rules for Social Clubs, VEBAs, SUBs, and GLSOs The following discussion applies to: Social clubs described in section 501(c)(7), Voluntary employees' beneficiary associations (VEBAs) described in section 501(c)(9), Supplemental unemployment compensation benefit trusts (SUBs) described in section 501(c)(17), and Group legal services organizations (GLSOs) described in section 501(c)(20). 1040ez 2009 These organizations must figure unrelated business taxable income under special rules. 1040ez 2009 Unlike other exempt organizations, they cannot exclude their investment income (dividends, interest, rents, etc. 1040ez 2009 ). 1040ez 2009 (See Exclusions under Income, earlier. 1040ez 2009 ) Therefore, they are generally subject to unrelated business income tax on this income. 1040ez 2009 The unrelated business taxable income of these organizations includes all gross income, less deductions directly connected with the production of that income, except that gross income for this purpose does not include exempt function income. 1040ez 2009 The dividends received by a corporation are not allowed in computing unrelated business taxable income because it is not an expense incurred in the production of income. 1040ez 2009 Losses from nonexempt activities. 1040ez 2009   Losses from nonexempt activities of these organizations cannot be used to offset investment income unless the activities were undertaken with the intent to make a profit. 1040ez 2009 Example. 1040ez 2009 A private golf and country club that is a qualified tax-exempt social club has nonexempt function income from interest and from the sale of food and beverages to nonmembers. 1040ez 2009 The club sells food and beverages as a service to members and their guests rather than for the purpose of making a profit. 1040ez 2009 Therefore, any loss resulting from sales to nonmembers cannot be used to offset the club's interest income. 1040ez 2009 Modifications. 1040ez 2009   The unrelated business taxable income is modified by any NOL or charitable contributions deduction and by the specific deduction (described earlier under Deductions). 1040ez 2009 Exempt function income. 1040ez 2009   This is gross income from dues, fees, charges or similar items paid by members for goods, facilities, or services to the members or their dependents or guests, to further the organization's exempt purposes. 1040ez 2009 Exempt function income also includes income set aside for qualified purposes. 1040ez 2009 Income that is set aside. 1040ez 2009   This is income set aside to be used for religious, charitable, scientific, literary, or educational purposes or for the prevention of cruelty to children or animals. 1040ez 2009 In addition, for a VEBA, SUB, or GLSO, it is income set aside to provide for the payment of life, sick, accident, or other benefits. 1040ez 2009   However, any amounts set aside by a VEBA or SUB that exceed the organization's qualified asset account limit (determined under section 419A) are unrelated business income. 1040ez 2009 Special rules apply to the treatment of existing reserves for post-retirement medical or life insurance benefits. 1040ez 2009 These rules are explained in section 512(a)(3)(E)(ii). 1040ez 2009   Income derived from an unrelated trade or business may not be set aside and therefore cannot be exempt function income. 1040ez 2009 In addition, any income set aside and later spent for other purposes must be included in unrelated business taxable income. 1040ez 2009   Set-aside income is generally excluded from gross income only if it is set aside in the tax year in which it is otherwise includible in gross income. 1040ez 2009 However, income set aside on or before the date for filing Form 990-T, including extensions of time, may, at the election of the organization, be treated as having been set aside in the tax year for which the return was filed. 1040ez 2009 The income set aside must have been includible in gross income for that earlier year. 1040ez 2009 Nonrecognition of gain. 1040ez 2009   If the organization sells property used directly in performing an exempt function and purchases other property used directly in performing an exempt function, any gain on the sale is recognized only to the extent that the sales price of the old property exceeds the cost of the new property. 1040ez 2009 The purchase of the new property must be made within 1 year before the date of sale of the old property or within 3 years after the date of sale. 1040ez 2009   This rule also applies to gain from an involuntary conversion of the property resulting from its destruction in whole or in part, theft, seizure, requisition, or condemnation. 1040ez 2009 Special Rules for Veterans' Organizations Unrelated business taxable income of a veterans' organization that is exempt under section 501(c)(19) does not include the net income from insurance business that is properly set aside. 1040ez 2009 The organization may set aside income from payments received for life, sick, accident, or health insurance for the organization's members or their dependents for the payment of insurance benefits or reasonable costs of insurance administration, or for use exclusively for religious, charitable, scientific, literary, or educational purposes, or the prevention of cruelty to children or animals. 1040ez 2009 For details, see section 512(a)(4) and the regulations under that section. 1040ez 2009 Income From Controlled Organizations The exclusions for interest, annuities, royalties, and rents, explained earlier in this chapter under Income, may not apply to a payment of these items received by a controlling organization from its controlled organization. 1040ez 2009 The payment is included in the controlling organization's unrelated business taxable income to the extent it reduced the net unrelated income (or increased the net unrelated loss) of the controlled organization. 1040ez 2009 All deductions of the controlling organization directly connected with the amount included in its unrelated business taxable income are allowed. 1040ez 2009 Excess qualifying specified payments. 1040ez 2009   Excess qualifying specified payments received or accrued from a controlled entity are included in a controlling exempt organization's unrelated business taxable income only on the amount that exceeds that which would have been paid or accrued if the payments had been determined under section 482. 1040ez 2009 Qualifying specified payments means any payments of interest, annuities, royalties, or rents received or accrued from the controlled organization pursuant to a binding written contract in effect on August 17, 2006, or to a contract which is a renewal, under substantially similar terms of a binding written contract in effect on August 17, 2006, and the payments are received or accrued before January 1, 2012. 1040ez 2009   If a controlled participant is not required to file a U. 1040ez 2009 S. 1040ez 2009 income tax return, the participant must ensure that the copy or copies of the Regulations section 1. 1040ez 2009 482-7 Cost Sharing Arrangement Statement and any updates are attached to Schedule M of any Form 5471, Information Return of U. 1040ez 2009 S. 1040ez 2009 Persons With Respect To Certain Foreign Corporations, any Form 5472, Information Return of a 25% Foreign-Owned U. 1040ez 2009 S. 1040ez 2009 Corporation or a Foreign Corporation Engaged in a U. 1040ez 2009 S. 1040ez 2009 Trade or Business, or any Form 8865, Return of U. 1040ez 2009 S. 1040ez 2009 Persons With Respect to Certain Foreign Partnerships, filed for that participant. 1040ez 2009 Addition to tax for valuation misstatements. 1040ez 2009   Under section 512(b)(13)(E)(ii), the tax imposed on a controlling organization will be increased by 20 percent of the excess qualifying specified payments that are determined with or without any amendments or supplements, whichever is larger. 1040ez 2009 See section 512(b)(13)(E)(ii) for more information. 1040ez 2009 Net unrelated income. 1040ez 2009   This is: For an exempt organization, its unrelated business taxable income, or For a nonexempt organization, the part of its taxable income that would be unrelated business taxable income if it were exempt and had the same exempt purposes as the controlling organization. 1040ez 2009 Net unrelated loss. 1040ez 2009   This is: For an exempt organization, its NOL, or For a nonexempt organization, the part of its NOL that would be its NOL if it were exempt and had the same exempt purposes as the controlling organization. 1040ez 2009 Control. 1040ez 2009   An organization is controlled if: For a corporation, the controlling organization owns (by vote or value) more than 50% of the stock, For a partnership, the controlling organization owns more than 50% of the profits or capital interests, or For any other organization, the controlling organization owns more than 50% of the beneficial interest. 1040ez 2009 For this purpose, constructive ownership of stock (determined under section 318) or other interests is taken into account. 1040ez 2009   As a result, an exempt parent organization is treated as controlling any subsidiary in which it holds more than 50% of the voting power or value, whether directly (as in the case of a first-tier subsidiary) or indirectly (as in the case of a second-tier subsidiary). 1040ez 2009 Income from property financed with qualified 501(c)(3) bonds. 1040ez 2009 If any part of a 501(c)(3) organization's property financed with qualified 501(c)(3) bonds is used in a trade or business of any person other than a section 501(c)(3) organization or a governmental unit, and such use is not consistent with the requirements for qualified 501(c)(3) bonds under section 145, the section 501(c)(3) organization is considered to have received unrelated business income in the amount of the greater of the actual rental income or the fair rental value of the property for the period it is used. 1040ez 2009 No deduction is allowed for interest on the private activity bond. 1040ez 2009 See sections 150(b)(3) and (c) for more information. 1040ez 2009 Disposition of property received from taxable subsidiary and used in unrelated business. 1040ez 2009 A taxable 80%-owned subsidiary corporation of one or more tax-exempt entities is generally subject to tax on a distribution in liquidation of its assets to its exempt parent (or parents). 1040ez 2009 The assets are treated as if sold at fair market value. 1040ez 2009 Tax-exempt entities include organizations described in sections 501(a), 529, and 115, charitable remainder trusts, U. 1040ez 2009 S. 1040ez 2009 and foreign governments, Indian tribal governments, international organizations, and similar non-taxable organizations. 1040ez 2009 A taxable corporation that transfers substantially all of its assets to a tax-exempt entity in a transaction that otherwise qualifies for nonrecognition treatment must recognize gain on the transaction as if it sold the assets at fair market value. 1040ez 2009 However, such a transfer is not taxable if it qualifies as a like-kind exchange under section 1031 or an involuntary conversion under section 1033. 1040ez 2009 In such a case the built-in appreciation is preserved in the replacement property received in the transaction. 1040ez 2009 A corporation that changes status from taxable to tax-exempt is treated generally as if it transferred all of its assets to a tax-exempt entity immediately before the change in status (thus subjecting it to the tax on a deemed sale for fair market value). 1040ez 2009 This rule does not apply where the taxable corporation becomes exempt within 3 years of formation, or had previously been exempt and within several years (generally a period of 3 years) regains exemption, unless the principal purpose of the transactions is to avoid the tax on the change in status. 1040ez 2009 In the transactions described above, the taxable event is deferred for property that the tax-exempt entity immediately uses in an unrelated business. 1040ez 2009 If the parent later disposes of the property, then any gain (not in excess of the amount not recognized) is included in the parent's unrelated business taxable income. 1040ez 2009 If there is partial use of the assets in unrelated business, then there is partial recognition of gain or loss. 1040ez 2009 Property is treated as disposed if the tax-exempt entity no longer uses it in an unrelated business. 1040ez 2009 Losses on the transfer of assets to a tax-exempt entity are disallowed if part of a plan with a principal purpose of recognizing losses. 1040ez 2009 Income From Debt-Financed Property Investment income that would otherwise be excluded from an exempt organization's unrelated business taxable income (see Exclusions under Income earlier) must be included to the extent it is derived from debt-financed property. 1040ez 2009 The amount of income included is proportionate to the debt on the property. 1040ez 2009 Debt-Financed Property In general, the term “debt-financed property” means any property held to produce income (including gain from its disposition) for which there is an acquisition indebtedness at any time during the tax year (or during the 12-month period before the date of the property's disposal, if it was disposed of during the tax year). 1040ez 2009 It includes rental real estate, tangible personal property, and corporate stock. 1040ez 2009 Acquisition Indebtedness For any debt-financed property, acquisition indebtedness is the unpaid amount of debt incurred by an organization: When acquiring or improving the property, Before acquiring or improving the property if the debt would not have been incurred except for the acquisition or improvement, and After acquiring or improving the property if: The debt would not have been incurred except for the acquisition or improvement, and Incurring the debt was reasonably foreseeable when the property was acquired or improved. 1040ez 2009 The facts and circumstances of each situation determine whether incurring a debt was reasonably foreseeable. 1040ez 2009 That an organization may not have foreseen the need to incur a debt before acquiring or improving the property does not necessarily mean that incurring the debt later was not reasonably foreseeable. 1040ez 2009 Example 1. 1040ez 2009 Y, an exempt scientific organization, mortgages its laboratory to replace working capital used in remodeling an office building that Y rents to an insurance company for nonexempt purposes. 1040ez 2009 The debt is acquisition indebtedness since the debt, though incurred after the improvement of the office building, would not have been incurred without the improvement, and the debt was reasonably foreseeable when, to make the improvement, Y reduced its working capital below the amount necessary to continue current operations. 1040ez 2009 Example 2. 1040ez 2009 X, an exempt organization, forms a partnership with A and B. 1040ez 2009 The partnership agreement provides that all three partners will share equally in the profits of the partnership, each will invest $3 million, and X will be a limited partner. 1040ez 2009 X invests $1 million of its own funds in the partnership and $2 million of borrowed funds. 1040ez 2009 The partnership buys as its sole asset an office building that it leases to the public for nonexempt purposes. 1040ez 2009 The office building costs the partnership $24 million, of which $15 million is borrowed from Y bank. 1040ez 2009 The loan is secured by a mortgage on the entire office building. 1040ez 2009 By agreement with Y bank, X is not personally liable for payment of the mortgage. 1040ez 2009 X has acquisition indebtedness of $7 million. 1040ez 2009 This amount is the $2 million debt X incurred in acquiring the partnership interest, plus the $5 million that is X's allocable part of the partnership's debt incurred to buy the office building (one-third of $15 million). 1040ez 2009 Example 3. 1040ez 2009 A labor union advanced funds, from existing resources and without any borrowing, to its tax-exempt subsidiary title-holding company. 1040ez 2009 The subsidiary used the funds to pay a debt owed to a third party that was previously incurred in acquiring two income-producing office buildings. 1040ez 2009 Neither the union nor the subsidiary has incurred any further debt in acquiring or improving the property. 1040ez 2009 The union has no outstanding debt on the property. 1040ez 2009 The subsidiary's debt to the union is represented by a demand note on which the subsidiary makes payments whenever it has the available cash. 1040ez 2009 The books of the union and the subsidiary list the outstanding debt as interorganizational indebtedness. 1040ez 2009 Although the subsidiary's books show a debt to the union, it is not the type subject to the debt-financed property rules. 1040ez 2009 In this situation, the very nature of the title-holding company and the parent-subsidiary relationship shows this debt to be merely a matter of accounting between the two organizations. 1040ez 2009 Accordingly, the debt is not acquisition indebtedness. 1040ez 2009 Change in use of property. 1040ez 2009   If an organization converts property that is not debt-financed property to a use that results in its treatment as debt-financed property, the outstanding principal debt on the property is thereafter treated as acquisition indebtedness. 1040ez 2009 Example. 1040ez 2009 Four years ago a university borrowed funds to acquire an apartment building as housing for married students. 1040ez 2009 Last year, the university rented the apartment building to the public for nonexempt purposes. 1040ez 2009 The outstanding principal debt becomes acquisition indebtedness as of the time the building was first rented to the public. 1040ez 2009 Continued debt. 1040ez 2009   If an organization sells property and, without paying off debt that would be acquisition indebtedness if the property were debt-financed property, buys property that is otherwise debt-financed property, the unpaid debt is acquisition indebtedness for the new property. 1040ez 2009 This is true even if the original property was not debt-financed property. 1040ez 2009 Example. 1040ez 2009 To house its administration offices, an exempt organization bought a building using $600,000 of its own funds and $400,000 of borrowed funds secured by a pledge of its securities. 1040ez 2009 The office building was not debt-financed property. 1040ez 2009 The organization later sold the building for $1 million without repaying the $400,000 loan. 1040ez 2009 It used the sale proceeds to buy an apartment building it rents to the general public. 1040ez 2009 The unpaid debt of $400,000 is acquisition indebtedness with respect to the apartment building. 1040ez 2009 Property acquired subject to mortgage or lien. 1040ez 2009   If property (other than certain gifts, bequests, and devises) is acquired subject to a mortgage, the outstanding principal debt secured by that mortgage is treated as acquisition indebtedness even if the organization did not assume or agree to pay the debt. 1040ez 2009 Example. 1040ez 2009 An exempt organization paid $50,000 for real property valued at $150,000 and subject to a $100,000 mortgage. 1040ez 2009 The $100,000 of outstanding principal debt is acquisition indebtedness, as though the organization had borrowed $100,000 to buy the property. 1040ez 2009 Liens similar to a mortgage. 1040ez 2009   In determining acquisition indebtedness, a lien similar to a mortgage is treated as a mortgage. 1040ez 2009 A lien is similar to a mortgage if title to property is encumbered by the lien for a creditor's benefit. 1040ez 2009 However, when state law provides that a lien for taxes or assessments attaches to property before the taxes or assessments become due and payable, the lien is not treated as a mortgage until after the taxes or assessments have become due and payable and the organization has had an opportunity to pay the lien in accordance with state law. 1040ez 2009 Liens similar to mortgages include (but are not limited to): Deeds of trust, Conditional sales contracts, Chattel mortgages, Security interests under the Uniform Commercial Code, Pledges, Agreements to hold title in escrow, and Liens for taxes or assessments (other than those discussed earlier in this paragraph). 1040ez 2009 Exception for property acquired by gift, bequest, or devise. 1040ez 2009   If property subject to a mortgage is acquired by gift, bequest, or devise, the outstanding principal debt secured by the mortgage is not treated as acquisition indebtedness during the 10-year period following the date the organization receives the property. 1040ez 2009 However, this applies to a gift of property only if:    The mortgage was placed on the property more than 5 years before the date the organization received it, and The donor held the property for more than 5 years before the date the organization received it. 1040ez 2009   This exception does not apply if an organization assumes and agrees to pay all or part of the debt secured by the mortgage or makes any payment for the equity in the property owned by the donor or decedent (other than a payment under an annuity obligation excluded from the definition of acquisition indebtedness, discussed under Debt That Is Not Acquisition Indebtedness, later). 1040ez 2009   Whether an organization has assumed and agreed to pay all or part of a debt in order to acquire the property is determined by the facts and circumstances of each situation. 1040ez 2009 Modifying existing debt. 1040ez 2009   Extending, renewing, or refinancing an existing debt is considered a continuation of that debt to the extent its outstanding principal does not increase. 1040ez 2009 When the principal of the modified debt is more than the outstanding principal of the old debt, the excess is treated as a separate debt. 1040ez 2009 Extension or renewal. 1040ez 2009   In general, any modification or substitution of the terms of a debt by an organization is considered an extension or renewal of the original debt, rather than the start of a new one, to the extent that the outstanding principal of the debt does not increase. 1040ez 2009   The following are examples of acts resulting in the extension or renewal of a debt: Substituting liens to secure the debt, Substituting obligees whether or not with the organization's consent, Renewing, extending, or accelerating the payment terms of the debt, and Adding, deleting, or substituting sureties or other primary or secondary obligors. 1040ez 2009 Debt increase. 1040ez 2009   If the outstanding principal of a modified debt is more than that of the unmodified debt, and only part of the refinanced debt is acquisition indebtedness, the payments on the refinanced debt must be allocated between the old debt and the excess. 1040ez 2009 Example. 1040ez 2009 An organization has an outstanding principal debt of $500,000 that is treated as acquisition indebtedness. 1040ez 2009 The organization borrows another $100,000, which is not acquisition indebtedness, from the same lender, resulting in a $600,000 note for the total obligation. 1040ez 2009 A payment of $60,000 on the total obligation would reduce the acquisition indebtedness by $50,000 ($60,000 x $500,000/$600,000) and the excess debt by $10,000. 1040ez 2009 Debt That Is Not Acquisition Indebtedness Certain debt and obligations are not acquisition indebtedness. 1040ez 2009 These include the following. 1040ez 2009 Debts incurred in performing an exempt purpose. 1040ez 2009 Annuity obligations. 1040ez 2009 Securities loans. 1040ez 2009 Real property debts of qualified organizations. 1040ez 2009 Certain Federal financing. 1040ez 2009 Debt incurred in performing exempt purpose. 1040ez 2009   A debt incurred in performing an exempt purpose is not acquisition indebtedness. 1040ez 2009 For example, acquisition indebtedness does not include the debt an exempt credit union incurs in accepting deposits from its members or the debt an exempt organization incurs in accepting payments from its members to provide them with insurance, retirement, or other benefits. 1040ez 2009 Annuity obligation. 1040ez 2009   The organization's obligation to pay an annuity is not acquisition indebtedness if the annuity meets all the following requirements. 1040ez 2009 It must be the sole consideration (other than a mortgage on property acquired by gift, bequest, or devise that meets the exception discussed under Property acquired subject to mortgage or lien, earlier in this chapter) issued in exchange for the property received. 1040ez 2009 Its present value, at the time of exchange, must be less than 90% of the value of the prior owner's equity in the property received. 1040ez 2009 It must be payable over the lives of either one or two individuals living when issued. 1040ez 2009 It must be payable under a contract that: Does not guarantee a minimum nor specify a maximum number of payments, and Does not provide for any adjustment of the amount of the annuity payments based on the income received from the transferred property or any other property. 1040ez 2009 Example. 1040ez 2009 X, an exempt organization, receives property valued at $100,000 from donor A, a male age 60. 1040ez 2009 In return X promises to pay A $6,000 a year for the rest of A's life, with neither a minimum nor maximum number of payments specified. 1040ez 2009 The amounts paid under the annuity are not dependent on the income derived from the property transferred to X. 1040ez 2009 The present value of this annuity is $81,156, determined from IRS valuation tables. 1040ez 2009 Since the value of the annuity is less than 90 percent of A's $100,000 equity in the property transferred and the annuity meets all the other requirements just discussed, the obligation to make annuity payments is not acquisition indebtedness. 1040ez 2009 Securities loans. 1040ez 2009   Acquisition indebtedness does not include an obligation of the exempt organization to return collateral security provided by the borrower of the exempt organization's securities under a securities loan agreement (discussed under Exclusions earlier in this chapter). 1040ez 2009 This transaction is not treated as the borrowing by the exempt organization of the collateral furnished by the borrower (usually a broker) of the securities. 1040ez 2009   However, if the exempt organization incurred debt to buy the loaned securities, any income from the securities (including income from