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2012 Income Tax Filing

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2012 Income Tax Filing

2012 income tax filing Publication 946 - Introductory Material Table of Contents What's New for 2013 What's New for 2014 Reminders IntroductionOrdering forms and publications. 2012 income tax filing Tax questions. 2012 income tax filing What's New for 2013 Increased section 179 deduction dollar limits. 2012 income tax filing  The maximum amount you can elect to deduct for most section 179 property you placed in service in 2013 is $500,000 ($535,000 for qualified enterprise zone property). 2012 income tax filing This limit is reduced by the amount by which the cost of the property placed in service during the tax year exceeds $2,000,000. 2012 income tax filing See Dollar Limits under How Much Can You Deduct in chapter 2. 2012 income tax filing Depreciation limits on business vehicles. 2012 income tax filing  The total section 179 deduction and depreciation you can deduct for a passenger automobile (that is not a truck or van) you use in your business and first placed in service in 2013 is $3,160, if the special depreciation allowance does not apply. 2012 income tax filing The maximum deduction you can take for a truck or van you use in your business and first placed in service in 2013 is $3,360, if the special depreciation allowance does not apply. 2012 income tax filing See Maximum Depreciation Deduction in chapter 5. 2012 income tax filing Special allowance for qualified second generation biofuel plant property. 2012 income tax filing . 2012 income tax filing  For tax years ending after December 31, 2012, you may be able to take a 50% special depreciation allowance for qualified second generation biofuel plant property placed in service after January 2, 2013, and before January 1, 2014. 2012 income tax filing Election to accelerate minimum tax credits for round 3 extension property. 2012 income tax filing . 2012 income tax filing  For tax years ending after December 31, 2012, a corporation can elect to claim pre-2006 unused minimum tax credits in lieu of the special depreciation allowance for round 3 extension property. 2012 income tax filing What's New for 2014 Expiration of the increased section 179 deduction limits and expanded definition of section 179 property. 2012 income tax filing  For tax years beginning after 2013, the increased section 179 expense deduction limit and threshold amount before reduction in limitation will no longer apply. 2012 income tax filing Also, the definition of section 179 property will no longer include certain qualified real property. 2012 income tax filing Expiration of the 7-year recovery period for motor sports entertainment complexes. 2012 income tax filing  Qualified motor sports entertainment complex property placed in service after December 31, 2013, will not be treated as 7-year property under MACRS. 2012 income tax filing Expiration of the 15-year recovery period for qualified leasehold improvement, restaurant, and retail improvement properties. 2012 income tax filing  Qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property placed in service after December 31, 2013, will not be treated as 15-year property under MACRS. 2012 income tax filing Expiration of the accelerated depreciation for qualified Indian reservation property. 2012 income tax filing  The accelerated depreciation of property on an Indian Reservation will not apply to property placed in service after December 31, 2013. 2012 income tax filing Expiration of the 3-year recovery period for certain race horses. 2012 income tax filing  The 3-year recovery period for race horses two years old or younger will expire for such horses placed in service after December 31, 2013. 2012 income tax filing Reminders Photographs of missing children. 2012 income tax filing  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. 2012 income tax filing Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. 2012 income tax filing You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. 2012 income tax filing Introduction Future developments. 2012 income tax filing   For the latest information about developments related to Publication 946 such as legislation enacted after this publication was published, go to www. 2012 income tax filing irs. 2012 income tax filing gov/pub946. 2012 income tax filing This publication explains how you can recover the cost of business or income-producing property through deductions for depreciation (for example, the special depreciation allowance and deductions under the Modified Accelerated Cost Recovery System (MACRS)). 2012 income tax filing It also explains how you can elect to take a section 179 deduction, instead of depreciation deductions, for certain property, and the additional rules for listed property. 2012 income tax filing The depreciation methods discussed in this publication generally do not apply to property placed in service before 1987. 2012 income tax filing For more information, see Publication 534, Depreciating Property Placed in Service Before 1987. 2012 income tax filing Definitions. 2012 income tax filing   Many of the terms used in this publication are defined in the Glossary near the end of the publication. 2012 income tax filing Glossary terms used in each discussion under the major headings are listed before the beginning of each discussion throughout the publication. 2012 income tax filing Do you need a different publication?   The following table shows where you can get more detailed information when depreciating certain types of property. 2012 income tax filing For information on depreciating: See Publication: A car 463, Travel, Entertainment, Gift, and Car Expenses Residential rental property 527, Residential Rental Property (Including Rental of Vacation Home) Office space in your home 587, Business Use of Your Home (Including Use by Daycare Providers) Farm property 225, Farmer's Tax Guide Comments and suggestions. 2012 income tax filing   We welcome your comments about this publication and your suggestions for future editions. 2012 income tax filing   You can write to us at the following address: Internal Revenue Service Business, Exempt Organizations and International Forms and Publications Branch SE:W:CAR:MP:T:B 1111 Constitution Ave. 2012 income tax filing NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. 2012 income tax filing Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. 2012 income tax filing   You can send us comments from www. 2012 income tax filing irs. 2012 income tax filing gov/formspubs/. 2012 income tax filing Select “Comment on Tax Forms and Publications” under “More Information. 2012 income tax filing ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. 2012 income tax filing Ordering forms and publications. 2012 income tax filing   Visit www. 2012 income tax filing irs. 2012 income tax filing gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. 2012 income tax filing Internal Revenue Service 1201 N. 2012 income tax filing Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. 2012 income tax filing   If you have a tax question, check the information available on IRS. 2012 income tax filing gov or call 1-800-829-1040. 2012 income tax filing We cannot answer tax questions sent to either of the above addresses. 2012 income tax filing Prev  Up  Next   Home   More Online Publications
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The 2012 Income Tax Filing

2012 income tax filing Other Methods of Depreciation Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: How To Figure the DeductionBasis Useful Life Salvage Value Methods To UseStraight Line Method Declining Balance Method Income Forecast Method How To Change Methods DispositionsSale or exchange. 2012 income tax filing Property not disposed of or abandoned. 2012 income tax filing Special rule for normal retirements from item accounts. 2012 income tax filing Abandoned property. 2012 income tax filing Single item accounts. 2012 income tax filing Multiple property account. 2012 income tax filing Topics - This chapter discusses: How to figure the deduction Methods to use How to change methods Dispositions Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets 551 Basis of Assets 583 Starting a Business and Keeping Records 946 How To Depreciate Property Form (and Instructions) 3115 Application for Change in Accounting Method 4562 Depreciation and Amortization Schedule C (Form 1040) Profit or Loss From Business If your property is being depreciated under ACRS, you must continue to use rules for depreciation that applied when you placed the property in service. 2012 income tax filing If your property qualified for MACRS, you must depreciate it under MACRS. 2012 income tax filing See Publication 946. 2012 income tax filing However, you cannot use MACRS for certain property because of special rules that exclude it from MACRS. 2012 income tax filing Also, you can elect to exclude certain property from being depreciated under MACRS. 2012 income tax filing Property that you cannot depreciate using MACRS includes: Intangible property, Property you can elect to exclude from MACRS that you properly depreciate under a method that is not based on a term of years, Certain public utility property, Any motion picture film or video tape, Any sound recording, and Certain real and personal property placed in service before 1987. 2012 income tax filing Intangible property. 2012 income tax filing   You cannot depreciate intangible property under ACRS or MACRS. 2012 income tax filing You depreciate intangible property using any other reasonable method, usually, the straight line method. 2012 income tax filing Note. 2012 income tax filing The cost of certain intangible property that you acquire after August 10, 1993, must be amortized over a 15-year period. 2012 income tax filing For more information, see chapter 12 of Publication 535. 2012 income tax filing Public utility property. 2012 income tax filing   The law excludes from MACRS any public utility property for which the taxpayer does not use a normalization method of accounting. 2012 income tax filing This type of property is subject to depreciation under a special rule. 2012 income tax filing Videocassettes. 2012 income tax filing   If you are in the videocassette rental business, you can depreciate those videocassettes purchased for rental. 2012 income tax filing You can depreciate the cost less salvage value of those videocassettes that have a useful life over one year using either: The straight line method, or The income forecast method. 2012 income tax filing The straight line method, salvage value, and useful life are discussed later under Methods To Use. 2012 income tax filing You can deduct in the year of purchase as a business expense the cost of any cassette that has a useful life of one year or less. 2012 income tax filing How To Figure the Deduction Two other reasonable methods can be used to figure your deduction for property not covered under ACRS or MACRS. 2012 income tax filing These methods are straight line and declining balance. 2012 income tax filing To figure depreciation using these methods, you must generally determine three things about the property you intend to depreciate. 2012 income tax filing They are: The basis, The useful life, and The estimated salvage value at the end of its useful life. 2012 income tax filing The amount of the deduction in any year also depends on which method of depreciation you choose. 2012 income tax filing Basis To deduct the proper amount of depreciation each year, first determine your basis in the property you intend to depreciate. 2012 income tax filing The basis used for figuring depreciation is the same as the basis that would be used for figuring the gain on a sale. 2012 income tax filing Your original basis is usually the purchase price. 2012 income tax filing However, if you acquire property in some other way, such as inheriting it, getting it as a gift, or building it yourself, you have to figure your original basis in a different way. 2012 income tax filing Adjusted basis. 2012 income tax filing   Events will often change the basis of property. 2012 income tax filing When this occurs, the changed basis is called the adjusted basis. 2012 income tax filing Some events, such as improvements you make, increase basis. 2012 income tax filing Events such as deducting casualty losses and depreciation decrease basis. 2012 income tax filing If basis is adjusted, the depreciation deduction may also have to be changed, depending on the reason for the adjustment and the method of depreciation you are using. 2012 income tax filing   Publication 551 explains how to figure basis for property acquired in different ways. 2012 income tax filing It also discusses what items increase and decrease basis, how to figure adjusted basis, and how to allocate cost if you buy several pieces of property at one time. 2012 income tax filing Useful Life The useful life of a piece of property is an estimate of how long you can expect to use it in your trade or business, or to produce income. 2012 income tax filing It is the length of time over which you will make yearly depreciation deductions of your basis in the property. 2012 income tax filing It is how long it will continue to be useful to you, not how long the property will last. 2012 income tax filing Many things affect the useful life of property, such as: Frequency of use, Age when acquired, Your repair policy, and Environmental conditions. 2012 income tax filing The useful life can also be affected by technological improvements, progress in the arts, reasonably foreseeable economic changes, shifting of business centers, prohibitory laws, and other causes. 2012 income tax filing Consider all these factors before you arrive at a useful life for your property. 2012 income tax filing The useful life of the same type of property varies from user to user. 2012 income tax filing When you determine the useful life of your property, keep in mind your own experience with similar property. 2012 income tax filing You can use the general experience of the industry you are in until you are able to determine a useful life of your property from your own experience. 2012 income tax filing Change in useful life. 2012 income tax filing   You base your estimate of useful life on certain facts. 2012 income tax filing If these facts change significantly, you can adjust your estimate of the remaining useful life. 2012 income tax filing However, you redetermine the estimated useful life only when the change is substantial and there is a clear reason for making the change. 2012 income tax filing Salvage Value It is important for you to accurately determine the correct salvage value of the property you want to depreciate. 2012 income tax filing You generally cannot depreciate property below a reasonable salvage value. 2012 income tax filing Determining salvage value. 2012 income tax filing   Salvage value is the estimated value of property at the end of its useful life. 2012 income tax filing It is what you expect to get for the property if you sell it after you can no longer use it productively. 2012 income tax filing You must estimate the salvage value of a piece of property when you first acquire it. 2012 income tax filing   Salvage value is affected both by how you use the property and how long you use it. 2012 income tax filing If it is your policy to dispose of property that is still in good operating condition, the salvage value can be relatively large. 2012 income tax filing However, if your policy is to use property until it is no longer usable, its salvage value can be its junk value. 2012 income tax filing Changing salvage value. 2012 income tax filing   Once you determine the salvage value for property, you should not change it merely because prices have changed. 2012 income tax filing However, if you redetermine the useful life of property, as discussed earlier under Change in useful life, you can also redetermine the salvage value. 2012 income tax filing When you redetermine the salvage value, take into account the facts that exist at the time. 2012 income tax filing Net salvage. 2012 income tax filing   Net salvage is the salvage value of property minus what it costs to remove it when you dispose of it. 2012 income tax filing You can choose either salvage value or net salvage when you figure depreciation. 2012 income tax filing You must consistently use the one you choose and the treatment of the costs of removal must be consistent with the practice adopted. 2012 income tax filing However, if the cost to remove the property is more than the estimated salvage value, then net salvage is zero. 2012 income tax filing Your salvage value can never be less than zero. 2012 income tax filing Ten percent rule. 2012 income tax filing   If you acquire personal property that has a useful life of 3 years or more, you can use an amount for salvage value that is less than your actual estimate. 2012 income tax filing You can subtract from your estimate of salvage value an amount equal to 10% of your basis in the property. 2012 income tax filing If salvage value is less than 10% of basis, you can ignore salvage value when you figure depreciation. 2012 income tax filing Methods To Use Two methods of depreciation are the straight line and declining balance methods. 2012 income tax filing If ACRS or MACRS does not apply, you can use one of these methods. 2012 income tax filing The straight line and declining balance methods discussed in this section are not figured in the same way as straight line or declining balance methods under MACRS. 2012 income tax filing Straight Line Method Before 1981, you could use any reasonable method for every kind of depreciable property. 2012 income tax filing One of these methods was the straight line method. 2012 income tax filing This method was also used for intangible property. 2012 income tax filing It lets you deduct the same amount of depreciation each year. 2012 income tax filing To figure your deduction, determine the adjusted basis of your property, its salvage value, and its estimated useful life. 2012 income tax filing Subtract the salvage value, if any, from the adjusted basis. 2012 income tax filing The balance is the total amount of depreciation you can take over the useful life of the property. 2012 income tax filing Divide the balance by the number of years remaining in the useful life. 2012 income tax filing This gives you the amount of your yearly depreciation deduction. 2012 income tax filing Unless there is a big change in adjusted basis, or useful life, this amount will stay the same throughout the time you depreciate the property. 2012 income tax filing If, in the first year, you use the property for less than a full year, you must prorate your depreciation deduction for the number of months in use. 2012 income tax filing Example. 2012 income tax filing In April 1994, Frank bought a franchise for $5,600. 2012 income tax filing It expires in 10 years. 2012 income tax filing This property is intangible property that cannot be depreciated under MACRS. 2012 income tax filing Frank depreciates the franchise under the straight line method, using a 10-year useful life and no salvage value. 2012 income tax filing He takes the $5,600 basis and divides that amount by 10 years ($5,600 ÷ 10 = $560, a full year's use). 2012 income tax filing He must prorate the $560 for his 9 months of use in 1994. 2012 income tax filing This gives him a deduction of $420 ($560 ÷ 9/12). 2012 income tax filing In 1995, Frank can deduct $560 for the full year. 2012 income tax filing Declining Balance Method The declining balance method allows you to recover a larger amount of the cost of the property in the early years of your use of the property. 2012 income tax filing The rate cannot be more than twice the straight line rate. 2012 income tax filing Rate of depreciation. 2012 income tax filing   Under this method, you must determine your declining balance rate of depreciation. 2012 income tax filing The initial step is to: Divide the number 1 by the useful life of your property to get a straight line rate. 2012 income tax filing (For example, if property has a useful life of 5 years, its normal straight line rate of depreciation is ⅕, or 20%. 2012 income tax filing ) Multiply this straight line rate by a number that is more than 1 but not more than 2 to determine the declining balance rate. 2012 income tax filing Unless there is a change in the useful life during the time you depreciate the property, the rate of depreciation generally will not change. 2012 income tax filing Depreciation deductions. 2012 income tax filing   After you determine the rate of depreciation, multiply the adjusted basis of the property by it. 2012 income tax filing This gives you the amount of your deduction. 2012 income tax filing For example, if your adjusted basis at the beginning of the first year is $10,000, and your declining balance rate is 20%, your depreciation deduction for the first year is $2,000 ($10,000 ÷ 20%). 2012 income tax filing To figure your depreciation deduction in the second year, you must first adjust the basis for the amount of depreciation you deducted in the first year. 2012 income tax filing Subtract the previous year's depreciation from your basis ($10,000 - $2,000 = $8,000). 2012 income tax filing Multiply this amount by the rate of depreciation ($8,000 ÷ 20% = $1,600). 2012 income tax filing Your depreciation deduction for the second year is $1,600. 2012 income tax filing   As you can see from this example, your adjusted basis in the property gets smaller each year. 2012 income tax filing Also, under this method, deductions are larger in the earlier years and smaller in the later years. 2012 income tax filing You can make a change to the straight line method without consent. 2012 income tax filing Salvage value. 2012 income tax filing   Do not subtract salvage value when you figure your yearly depreciation deductions under the declining balance method. 2012 income tax filing However, you cannot depreciate the property below its reasonable salvage value. 2012 income tax filing Determine salvage value using the rules discussed earlier, including the special 10% rule. 2012 income tax filing Example. 2012 income tax filing If your adjusted basis has been decreased to $1,000 and the rate of depreciation is 20%, your depreciation deduction should be $200. 2012 income tax filing But if your estimate of salvage value was $900, you can only deduct $100. 2012 income tax filing This is because $100 is the amount that would lower your adjusted basis to equal salvage value. 2012 income tax filing Income Forecast Method The income forecast method requires income projections for each videocassette or group of videocassettes. 2012 income tax filing You can group the videocassettes by title for making this projection. 2012 income tax filing You determine the depreciation by applying a fraction to the cost less salvage value of the cassette. 2012 income tax filing The numerator is the income from the videocassette for the tax year and the denominator is the total projected income for the cassette. 2012 income tax filing For more information on the income forecast method, see Revenue Ruling 60-358 in Cumulative Bulletin 1960, Volume 2, on page 68. 2012 income tax filing How To Change Methods In some cases, you may change your method of depreciation for property depreciated under a reasonable method. 2012 income tax filing If you change your method of depreciation, it is generally a change in your method of accounting. 2012 income tax filing You must get IRS consent before making the change. 2012 income tax filing However, you do not need permission for certain changes in your method of depreciation. 2012 income tax filing The rules discussed in this section do not apply to property depreciated under ACRS or MACRS. 2012 income tax filing For information on ACRS elections,see Revocation of election, in chapter 1 under Alternate ACRS Method. 2012 income tax filing Change to the straight line method. 2012 income tax filing   You can change from the declining balance method to the straight line method at any time during the useful life of your property without IRS consent. 2012 income tax filing However, if you have a written agreement with the IRS that prohibits a change, you must first get IRS permission. 2012 income tax filing When the change is made, figure depreciation based on your adjusted basis in the property at that time. 2012 income tax filing Your adjusted basis takes into account all previous depreciation deductions. 2012 income tax filing Use the estimated remaining useful life of your property at the time of change and its estimated salvage value. 2012 income tax filing   You can change from the declining balance method to straight line only on the original tax return for the year you first use the straight line method. 2012 income tax filing You cannot make the change on an amended return filed after the due date of the original return (including extensions). 2012 income tax filing   When you make the change, attach a statement to your tax return showing: When you acquired the property, Its original cost or other original basis, The total amount claimed for depreciation and other allowances since you acquired it, Its salvage value and remaining useful life, and A description of the property and its use. 2012 income tax filing   After you change to straight line, you cannot change back to the declining balance method or to any other method for a period of 10 years without written permission from the IRS. 2012 income tax filing Changes that require permission. 2012 income tax filing   For most other changes in method of depreciation, you must get permission from the IRS. 2012 income tax filing To request a change in method of depreciation, file Form 3115. 2012 income tax filing File the application within the first 180 days of the tax year the change is to become effective. 2012 income tax filing In most cases, there is a user fee that must accompany Form 3115. 2012 income tax filing See the instructions for Form 3115 to determine if a fee is required. 2012 income tax filing Changes granted automatically. 2012 income tax filing   The IRS automatically approves certain changes of a method of depreciation. 2012 income tax filing But, you must file Form 3115 for these automatic changes. 2012 income tax filing   However, IRS can deny permission if Form 3115 is not filed on time. 2012 income tax filing For more information on automatic changes, see Revenue Procedure 74-11, 1974-1 C. 2012 income tax filing B. 2012 income tax filing 420. 2012 income tax filing Changes for which approval is not automatic. 2012 income tax filing   The automatic change procedures do not apply to: Property or an account where you made a change in depreciation within the last 10 tax years (unless the change was made under the Class Life System), Class Life Asset Depreciation Range System, and Public utility property. 2012 income tax filing   You must request and receive permission for these changes. 2012 income tax filing To make the request, file Form 3115 during the first 180 days of the tax year for which you want the change to be effective. 2012 income tax filing Change from an improper method. 2012 income tax filing   If the IRS disallows the method you are using, you do not need permission to change to a proper method. 2012 income tax filing You can adopt the straight line method, or any other method that would have been permitted if you had used it from the beginning. 2012 income tax filing If you file your tax return using an improper method, but later file an amended return, you can use a proper method on the amended return without getting IRS permission. 2012 income tax filing However, you must file the amended return before the filing date for the next tax year. 2012 income tax filing Dispositions Retirement is the permanent withdrawal of depreciable property from use in your trade or business or for the production of income. 2012 income tax filing You can do this by selling, exchanging, or abandoning the item of property. 2012 income tax filing You can also withdraw it from use without disposing of it. 2012 income tax filing For example, you could place it in a supplies or scrap account. 2012 income tax filing Retirements can be either normal or abnormal depending on all facts and circumstances. 2012 income tax filing The rules discussed next do not apply to MACRS and ACRS property. 2012 income tax filing Normal retirement. 2012 income tax filing   A normal retirement is a permanent withdrawal of depreciable property from use if the following apply: The retirement is made within the useful life you estimated originally, and The property has reached a condition at which you customarily retire or would retire similar property from use. 2012 income tax filing A retirement is generally considered normal unless you can show that you retired the property because of a reason you did not consider when you originally estimated the useful life of the property. 2012 income tax filing Abnormal retirement. 2012 income tax filing   A retirement can be abnormal if you withdraw the property early or under other circumstances. 2012 income tax filing For example, if the property is damaged by a fire or suddenly becomes obsolete and is now useless. 2012 income tax filing Gain or loss on retirement. 2012 income tax filing   There are special rules for figuring the gain or loss on retirement of property. 2012 income tax filing The gain or loss will depend on several factors. 2012 income tax filing These include the type of withdrawal, if the withdrawal was from a single property or multiple property account, and if the retirement was normal or abnormal. 2012 income tax filing A single property account contains only one item of property. 2012 income tax filing A multiple property account is one in which several items have been combined with a single rate of depreciation assigned to the entire account. 2012 income tax filing Sale or exchange. 2012 income tax filing   If property is retired by sale or exchange, you figure gain or loss by the usual rules that apply to sales or other dispositions of property. 2012 income tax filing See Publication 544. 2012 income tax filing Property not disposed of or abandoned. 2012 income tax filing   If property is retired permanently, but not disposed of or physically abandoned, you do not recognize gain. 2012 income tax filing You are allowed a loss in such a case, but only if the retirement is: An abnormal retirement, A normal retirement from a single property account in which you determined the life of each item of property separately, or A normal retirement from a multiple property account in which the depreciation rate is based on the maximum expected life of the longest lived item of property and the loss occurs before the expiration of the full useful life. 2012 income tax filing However, you are not allowed a loss if the depreciation rate is based on the average useful life of the items of property in the account. 2012 income tax filing   To figure your loss, subtract the estimated salvage or fair market value of the property at the date of retirement, whichever is more, from its adjusted basis. 2012 income tax filing Special rule for normal retirements from item accounts. 2012 income tax filing   You can generally deduct losses upon retirement of a few depreciable items of property with similar useful lives, if: You account for each one in a separate account, and You use the average useful life to figure depreciation. 2012 income tax filing However, you cannot deduct losses if you use the average useful life to figure depreciation and they have a wide range of useful lives. 2012 income tax filing   If you have a large number of depreciable property items and use average useful lives to figure depreciation, you cannot deduct the losses upon normal retirements from these accounts. 2012 income tax filing Abandoned property. 2012 income tax filing   If you physically abandon property, you can deduct as a loss the adjusted basis of the property at the time of its abandonment. 2012 income tax filing However, your intent must be to discard the property so that you will not use it again or retrieve it for sale, exchange, or other disposition. 2012 income tax filing Basis of property retired. 2012 income tax filing   The basis for figuring gain or loss on the retirement of property is its adjusted basis at the time of retirement, as determined in the following discussions. 2012 income tax filing Single item accounts. 2012 income tax filing   If an item of property is accounted for in a single item account, the adjusted basis is the basis you would use to figure gain or loss for a sale or exchange of the property. 2012 income tax filing This is generally the cost or other basis of the item of property less depreciation. 2012 income tax filing See Publication 551. 2012 income tax filing Multiple property account. 2012 income tax filing   For a normal retirement from a multiple property account, if you figured depreciation using the average expected useful life, the adjusted basis is the salvage value estimated for the item of property when it was originally acquired. 2012 income tax filing If you figured depreciation using the maximum expected useful life of the longest lived item of property in the account, you must use the depreciation method used for the multiple property account and a rate based on the maximum expected useful life of the item of property retired. 2012 income tax filing   You make the adjustment for depreciation for an abnormal retirement from a multiple property account at the rate that would be proper if the item of property was depreciated in a single property account. 2012 income tax filing The method of depreciation used for the multiple property account is used. 2012 income tax filing You base the rate on either the average expected useful life or the maximum expected useful life of the retired item of property, depending on the method used to determine the depreciation rate for the multiple property account. 2012 income tax filing Prev  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