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

1040ez printable form 2. 1040ez printable form   Fuel Tax Credits and Refunds Table of Contents Gasoline and Aviation Gasoline Undyed Diesel Fuel and Undyed Kerosene (Other Than Kerosene Used in Aviation)Sales by Registered Ultimate Vendors Diesel-Water Fuel Emulsion Kerosene for Use in AviationSales by Registered Ultimate Vendors Other Fuels (Including Alternative Fuels) Refunds of Second TaxOptional reporting. 1040ez printable form Providing information. 1040ez printable form Definitions of Nontaxable UsesCustom application of fertilizer and pesticide. 1040ez printable form Fuel used between airfield and farm. 1040ez printable form Fuel not used for farming. 1040ez printable form Vehicles not considered highway vehicles. 1040ez printable form Biodiesel or Renewable Diesel Mixture Credit, Alternative Fuel Credit, and Alternative Fuel Mixture CreditHow to Claim the Credit Filing Claims Claiming A Refund Claiming a Credit on Form 4136 Including the Credit or Refund in Income Federal excise taxes are imposed on certain fuels as discussed in chapter 1. 1040ez printable form This chapter lists the nontaxable uses of each fuel and defines the nontaxable uses. 1040ez printable form Information on the refund of second tax is included. 1040ez printable form This chapter also explains credits and refunds for the biodiesel or renewable diesel mixture credits, and the alternative fuel mixture and alternative fuel credits. 1040ez printable form Information on how to make a claim for credit or refund is included in this chapter and in the instructions for: Form 720, Form 4136, and Form 8849. 1040ez printable form Exported taxable fuel. 1040ez printable form   The claim rates for exported taxable fuel are listed on Schedule C (Form 720), Schedule 1 (Form 8849), and Form 4136. 1040ez printable form Taxpayers making a claim for exported taxable fuel must include with their records proof of exportation. 1040ez printable form Proof of exportation includes: A copy of the export bill of lading issued by the delivering carrier, A certificate by the agent or representative of the export carrier showing actual exportation of the fuel, A certificate of lading signed by a customs officer of the foreign country to which the fuel is exported, or A statement of the foreign consignee showing receipt of the fuel. 1040ez printable form Gasoline and Aviation Gasoline Ultimate Purchasers. 1040ez printable form   The following are the uses of gasoline (defined earlier) for which a credit or refund may be allowable to an ultimate purchaser. 1040ez printable form On a farm for farming purposes (credit only). 1040ez printable form Off-highway business use. 1040ez printable form Export. 1040ez printable form In a boat engaged in commercial fishing. 1040ez printable form In certain intercity and local buses. 1040ez printable form In a school bus. 1040ez printable form Exclusive use by a qualified blood collector organization. 1040ez printable form In a highway vehicle owned by the United States that is not used on a highway. 1040ez printable form Exclusive use by a nonprofit educational organization (see Sales by registered ultimate vendors and Credit Card Purchases, later). 1040ez printable form Exclusive use by a state, political subdivision of a state, or the District of Columbia (see Sales by registered ultimate vendors and Credit Card Purchases, later). 1040ez printable form In an aircraft or vehicle owned by an aircraft museum. 1040ez printable form   The following are the uses of aviation gasoline for which a credit or refund may be allowable to an ultimate purchaser. 1040ez printable form On a farm for farming purposes (credit only). 1040ez printable form Export. 1040ez printable form In foreign trade. 1040ez printable form Certain helicopter and fixed-wing air ambulance uses. 1040ez printable form In commercial aviation (other than foreign trade). 1040ez printable form Exclusive use by a qualified blood collector organization. 1040ez printable form Exclusive use by a nonprofit education organization (see Sales by registered ultimate vendors and Credit card purchases, later). 1040ez printable form Exclusive use by a state, political subdivision of a state, or the District of Columbia (see Sales by registered ultimate vendors and Credit and purchases, later). 1040ez printable form In an aircraft owned by an aircraft museum. 1040ez printable form In military aircraft. 1040ez printable form Claims by persons who paid the tax to the government. 1040ez printable form   Except for sales to nonprofit educational organizations and states and local governments, a credit or refund is allowable to the person that paid the tax to the government if the gasoline was sold to the ultimate purchaser (including an exporter) by either that person or by a retailer and the fuel was exported; used or sold for use as supplies for vessels or aircraft, including military aircraft, commercial fishing, and foreign trade; sold to a qualified blood collector organization; or used or sold for use in the production of Other Fuels. 1040ez printable form See Filing Claims, later. 1040ez printable form Sales by registered ultimate vendors. 1040ez printable form   This is an ultimate vendor that sells gasoline or aviation gasoline to any of the following and that is purchased without the use of a credit card. 1040ez printable form A state or local government for its exclusive use (including essential government use by an Indian tribal government). 1040ez printable form A nonprofit educational organization for its exclusive use. 1040ez printable form   The registered ultimate vendor may make the claim if the ultimate purchaser did not use a credit card and waives its right to the credit or refund by providing the registered ultimate vendor with a certificate. 1040ez printable form A sample certificate is included as Model Certificate M in the Appendix. 1040ez printable form The registered ultimate vendor must have the certificate at the time the credit or refund is claimed. 1040ez printable form   The ultimate vendor must be registered by the IRS. 1040ez printable form See Registration Requirements, earlier. 1040ez printable form Credit card purchases. 1040ez printable form   If gasoline and aviation gasoline are purchased with a credit card issued to a state or local government for its exclusive use (including essential government use by an Indian tribal government), or a nonprofit educational organization for its exclusive use, the person who extended credit to the ultimate purchaser (the credit card issuer) is treated as the person that paid the tax and makes the claim if the credit card issuer: Is registered by the IRS, Has established that the amount of tax has not been collected from the person who purchased the gasoline or has obtained written consent from the ultimate purchaser to the allowance of the credit or refund, and Has repaid or agreed to repay the amount of the tax to the ultimate vendor, has obtained the written consent of the ultimate vendor to the allowance of the credit or refund, or has made arrangements that provide the ultimate vendor with reimbursement of the tax. 1040ez printable form   If the requirements above are not met by the credit card issuer, the credit card issuer must collect the tax from the ultimate purchaser and only the ultimate purchaser may make the claim. 1040ez printable form How to make the claim. 1040ez printable form   If the claim is made by the credit card issuer, see Schedule C  (Form 720) or Schedule 8 (Form 8849). 1040ez printable form Undyed Diesel Fuel and Undyed Kerosene (Other Than Kerosene Used in Aviation) For conditions to an allowance of a credit or refund on exported dyed diesel fuel and dyed kerosene, see Exported taxable fuel, earlier. 1040ez printable form Ultimate purchasers. 1040ez printable form   The following are nontaxable uses of diesel fuel and kerosene (defined earlier) for which a credit or refund may be allowable to an ultimate purchaser. 1040ez printable form On a farm for farming purposes. 1040ez printable form Off-highway business use. 1040ez printable form Export. 1040ez printable form In a qualified local bus. 1040ez printable form In a school bus. 1040ez printable form Other than as a fuel in a propulsion engine of a diesel-powered highway vehicle (such as home heating oil). 1040ez printable form Exclusive use by a qualified blood collector organization. 1040ez printable form In a highway vehicle owned by the United States that is not used on a highway. 1040ez printable form Exclusive use by a nonprofit educational organization (see Sales by Registered Ultimate Vendors and Credit Card Purchases, later). 1040ez printable form Exclusive use by a state, political subdivision of a state, or the District of Columbia (see Sales by Registered Ultimate Vendors and Credit Card Purchases, later). 1040ez printable form In a vehicle owned by an aircraft museum. 1040ez printable form As a fuel in a propulsion engine of a diesel-powered train. 1040ez printable form Sales by Registered Ultimate Vendors The following are the sales for which a credit or refund may be allowable to the registered ultimate vendor only. 1040ez printable form Undyed diesel fuel or undyed kerosene sold for the exclusive use by a state or local government (if credit card rules (defined later) do not apply), Undyed kerosene sold from a blocked pump (defined below), or Undyed diesel fuel or undyed kerosene used in certain intercity and local buses, only if the ultimate purchaser waives its right to the credit or refund by providing the registered ultimate vendor with a waiver. 1040ez printable form Registered ultimate vendor (state use). 1040ez printable form   This is a person that sells undyed diesel fuel or undyed kerosene to a state or local government for its exclusive use (including essential government use by an Indian tribal government). 1040ez printable form The diesel fuel or kerosene must be purchased by the state without the use of a credit card, issued to the state by the credit card issuer, in order for the ultimate vendor to make the claim. 1040ez printable form The ultimate vendor must be registered by the IRS. 1040ez printable form See Registration Requirements, earlier. 1040ez printable form Registered ultimate vendor (blocked pump). 1040ez printable form   This is an ultimate vendor that sells undyed kerosene from a blocked pump. 1040ez printable form   A credit or refund may be allowable to a registered ultimate vendor (blocked pump) if the vendor sold to a buyer undyed kerosene from a blocked pump for use other than as a fuel in a diesel-powered highway vehicle and the vendor had no reason to believe the kerosene would not be used in that manner. 1040ez printable form Blocked pump. 1040ez printable form   A blocked pump is a fuel pump that meets all the following requirements. 1040ez printable form It is used to make retail sales of undyed kerosene for use by the buyer in any nontaxable use. 1040ez printable form It is at a fixed location. 1040ez printable form It is identified with a legible and conspicuous notice stating, “UNDYED UNTAXED KEROSENE, NONTAXABLE USE ONLY. 1040ez printable form ” It meets either of the following conditions. 1040ez printable form It cannot reasonably be used to dispense fuel directly into the fuel supply tank of a diesel-powered highway vehicle or train. 1040ez printable form It is locked by the vendor after each sale and unlocked by the vendor only in response to a buyer's request for undyed kerosene for use other than as a fuel in a diesel-powered highway vehicle or train. 1040ez printable form Registered ultimate vendor (certain intercity and local buses). 1040ez printable form   This is an ultimate vendor that sells undyed diesel fuel or undyed kerosene to the ultimate purchaser for use in certain intercity and local buses. 1040ez printable form   The registered ultimate vendor may make the claim if the ultimate purchaser waives its right to the credit or refund by providing the registered ultimate vendor with a waiver. 1040ez printable form A sample waiver is included as Model Waiver N in the Appendix. 1040ez printable form The registered ultimate vendor must have the waiver at the time the credit or payment is claimed. 1040ez printable form Credit Card Purchases. 1040ez printable form   If undyed diesel fuel or kerosene is purchased with a credit card issued to a state, the person who extended credit to the state (the credit card issuer) is treated as the person that paid the tax and makes the claim if the credit card issuer: Is registered by the IRS, Has established that the amount of tax has not been collected from the person who purchased the diesel fuel or kerosene, or has obtained written consent from the ultimate purchaser to the allowance of the credit or refund, and Has repaid or agreed to repay the amount of the tax to the ultimate vendor, has obtained the written consent of the ultimate vendor to the allowance of the credit or refund, or has made arrangements that provide the ultimate vendor with reimbursement of the tax. 1040ez printable form   If the requirements above are not met by the credit card issuer, the credit card issuer must collect the tax from the ultimate purchaser and only the ultimate purchaser may make the claim. 1040ez printable form Diesel-Water Fuel Emulsion A claim for credit or refund may be made for the nontaxable use of a diesel-water fuel emulsion and for undyed diesel fuel used to produce a diesel-water fuel emulsion. 1040ez printable form The claim rate for nontaxable use of a diesel-water fuel emulsion taxed at $. 1040ez printable form 198 per gallon is $. 1040ez printable form 197 (if exported, the claim rate is $. 1040ez printable form 198). 1040ez printable form The following are the nontaxable uses for a diesel-water fuel emulsion for which a credit or refund may be allowable to an ultimate purchaser. 1040ez printable form On a farm for farming purposes. 1040ez printable form Off-highway business use. 1040ez printable form Export. 1040ez printable form In a qualified local bus. 1040ez printable form In a school bus. 1040ez printable form Other than as fuel in the propulsion engine of a train or diesel-powered highway vehicle (but not off-highway use). 1040ez printable form Exclusive use by a qualified blood collector organization. 1040ez printable form In a highway vehicle owned by the United States that is not used on a highway. 1040ez printable form Exclusive use by a nonprofit educational organization. 1040ez printable form Exclusive use by a state, political subdivision of a state, or the District of Columbia. 1040ez printable form In an aircraft or vehicle owned by an aircraft museum. 1040ez printable form Blender claims. 1040ez printable form   The claim rate for undyed diesel fuel taxed at $. 1040ez printable form 244 and used to produce a diesel-water fuel emulsion is $. 1040ez printable form 046 per gallon of diesel fuel so used. 1040ez printable form The blender must be registered by the IRS in order to make the claim. 1040ez printable form The blender must attach a statement to the claim certifying that: The diesel-water fuel emulsion contains at least 14% water, The emulsion additive is registered by a United States manufacturer with the EPA under section 211 of the Clean Air Act as in effect on March 31, 2003, Undyed diesel fuel taxed at $. 1040ez printable form 244 was used to produce the diesel-water fuel emulsion, and The diesel-water fuel emulsion was used or sold for use in the blender's trade or business. 1040ez printable form Kerosene for Use in Aviation Ultimate purchasers. 1040ez printable form   Ultimate purchasers of kerosene used in certain aviation uses may make a claim if the rate of tax on their use is less than the rate of tax that was charged on the kerosene. 1040ez printable form   The ultimate purchaser of the kerosene used in commercial aviation (other than foreign trade) and noncommercial aviation (other than nonexempt, noncommercial aviation and exclusive use by a state, political subdivision of a state, or the District of Columbia) is eligible to make a claim if the ultimate purchaser certifies that the right to make the claim has not been waived. 1040ez printable form Generally, the ultimate purchaser is the aircraft operator. 1040ez printable form   The following are the nontaxable uses of kerosene used in noncommercial aviation for which a credit or refund may be allowable to the ultimate purchaser. 1040ez printable form On a farm for farming purposes. 1040ez printable form Certain helicopter and fixed-wing aircraft uses. 1040ez printable form Exclusive use by a qualified blood collector organization. 1040ez printable form Exclusive use by a nonprofit educational organization. 1040ez printable form In an aircraft owned by an aircraft museum. 1040ez printable form In military aircraft. 1040ez printable form Kerosene for use partly in commercial aviation and partly in nonexempt, noncommercial aviation. 1040ez printable form   If the fuel is used partly for use in commercial aviation and partly for use in nonexempt, noncommercial aviation, the operator may identify, either at the time of purchase or after the kerosene has been used, the amount that will be (or has been) used in commercial aviation. 1040ez printable form At the same time, the operator would either make the claim or waive the right to make the claim for credit or refund of the kerosene for use in commercial and nonexempt, noncommercial aviation. 1040ez printable form   If the operator does not identify the amount of kerosene that will be (or has been) used in commercial aviation, the operator may provide a certificate to the ultimate vendor similar to Model Certificate Q in the Appendix. 1040ez printable form For kerosene purchased with the certificate, used in commercial aviation, and taxed at $. 1040ez printable form 244 per gallon, use of the certificate will be treated as a waiver of the right to claim a credit or refund for the $. 1040ez printable form 025 per gallon part of the tax. 1040ez printable form The ultimate vendor may make this claim. 1040ez printable form The operator may make a claim for the $. 1040ez printable form 175 tax per gallon of the kerosene, but cannot waive the right to make the claim for the $. 1040ez printable form 175 tax per gallon. 1040ez printable form Sales by Registered Ultimate Vendors Kerosene for use in commercial aviation or noncommercial aviation. 1040ez printable form   The registered ultimate vendor of kerosene for use in commercial aviation (other than foreign trade) or noncommercial aviation (other than nonexempt, noncommercial aviation and exclusive use by a state, political subdivision of a state, or the District of Columbia) may make this claim if the ultimate purchaser waives its right to the credit or payment by providing the registered ultimate vendor with a waiver. 1040ez printable form A sample waiver is included as Model Waiver L in the Appendix. 1040ez printable form The registered ultimate vendor must have the waiver at the time the credit or payment is claimed. 1040ez printable form   Noncommercial aviation means any use of an aircraft not described as commercial aviation. 1040ez printable form For the definition of commercial aviation, see Commercial aviation on page 11. 1040ez printable form Kerosene for use in nonexempt, noncommercial aviation. 1040ez printable form   Only the registered ultimate vendor may claim a credit or payment for sales of kerosene for use in nonexempt, noncommercial aviation. 1040ez printable form The ultimate vendor must be registered by the IRS (activity letter UA) and have the required certificate from the ultimate purchaser. 1040ez printable form A sample certificate is included as Model Certificate Q in the Appendix. 1040ez printable form The registered ultimate vendor must have the certificate at the time the credit or payment is claimed. 1040ez printable form Kerosene for use in aviation by a state or local government. 1040ez printable form   Only the registered ultimate vendor may claim a credit or payment for sales of kerosene for use in aviation to a state or local government for its exclusive use (including essential government use by an Indian tribal government). 1040ez printable form The kerosene for use in aviation must be purchased by the state without the use of a credit card in order for the ultimate vendor to make the claim. 1040ez printable form The ultimate vendor must be registered by the IRS (activity letter UV) and have the required certificate from the ultimate purchaser. 1040ez printable form A sample certificate is included as Model Certificate P in the Appendix. 1040ez printable form The registered ultimate vendor must have the certificate at the time the credit or payment is claimed. 1040ez printable form Credit card purchases. 1040ez printable form   If taxed kerosene for use in aviation is purchased with a credit card issued to a state, the person who extended credit to the state (the credit card issuer) is treated as the person that paid the tax and makes the claim if the credit card issuer: Is registered by the IRS, Has established that the amount of tax has not been collected from the person who purchased the kerosene, or has obtained written consent from the ultimate purchaser to the allowance of the credit or refund, and Has repaid or agreed to repay the amount of the tax to the ultimate vendor, has obtained the written consent of the ultimate vendor to the allowance of the credit or refund, or has made arrangements that provide the ultimate vendor with reimbursement of the tax. 1040ez printable form   If the requirements above are not met by the credit card issuer, the credit card issuer must collect the tax from the ultimate purchaser and only the ultimate purchaser may make the claim. 1040ez printable form Other Fuels (Including Alternative Fuels) Credit or refund for nontaxable use of taxed Other Fuels may be allowable to an ultimate purchaser. 1040ez printable form While tax is generally imposed on delivery, Other Fuels are taxed prior to delivery in the case of certain bulk sales described in chapter 1. 1040ez printable form The following are the nontaxable uses of Other Fuels for which a credit or refund may be allowable to the ultimate purchaser. 1040ez printable form On a farm for farming purposes. 1040ez printable form Off-highway business use. 1040ez printable form In a boat engaged in commercial fishing. 1040ez printable form In certain intercity and local buses. 1040ez printable form In a school bus. 1040ez printable form In a qualified local bus. 1040ez printable form Exclusive use by a qualified blood collector organization. 1040ez printable form Exclusive use by a nonprofit educational organization. 1040ez printable form Exclusive use by a state, political subdivision of a state, or the District of Columbia. 1040ez printable form In an aircraft or vehicle owned by an aircraft museum. 1040ez printable form Use in any boat operated by the United States for its exclusive use or any vessel of war of any foreign nation. 1040ez printable form See Biodiesel or Renewable Diesel Mixture Credit, Alternative Fuel Credit, and Alternative Fuel Mixture Credit, later. 1040ez printable form Refunds of Second Tax The tax on dyed diesel fuel for inland waterways fuel use applies at the rate listed on Form 720. 1040ez printable form This is in addition to all other taxes imposed on the sale or use of the fuel. 1040ez printable form The section 4081(e) refund (discussed below) cannot be claimed. 1040ez printable form If the tax is paid and reported to the government on more than one taxable event for a taxable fuel under section 4081, the person paying the “second tax” may claim a refund (without interest) of that tax if certain conditions and reporting requirements are met. 1040ez printable form No credit against any tax is allowed for this tax. 1040ez printable form For information about taxable events, see the discussions under Gasoline, Diesel Fuel and Kerosene and Kerosene for Use in Aviation in chapter 1. 1040ez printable form Conditions to allowance of refund. 1040ez printable form   A claim for refund of the tax is allowed only if all the following conditions are met. 1040ez printable form A tax on the fuel was paid to the government and not credited or refunded (the “first tax”). 1040ez printable form After the first tax was imposed, another tax was imposed on the same fuel and was paid to the government (the “second tax”). 1040ez printable form The person that paid the second tax filed a timely claim for refund containing the information required (see Refund claim, later). 1040ez printable form The person that paid the first tax has met the reporting requirements, discussed next. 1040ez printable form Reporting requirements. 1040ez printable form   Generally, the person that paid the first tax must file a “First Taxpayer's Report” with its Form 720 for the quarter to which the report relates. 1040ez printable form A model first taxpayer's report is shown in the Appendix as Model Certificate B. 1040ez printable form The report must contain all information needed to complete the model. 1040ez printable form   By the due date for filing the Form 720, you must also send a separate copy of the report to the following address. 1040ez printable form Department of the Treasury Internal Revenue Service  Cincinnati, OH 45999-0555 Write “EXCISE – FIRST TAXPAYER'S REPORT” across the top of that copy. 1040ez printable form Optional reporting. 1040ez printable form   A first taxpayer's report is not required for the tax imposed on: Removal at a terminal rack, Nonbulk entries into the United States, and Removals or sales by blenders. 1040ez printable form However, if the person liable for the tax expects that another tax will be imposed on that fuel, that person should (but is not required to) file a first taxpayer's report. 1040ez printable form Providing information. 1040ez printable form   The first taxpayer must give a copy of the report to the buyer of the fuel within the bulk transfer/terminal system or to the owner of the fuel immediately before the first tax was imposed, if the first taxpayer is not the owner at that time. 1040ez printable form If an optional report is filed, a copy should (but is not required to) be given to the buyer or owner. 1040ez printable form   A person that receives a copy of the first taxpayer's report and later sells the fuel within the bulk transfer/terminal system must give the copy and a “Statement of Subsequent Seller” to the buyer. 1040ez printable form If the later sale is outside the bulk transfer/terminal system and that person expects that another tax will be imposed, that person should (but is not required to) give the copy and the statement to the buyer. 1040ez printable form A model statement of subsequent seller is shown in the Appendix as Model Certificate A. 1040ez printable form The statement must contain all information necessary to complete the model. 1040ez printable form   If the first taxpayer's report relates to fuel sold to more than one buyer, copies of that report must be made when the fuel is divided. 1040ez printable form Each buyer must be given a copy of the report. 1040ez printable form Refund claim. 1040ez printable form   You must have filed Form 720 and paid the second tax before you file for a refund of that tax. 1040ez printable form You must make your claim for refund on Form 8849. 1040ez printable form Complete Schedule 5 (Form 8849) and attach it to your Form 8849. 1040ez printable form Do not include this claim with a claim under another tax provision. 1040ez printable form You must not have included the second tax in the price of the fuel and must not have collected it from the purchaser. 1040ez printable form You must submit the following information with your claim. 1040ez printable form A copy of the first taxpayer's report (discussed earlier). 1040ez printable form A copy of the statement of subsequent seller if the fuel was bought from someone other than the first taxpayer. 1040ez printable form Definitions of Nontaxable Uses This section provides definitions of the terms used in Table 2-1 for nontaxable uses. 1040ez printable form If applicable, the type of use number from Table 2-1 is indicated in each heading. 1040ez printable form Type of use table. 1040ez printable form   The first column of the table is the number you enter on Form 4136, Form 8849, or Schedule C (Form 720) for that type of use. 1040ez printable form For type of use 2, the mobile machinery parenthetical applies only to Form 8849 and Form 720. 1040ez printable form Table 2-1. 1040ez printable form Type of Use Table No. 1040ez printable form Type of Use 1 On a farm for farming purposes 2 Off-highway business use (for business use other than in a highway vehicle registered or required to be registered for highway use) (other than use in mobile machinery) 3 Export 4 In a boat engaged in commercial fishing 5 In certain intercity and local buses 6 In a qualified local bus 7 In a bus transporting students and employees of schools (school buses) 8 For diesel fuel and kerosene (other than kerosene used in aviation) used other than as a fuel in the propulsion engine of a train or diesel-powered highway vehicle (but not off-highway business use) 9 In foreign trade 10 Certain helicopter and fixed-wing aircraft uses 11 Exclusive use by a qualified blood collector organization 12 In a highway vehicle owned by the United States that is not used on a highway 13 Exclusive use by a nonprofit educational organization 14 Exclusive use by a state, political subdivision of a state, or the District of Columbia 15 In an aircraft or vehicle owned by an aircraft museum 16 In military aircraft On a farm for farming purposes (No. 1040ez printable form 1). 1040ez printable form   On a farm for farming purposes means fuel used in carrying on a trade or business of farming, on a farm in the United States, and for farming purposes. 1040ez printable form Farm. 1040ez printable form   A farm includes livestock, dairy, fish, poultry, fruit, fur-bearing animals, and truck farms; orchards; plantations; ranches; nurseries; ranges; and feed yards for fattening cattle. 1040ez printable form It also includes structures such as greenhouses used primarily for the raising of agricultural or horticultural commodities. 1040ez printable form A fish farm is an area where fish are grown or raised — not merely caught or harvested. 1040ez printable form Farming purposes. 1040ez printable form   As an owner, tenant, or operator, you use fuel on a farm for farming purposes if you use it in any of the following ways. 1040ez printable form To cultivate the soil or to raise or harvest any agricultural or horticultural commodity. 1040ez printable form To raise, shear, feed, care for, train, or manage livestock, bees, poultry, fur-bearing animals, or wildlife. 1040ez printable form To operate, manage, conserve, improve, or maintain your farm and its tools and equipment. 1040ez printable form To handle, dry, pack, grade, or store any raw agricultural or horticultural commodity. 1040ez printable form For this use to qualify, you must have produced more than half the commodity so treated during the tax year. 1040ez printable form Commodity means a single raw product. 1040ez printable form For example, apples and peaches are two separate commodities. 1040ez printable form To plant, cultivate, care for, or cut trees or to prepare (other than sawing logs into lumber, chipping, or other milling) trees for market, but only if the planting, etc. 1040ez printable form , is incidental to your farming operations. 1040ez printable form Your tree operations will be incidental only if they are minor in nature when compared to the total farming operations. 1040ez printable form   If any other person, such as a neighbor or custom operator, performs a service for you on your farm for any of the purposes listed in (1) or (2), you are considered to be the ultimate purchaser that used the fuel on a farm for farming purposes. 1040ez printable form However, see Custom application of fertilizer and pesticide, next. 1040ez printable form   If doubt exists whether the owner, the tenant, or the operator of the farm bought the fuel, determine who bore the cost of the fuel. 1040ez printable form For example, if the owner of a farm and the tenant equally share the cost of gasoline that is used on a farm for farming purposes, each can claim a credit for the tax on one-half the fuel used. 1040ez printable form Custom application of fertilizer and pesticide. 1040ez printable form   Fuel used on a farm for farming purposes includes fuel used in the application of fertilizer, pesticides, or other substances, including aerial applications. 1040ez printable form Generally, the applicator is treated as having used the fuel on a farm for farming purposes. 1040ez printable form For aviation gasoline, the aerial applicator makes the claim as the ultimate purchaser. 1040ez printable form For kerosene used in aviation, the ultimate purchaser may make the claim or waive their right to make the claim to the registered ultimate vendor. 1040ez printable form Fuel used between airfield and farm. 1040ez printable form   Fuel used by an aerial applicator for the direct flight between the airfield and one or more farms is treated as a farming purpose. 1040ez printable form Fuel not used for farming. 1040ez printable form   Fuel is not used on a farm for farming purposes if it is used in any of the following ways. 1040ez printable form Off the farm, such as on the highway or in noncommercial aviation, other than fuel used between the airfield and farm described above, even if the fuel is used in transporting livestock, feed, crops, or equipment. 1040ez printable form For personal use, such as mowing the lawn. 1040ez printable form In processing, packaging, freezing, or canning operations. 1040ez printable form In processing crude gum into gum spirits of turpentine or gum resin or in processing maple sap into maple syrup or maple sugar. 1040ez printable form Off-highway business use (No. 1040ez printable form 2). 1040ez printable form   Off-highway business use means fuel used in a trade or business or in an income-producing activity other than as a fuel in a highway vehicle registered or required to be registered for use on public highways. 1040ez printable form The terms “highway vehicle,” “public highway,” and “registered” are defined below. 1040ez printable form Do not consider any use in a boat as an off-highway business use. 1040ez printable form   Off-highway business use includes fuels used in any of the following ways. 1040ez printable form In stationary machines such as generators, compressors, power saws, and similar equipment. 1040ez printable form For cleaning purposes. 1040ez printable form In forklift trucks, bulldozers, and earthmovers. 1040ez printable form   Generally, this use does not include nonbusiness use of fuel, such as use by minibikes, snowmobiles, power lawn mowers, chain saws, and other yard equipment. 1040ez printable form Example. 1040ez printable form Caroline owns a landscaping business. 1040ez printable form She uses power lawn mowers and chain saws in her business. 1040ez printable form The gasoline used in the power lawn mowers and chain saws qualifies as fuel used in an off-highway business use. 1040ez printable form The gasoline used in her personal lawn mower at home does not qualify. 1040ez printable form Highway vehicle. 1040ez printable form   A highway vehicle is any self-propelled vehicle designed to carry a load over public highways, whether or not it is also designed to perform other functions. 1040ez printable form Examples of vehicles designed to carry a load over public highways are passenger automobiles, motorcycles, buses, and highway-type trucks and truck tractors. 1040ez printable form A vehicle is a highway vehicle even though the vehicle's design allows it to perform a highway transportation function for only one of the following. 1040ez printable form A particular type of load, such as passengers, furnishings, and personal effects (as in a house, office, or utility trailer). 1040ez printable form A special kind of cargo, goods, supplies, or materials. 1040ez printable form Some off-highway task unrelated to highway transportation, except as discussed next. 1040ez printable form Vehicles not considered highway vehicles. 1040ez printable form   Generally, the following kinds of vehicles are not considered highway vehicles for purposes of the credit or refund of fuel taxes. 1040ez printable form Specially designed mobile machinery for nontransportation functions. 1040ez printable form A self-propelled vehicle is not a highway vehicle if all the following apply. 1040ez printable form The chassis has permanently mounted to it machinery or equipment used to perform certain operations (construction, manufacturing, drilling, mining, timbering, processing, farming, or similar operations) if the operation of the machinery or equipment is unrelated to transportation on or off the public highways. 1040ez printable form The chassis has been specially designed to serve only as a mobile carriage and mount (and power source, if applicable) for the machinery or equipment, whether or not the machinery or equipment is in operation. 1040ez printable form The chassis could not, because of its special design and without substantial structural modification, be used as part of a vehicle designed to carry any other load. 1040ez printable form The vehicle must have traveled less than 7,500 miles on public highways during the taxable year. 1040ez printable form Vehicles specially designed for off-highway transportation. 1040ez printable form A vehicle is not treated as a highway vehicle if the vehicle is specially designed for the primary function of transporting a particular type of load other than over the public highway and because of this special design, the vehicle's capability to transport a load over a public highway is substantially limited or impaired. 1040ez printable form To make this determination, you can take into account the vehicle's size, whether the vehicle is subject to licensing, safety, or other requirements, and whether the vehicle can transport a load at a sustained speed of at least 25 miles per hour. 1040ez printable form It does not matter that the vehicle can carry heavier loads off highway than it is allowed to carry over the highway. 1040ez printable form Nontransportation trailers and semitrailers. 1040ez printable form A trailer or semi-trailer is not treated as a highway vehicle if it is specially designed to function only as an enclosed stationary shelter for carrying on a nontransportation function at an off-highway site. 1040ez printable form For example, a trailer that is capable only of functioning as an office for an off-highway construction operation is not a highway vehicle. 1040ez printable form Public highway. 1040ez printable form   A public highway includes any road in the United States that is not a private roadway. 1040ez printable form This includes federal, state, county, and city roads and streets. 1040ez printable form Registered. 1040ez printable form   A vehicle is considered registered when it is registered or required to be registered for highway use under the law of any state, the District of Columbia, or any foreign country in which it is operated or situated. 1040ez printable form Any highway vehicle operated under a dealer's tag, license, or permit is considered registered. 1040ez printable form A highway vehicle is not considered registered solely because a special permit allows the vehicle to be operated at particular times and under specified conditions. 1040ez printable form Dual use of propulsion motor. 1040ez printable form   Off-highway business use does not include any fuel used in the propulsion motor of a registered highway vehicle even though that motor also operates special equipment by means of a power take-off or power transfer. 1040ez printable form It does not matter if the special equipment is mounted on the vehicle. 1040ez printable form Example. 1040ez printable form The motor of a registered concrete-mixer truck operates both the engine and the mixing unit by means of a power take-off. 1040ez printable form The fuel used in the motor to run the mixer is not off-highway business use. 1040ez printable form Use in separate motor. 1040ez printable form   Off-highway business use includes fuel used in a separate motor to operate special equipment, such as a refrigeration unit, pump, generator, or mixing unit. 1040ez printable form If you draw fuel from the same tank that supplies fuel to the propulsion motor, you must figure the quantity used in the separate motor operating the special equipment. 1040ez printable form You may make a reasonable estimate based on your operating experience and supported by your records. 1040ez printable form   You can use devices that measure the miles the vehicle has traveled (such as hubometers) to figure the gallons of fuel used to propel the vehicle. 1040ez printable form Add to this amount the fuel consumed while idling or warming up the motor before propelling the vehicle. 1040ez printable form The difference between your total fuel used and the fuel used to propel the vehicle is the fuel used in the separate motor. 1040ez printable form Example. 1040ez printable form Hazel owns a refrigerated truck. 1040ez printable form It has a separate motor for the refrigeration unit. 1040ez printable form The same tank supplies both motors. 1040ez printable form Using the truck's hubometer, Hazel figures that 90% of the fuel was used to propel the truck. 1040ez printable form Therefore, 10% of the fuel is used in an off-highway business use. 1040ez printable form Fuel lost or destroyed. 1040ez printable form   You cannot treat fuel lost or destroyed through spillage, fire, or other casualty as fuel used in an off-highway business use. 1040ez printable form Export (No. 1040ez printable form 3). 1040ez printable form   Export means fuel transported from the United States with the intention that the fuel remain in a foreign country or possession of the United States. 1040ez printable form Fuel is not exported if it is in the fuel supply tank of a vehicle or aircraft. 1040ez printable form In a boat engaged in commercial fishing (No. 1040ez printable form 4). 1040ez printable form   In a boat engaged in commercial fishing means fuel used in taking, catching, processing, or transporting fish, shellfish, or other aquatic life for commercial purposes, such as selling or processing the catch, on a specific trip basis. 1040ez printable form They include boats used in both fresh and salt water fishing. 1040ez printable form They do not include boats used for both sport fishing and commercial fishing on the same trip. 1040ez printable form In certain intercity and local buses (No. 1040ez printable form 5). 1040ez printable form   In certain intercity and local buses means fuel used in a bus engaged in furnishing (for compensation) passenger land transportation available to the general public. 1040ez printable form The bus must be engaged in one of the following activities. 1040ez printable form Scheduled transportation along regular routes. 1040ez printable form Nonscheduled operations if the seating capacity of the bus is at least 20 adults, not including the driver. 1040ez printable form Vans and similar vehicles used for van-pooling or taxi service do not qualify. 1040ez printable form Available to the general public. 1040ez printable form   This means you offer service to more than a limited number of persons or organizations. 1040ez printable form If a bus operator normally provides charter operations through travel agencies but has buses available for chartering by the general public, this service is available to the general public. 1040ez printable form A bus does not qualify when its operator uses it to provide exclusive services to only one person, group, or organization. 1040ez printable form Also, intercity bus transportation does not include transporting students and employees of schools or intercity transportation in a qualified local bus. 1040ez printable form In a qualified local bus (No. 1040ez printable form 6). 1040ez printable form   In a qualified local bus means fuel used in a bus meeting all the following requirements. 1040ez printable form It is engaged in furnishing (for compensation) intracity passenger land transportation available to the general public. 1040ez printable form It operates along scheduled, regular routes. 1040ez printable form It has a seating capacity of at least 20 adults (excluding the driver). 1040ez printable form It is under contract with (or is receiving more than a nominal subsidy from) any state or local government to furnish the transportation. 1040ez printable form Intracity passenger land transportation. 1040ez printable form   This is the land transportation of passengers between points located within the same metropolitan area. 1040ez printable form It includes transportation along routes that cross state, city, or county boundaries if the routes remain within the metropolitan area. 1040ez printable form Under contract. 1040ez printable form   A bus is under contract with a state or local government only if the contract imposes a bona fide obligation on the bus operator to furnish the transportation. 1040ez printable form More than a nominal subsidy. 1040ez printable form   A subsidy is more than nominal if it is reasonably expected to exceed an amount equal to 3 cents multiplied by the number of gallons of fuel used in buses on subsidized routes. 1040ez printable form A company that operates its buses along subsidized and unsubsidized intracity routes may consider its buses qualified local buses only when the buses are used on the subsidized intracity routes. 1040ez printable form In a school bus (No. 1040ez printable form 7). 1040ez printable form   In a school bus means fuel used in a bus engaged in the transportation of students or employees of schools. 1040ez printable form A school is an educational organization with a regular faculty and curriculum and a regularly enrolled body of students who attend the place where the educational activities occur. 1040ez printable form For diesel fuel and kerosene (other than kerosene used in aviation) used other than as a fuel (No. 1040ez printable form 8). 1040ez printable form   Diesel fuel and kerosene (other than kerosene used in aviation) used other than as a fuel in the propulsion engine of a diesel-powered highway vehicle or diesel-powered train (not including off-highway business use) means undyed diesel fuel and undyed kerosene used: For home heating, lighting, and cooking; In boats; In stationary machines, such as generators and compressors; For cleaning purposes; or In minibikes and snowmobiles. 1040ez printable form In foreign trade (No. 1040ez printable form 9). 1040ez printable form   In foreign trade means fuel used in civil aircraft employed in foreign trade or trade between the United States and any of its possessions. 1040ez printable form The term trade includes the transportation of persons or property for hire and the making of the necessary preparations for such transportation. 1040ez printable form In the case of aircraft registered in a foreign country, the country must allow reciprocal benefits for aircraft registered in the United States. 1040ez printable form Certain helicopter and fixed-wing aircraft uses (No. 1040ez printable form 10). 1040ez printable form   Includes: Certain helicopter uses. 1040ez printable form   Certain helicopter uses means fuel used by a helicopter for any of the following purposes. 1040ez printable form Transporting individuals, equipment, or supplies in the exploration for, or the development or removal of, hard minerals, oil, or gas. 1040ez printable form Planting, cultivating, cutting, transporting, or caring for trees (including logging operations). 1040ez printable form Providing emergency medical transportation. 1040ez printable form   During a use described in items (1) and (2), the helicopter must not take off from, or land at, a facility eligible for assistance under the Airport and Airway Development Act of 1970, or otherwise use services provided pursuant to section 44509 or 44913(b) or subchapter I of chapter 471 of title 49, United States Code. 1040ez printable form For item (1), treat each flight segment as a separate flight. 1040ez printable form Fixed-wing aircraft uses. 1040ez printable form   Fixed-wing aircraft uses means fuel used by a fixed-wing aircraft for any of the following purposes. 1040ez printable form Planting, cultivating, cutting, transporting, or caring for trees (including logging operations). 1040ez printable form Providing emergency medical transportation. 1040ez printable form The aircraft must be equipped for and exclusively dedicated on that flight to acute care emergency medical services. 1040ez printable form During a use described in item (1), the aircraft must not take off from, or land at, a facility eligible for assistance under the Airport and Airway Development Act of 1970, or otherwise use services provided pursuant to section 44509 or 44913(b) or subchapter I of chapter 471 of title 49, United States Code. 1040ez printable form Exclusive use by a qualified blood collector organization (No. 1040ez printable form 11). 1040ez printable form   Exclusive use by a qualified blood collector organization means fuel used by the qualified blood collector organization for its exclusive use in the collection, storage, or transportation of blood. 1040ez printable form Qualified blood collector organization. 1040ez printable form   A qualified blood collector organization is one that is: Described in section 501(c)(3) and exempt from tax under section 501(a), Primarily engaged in the activity of collecting human blood, Registered by the IRS, and Registered by the Food and Drug Administration to collect blood. 1040ez printable form In a highway vehicle owned by the United States that is not used on a highway (No. 1040ez printable form 12). 1040ez printable form   In a highway vehicle owned by the United States that is not used on a highway means fuel used in a vehicle that was not used on public highways during the period covered by the claim. 1040ez printable form This use applies whether or not the vehicle is registered or required to be registered for highway use. 1040ez printable form Exclusive use by a nonprofit educational organization (No. 1040ez printable form 13). 1040ez printable form   Exclusive use by a nonprofit educational organization means fuel used by an organization exempt from income tax under section 501(a) that meets both of the following requirements. 1040ez printable form It has a regular faculty and curriculum. 1040ez printable form It has a regularly enrolled body of students who attend the place where the instruction normally occurs. 1040ez printable form   A nonprofit educational organization also includes a school operated by a church or other organization described in section 501(c)(3) if the school meets the above requirements. 1040ez printable form Exclusive use by a state, political subdivision of a state, or the District of Columbia (No. 1040ez printable form 14). 1040ez printable form   Exclusive use by a state, political subdivision of a state, or the District of Columbia means fuel purchased by the state or local government for its exclusive use. 1040ez printable form A state or local government is any state, any political subdivision thereof, or the District of Columbia. 1040ez printable form An Indian tribal government is treated as a state only if the fuel is used in an activity that involves the exercise of an essential tribal government function. 1040ez printable form Gasoline, diesel fuel, and kerosene used by the American Red Cross is considered to be the use of these fuels by a state. 1040ez printable form In an aircraft or vehicle owned by an aircraft museum (No. 1040ez printable form 15). 1040ez printable form   In an aircraft or vehicle owned by an aircraft museum means fuel used in an aircraft or vehicle that is owned by an organization that meets all the following requirements. 1040ez printable form It is exempt from income tax as an organization described in section 501(c)(3). 1040ez printable form It is operated as a museum under a state (or District of Columbia) charter. 1040ez printable form It is operated exclusively for acquiring, exhibiting, and caring for aircraft of the type used for combat or transport in  World War II. 1040ez printable form   The aircraft or vehicle (such as a ground servicing vehicle for aircraft) must be used exclusively for the purposes described in item (3). 1040ez printable form In military aircraft (No. 1040ez printable form 16). 1040ez printable form   In a military aircraft means fuel used in an aircraft owned by the United States or any foreign nation and constituting a part of its armed forces. 1040ez printable form In commercial aviation (other than foreign trade). 1040ez printable form   See Commercial aviation, earlier, for the definition. 1040ez printable form Use in a train. 1040ez printable form   Use in a train means fuel used in the propulsion engine of equipment or machinery that rides on rails. 1040ez printable form This includes use in a locomotive, work train, switching engine, and track maintenance machine. 1040ez printable form Biodiesel or Renewable Diesel Mixture Credit, Alternative Fuel Credit, and Alternative Fuel Mixture Credit For alternative fuel mixtures produced after December 31, 2011, see How to Claim the Credit below. 1040ez printable form The section 6426 credit for biodiesel and alternative fuel consists of the biodiesel or renewable diesel mixture credit, alternative fuel credit, and alternative fuel mixture credit. 1040ez printable form Biodiesel or renewable diesel mixture credit claimant. 1040ez printable form   Claimant produced a biodiesel mixture by mixing biodiesel with diesel fuel. 1040ez printable form Claimant produced a renewable diesel mixture by mixing renewable diesel with liquid fuel (other than renewable diesel). 1040ez printable form   The person that produced and sold or used the mixture in their trade or business is the only person eligible to make this claim. 1040ez printable form The credit is based on the gallons of biodiesel or renewable diesel in the mixture. 1040ez printable form Renewable diesel does not include any fuel derived from coprocessing biomass (as defined in section 45K(c)(3)) with a feedstock that is not biomass. 1040ez printable form Claim requirements. 1040ez printable form   See the Instructions for Form 720 for the biodiesel or renewable diesel mixture claim requirements. 1040ez printable form Alternative fuel credit claimant. 1040ez printable form   For the alternative fuel credit, the registered alternative fueler who (1) sold an alternative fuel at retail delivered it into the fuel supply tank of a motor vehicle or motorboat, (2) sold an alternative fuel, delivered it in bulk taxable use in a motor vehicle or motorboat, and received required statement from the buyer, (3) used an alternative fuel (not sold at retail or in bulk as previously described) motor vehicle or motorboat, or (4) sold an alternative fuel used as a fuel in aviation is the only person eligible to make this claim. 1040ez printable form Carbon capture requirement. 1040ez printable form   A credit for Fischer-Tropsch process liquid fuel derived from coal (including peat) can be claimed only if the fuel is derived from coal produced at a gasification facility that separates and sequesters at least 75% of the facility's total carbon dioxide emissions. 1040ez printable form Alternative fuel credit. 1040ez printable form   The registered alternative fueler is the person eligible to make the claim. 1040ez printable form An alternative fueler is the person liable for tax on alternative fuel under the rules for taxable events for Other Fuels (discussed in chapter 1) or would be liable but for an exemption for nontaxable uses. 1040ez printable form An alternative fueler includes a person who sells for use or uses an alternative fuel in aviation. 1040ez printable form Alternative fuel mixture credit claimant. 1040ez printable form   For the alternative fuel mixture credit, the registered alternative fueler that produced and sold or used the mixture as a fuel in their trade or business is the only person eligible to make this claim. 1040ez printable form The credit is based on the gallons of alternative fuel in the mixture. 1040ez printable form An alternative fuel mixture is a mixture of alternative fuel and section 4081 taxable fuel (gasoline, diesel fuel, or kerosene). 1040ez printable form Registration. 1040ez printable form   You must be registered by the IRS to be eligible to claim the section 6426 fuel credit. 1040ez printable form See Registration Requirements in chapter 1. 1040ez printable form Credits for fuel provide incentive for United States production. 1040ez printable form   The section 6426 fuel credit may not be claimed for alternative fuel that is produced outside the United States for use as a fuel outside the United States. 1040ez printable form The United States includes any possession of the United States. 1040ez printable form Credit for fuels derived from paper or pulp production. 1040ez printable form   Credit for alternative fuels and alternative fuel mixtures for any fuel derived from the production of paper or pulp are not available for fuel sold or used on or after December 31, 2009. 1040ez printable form How to Claim the Credit Any biodiesel or renewable diesel mixture credit must first be claimed on Schedule C to reduce your taxable fuel liability reported on Form 720. 1040ez printable form Any excess credit may be claimed on Schedule C (Form 720), Schedule 3 (Form 8849), Form 4136, or Form 8864, Biodiesel and Renewable Diesel Fuels Credit. 1040ez printable form See Notice 2005-4 and the Instructions for Form 720 for more information. 1040ez printable form Also see Notice 2013-26 on page 984 of I. 1040ez printable form R. 1040ez printable form B. 1040ez printable form 2013-18 at www. 1040ez printable form irs. 1040ez printable form gov/pub/irs-irbs/irb13-18. 1040ez printable form pdf; and see chapter 2, later. 1040ez printable form Coordination with income tax credit. 1040ez printable form   Only one credit may be taken for any amount of biodiesel or renewable diesel. 1040ez printable form If any amount is claimed (or will be claimed) for any amount of biodiesel or renewable diesel on Form 720, Form 8849, or Form 4136, then a claim cannot be made on Form 8864 for that amount of biodiesel or renewable diesel. 1040ez printable form   Any alternative fuel credit must first be claimed on Schedule C (Form 720) to reduce your section 4041 taxable fuel liability for alternative fuel and CNG reported on Form 720. 1040ez printable form Any excess credit may claimed on Schedule C (Form 720), Schedule 3 (Form 8849), or Form 4136. 1040ez printable form   For alternative fuel mixtures produced after December 31, 2011, the alternative fuel mixture credit can be claimed on Schedule C (Form 720), not on Form 4136 or Schedule 3 (Form 8849), and only to the extent of your section 4081 taxable fuel liability for gasoline, diesel fuel and kerosene reported on Form 720. 1040ez printable form   Calculate the limitation for alternative fuel mixtures separately and enter on Schedule C (Form 720), line 14, only the gallons of mixtures that do not exceed your section 4081 taxable fuel liability. 1040ez printable form Filing Claims This section tells you how to make a claim for a credit or refund of excise taxes on fuels. 1040ez printable form This section also covers recordkeeping requirements and when to include the credit or refund in your income. 1040ez printable form Generally, you will provide all the information needed to claim a credit or refund when you properly complete Form 8849, Form 4136, Schedule C (Form 720), Form 6478, or Form 8864. 1040ez printable form In some cases, you will have to attach additional information. 1040ez printable form You need to keep records that support your claim for a credit or refund. 1040ez printable form Keep at your principal place of business all records needed to enable the IRS to verify that you are the person entitled to claim a credit or refund and the amount you claimed. 1040ez printable form Ultimate purchaser. 1040ez printable form   Ultimate purchasers may make claims for the nontaxable use of fuels on Form 4136, Schedule 1 (Form 8849), and Schedule C (Form 720) if reporting excise tax liability on that return. 1040ez printable form If you are an ultimate purchaser, you must keep the following records. 1040ez printable form The number of gallons purchased and used during the period covered by your claim. 1040ez printable form The dates of the purchases. 1040ez printable form The names and addresses of suppliers and amounts purchased from each in the period covered by your claim. 1040ez printable form The nontaxable use for which you used the fuel. 1040ez printable form The number of gallons used for each nontaxable use. 1040ez printable form It is important that your records show separately the number of gallons used for each nontaxable use that qualifies as a claim. 1040ez printable form If the fuel is exported, you must have proof of exportation. 1040ez printable form   For more information about keeping records, see Publication 583, Starting a Business and Keeping Records, or chapter 1 of Publication 17, Your Federal Income Tax for Individuals. 1040ez printable form Exceptions. 1040ez printable form    Generally, the ultimate purchaser may not claim a credit or refund for undyed diesel fuel, undyed kerosene, or kerosene for use in aviation sold for the exclusive use of a state or local government. 1040ez printable form However, see Claims by credit card issuers, later, for an exception. 1040ez printable form The ultimate purchaser may not claim a credit or refund as follows. 1040ez printable form The ultimate purchaser of gasoline or aviation gasoline used by a state or local government for its exclusive use or by a nonprofit educational organization for its exclusive use may waive its right to make a claim by providing a certificate that is signed under penalties of perjury by a person authorized to bind the ultimate purchaser and is in the same format as the Model Certificate M. 1040ez printable form A new certificate is required each year or when any information in the current certificate expires. 1040ez printable form The ultimate purchaser of kerosene for use in commercial aviation or noncommercial aviation (other than nonexempt, noncommercial aviation and exclusive use by a state, political subdivision of a state, or the District of Columbia) may waive its right to make a claim by providing a waiver that is signed under penalties of perjury by a person authorized to bind the ultimate purchaser and is in the same format as the Model Waiver L. 1040ez printable form A new waiver is required each year or when any information in the current waiver expires. 1040ez printable form The ultimate purchaser of undyed diesel fuel or undyed kerosene used in certain intercity and local buses may waive its right to make a claim by providing a waiver that is signed under penalties of perjury by a person authorized to bind the ultimate purchaser and is in the same format as the Model Waiver N. 1040ez printable form A new waiver is required each year or when any information in the current waiver expires. 1040ez printable form The ultimate purchaser of kerosene for use in nonexempt, noncommercial aviation must provide a certificate that is signed under penalties of perjury by a person authorized to bind the ultimate purchaser and is in the same format as the Model Certificate Q. 1040ez printable form A new certificate is required each year or when any information in the current certificate expires. 1040ez printable form Registered ultimate vendor. 1040ez printable form   Registered ultimate vendors may make claims for certain sales of fuels on Form 4136, Schedule 2 (Form 8849), and Schedule C (Form 720) if reporting excise tax liability on that return. 1040ez printable form If you are a registered ultimate vendor, you must keep certain information pertaining to the sale of the fuel. 1040ez printable form   To make a claim, you must have sold the fuel at a tax-excluded price, repaid the tax to the buyer, or obtained the buyer's written consent to the allowance of the claim. 1040ez printable form You are required to have a valid certificate or waiver in your possession in order to make the claim. 1040ez printable form   In addition, you must have a registration number that has not been revoked or suspended. 1040ez printable form See Form 637. 1040ez printable form State use. 1040ez printable form   To make a claim as an ultimate vendor (state), you must have a UV registration number and the fuel cannot be purchased with a credit card as explained below. 1040ez printable form If you sell undyed diesel fuel, undyed kerosene, or kerosene for use in aviation for use by a state or local government, you must keep the following information. 1040ez printable form The name and taxpayer identification number of each person (government unit) that bought the fuel. 1040ez printable form The number of gallons sold to each person. 1040ez printable form An unexpired certificate from the buyer. 1040ez printable form See Model Certificate P in the Appendix. 1040ez printable form The certificate expires on the earlier of 1 year after the date of the certificate or the date a new certificate is given to the registered ultimate vendor. 1040ez printable form Nonprofit educational organization and state use. 1040ez printable form   To make a claim as an ultimate vendor (nonprofit educational organization or state), you must have a UV registration number and the fuel cannot be purchased with a credit card as explained later. 1040ez printable form If you sell gasoline or aviation gasoline to a nonprofit educational organization for its exclusive use or to a state or local government for its exclusive use, you must keep the following information. 1040ez printable form The name and taxpayer identification number of each person (nonprofit educational organization or government unit) that bought the fuel. 1040ez printable form The number of gallons sold to each person. 1040ez printable form An unexpired certificate from the buyer. 1040ez printable form See Model Certificate M in the Appendix. 1040ez printable form  The certificate expires on the earlier of 1 year after the date of the certificate or the date a new certificate is given to the registered ultimate vendor. 1040ez printable form Blocked pump. 1040ez printable form   To make a claim as an ultimate vendor (blocked pump), you must have a UP registration number. 1040ez printable form If you sell undyed kerosene (other than kerosene for use in aviation) from a pump that qualifies as a blocked pump because it is locked by you after each sale and is unlocked by you at the request of the buyer, you must keep the following information for each sale of more than 5 gallons. 1040ez printable form The date of each sale. 1040ez printable form The name and address of the buyer. 1040ez printable form The number of gallons sold to that buyer. 1040ez printable form Certain intercity and local bus use. 1040ez printable form   To make a claim as an ultimate vendor of undyed diesel fuel or undyed kerosene used in certain intercity and local buses, you must have a UB registration number. 1040ez printable form You must keep the following information. 1040ez printable form The date of each sale. 1040ez printable form The name and address of the buyer. 1040ez printable form The number of gallons sold to the buyer. 1040ez printable form A copy of the waiver signed by the buyer at the time the credit or payment is claimed. 1040ez printable form See Model Waiver N in the Appendix. 1040ez printable form Kerosene for use in commercial aviation or noncommercial aviation. 1040ez printable form   To make a claim as an ultimate vendor of kerosene for use in commercial aviation (other than foreign trade) or noncommercial aviation (other than nonexempt, noncommercial aviation and exclusive use by a state, political subdivision of a state, or the District of Columbia), you must have a UA registration number. 1040ez printable form See Kerosene for use in aviation, earlier, for a list of nontaxable uses. 1040ez printable form You must keep the following information. 1040ez printable form The date of each sale. 1040ez printable form The name and address of the buyer. 1040ez printable form The number of gallons sold to the buyer. 1040ez printable form A copy of the waiver signed by the buyer at the time the credit or payment is claimed. 1040ez printable form See Model Waiver L in the Appendix. 1040ez printable form Kerosene for use in nonexempt, noncommercial aviation. 1040ez printable form   To make a claim as an ultimate vendor of kerosene for use in nonexempt, noncommercial aviation, you must have a UA registration number. 1040ez printable form You must keep the following information. 1040ez printable form The date of each sale. 1040ez printable form The name and address of the buyer. 1040ez printable form The number of gallons sold to the buyer. 1040ez printable form A copy of the certificate signed by the buyer at the time the credit or payment is claimed. 1040ez printable form See Model Certificate Q in the Appendix. 1040ez printable form Claims by credit card issuers. 1040ez printable form   For sales of gasoline, aviation gasoline, diesel fuel, kerosene, or kerosene for use in aviation that are purchased by an exempt user with the use of a credit card, the registered credit card issuer is the only person who can make the claim. 1040ez printable form An exempt user for this purpose is: For gasoline or aviation gasoline, a state or local government (including essential government use by an Indian tribal government) or a nonprofit educational organization; or For diesel fuel, kerosene, or kerosene for use in aviation, a state or local government (including essential government use by an Indian tribal government). 1040ez printable form   If gasoline is purchased without the use of a credit card, then the registered ultimate vendor of the gasoline may make the claim for refund or credit. 1040ez printable form However, if the gasoline is purchased with a credit card issued to a state, but the credit card issuer is not registered by the IRS or does not meet the conditions described, the credit card issuer must collect the tax and the state may make the claim. 1040ez printable form   If diesel fuel, kerosene, or kerosene for use in aviation is purchased without the use of a credit card, the registered ultimate vendor may make the claim for refund or credit. 1040ez printable form A state is not allowed to make a claim for these fuels. 1040ez printable form However, if the diesel fuel or kerosene is purchased with a credit card issued to a state, but the credit card issuer is not registered by the IRS or does not meet the conditions described, the credit card issuer must collect the tax and the state may make the claim. 1040ez printable form   The claim from the credit card issuer must contain the following information as it applies to the fuel covered in the claim. 1040ez printable form The total number of gallons. 1040ez printable form Its registration number. 1040ez printable form A statement that it has not collected the amount of tax from the ultimate purchaser or has obtained the written consent of the ultimate purchaser to make the claim. 1040ez printable form A statement that it has repaid or agreed to repay the amount of tax to the ultimate vendor, has obtained the written consent of the ultimate vendor to make the claim, or has otherwise made arrangements which directly or indirectly provide the ultimate vendor with reimbursement of the tax. 1040ez printable form Has in its possession an unexpired certificate similar to Model Certificate R in the Appendix and has no reason to believe any of the information in the certificate is false. 1040ez printable form Taxpayer identification number. 1040ez printable form   To file a claim, you must have a taxpayer identification number. 1040ez printable form Your taxpayer identification number can be an: Employer identification number (EIN), Social security number (SSN), or Individual taxpayer identification number (ITIN), if you are an alien individual and do not have and are not eligible to get an SSN. 1040ez printable form   If you normally file only a U. 1040ez printable form S. 1040ez printable form individual income tax return (such as Form 1040 or 1040NR), use your SSN or ITIN. 1040ez printable form You get an SSN by filing Form SS-5, Application for a Social Security Card, with the Social Security Administration. 1040ez printable form To get an ITIN, file Form W-7, Application for IRS Individual Taxpayer Identification Number, with the IRS. 1040ez printable form   If you operate a business, use your EIN. 1040ez printable form If you do not have an EIN, you may apply for one online. 1040ez printable form Go to the IRS website at irs. 1040ez printable form gov/businesses/small and click on the “Employer ID Numbers (EINs)” link. 1040ez printable form You may also apply for an EIN by calling 1-800-829-4933, or you can fax or mail Form SS-4, Application for Employer Identification Number, to the IRS. 1040ez printable form Claiming A Refund Generally, you may claim a refund of excise taxes on Form 8849. 1040ez printable form Complete and attach to Form 8849 the appropriate Form 8849 schedules. 1040ez printable form The instructions for Form 8849 and the separate instructions for each schedule explain the requirements for making a claim for refund. 1040ez printable form If you file Form 720, you can use the Schedule C (Form 720) for your refund claims for the quarter. 1040ez printable form See the Instructions for Form 720. 1040ez printable form Do not claim a refund on Form 8849 for any amount for which you have filed or will file a claim on Schedule C (Form 720) or Form 4136. 1040ez printable form The alternative fuel mixture credit must be claimed on Schedule C (Form 720) against your section 4081 taxable fuel liability for gasoline, diesel, and kerosene and any excess is not allowed. 1040ez printable form The alternative fuel credit must first be claimed on Schedule C (Form 720) against your section 4041 taxable fuel liability for alternative fuel and CNG. 1040ez printable form To the extent the alternative fuel credit exceeds this taxable fuel liability, a payment is allowed and may be claimed as a credit on Schedule C (Form 720), or as an income tax credit on Forms 4136, 6478, or 8864, as applicable. 1040ez printable form Only one claim may be made for any particular amount of alternative fuel. 1040ez printable form Claiming a Credit on Form 4136 For alternative fuel mixtures produced after December 31, 2011, the alternative fuel mixture credit cannot be claimed on Form 4136. 1040ez printable form See Biodiesel or Renewable Diesel Mixture Credit, Alternative Fuel Credit and Alternative Fuel Mixture Credit in chapter 2, earlier. 1040ez printable form A credit may be claimed for certain uses and sales of fuels on Form 4136 when you file your income tax return at the end of the year. 1040ez printable form If you meet certain requirements (discussed earlier), you may be able to make a claim during the year. 1040ez printable form Credit only. 1040ez printable form   You can claim the following taxes only as a credit on Form 4136. 1040ez printable form Tax on fuels used for nontaxable uses if the total for your tax year is less than $750. 1040ez printable form Tax on fuel you did not include in any claim for refund previously filed for any quarter of your tax year. 1040ez printable form Tax on fuel you used in mobile machinery (off-highway business use) that traveled less than 7,500 miles on public highways. 1040ez printable form Do not claim a credit for any amount for which you have filed a refund claim on Form 8849 or credit on Schedule C (Form 720). 1040ez printable form When to file. 1040ez printable form   You can claim a fuel tax credit on your income tax return for the year you used the fuel (or sold the fuel in the case of a registered ultimate vendor claim). 1040ez printable form You may be able to make a fuel tax claim on an amended income tax return for the year you used the fuel. 1040ez printable form Generally, you must file an amended return by the later of 3 years from the date you filed your original return or within 2 years from the date you paid the income tax. 1040ez printable form How to claim a credit. 1040ez printable form   How you claim a credit depends on whether you are an individual, partnership, corporation, S corporation, or farmers' cooperative association. 1040ez printable form Individuals. 1040ez printable form   You claim the credit on the “Credits from” line of Form 1040. 1040ez printable form Also check box b on that line. 1040ez printable form If you would not otherwise have to file an income tax return, you must do so to get a fuel tax credit. 1040ez printable form Partnerships. 1040ez printable form   Partnerships (other than electing large partnerships) claim the credit by including a statement on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. 1040ez printable form , showing each partner's share of the number of gallons of each fuel sold or used for a non