Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

2012 Tax Forms 1040 Ez

Irs Form 4868Turbotax Free State FilingTurbotax Free FileIrs 1040ez FormMyfreetaxes 2014Hrblock TaxesTax Act Online 2012File Federal And State Income Tax For FreeAmending A Tax Return With TurbotaxWhere To Send 1040xE File 2010 Tax Return FreeFree State Tax E FilingIrs 1040v FormCan I Efile My 2011 TaxesFree 1040ez Form1040ez Forms And InstructionsFree Tax ServicesHow To File Back Taxes For Free2009 Tax TablesForm 1040 EzHow To E-file 2012 Taxes1040ez Free File OnlineH R Block TaxHow To Fill Out A 1040x Form For The IrsTax MilitaryHow To Fill Out A 1040x Form For The Irs2012 Tax PreparationCan I Still File My 2010 Taxes OnlineFree 1040ez Tax FormEz1040File State And Federal Taxes For FreeHr Block 1040xTaxact.com 2010Irs Gov Free File 2011Form 1040x FillableFree 2011 Tax Software Download1040ez FilingTaxact 20131040a Income Tax Form1044ez

2012 Tax Forms 1040 Ez

2012 tax forms 1040 ez 5. 2012 tax forms 1040 ez   Manufacturers Taxes Table of Contents Importer. 2012 tax forms 1040 ez Use considered sale. 2012 tax forms 1040 ez Lease considered sale. 2012 tax forms 1040 ez Bonus goods. 2012 tax forms 1040 ez Taxable Event ExemptionsRequirements for Exempt Sales Credits or Refunds Sport Fishing EquipmentRelated person. 2012 tax forms 1040 ez Bows, Quivers, Broadheads, and Points Arrow ShaftsExemption for certain wooden arrows. 2012 tax forms 1040 ez CoalExported. 2012 tax forms 1040 ez Taxable TiresQualifying intercity or local bus. 2012 tax forms 1040 ez Qualifying school bus. 2012 tax forms 1040 ez Gas Guzzler TaxVehicles not subject to tax. 2012 tax forms 1040 ez Imported automobiles. 2012 tax forms 1040 ez VaccinesConditions to allowance. 2012 tax forms 1040 ez Taxable Medical Devices The following discussion of manufacturers taxes applies to the tax on: Sport fishing equipment; Fishing rods and fishing poles; Electric outboard motors; Fishing tackle boxes; Bows, quivers, broadheads, and points; Arrow shafts; Coal; Taxable tires; Gas guzzler automobiles; and Vaccines. 2012 tax forms 1040 ez Manufacturer. 2012 tax forms 1040 ez   The term “manufacturer” includes a producer or importer. 2012 tax forms 1040 ez A manufacturer is any person who produces a taxable article from new or raw material, or from scrap, salvage, or junk material, by processing or changing the form of an article or by combining or assembling two or more articles. 2012 tax forms 1040 ez If you furnish the materials and keep title to those materials and to the finished article, you are considered the manufacturer even though another person actually manufactures the taxable article. 2012 tax forms 1040 ez   A manufacturer who sells a taxable article in knockdown (unassembled) condition is liable for the tax. 2012 tax forms 1040 ez The person who buys these component parts and assembles a taxable article may also be liable for tax as a further manufacturer depending on the labor, material, and overhead required to assemble the completed article if the article is assembled for business use. 2012 tax forms 1040 ez Importer. 2012 tax forms 1040 ez   An importer is a person who brings a taxable article into the United States, or withdraws a taxable article from a customs bonded warehouse for sale or use in the United States. 2012 tax forms 1040 ez Sale. 2012 tax forms 1040 ez   A sale is the transfer of the title to, or the substantial incidents of ownership in, an article to a buyer for consideration that may consist of money, services, or other things. 2012 tax forms 1040 ez Use considered sale. 2012 tax forms 1040 ez   A manufacturer who uses a taxable article is liable for the tax in the same manner as if it were sold. 2012 tax forms 1040 ez Lease considered sale. 2012 tax forms 1040 ez   The lease of an article (including any renewal or extension of the lease) by the manufacturer is generally considered a taxable sale. 2012 tax forms 1040 ez However, for the gas guzzler tax, only the first lease (excluding any renewal or extension) of the automobile by the manufacturer is considered a sale. 2012 tax forms 1040 ez Manufacturers taxes based on sale price. 2012 tax forms 1040 ez   The manufacturers taxes imposed on the sale of sport fishing equipment, electric outboard motors, and bows are based on the sale price of the article. 2012 tax forms 1040 ez The taxes imposed on coal are based either on the sale price or the weight. 2012 tax forms 1040 ez   The price for which an article is sold includes the total consideration paid for the article, whether that consideration is in the form of money, services, or other things. 2012 tax forms 1040 ez However, you include certain charges made when a taxable article is sold and you exclude others. 2012 tax forms 1040 ez To figure the price on which you base the tax, use the following rules. 2012 tax forms 1040 ez Include both the following charges in the price. 2012 tax forms 1040 ez Any charge for coverings or containers (regardless of their nature). 2012 tax forms 1040 ez Any charge incident to placing the article in a condition packed ready for shipment. 2012 tax forms 1040 ez Exclude all the following amounts from the price. 2012 tax forms 1040 ez The manufacturers excise tax, whether or not it is stated as a separate charge. 2012 tax forms 1040 ez The transportation charges pursuant to the sale. 2012 tax forms 1040 ez The cost of transportation of goods to a warehouse before their bona fide sale is not excludable. 2012 tax forms 1040 ez Delivery, insurance, installation, retail dealer preparation charges, and other charges you incur in placing the article in the hands of the purchaser under a bona fide sale. 2012 tax forms 1040 ez Discounts, rebates, and similar allowances actually granted to the purchaser. 2012 tax forms 1040 ez Local advertising charges. 2012 tax forms 1040 ez A charge made separately when the article is sold and that qualifies as a charge for “local advertising” may, within certain limits, be excluded from the sale price. 2012 tax forms 1040 ez Charges for warranty paid at the purchaser's option. 2012 tax forms 1040 ez However, a charge for a warranty of an article that the manufacturer requires the purchaser to pay to obtain the article is included in the sale price on which the tax is figured. 2012 tax forms 1040 ez Bonus goods. 2012 tax forms 1040 ez   Allocate the sale price if you give free nontaxable goods with the purchase of taxable merchandise. 2012 tax forms 1040 ez Figure the tax only on the sale price attributable to the taxable articles. 2012 tax forms 1040 ez Example. 2012 tax forms 1040 ez A manufacturer sells a quantity of taxable articles and gives the purchaser certain nontaxable articles as a bonus. 2012 tax forms 1040 ez The sale price of the shipment is $1,500. 2012 tax forms 1040 ez The normal sale price is $2,000: $1,500 for the taxable articles and $500 for the nontaxable articles. 2012 tax forms 1040 ez Since the taxable items represent 75% of the normal sale price, the tax is based on 75% of the actual sale price, or $1,125 (75% of $1,500). 2012 tax forms 1040 ez The remaining $375 is allocated to the nontaxable articles. 2012 tax forms 1040 ez Taxable Event Tax attaches when the title to the article sold passes from the manufacturer to the buyer. 2012 tax forms 1040 ez When the title passes depends on the intention of the parties as gathered from the contract of sale. 2012 tax forms 1040 ez In the absence of expressed intention, the legal rules of presumption followed in the jurisdiction where the sale occurs determine when title passes. 2012 tax forms 1040 ez If the taxable article is used by the manufacturer, the tax attaches at the time use begins. 2012 tax forms 1040 ez The manufacturer is liable for the tax. 2012 tax forms 1040 ez Partial payments. 2012 tax forms 1040 ez   The tax applies to each partial payment received when taxable articles are: Leased, Sold conditionally, Sold on installment with chattel mortgage, or Sold on installment with title to pass in the future. 2012 tax forms 1040 ez To figure the tax, multiply the partial payment by the tax rate in effect at the time of the payment. 2012 tax forms 1040 ez Exemptions The following sales by the manufacturer are exempt from the manufacturers tax. 2012 tax forms 1040 ez Sale of an article to a state or local government for the exclusive use of the state or local government. 2012 tax forms 1040 ez This exemption does not apply to the taxes on coal, gas guzzlers, and vaccines. 2012 tax forms 1040 ez State is defined in Definitions in chapter 1. 2012 tax forms 1040 ez Sale of an article to a nonprofit educational organization for its exclusive use. 2012 tax forms 1040 ez This exemption does not apply to the taxes on coal, gas guzzlers, and vaccines. 2012 tax forms 1040 ez Nonprofit educational organization is defined under Communications Tax in chapter 4. 2012 tax forms 1040 ez Sale of an article to a qualified blood collector organization. 2012 tax forms 1040 ez This exemption does not apply to gas guzzlers, recreational equipment, and vaccines. 2012 tax forms 1040 ez Qualified blood collector organizations are defined under Communications Tax in chapter 4. 2012 tax forms 1040 ez Sale of an article for use by the purchaser as supplies for vessels. 2012 tax forms 1040 ez This exemption does not apply to the taxes on coal and vaccines. 2012 tax forms 1040 ez Supplies for vessels means ships' stores, sea stores, or legitimate equipment on vessels of war of the United States or any foreign nation, vessels employed in the fisheries or whaling business, or vessels actually engaged in foreign trade. 2012 tax forms 1040 ez Sale of an article for use by the purchaser for further manufacture, or for resale by the purchaser to a second purchaser for use by the second purchaser for further manufacture. 2012 tax forms 1040 ez This exemption does not apply to the tax on coal and tires. 2012 tax forms 1040 ez Use for further manufacture means use in the manufacture or production of an article subject to the manufacturers excise taxes. 2012 tax forms 1040 ez If you buy articles tax free and resell or use them other than in the manufacture of another article, you are liable for the tax on their resale or use just as if you had manufactured and sold them. 2012 tax forms 1040 ez Sale of an article for export or for resale by the purchaser to a second purchaser for export. 2012 tax forms 1040 ez The article may be exported to a foreign country or to a possession of the United States. 2012 tax forms 1040 ez A vaccine shipped to a possession of the United States is not considered to be exported. 2012 tax forms 1040 ez If an article is sold tax free for export and the manufacturer does not receive proof of export, described later, the manufacturer is liable for the tax. 2012 tax forms 1040 ez Sales of articles of native Indian handicraft, such as bows and arrow shafts, manufactured by Indians on reservations, in Indian schools, or under U. 2012 tax forms 1040 ez S. 2012 tax forms 1040 ez jurisdiction in Alaska. 2012 tax forms 1040 ez For tire exemptions, see section 4221(e)(2). 2012 tax forms 1040 ez Requirements for Exempt Sales The following requirements must be met for a sale to be exempt from the manufacturers tax. 2012 tax forms 1040 ez Registration requirements. 2012 tax forms 1040 ez   The manufacturer, first purchaser, and second purchaser in the case of resales must be registered. 2012 tax forms 1040 ez See the Form 637 instructions for more information. 2012 tax forms 1040 ez Exceptions to registration requirements. 2012 tax forms 1040 ez   Registration is not required for: State or local governments, Foreign purchasers of articles sold or resold for export, The United States, or Parties to a sale of supplies for vessels and aircraft. 2012 tax forms 1040 ez Certification requirement. 2012 tax forms 1040 ez   If the purchaser is required to be registered, the purchaser must give the manufacturer its registration number and certify the exempt purpose for which the article will be used. 2012 tax forms 1040 ez The information must be in writing and may be noted on the purchase order or other document furnished by the purchaser to the seller in connection with the sale. 2012 tax forms 1040 ez   For a sale to a state or local government, an exemption certificate must be signed by an officer or employee authorized by the state or local government. 2012 tax forms 1040 ez See Regulations section 48. 2012 tax forms 1040 ez 4221-5(c) for the certificate requirements. 2012 tax forms 1040 ez   For sales for use as supplies for vessels and aircraft, if the manufacturer and purchaser are not registered, the owner or agent of the vessel must provide an exemption certificate to the manufacturer before or at the time of sale. 2012 tax forms 1040 ez See Regulations section 48. 2012 tax forms 1040 ez 4221-4(d) for the certificate requirements. 2012 tax forms 1040 ez Proof of export requirement. 2012 tax forms 1040 ez   Within 6 months of the date of sale or shipment by the manufacturer, whichever is earlier, the manufacturer must receive proof of exportation. 2012 tax forms 1040 ez See Regulations section 48. 2012 tax forms 1040 ez 4221-3(d) for evidence that qualifies as proof of exportation. 2012 tax forms 1040 ez Proof of resale for further manufacture requirement. 2012 tax forms 1040 ez   Within 6 months of the date of sale or shipment by the manufacturer, whichever is earlier, the manufacturer must receive proof that the article has been resold for use in further manufacture. 2012 tax forms 1040 ez See Regulations section 48. 2012 tax forms 1040 ez 4221-2(c) for evidence that qualifies as proof of resale. 2012 tax forms 1040 ez Information to be furnished to purchaser. 2012 tax forms 1040 ez   The manufacturer must indicate to the purchaser that the articles normally would be subject to tax and are being sold tax free for an exempt purpose because the purchaser has provided the required certificate. 2012 tax forms 1040 ez Credits or Refunds The manufacturer may be eligible to obtain a credit or refund of the manufacturers tax for certain uses, sales, exports, and price readjustments. 2012 tax forms 1040 ez The claim must set forth in detail the facts upon which the claim is based. 2012 tax forms 1040 ez Uses, sales, and exports. 2012 tax forms 1040 ez   A credit or refund (without interest) of the manufacturers taxes may be allowable if a tax-paid article is, by any person: Exported, Used or sold for use as supplies for vessels (except for coal and vaccines), Sold to a state or local government for its exclusive use (except for coal, gas guzzlers, and vaccines), Sold to a nonprofit educational organization for its exclusive use (except for coal, gas guzzlers, and vaccines), Sold to a qualified blood collector organization for its exclusive use (except for gas guzzlers, recreational equipment, and vaccines), or Used for further manufacture of another article subject to the manufacturers taxes (except for coal). 2012 tax forms 1040 ez Export. 2012 tax forms 1040 ez   If a tax-paid article is exported, the exporter or shipper may claim a credit or refund if the manufacturer waives its right to claim the credit or refund. 2012 tax forms 1040 ez In the case of a tax-paid article used to make another taxable article, the subsequent manufacturer may claim the credit or refund. 2012 tax forms 1040 ez Price readjustments. 2012 tax forms 1040 ez   In addition, a credit or refund (without interest) may be allowable for a tax-paid article for which the price is readjusted by reason of return or repossession of the article or a bona fide discount, rebate, or allowance for taxes based on price. 2012 tax forms 1040 ez Conditions to allowance. 2012 tax forms 1040 ez   To claim a credit or refund in the case of export; supplies for vessels; or sales to a state or local government, nonprofit educational organization, or qualified blood collector organization; the person who paid the tax must certify on the claim that one of the following applies and that the claimant has the required supporting information. 2012 tax forms 1040 ez The claimant sold the article at a tax-excluded price. 2012 tax forms 1040 ez The person has repaid, or agreed to repay, the tax to the ultimate vendor of the article. 2012 tax forms 1040 ez The person has obtained the written consent of the ultimate vendor to make the claim. 2012 tax forms 1040 ez The ultimate vendor generally is the seller making the sale that gives rise to the overpayment of tax. 2012 tax forms 1040 ez Claim for further manufacture. 2012 tax forms 1040 ez   To claim a credit or refund for further manufacture, the claimant must include a statement that contains the following. 2012 tax forms 1040 ez The name and address of the manufacturer and the date of payment. 2012 tax forms 1040 ez An identification of the article for which the credit or refund is claimed. 2012 tax forms 1040 ez The amount of tax paid on the article and the date on which it was paid. 2012 tax forms 1040 ez Information indicating that the article was used as material in the manufacture or production of, or as a component part of, a second article manufactured or produced by the manufacturer, or was sold on or in connection with, or with the sale of a second article manufactured or produced by the manufacturer. 2012 tax forms 1040 ez An identification of the second article. 2012 tax forms 1040 ez   For claims by the exporter or shipper, the claim must contain the proof of export and a statement signed by the person that paid the tax waiving the right to claim a credit or refund. 2012 tax forms 1040 ez The statement must include the amount of tax paid, the date of payment, and the office to which it was paid. 2012 tax forms 1040 ez Claim for price readjustment. 2012 tax forms 1040 ez   To claim a credit or refund for a price readjustment, the person who paid the tax must include with the claim, a statement that contains the following. 2012 tax forms 1040 ez A description of the circumstances that gave rise to the price readjustment. 2012 tax forms 1040 ez An identification of the article whose price was readjusted. 2012 tax forms 1040 ez The price at which the article was sold. 2012 tax forms 1040 ez The amount of tax paid on the article and the date on which it was paid. 2012 tax forms 1040 ez The name and address of the purchaser. 2012 tax forms 1040 ez The amount repaid to the purchaser or credited to the purchaser's account. 2012 tax forms 1040 ez Sport Fishing Equipment A tax of 10% of the sale price is imposed on many articles of sport fishing equipment sold by the manufacturer. 2012 tax forms 1040 ez This includes any parts or accessories sold on or in connection with the sale of those articles. 2012 tax forms 1040 ez Pay this tax with Form 720. 2012 tax forms 1040 ez No tax deposits are required. 2012 tax forms 1040 ez Sport fishing equipment includes all the following items. 2012 tax forms 1040 ez Fishing rods and poles (and component parts), fishing reels, fly fishing lines, and other fishing lines not over 130 pounds test, fishing spears, spear guns, and spear tips. 2012 tax forms 1040 ez Items of terminal tackle, including leaders, artificial lures, artificial baits, artificial flies, fishing hooks, bobbers, sinkers, snaps, drayles, and swivels (but not including natural bait or any item of terminal tackle designed for use and ordinarily used on fishing lines not described in (1)). 2012 tax forms 1040 ez The following items of fishing supplies and accessories: fish stringers, creels, bags, baskets, and other containers designed to hold fish, portable bait containers, fishing vests, landing nets, gaff hooks, fishing hook disgorgers, and dressing for fishing lines and artificial flies. 2012 tax forms 1040 ez Fishing tip-ups and tilts. 2012 tax forms 1040 ez Fishing rod belts, fishing rodholders, fishing harnesses, fish fighting chairs, fishing outriggers, and fishing downriggers. 2012 tax forms 1040 ez See Revenue Ruling 88-52 in Cumulative Bulletin 1988-1 for a more complete description of the items of taxable equipment. 2012 tax forms 1040 ez Fishing rods and fishing poles. 2012 tax forms 1040 ez   The tax on fishing rods and fishing poles (and component parts) is 10% of the sales price not to exceed $10 per article. 2012 tax forms 1040 ez The tax is paid by the manufacturer, producer, or importer. 2012 tax forms 1040 ez Fishing tackle boxes. 2012 tax forms 1040 ez   The tax on fishing tackle boxes is 3% of the sales price. 2012 tax forms 1040 ez The tax is paid by the manufacturer, producer, or importer. 2012 tax forms 1040 ez Electric outboard boat motors. 2012 tax forms 1040 ez   A tax of 3% of the sale price is imposed on the sale by the manufacturer of electric outboard motors. 2012 tax forms 1040 ez This includes any parts or accessories sold on or in connection with the sale of those articles. 2012 tax forms 1040 ez Certain equipment resale. 2012 tax forms 1040 ez   The tax on the sale of sport fishing equipment is imposed a second time under the following circumstances. 2012 tax forms 1040 ez If the manufacturer sells a taxable article to any person, the manufacturer is liable for the tax. 2012 tax forms 1040 ez If the purchaser or any other person then sells it to a person who is related (discussed next) to the manufacturer, that related person is liable for a second tax on any subsequent sale of the article. 2012 tax forms 1040 ez The second tax, however, is not imposed if the constructive sale price rules under section 4216(b) apply to the sale by the manufacturer. 2012 tax forms 1040 ez   If the second tax is imposed, a credit for tax previously paid by the manufacturer is available provided the related person can document the tax paid. 2012 tax forms 1040 ez The documentation requirement is generally satisfied only through submission of copies of actual records of the person that previously paid the tax. 2012 tax forms 1040 ez Related person. 2012 tax forms 1040 ez   For the tax on sport fishing equipment, a person is a related person of the manufacturer if that person and the manufacturer have a relationship described in section 465(b)(3)(C). 2012 tax forms 1040 ez Bows, Quivers, Broadheads, and Points The tax on bows is 11% (. 2012 tax forms 1040 ez 11) of the sales price. 2012 tax forms 1040 ez The tax is paid by the manufacturer, producer, or importer. 2012 tax forms 1040 ez It applies to bows having a peak draw weight of 30 pounds or more. 2012 tax forms 1040 ez The tax is also imposed on the sale of any part or accessory suitable for inclusion in or attachment to a taxable bow and any quiver, broadhead, or point suitable for use with arrows described below. 2012 tax forms 1040 ez Pay this tax with Form 720. 2012 tax forms 1040 ez No tax deposits are required. 2012 tax forms 1040 ez Arrow Shafts The tax on arrow shafts is listed on Form 720. 2012 tax forms 1040 ez The tax is paid by the manufacturer, producer, or importer of any arrow shaft (whether sold separately or incorporated as part of a finished or unfinished product) of a type used in the manufacture of any arrow that after its assembly meets either of the following conditions. 2012 tax forms 1040 ez It measures 18 inches or more in overall length. 2012 tax forms 1040 ez It measures less than 18 inches in overall length but is suitable for use with a taxable bow, described earlier. 2012 tax forms 1040 ez Exemption for certain wooden arrows. 2012 tax forms 1040 ez   After October 3, 2008, the tax does not apply to any shaft made of all natural wood with no laminations or artificial means of enhancing the spine of such shaft (whether sold separately or incorporated as part of a finished or unfinished product) and used in the manufacture of any arrow that after its assembly meets both of the following conditions. 2012 tax forms 1040 ez It measures 5/16 of an inch or less in diameter. 2012 tax forms 1040 ez It is not suitable for use with a taxable bow, described earlier. 2012 tax forms 1040 ez Pay this tax with Form 720. 2012 tax forms 1040 ez No tax deposits are required. 2012 tax forms 1040 ez Coal A tax is imposed on the first sale of coal mined in the United States. 2012 tax forms 1040 ez The producer of the coal is liable for the tax. 2012 tax forms 1040 ez The producer is the person who has vested ownership of the coal under state law immediately after the coal is severed from the ground. 2012 tax forms 1040 ez Determine vested ownership without regard to any contractual arrangement for the sale or other disposition of the coal or the payment of any royalties between the producer and third parties. 2012 tax forms 1040 ez A producer includes any person who extracts coal from coal waste refuse piles (or from the silt waste product that results from the wet washing of coal). 2012 tax forms 1040 ez The tax is not imposed on coal extracted from a riverbed by dredging if it can be shown that the coal has been taxed previously. 2012 tax forms 1040 ez Tax rates. 2012 tax forms 1040 ez   The tax on underground-mined coal is the lower of: $1. 2012 tax forms 1040 ez 10 a ton, or 4. 2012 tax forms 1040 ez 4% of the sale price. 2012 tax forms 1040 ez   The tax on surface-mined coal is the lower of: 55 cents a ton, or 4. 2012 tax forms 1040 ez 4% of the sale price. 2012 tax forms 1040 ez   Coal will be taxed at the 4. 2012 tax forms 1040 ez 4% rate if the selling price is less than $25 a ton for underground-mined coal and less than $12. 2012 tax forms 1040 ez 50 a ton for surface-mined coal. 2012 tax forms 1040 ez Apply the tax proportionately if a sale or use includes a portion of a ton. 2012 tax forms 1040 ez Example. 2012 tax forms 1040 ez If you sell 21,000 pounds (10. 2012 tax forms 1040 ez 5 tons) of coal from an underground mine for $525, the price per ton is $50. 2012 tax forms 1040 ez The tax is $1. 2012 tax forms 1040 ez 10 × 10. 2012 tax forms 1040 ez 5 tons ($11. 2012 tax forms 1040 ez 55). 2012 tax forms 1040 ez Coal production. 2012 tax forms 1040 ez   Coal is produced from surface mines if all geological matter (trees, earth, rock) above the coal is removed before the coal is mined. 2012 tax forms 1040 ez Treat coal removed by auger and coal reclaimed from coal waste refuse piles as produced from a surface mine. 2012 tax forms 1040 ez   Treat coal as produced from an underground mine when the coal is not produced from a surface mine. 2012 tax forms 1040 ez In some cases, a single mine may yield coal from both surface mining and underground mining. 2012 tax forms 1040 ez Determine if the coal is from a surface mine or an underground mine for each ton of coal produced and not on a mine-by-mine basis. 2012 tax forms 1040 ez Determining tonnage or selling price. 2012 tax forms 1040 ez   The producer pays the tax on coal at the time of sale or use. 2012 tax forms 1040 ez In figuring the selling price for applying the tax, the point of sale is f. 2012 tax forms 1040 ez o. 2012 tax forms 1040 ez b. 2012 tax forms 1040 ez (free on board) mine or f. 2012 tax forms 1040 ez o. 2012 tax forms 1040 ez b. 2012 tax forms 1040 ez cleaning plant if you clean the coal before selling it. 2012 tax forms 1040 ez This applies even if you sell the coal for a delivered price. 2012 tax forms 1040 ez The f. 2012 tax forms 1040 ez o. 2012 tax forms 1040 ez b. 2012 tax forms 1040 ez mine or f. 2012 tax forms 1040 ez o. 2012 tax forms 1040 ez b. 2012 tax forms 1040 ez cleaning plant is the point at which you figure the number of tons sold for applying the applicable tonnage rate, and the point at which you figure the sale price for applying the 4. 2012 tax forms 1040 ez 4% rate. 2012 tax forms 1040 ez   The tax applies to the full amount of coal sold. 2012 tax forms 1040 ez However, the IRS allows a calculated reduction of the taxable weight of the coal for the weight of the moisture in excess of the coal's inherent moisture content. 2012 tax forms 1040 ez Include in the sale price any additional charge for a freeze-conditioning additive in figuring the tax. 2012 tax forms 1040 ez   Do not include in the sales price the excise tax imposed on coal. 2012 tax forms 1040 ez Coal used by the producer. 2012 tax forms 1040 ez   The tax on coal applies if the coal is used by the producer in other than a mining process. 2012 tax forms 1040 ez A mining process means the same for this purpose as for percentage depletion. 2012 tax forms 1040 ez For example, the tax does not apply if, before selling the coal, you break it, clean it, size it, or apply any other process considered mining under the rules for depletion. 2012 tax forms 1040 ez In this case, the tax applies only when you sell the coal. 2012 tax forms 1040 ez The tax does not apply to coal used as fuel in the coal drying process since it is considered to be used in a mining process. 2012 tax forms 1040 ez However, the tax does apply when you use the coal as fuel or as an ingredient in making coke since the coal is not used in a mining process. 2012 tax forms 1040 ez   You must use a constructive sale price to figure the tax under the 4. 2012 tax forms 1040 ez 4% rate if you use the coal in other than a mining process. 2012 tax forms 1040 ez Base your constructive sale price on sales of a like kind and grade of coal by you or other producers made f. 2012 tax forms 1040 ez o. 2012 tax forms 1040 ez b. 2012 tax forms 1040 ez mine or cleaning plant. 2012 tax forms 1040 ez Normally, you use the same constructive price used to figure your percentage depletion deduction. 2012 tax forms 1040 ez Blending. 2012 tax forms 1040 ez   If you blend surface-mined coal with underground-mined coal during the cleaning process, you must figure the excise tax on the sale of the blended, cleaned coal. 2012 tax forms 1040 ez Figure the tax separately for each type of coal in the blend. 2012 tax forms 1040 ez Base the tax on the amount of each type in the blend if you can determine the proportion of each type of coal contained in the final blend. 2012 tax forms 1040 ez Base the tax on the ratio of each type originally put into the cleaning process if you cannot determine the proportion of each type of coal in the blend. 2012 tax forms 1040 ez However, the tax is limited to 4. 2012 tax forms 1040 ez 4% of the sale price per ton of the blended coal. 2012 tax forms 1040 ez Exemption from tax. 2012 tax forms 1040 ez   The tax does not apply to sales of lignite and imported coal. 2012 tax forms 1040 ez The only other exemption from the tax on the sale of coal is for coal exported as discussed next. 2012 tax forms 1040 ez Exported. 2012 tax forms 1040 ez   The tax does not apply to the sale of coal if the coal is in the stream of export when sold by the producer and the coal is actually exported. 2012 tax forms 1040 ez   Coal is in the stream of export when sold by the producer if the sale is a step in the exportation of the coal to its ultimate destination in a foreign country. 2012 tax forms 1040 ez For example, coal is in the stream of export when: The coal is loaded on an export vessel and title is transferred from the producer to a foreign purchaser, or The producer sells the coal to an export broker in the United States under terms of a contract showing that the coal is to be shipped to a foreign country. 2012 tax forms 1040 ez   Proof of export includes any of the following items. 2012 tax forms 1040 ez A copy of the export bill of lading issued by the delivering carrier. 2012 tax forms 1040 ez A certificate signed by the export carrier's agent or representative showing actual exportation of the coal. 2012 tax forms 1040 ez A certificate of landing signed by a customs officer of the foreign country to which the coal is exported. 2012 tax forms 1040 ez If the foreign country does not have a customs administrator, a statement of the foreign consignee showing receipt of the coal. 2012 tax forms 1040 ez Taxable Tires Taxable tires are divided into three categories for reporting and figuring the tax as described below. 2012 tax forms 1040 ez A tax is imposed on taxable tires sold by the manufacturer, producer, or importer at the rate of $. 2012 tax forms 1040 ez 0945 ($. 2012 tax forms 1040 ez 04725 in the case of a biasply tire or super single tire) for each 10 pounds of the maximum rated load capacity over 3,500 pounds. 2012 tax forms 1040 ez The three categories for reporting the tax and the tax rate are listed below. 2012 tax forms 1040 ez Taxable tires other than biasply or super single tires at $. 2012 tax forms 1040 ez 0945. 2012 tax forms 1040 ez Taxable tires, biasply or super single tires (other than super single tires designed for steering) at $. 2012 tax forms 1040 ez 04725. 2012 tax forms 1040 ez Taxable tires, super single tires designed for steering at $. 2012 tax forms 1040 ez 0945. 2012 tax forms 1040 ez A taxable tire is any tire of the type used on highway vehicles if wholly or partially made of rubber and if marked according to federal regulations for highway use. 2012 tax forms 1040 ez A biasply tire is a pneumatic tire on which the ply cords that extend to the beads are laid at alternate angles substantially less than 90 degrees to the centerline of the tread. 2012 tax forms 1040 ez A super single tire is a tire greater than 13 inches in cross section width designed to replace 2 tires in a dual fitment. 2012 tax forms 1040 ez Special rule, manufacturer's retail stores. 2012 tax forms 1040 ez   The excise tax on taxable tires is imposed at the time the taxable tires are delivered to the manufacturer-owned retail stores, not at the time of sale. 2012 tax forms 1040 ez Tires on imported articles. 2012 tax forms 1040 ez   The importer of an article equipped with taxable tires is treated as the manufacturer of the tires and is liable for the taxable tire excise tax when the article is sold (except in the case of an automobile bus chassis or body with tires). 2012 tax forms 1040 ez Tires exempt from tax. 2012 tax forms 1040 ez   The tax on taxable tires does not apply to the following items. 2012 tax forms 1040 ez Domestically recapped or retreaded tires if the tires have been sold previously in the United States and were taxable tires at the time of sale. 2012 tax forms 1040 ez Tire carcasses not suitable for commercial use. 2012 tax forms 1040 ez Tires for use on qualifying intercity, local, and school buses. 2012 tax forms 1040 ez For tax-free treatment, the registration requirements discussed earlier under Requirements for Exempt Sales apply. 2012 tax forms 1040 ez Tires sold for the exclusive use of the Department of Defense or the Coast Guard. 2012 tax forms 1040 ez Tires of a type used exclusively on mobile machinery. 2012 tax forms 1040 ez A taxable tire used on mobile machinery is not exempt from tax. 2012 tax forms 1040 ez Qualifying intercity or local bus. 2012 tax forms 1040 ez   This is any bus used mainly (more than 50%) to transport the general public for a fee and that either operates on a schedule along regular routes or seats at least 20 adults (excluding the driver). 2012 tax forms 1040 ez Qualifying school bus. 2012 tax forms 1040 ez   This is any bus substantially all the use (85% or more) of which is to transport students and employees of schools. 2012 tax forms 1040 ez Credit or refund. 2012 tax forms 1040 ez   A credit or refund (without interest) is allowable on tax-paid tires if the tires have been: Exported; Sold to a state or local government for its exclusive use; Sold to a nonprofit educational organization for its exclusive use (as defined under Communications Tax in chapter 4); Sold to a qualified blood collector organization (as defined under Communications Tax in chapter 4) for its exclusive use in connection with a vehicle the organization certifies will be primarily used in the collection, storage, or transportation of blood; Used or sold for use as supplies for vessels; or Sold in connection with qualified intercity, local, or school buses. 2012 tax forms 1040 ez   Also, a credit or refund (without interest) is allowable on tax-paid tires sold by any person on, or in connection with, any other article that is sold or used in an activity listed above. 2012 tax forms 1040 ez   The person who paid the tax is eligible to make the claim. 2012 tax forms 1040 ez Gas Guzzler Tax Tax is imposed on the sale by the manufacturer of automobiles of a model type that has a fuel economy standard as measured by the Environmental Protection Agency (EPA) of less than 22. 2012 tax forms 1040 ez 5 miles per gallon. 2012 tax forms 1040 ez If you import an automobile for personal use, you may be liable for this tax. 2012 tax forms 1040 ez Figure the tax on Form 6197, as discussed later. 2012 tax forms 1040 ez The tax rate is based on fuel economy rating. 2012 tax forms 1040 ez The tax rates for the gas guzzler tax are shown on Form 6197. 2012 tax forms 1040 ez A person that lengthens an existing automobile is the manufacturer of an automobile. 2012 tax forms 1040 ez Automobiles. 2012 tax forms 1040 ez   An automobile (including limousines) means any four-wheeled vehicle that is: Rated at an unloaded gross vehicle weight of 6,000 pounds or less, Propelled by an engine powered by gasoline or diesel fuel, and Intended for use mainly on public streets, roads, and highways. 2012 tax forms 1040 ez Vehicles not subject to tax. 2012 tax forms 1040 ez   For the gas guzzler tax, the following vehicles are not considered automobiles. 2012 tax forms 1040 ez Limousines with a gross unloaded vehicle weight of more than 6,000 pounds. 2012 tax forms 1040 ez Vehicles operated exclusively on a rail or rails. 2012 tax forms 1040 ez Vehicles sold for use and used primarily: As ambulances or combination ambulance-hearses, For police or other law enforcement purposes by federal, state, or local governments, or For firefighting purposes. 2012 tax forms 1040 ez Vehicles treated under 49 U. 2012 tax forms 1040 ez S. 2012 tax forms 1040 ez C. 2012 tax forms 1040 ez 32901 (1978) as non-passenger automobiles. 2012 tax forms 1040 ez This includes limousines manufactured primarily to transport more than 10 persons. 2012 tax forms 1040 ez   The manufacturer can sell a vehicle described in item (3) tax free only when the sale is made directly to a purchaser for the described emergency use and the manufacturer and purchaser (other than a state or local government) are registered. 2012 tax forms 1040 ez   Treat an Indian tribal government as a state only if the police or other law enforcement purposes are an essential tribal government function. 2012 tax forms 1040 ez Model type. 2012 tax forms 1040 ez   Model type is a particular class of automobile as determined by EPA regulations. 2012 tax forms 1040 ez Fuel economy. 2012 tax forms 1040 ez   Fuel economy is the average number of miles an automobile travels on a gallon of gasoline (or diesel fuel) rounded to the nearest 0. 2012 tax forms 1040 ez 1 mile as figured by the EPA. 2012 tax forms 1040 ez Imported automobiles. 2012 tax forms 1040 ez   The tax also applies to automobiles that do not have a prototype-based fuel economy rating assigned by the EPA. 2012 tax forms 1040 ez An automobile imported into the United States without a certificate of conformity to United States emission standards and that has no assigned fuel economy rating must be either: Converted by installation of emission controls to conform in all material respects to an automobile already certified for sale in the United States, or Modified by installation of emission control components and individually tested to demonstrate emission compliance. 2012 tax forms 1040 ez   An imported automobile that has been converted to conform to an automobile already certified for sale in the United States may use the fuel economy rating assigned to that certified automobile. 2012 tax forms 1040 ez   A fuel economy rating is not generally available for modified imported automobiles because the EPA does not require a highway fuel economy test on them. 2012 tax forms 1040 ez A separate highway fuel economy test would be required to devise a fuel economy rating (otherwise the automobile is presumed to fall within the lowest fuel economy rating category). 2012 tax forms 1040 ez   For more information about fuel economy ratings for imported automobiles, see Revenue Ruling 86-20 and Revenue Procedure 86-9 in Cumulative Bulletin 1986-1, and Revenue Procedure 87-10 in Cumulative Bulletin 1987-1. 2012 tax forms 1040 ez Exemptions. 2012 tax forms 1040 ez   No one is exempt from the gas guzzler tax, including the federal government, state and local governments, qualified blood collector organizations, and nonprofit educational organizations. 2012 tax forms 1040 ez However, see Vehicles not subject to tax, earlier. 2012 tax forms 1040 ez Form 6197. 2012 tax forms 1040 ez   Use Form 6197 to figure your tax liability for each quarter. 2012 tax forms 1040 ez Attach Form 6197 to your Form 720 for the quarter. 2012 tax forms 1040 ez See the Form 6197 instructions for more information and the one-time filing rules. 2012 tax forms 1040 ez Credit or refund. 2012 tax forms 1040 ez   If the manufacturer paid the tax on a vehicle that is used or resold for an emergency use (see item (3) under Vehicles not subject to tax), the manufacturer can claim a credit or refund. 2012 tax forms 1040 ez For information about how to file for credits or refunds, see the Instructions for Form 720 or Form 8849. 2012 tax forms 1040 ez Vaccines Tax is imposed on certain vaccines sold by the manufacturer in the United States. 2012 tax forms 1040 ez A taxable vaccine means any of the following vaccines. 2012 tax forms 1040 ez Any vaccine containing diphtheria toxoid. 2012 tax forms 1040 ez Any vaccine containing tetanus toxoid. 2012 tax forms 1040 ez Any vaccine containing pertussis bacteria, extracted or partial cell bacteria, or specific pertussis antigens. 2012 tax forms 1040 ez Any vaccine containing polio virus. 2012 tax forms 1040 ez Any vaccine against measles. 2012 tax forms 1040 ez Any vaccine against mumps. 2012 tax forms 1040 ez Any vaccine against rubella. 2012 tax forms 1040 ez Any vaccine against hepatitis A. 2012 tax forms 1040 ez Any vaccine against hepatitis B. 2012 tax forms 1040 ez Any vaccine against chicken pox. 2012 tax forms 1040 ez Any vaccine against rotavirus gastroenteritis. 2012 tax forms 1040 ez Any HIB vaccine. 2012 tax forms 1040 ez Any conjugate vaccine against streptococcus pneumoniae. 2012 tax forms 1040 ez Any trivalent vaccine against influenza or any other vaccine against influenza. 2012 tax forms 1040 ez Any meningococcal vaccine. 2012 tax forms 1040 ez Any vaccine against the human papillomavirus. 2012 tax forms 1040 ez The effective date for the tax on any vaccine against influenza, other than trivalent influenza vaccines, is the later of August 1, 2013, or the date the Secretary of Health and Human Services lists a vaccine against seasonal influenza for purposes of compensation for any vaccine-related injury or death through the Vaccine Injury Compensation Trust Fund. 2012 tax forms 1040 ez The tax is $. 2012 tax forms 1040 ez 75 per dose of each taxable vaccine. 2012 tax forms 1040 ez The tax per dose on a vaccine that contains more than one taxable vaccine is $. 2012 tax forms 1040 ez 75 times the number of taxable vaccines. 2012 tax forms 1040 ez Taxable use. 2012 tax forms 1040 ez   Any manufacturer (including a governmental entity) that uses a taxable vaccine before it is sold will be liable for the tax in the same manner as if the vaccine was sold by the manufacturer. 2012 tax forms 1040 ez Credit or refund. 2012 tax forms 1040 ez   A credit or refund (without interest) is available if the vaccine is: Returned to the person who paid the tax (other than for resale), or Destroyed. 2012 tax forms 1040 ez The claim for a credit or refund must be filed within 6 months after the vaccine is returned or destroyed. 2012 tax forms 1040 ez Conditions to allowance. 2012 tax forms 1040 ez   To claim a credit or refund, the person who paid the tax must have repaid or agreed to repay the tax to the ultimate purchaser of the vaccine or obtained the written consent of such purchaser to allowance of the credit or refund. 2012 tax forms 1040 ez Taxable Medical Devices Taxable medical devices. 2012 tax forms 1040 ez   The tax on the sale of certain medical devices by the manufacturer, producer, or importer of the device is 2. 2012 tax forms 1040 ez 3% (. 2012 tax forms 1040 ez 023) of the sales price. 2012 tax forms 1040 ez A taxable medical device is a device that is listed as a device with the Food and Drug Administration (FDA) under section 510(j) of the Federal Food, Drug, and Cosmetic Act and 21 CFR part 807, pursuant to FDA requirements. 2012 tax forms 1040 ez There are specific exemptions for eyeglasses, contact lenses, and hearing aids. 2012 tax forms 1040 ez There is also an exemption for devices that are determined by the Secretary to be of a type that are generally purchased by the general public at retail for individual use (this exemption is known as the retail exemption). 2012 tax forms 1040 ez See T. 2012 tax forms 1040 ez D. 2012 tax forms 1040 ez 9604 for information on how to determine whether a device falls within the retail exemption, and examples of how a taxpayer might evaluate a given device. 2012 tax forms 1040 ez More information. 2012 tax forms 1040 ez   For more information on the medical device tax, see section 4191, T. 2012 tax forms 1040 ez D. 2012 tax forms 1040 ez 9604, and Notice 2012-77. 2012 tax forms 1040 ez You can find T. 2012 tax forms 1040 ez D. 2012 tax forms 1040 ez 9604 and Notice 2012-77 on pages 730 and 781, respectively, of I. 2012 tax forms 1040 ez R. 2012 tax forms 1040 ez B. 2012 tax forms 1040 ez 2012-52 at www. 2012 tax forms 1040 ez irs. 2012 tax forms 1040 ez gov/pub/irs-irbs/irb12-52. 2012 tax forms 1040 ez pdf. 2012 tax forms 1040 ez Prev  Up  Next   Home   More Online Publications
Print - Click this link to Print this page

Filing Information For Charities & Non-Profits

How to Apply to Be Tax-Exempt
Information about how to apply for IRS recognition of tax-exempt status.

Revoked? Reinstated? Learn More
Information about the automatic revocation process and how to be reinstated.

EO Select Check
Search for a tax-exempt's status.

Employment Taxes
Federal income tax, Social Security and Medicare taxes, FUTA, self-employment tax and more.

e-file for Charities and Non-Profits
Electronic filing for Charities and Nonprofits is available. Some organizations may be required to file returns electronically beginning in 2006 for TY2005.

Page Last Reviewed or Updated: 31-Mar-2014

The 2012 Tax Forms 1040 Ez

2012 tax forms 1040 ez 2. 2012 tax forms 1040 ez   Electing the Section 179 Deduction Table of Contents Introduction Useful Items - You may want to see: What Property Qualifies?Eligible Property Property Acquired for Business Use Property Acquired by Purchase What Property Does Not Qualify?Land and Improvements Excepted Property How Much Can You Deduct?Dollar Limits Business Income Limit Partnerships and Partners S Corporations Other Corporations How Do You Elect the Deduction? When Must You Recapture the Deduction? Introduction You can elect to recover all or part of the cost of certain qualifying property, up to a limit, by deducting it in the year you place the property in service. 2012 tax forms 1040 ez This is the section 179 deduction. 2012 tax forms 1040 ez You can elect the section 179 deduction instead of recovering the cost by taking depreciation deductions. 2012 tax forms 1040 ez Estates and trusts cannot elect the section 179 deduction. 2012 tax forms 1040 ez This chapter explains what property does and does not qualify for the section 179 deduction, what limits apply to the deduction (including special rules for partnerships and corporations), and how to elect it. 2012 tax forms 1040 ez It also explains when and how to recapture the deduction. 2012 tax forms 1040 ez Useful Items - You may want to see: Publication 537 Installment Sales 544 Sales and Other Dispositions of Assets 954 Tax Incentives for Distressed Communities Form (and Instructions) 4562 Depreciation and Amortization 4797 Sales of Business Property See chapter 6 for information about getting publications and forms. 2012 tax forms 1040 ez What Property Qualifies? To qualify for the section 179 deduction, your property must meet all the following requirements. 2012 tax forms 1040 ez It must be eligible property. 2012 tax forms 1040 ez It must be acquired for business use. 2012 tax forms 1040 ez It must have been acquired by purchase. 2012 tax forms 1040 ez It must not be property described later under What Property Does Not Qualify . 2012 tax forms 1040 ez The following discussions provide information about these requirements and exceptions. 2012 tax forms 1040 ez Eligible Property To qualify for the section 179 deduction, your property must be one of the following types of depreciable property. 2012 tax forms 1040 ez Tangible personal property. 2012 tax forms 1040 ez Other tangible property (except buildings and their structural components) used as: An integral part of manufacturing, production, or extraction or of furnishing transportation, communications, electricity, gas, water, or sewage disposal services, A research facility used in connection with any of the activities in (a) above, or A facility used in connection with any of the activities in (a) for the bulk storage of fungible commodities. 2012 tax forms 1040 ez Single purpose agricultural (livestock) or horticultural structures. 2012 tax forms 1040 ez See chapter 7 of Publication 225 for definitions and information regarding the use requirements that apply to these structures. 2012 tax forms 1040 ez Storage facilities (except buildings and their structural components) used in connection with distributing petroleum or any primary product of petroleum. 2012 tax forms 1040 ez Off-the-shelf computer software. 2012 tax forms 1040 ez Qualified real property (described below). 2012 tax forms 1040 ez Tangible personal property. 2012 tax forms 1040 ez   Tangible personal property is any tangible property that is not real property. 2012 tax forms 1040 ez It includes the following property. 2012 tax forms 1040 ez Machinery and equipment. 2012 tax forms 1040 ez Property contained in or attached to a building (other than structural components), such as refrigerators, grocery store counters, office equipment, printing presses, testing equipment, and signs. 2012 tax forms 1040 ez Gasoline storage tanks and pumps at retail service stations. 2012 tax forms 1040 ez Livestock, including horses, cattle, hogs, sheep, goats, and mink and other furbearing animals. 2012 tax forms 1040 ez   The treatment of property as tangible personal property for the section 179 deduction is not controlled by its treatment under local law. 2012 tax forms 1040 ez For example, property may not be tangible personal property for the deduction even if treated so under local law, and some property (such as fixtures) may be tangible personal property for the deduction even if treated as real property under local law. 2012 tax forms 1040 ez Off-the-shelf computer software. 2012 tax forms 1040 ez   Off-the-shelf computer software placed in service during the tax year is qualifying property for purposes of the section 179 deduction. 2012 tax forms 1040 ez This is computer software that is readily available for purchase by the general public, is subject to a nonexclusive license, and has not been substantially modified. 2012 tax forms 1040 ez It includes any program designed to cause a computer to perform a desired function. 2012 tax forms 1040 ez However, a database or similar item is not considered computer software unless it is in the public domain and is incidental to the operation of otherwise qualifying software. 2012 tax forms 1040 ez Qualified real property. 2012 tax forms 1040 ez   You can elect to treat certain qualified real property you placed in service as section 179 property for tax years beginning in 2013. 2012 tax forms 1040 ez If this election is made, the term “section 179 property” will include any qualified real property that is: Qualified leasehold improvement property, Qualified restaurant property, or Qualified retail improvement property. 2012 tax forms 1040 ez The maximum section 179 expense deduction that can be elected for qualified section 179 real property is $250,000 of the maximum section 179 deduction of $500,000 in 2013. 2012 tax forms 1040 ez For more information, see Special rules for qualified section 179 real property, later. 2012 tax forms 1040 ez Also, see Election for certain qualified section 179 real property, later, for information on how to make this election. 2012 tax forms 1040 ez Qualified leasehold improvement property. 2012 tax forms 1040 ez   Generally, this is any improvement to an interior part of a building (placed in service before January 1, 2014) that is nonresidential real property, provided all of the requirements discussed in chapter 3 under Qualified leasehold improvement property are met. 2012 tax forms 1040 ez   In addition, an improvement made by the lessor does not qualify as qualified leasehold improvement property to any subsequent owner unless it is acquired from the original lessor by reason of the lessor’s death or in any of the following types of transactions. 2012 tax forms 1040 ez A transaction to which section 381(a) applies, A mere change in the form of conducting the trade or business so long as the property is retained in the trade or business as qualified leasehold improvement property and the taxpayer retains a substantial interest in the trade or business, A like-kind exchange, involuntary conversion, or re-acquisition of real property to the extent that the basis in the property represents the carryover basis, or Certain nonrecognition transactions to the extent that your basis in the property is determined by reference to the transferor’s or distributor’s basis in the property. 2012 tax forms 1040 ez Examples include the following. 2012 tax forms 1040 ez A complete liquidation of a subsidiary. 2012 tax forms 1040 ez A transfer to a corporation controlled by the transferor. 2012 tax forms 1040 ez An exchange of property by a corporation solely for stock or securities in another corporation in a reorganization. 2012 tax forms 1040 ez Qualified restaurant property. 2012 tax forms 1040 ez   Qualified restaurant property is any section 1250 property that is a building or an improvement to a building placed in service after December 31, 2008, and before January 1, 2014. 2012 tax forms 1040 ez Also, more than 50% of the building’s square footage must be devoted to preparation of meals and seating for on-premise consumption of prepared meals. 2012 tax forms 1040 ez Qualified retail improvement property. 2012 tax forms 1040 ez   Generally, this is any improvement (placed in service after December 31, 2008, and before January 1, 2014) to an interior portion of nonresidential real property if it meets the following requirements. 2012 tax forms 1040 ez The portion is open to the general public and is used in the retail trade or business of selling tangible property to the general public. 2012 tax forms 1040 ez The improvement is placed in service more than 3 years after the date the building was first placed in service. 2012 tax forms 1040 ez The expenses are not for the enlargement of the building, any elevator or escalator, any structural components benefiting a common area, or the internal structural framework of the building. 2012 tax forms 1040 ez In addition, an improvement made by the lessor does not qualify as qualified retail improvement property to any subsequent owner unless it is acquired from the original lessor by reason of the lessor’s death or in any of the following types of transactions. 2012 tax forms 1040 ez A transaction to which section 381(a) applies, A mere change in the form of conducting the trade or business so long as the property is retained in the trade or business as qualified leasehold improvement property and the taxpayer retains a substantial interest in the trade or business, A like-kind exchange, involuntary conversion, or re-acquisition of real property to the extent that the basis in the property represents the carryover basis, or Certain nonrecognition transactions to the extent that your basis in the property is determined by reference to the transferor’s or distributor’s basis in the property. 2012 tax forms 1040 ez Examples include the following. 2012 tax forms 1040 ez A complete liquidation of a subsidiary. 2012 tax forms 1040 ez A transfer to a corporation controlled by the transferor. 2012 tax forms 1040 ez An exchange of property by a corporation solely for stock or securities in another corporation in a reorganization. 2012 tax forms 1040 ez Property Acquired for Business Use To qualify for the section 179 deduction, your property must have been acquired for use in your trade or business. 2012 tax forms 1040 ez Property you acquire only for the production of income, such as investment property, rental property (if renting property is not your trade or business), and property that produces royalties, does not qualify. 2012 tax forms 1040 ez Partial business use. 2012 tax forms 1040 ez   When you use property for both business and nonbusiness purposes, you can elect the section 179 deduction only if you use the property more than 50% for business in the year you place it in service. 2012 tax forms 1040 ez If you use the property more than 50% for business, multiply the cost of the property by the percentage of business use. 2012 tax forms 1040 ez Use the resulting business cost to figure your section 179 deduction. 2012 tax forms 1040 ez Example. 2012 tax forms 1040 ez May Oak bought and placed in service an item of section 179 property costing $11,000. 2012 tax forms 1040 ez She used the property 80% for her business and 20% for personal purposes. 2012 tax forms 1040 ez The business part of the cost of the property is $8,800 (80% × $11,000). 2012 tax forms 1040 ez Property Acquired by Purchase To qualify for the section 179 deduction, your property must have been acquired by purchase. 2012 tax forms 1040 ez For example, property acquired by gift or inheritance does not qualify. 2012 tax forms 1040 ez Property is not considered acquired by purchase in the following situations. 2012 tax forms 1040 ez It is acquired by one component member of a controlled group from another component member of the same group. 2012 tax forms 1040 ez Its basis is determined either— In whole or in part by its adjusted basis in the hands of the person from whom it was acquired, or Under the stepped-up basis rules for property acquired from a decedent. 2012 tax forms 1040 ez It is acquired from a related person. 2012 tax forms 1040 ez Related persons. 2012 tax forms 1040 ez   Related persons are described under Related persons earlier. 2012 tax forms 1040 ez However, to determine whether property qualifies for the section 179 deduction, treat as an individual's family only his or her spouse, ancestors, and lineal descendants and substitute "50%" for "10%" each place it appears. 2012 tax forms 1040 ez Example. 2012 tax forms 1040 ez Ken Larch is a tailor. 2012 tax forms 1040 ez He bought two industrial sewing machines from his father. 2012 tax forms 1040 ez He placed both machines in service in the same year he bought them. 2012 tax forms 1040 ez They do not qualify as section 179 property because Ken and his father are related persons. 2012 tax forms 1040 ez He cannot claim a section 179 deduction for the cost of these machines. 2012 tax forms 1040 ez What Property Does Not Qualify? Certain property does not qualify for the section 179 deduction. 2012 tax forms 1040 ez This includes the following. 2012 tax forms 1040 ez Land and Improvements Land and land improvements do not qualify as section 179 property. 2012 tax forms 1040 ez Land improvements include swimming pools, paved parking areas, wharves, docks, bridges, and fences. 2012 tax forms 1040 ez Excepted Property Even if the requirements explained earlier under What Property Qualifies are met, you cannot elect the section 179 deduction for the following property. 2012 tax forms 1040 ez Certain property you lease to others (if you are a noncorporate lessor). 2012 tax forms 1040 ez Certain property used predominantly to furnish lodging or in connection with the furnishing of lodging. 2012 tax forms 1040 ez Air conditioning or heating units. 2012 tax forms 1040 ez Property used predominantly outside the United States, except property described in section 168(g)(4) of the Internal Revenue Code. 2012 tax forms 1040 ez Property used by certain tax-exempt organizations, except property used in connection with the production of income subject to the tax on unrelated trade or business income. 2012 tax forms 1040 ez Property used by governmental units or foreign persons or entities, except property used under a lease with a term of less than 6 months. 2012 tax forms 1040 ez Leased property. 2012 tax forms 1040 ez   Generally, you cannot claim a section 179 deduction based on the cost of property you lease to someone else. 2012 tax forms 1040 ez This rule does not apply to corporations. 2012 tax forms 1040 ez However, you can claim a section 179 deduction for the cost of the following property. 2012 tax forms 1040 ez Property you manufacture or produce and lease to others. 2012 tax forms 1040 ez Property you purchase and lease to others if both the following tests are met. 2012 tax forms 1040 ez The term of the lease (including options to renew) is less than 50% of the property's class life. 2012 tax forms 1040 ez For the first 12 months after the property is transferred to the lessee, the total business deductions you are allowed on the property (other than rents and reimbursed amounts) are more than 15% of the rental income from the property. 2012 tax forms 1040 ez Property used for lodging. 2012 tax forms 1040 ez   Generally, you cannot claim a section 179 deduction for property used predominantly to furnish lodging or in connection with the furnishing of lodging. 2012 tax forms 1040 ez However, this does not apply to the following types of property. 2012 tax forms 1040 ez Nonlodging commercial facilities that are available to those not using the lodging facilities on the same basis as they are available to those using the lodging facilities. 2012 tax forms 1040 ez Property used by a hotel or motel in connection with the trade or business of furnishing lodging where the predominant portion of the accommodations is used by transients. 2012 tax forms 1040 ez Any certified historic structure to the extent its basis is due to qualified rehabilitation expenditures. 2012 tax forms 1040 ez Any energy property. 2012 tax forms 1040 ez Energy property. 2012 tax forms 1040 ez   Energy property is property that meets the following requirements. 2012 tax forms 1040 ez It is one of the following types of property. 2012 tax forms 1040 ez Equipment that uses solar energy to generate electricity, to heat or cool a structure, to provide hot water for use in a structure, or to provide solar process heat, except for equipment used to generate energy to heat a swimming pool. 2012 tax forms 1040 ez Equipment placed in service after December 31, 2005, and before January 1, 2017, that uses solar energy to illuminate the inside of a structure using fiber-optic distributed sunlight. 2012 tax forms 1040 ez Equipment used to produce, distribute, or use energy derived from a geothermal deposit. 2012 tax forms 1040 ez For electricity generated by geothermal power, this includes equipment up to (but not including) the electrical transmission stage. 2012 tax forms 1040 ez Qualified fuel cell property or qualified microturbine property placed in service after December 31, 2005, and before January 1, 2017. 2012 tax forms 1040 ez The construction, reconstruction, or erection of the property must be completed by you. 2012 tax forms 1040 ez For property you acquire, the original use of the property must begin with you. 2012 tax forms 1040 ez The property must meet the performance and quality standards, if any, prescribed by Income Tax Regulations in effect at the time you get the property. 2012 tax forms 1040 ez   For periods before February 14, 2008, energy property does not include any property that is public utility property as defined by section 46(f)(5) of the Internal Revenue Code (as in effect on November 4, 1990). 2012 tax forms 1040 ez How Much Can You Deduct? Your section 179 deduction is generally the cost of the qualifying property. 2012 tax forms 1040 ez However, the total amount you can elect to deduct under section 179 is subject to a dollar limit and a business income limit. 2012 tax forms 1040 ez These limits apply to each taxpayer, not to each business. 2012 tax forms 1040 ez However, see Married Individuals under Dollar Limits , later. 2012 tax forms 1040 ez For a passenger automobile, the total section 179 deduction and depreciation deduction are limited. 2012 tax forms 1040 ez See Do the Passenger Automobile Limits Apply in chapter 5 . 2012 tax forms 1040 ez If you deduct only part of the cost of qualifying property as a section 179 deduction, you can generally depreciate the cost you do not deduct. 2012 tax forms 1040 ez Trade-in of other property. 2012 tax forms 1040 ez   If you buy qualifying property with cash and a trade-in, its cost for purposes of the section 179 deduction includes only the cash you paid. 2012 tax forms 1040 ez Example. 2012 tax forms 1040 ez Silver Leaf, a retail bakery, traded two ovens having a total adjusted basis of $680 for a new oven costing $1,320. 2012 tax forms 1040 ez They received an $800 trade-in allowance for the old ovens and paid $520 in cash for the new oven. 2012 tax forms 1040 ez The bakery also traded a used van with an adjusted basis of $4,500 for a new van costing $9,000. 2012 tax forms 1040 ez They received a $4,800 trade-in allowance on the used van and paid $4,200 in cash for the new van. 2012 tax forms 1040 ez Only the portion of the new property's basis paid by cash qualifies for the section 179 deduction. 2012 tax forms 1040 ez Therefore, Silver Leaf's qualifying costs for the section 179 deduction are $4,720 ($520 + $4,200). 2012 tax forms 1040 ez Dollar Limits The total amount you can elect to deduct under section 179 for most property placed in service in 2013 generally cannot be more than $500,000. 2012 tax forms 1040 ez If you acquire and place in service more than one item of qualifying property during the year, you can allocate the section 179 deduction among the items in any way, as long as the total deduction is not more than $500,000. 2012 tax forms 1040 ez You do not have to claim the full $500,000. 2012 tax forms 1040 ez Qualified real property (described earlier) that you elected to treat as section 179 real property is limited to $250,000 of the maximum deduction of $500,000 for 2013. 2012 tax forms 1040 ez The amount you can elect to deduct is not affected if you place qualifying property in service in a short tax year or if you place qualifying property in service for only a part of a 12-month tax year. 2012 tax forms 1040 ez After you apply the dollar limit to determine a tentative deduction, you must apply the business income limit (described later) to determine your actual section 179 deduction. 2012 tax forms 1040 ez Example. 2012 tax forms 1040 ez In 2013, you bought and placed in service $500,000 in machinery and a $25,000 circular saw for your business. 2012 tax forms 1040 ez You elect to deduct $475,000 for the machinery and the entire $25,000 for the saw, a total of $500,000. 2012 tax forms 1040 ez This is the maximum amount you can deduct. 2012 tax forms 1040 ez Your $25,000 deduction for the saw completely recovered its cost. 2012 tax forms 1040 ez Your basis for depreciation is zero. 2012 tax forms 1040 ez The basis for depreciation of your machinery is $25,000. 2012 tax forms 1040 ez You figure this by subtracting your $475,000 section 179 deduction for the machinery from the $500,000 cost of the machinery. 2012 tax forms 1040 ez Situations affecting dollar limit. 2012 tax forms 1040 ez   Under certain circumstances, the general dollar limits on the section 179 deduction may be reduced or increased or there may be additional dollar limits. 2012 tax forms 1040 ez The general dollar limit is affected by any of the following situations. 2012 tax forms 1040 ez The cost of your section 179 property placed in service exceeds $2,000,000. 2012 tax forms 1040 ez Your business is an enterprise zone business. 2012 tax forms 1040 ez You placed in service a sport utility or certain other vehicles. 2012 tax forms 1040 ez You are married filing a joint or separate return. 2012 tax forms 1040 ez Costs exceeding $2,000,000 If the cost of your qualifying section 179 property placed in service in a year is more than $2,000,000, you generally must reduce the dollar limit (but not below zero) by the amount of cost over $2,000,000. 2012 tax forms 1040 ez If the cost of your section 179 property placed in service during 2013 is $2,500,000 or more, you cannot take a section 179 deduction. 2012 tax forms 1040 ez Example. 2012 tax forms 1040 ez In 2013, Jane Ash placed in service machinery costing $2,100,000. 2012 tax forms 1040 ez This cost is $100,000 more than $2,000,000, so she must reduce her dollar limit to $400,000 ($500,000 − $100,000). 2012 tax forms 1040 ez Enterprise Zone Businesses An increased section 179 deduction is available to enterprise zone businesses for qualified zone property placed in service during the tax year, in an empowerment zone. 2012 tax forms 1040 ez For more information including the definitions of “enterprise zone business” and “qualified zone property,” see sections 1397A, 1397C, and 1397D of the Internal Revenue Code. 2012 tax forms 1040 ez The dollar limit on the section 179 deduction is increased by the smaller of: $35,000, or The cost of section 179 property that is also qualified zone property placed in service before January 1, 2014 (including such property placed in service by your spouse, even if you are filing a separate return). 2012 tax forms 1040 ez Note. 2012 tax forms 1040 ez   You take into account only 50% (instead of 100%) of the cost of qualified zone property placed in service in a year when figuring the reduced dollar limit for costs exceeding $2,000,000 (explained earlier). 2012 tax forms 1040 ez Sport Utility and Certain Other Vehicles You cannot elect to expense more than $25,000 of the cost of any heavy sport utility vehicle (SUV) and certain other vehicles placed in service during the tax year. 2012 tax forms 1040 ez This rule applies to any 4-wheeled vehicle primarily designed or used to carry passengers over public streets, roads, or highways, that is rated at more than 6,000 pounds gross vehicle weight and not more than 14,000 pounds gross vehicle weight. 2012 tax forms 1040 ez However, the $25,000 limit does not apply to any vehicle: Designed to seat more than nine passengers behind the driver's seat, Equipped with a cargo area (either open or enclosed by a cap) of at least six feet in interior length that is not readily accessible from the passenger compartment, or That has an integral enclosure fully enclosing the driver compartment and load carrying device, does not have seating rearward of the driver's seat, and has no body section protruding more than 30 inches ahead of the leading edge of the windshield. 2012 tax forms 1040 ez Married Individuals If you are married, how you figure your section 179 deduction depends on whether you file jointly or separately. 2012 tax forms 1040 ez If you file a joint return, you and your spouse are treated as one taxpayer in determining any reduction to the dollar limit, regardless of which of you purchased the property or placed it in service. 2012 tax forms 1040 ez If you and your spouse file separate returns, you are treated as one taxpayer for the dollar limit, including the reduction for costs over $2,000,000. 2012 tax forms 1040 ez You must allocate the dollar limit (after any reduction) between you equally, unless you both elect a different allocation. 2012 tax forms 1040 ez If the percentages elected by each of you do not total 100%, 50% will be allocated to each of you. 2012 tax forms 1040 ez Example. 2012 tax forms 1040 ez Jack Elm is married. 2012 tax forms 1040 ez He and his wife file separate returns. 2012 tax forms 1040 ez Jack bought and placed in service $2,000,000 of qualified farm machinery in 2013. 2012 tax forms 1040 ez His wife has her own business, and she bought and placed in service $30,000 of qualified business equipment. 2012 tax forms 1040 ez Their combined dollar limit is $470,000. 2012 tax forms 1040 ez This is because they must figure the limit as if they were one taxpayer. 2012 tax forms 1040 ez They reduce the $500,000 dollar limit by the $30,000 excess of their costs over $2,000,000. 2012 tax forms 1040 ez They elect to allocate the $470,000 dollar limit as follows. 2012 tax forms 1040 ez $446,500 ($470,000 x 95%) to Mr. 2012 tax forms 1040 ez Elm's machinery. 2012 tax forms 1040 ez $23,500 ($470,000 x 5%) to Mrs. 2012 tax forms 1040 ez Elm's equipment. 2012 tax forms 1040 ez If they did not make an election to allocate their costs in this way, they would have to allocate $235,000 ($470,000 × 50%) to each of them. 2012 tax forms 1040 ez Joint return after filing separate returns. 2012 tax forms 1040 ez   If you and your spouse elect to amend your separate returns by filing a joint return after the due date for filing your return, the dollar limit on the joint return is the lesser of the following amounts. 2012 tax forms 1040 ez The dollar limit (after reduction for any cost of section 179 property over $2,000,000). 2012 tax forms 1040 ez The total cost of section 179 property you and your spouse elected to expense on your separate returns. 2012 tax forms 1040 ez Example. 2012 tax forms 1040 ez The facts are the same as in the previous example except that Jack elected to deduct $30,000 of the cost of section 179 property on his separate return and his wife elected to deduct $2,000. 2012 tax forms 1040 ez After the due date of their returns, they file a joint return. 2012 tax forms 1040 ez Their dollar limit for the section 179 deduction is $32,000. 2012 tax forms 1040 ez This is the lesser of the following amounts. 2012 tax forms 1040 ez $470,000—The dollar limit less the cost of section 179 property over $2,000,000. 2012 tax forms 1040 ez $32,000—The total they elected to expense on their separate returns. 2012 tax forms 1040 ez Business Income Limit The total cost you can deduct each year after you apply the dollar limit is limited to the taxable income from the active conduct of any trade or business during the year. 2012 tax forms 1040 ez Generally, you are considered to actively conduct a trade or business if you meaningfully participate in the management or operations of the trade or business. 2012 tax forms 1040 ez Any cost not deductible in one year under section 179 because of this limit can be carried to the next year. 2012 tax forms 1040 ez Special rules apply to a 2013 deduction of qualified section 179 real property that is disallowed because of the business income limit. 2012 tax forms 1040 ez See Special rules for qualified section 179 property under Carryover of disallowed deduction, later. 2012 tax forms 1040 ez Taxable income. 2012 tax forms 1040 ez   In general, figure taxable income for this purpose by totaling the net income and losses from all trades and businesses you actively conducted during the year. 2012 tax forms 1040 ez Net income or loss from a trade or business includes the following items. 2012 tax forms 1040 ez Section 1231 gains (or losses). 2012 tax forms 1040 ez Interest from working capital of your trade or business. 2012 tax forms 1040 ez Wages, salaries, tips, or other pay earned as an employee. 2012 tax forms 1040 ez For information about section 1231 gains and losses, see chapter 3 in Publication 544. 2012 tax forms 1040 ez   In addition, figure taxable income without regard to any of the following. 2012 tax forms 1040 ez The section 179 deduction. 2012 tax forms 1040 ez The self-employment tax deduction. 2012 tax forms 1040 ez Any net operating loss carryback or carryforward. 2012 tax forms 1040 ez Any unreimbursed employee business expenses. 2012 tax forms 1040 ez Two different taxable income limits. 2012 tax forms 1040 ez   In addition to the business income limit for your section 179 deduction, you may have a taxable income limit for some other deduction. 2012 tax forms 1040 ez You may have to figure the limit for this other deduction taking into account the section 179 deduction. 2012 tax forms 1040 ez If so, complete the following steps. 2012 tax forms 1040 ez Step Action 1 Figure taxable income without the section 179 deduction or the other deduction. 2012 tax forms 1040 ez 2 Figure a hypothetical section 179 deduction using the taxable income figured in Step 1. 2012 tax forms 1040 ez 3 Subtract the hypothetical section 179 deduction figured in Step 2 from the taxable income figured in Step 1. 2012 tax forms 1040 ez 4 Figure a hypothetical amount for the other deduction using the amount figured in Step 3 as taxable income. 2012 tax forms 1040 ez 5 Subtract the hypothetical other deduction figured in Step 4 from the taxable income figured in Step 1. 2012 tax forms 1040 ez 6 Figure your actual section 179 deduction using the taxable income figured in Step 5. 2012 tax forms 1040 ez 7 Subtract your actual section 179 deduction figured in Step 6 from the taxable income figured in Step 1. 2012 tax forms 1040 ez 8 Figure your actual other deduction using the taxable income figured in Step 7. 2012 tax forms 1040 ez Example. 2012 tax forms 1040 ez On February 1, 2013, the XYZ corporation purchased and placed in service qualifying section 179 property that cost $500,000. 2012 tax forms 1040 ez It elects to expense the entire $500,000 cost under section 179. 2012 tax forms 1040 ez In June, the corporation gave a charitable contribution of $10,000. 2012 tax forms 1040 ez A corporation's limit on charitable contributions is figured after subtracting any section 179 deduction. 2012 tax forms 1040 ez The business income limit for the section 179 deduction is figured after subtracting any allowable charitable contributions. 2012 tax forms 1040 ez XYZ's taxable income figured without the section 179 deduction or the deduction for charitable contributions is $520,000. 2012 tax forms 1040 ez XYZ figures its section 179 deduction and its deduction for charitable contributions as follows. 2012 tax forms 1040 ez Step 1– Taxable income figured without either deduction is $520,000. 2012 tax forms 1040 ez Step 2– Using $520,000 as taxable income, XYZ's hypothetical section 179 deduction is $500,000. 2012 tax forms 1040 ez Step 3– $20,000 ($520,000 − $500,000). 2012 tax forms 1040 ez Step 4– Using $20,000 (from Step 3) as taxable income, XYZ's hypothetical charitable contribution (limited to 10% of taxable income) is $2,000. 2012 tax forms 1040 ez Step 5– $518,000 ($520,000 − $2,000). 2012 tax forms 1040 ez Step 6– Using $518,000 (from Step 5) as taxable income, XYZ figures the actual section 179 deduction. 2012 tax forms 1040 ez Because the taxable income is at least $500,000, XYZ can take a $500,000 section 179 deduction. 2012 tax forms 1040 ez Step 7– $20,000 ($520,000 − $500,000). 2012 tax forms 1040 ez Step 8– Using $20,000 (from Step 7) as taxable income, XYZ's actual charitable contribution (limited to 10% of taxable income) is $2,000. 2012 tax forms 1040 ez Carryover of disallowed deduction. 2012 tax forms 1040 ez   You can carry over for an unlimited number of years the cost of any section 179 property you elected to expense but were unable to because of the business income limit. 2012 tax forms 1040 ez This disallowed deduction amount is shown on line 13 of Form 4562. 2012 tax forms 1040 ez You use the amount you carry over to determine your section 179 deduction in the next year. 2012 tax forms 1040 ez Enter that amount on line 10 of your Form 4562 for the next year. 2012 tax forms 1040 ez   If you place more than one property in service in a year, you can select the properties for which all or a part of the costs will be carried forward. 2012 tax forms 1040 ez Your selections must be shown in your books and records. 2012 tax forms 1040 ez For this purpose, treat section 179 costs allocated from a partnership or an S corporation as one item of section 179 property. 2012 tax forms 1040 ez If you do not make a selection, the total carryover will be allocated equally among the properties you elected to expense for the year. 2012 tax forms 1040 ez   If costs from more than one year are carried forward to a subsequent year in which only part of the total carryover can be deducted, you must deduct the costs being carried forward from the earliest year first. 2012 tax forms 1040 ez Special rules for qualified section 179 real property. 2012 tax forms 1040 ez   You can carry over to 2013 a 2012 deduction attributable to qualified section 179 real property that you elected to expense but were unable to take because of the business income limitation. 2012 tax forms 1040 ez Any such 2012 carryover amounts that are not deducted in 2013, plus any 2013 disallowed section 179 expense deductions attributable to qualified real property, are not carried over to 2014. 2012 tax forms 1040 ez Instead these amounts are treated as property placed in service on the first day of 2013 for purposes of computing depreciation (including the special depreciation allowance, if applicable). 2012 tax forms 1040 ez See section 179(f) of the Internal Revenue Code and Notice 2013-59 for more information. 2012 tax forms 1040 ez If there is a sale or other disposition of your property (including a transfer at death) before you can use the full amount of any outstanding carryover of your disallowed section 179 deduction, neither you nor the new owner can deduct any of the unused amount. 2012 tax forms 1040 ez Instead, you must add it back to the property's basis. 2012 tax forms 1040 ez Partnerships and Partners The section 179 deduction limits apply both to the partnership and to each partner. 2012 tax forms 1040 ez The partnership determines its section 179 deduction subject to the limits. 2012 tax forms 1040 ez It then allocates the deduction among its partners. 2012 tax forms 1040 ez Each partner adds the amount allocated from partnerships (shown on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. 2012 tax forms 1040 ez ) to his or her nonpartnership section 179 costs and then applies the dollar limit to this total. 2012 tax forms 1040 ez To determine any reduction in the dollar limit for costs over $2,000,000, the partner does not include any of the cost of section 179 property placed in service by the partnership. 2012 tax forms 1040 ez After the dollar limit (reduced for any nonpartnership section 179 costs over $2,000,000) is applied, any remaining cost of the partnership and nonpartnership section 179 property is subject to the business income limit. 2012 tax forms 1040 ez Partnership's taxable income. 2012 tax forms 1040 ez   For purposes of the business income limit, figure the partnership's taxable income by adding together the net income and losses from all trades or businesses actively conducted by the partnership during the year. 2012 tax forms 1040 ez See the Instructions for Form 1065 for information on how to figure partnership net income (or loss). 2012 tax forms 1040 ez However, figure taxable income without regard to credits, tax-exempt income, the section 179 deduction, and guaranteed payments under section 707(c) of the Internal Revenue Code. 2012 tax forms 1040 ez Partner's share of partnership's taxable income. 2012 tax forms 1040 ez   For purposes of the business income limit, the taxable income of a partner engaged in the active conduct of one or more of a partnership's trades or businesses includes his or her allocable share of taxable income derived from the partnership's active conduct of any trade or business. 2012 tax forms 1040 ez Example. 2012 tax forms 1040 ez In 2013, Beech Partnership placed in service section 179 property with a total cost of $2,025,000. 2012 tax forms 1040 ez The partnership must reduce its dollar limit by $25,000 ($2,025,000 − $2,000,000). 2012 tax forms 1040 ez Its maximum section 179 deduction is $475,000 ($500,000 − $25,000), and it elects to expense that amount. 2012 tax forms 1040 ez The partnership's taxable income from the active conduct of all its trades or businesses for the year was $600,000, so it can deduct the full $475,000. 2012 tax forms 1040 ez It allocates $40,000 of its section 179 deduction and $50,000 of its taxable income to Dean, one of its partners. 2012 tax forms 1040 ez In addition to being a partner in Beech Partnership, Dean is also a partner in the Cedar Partnership, which allocated to him a $30,000 section 179 deduction and $35,000 of its taxable income from the active conduct of its business. 2012 tax forms 1040 ez He also conducts a business as a sole proprietor and, in 2013, placed in service in that business qualifying section 179 property costing $55,000. 2012 tax forms 1040 ez He had a net loss of $5,000 from that business for the year. 2012 tax forms 1040 ez Dean does not have to include section 179 partnership costs to figure any reduction in his dollar limit, so his total section 179 costs for the year are not more than $2,000,000 and his dollar limit is not reduced. 2012 tax forms 1040 ez His maximum section 179 deduction is $500,000. 2012 tax forms 1040 ez He elects to expense all of the $70,000 in section 179 deductions allocated from the partnerships ($40,000 from Beech Partnership plus $30,000 from Cedar Partnership), plus $55,000 of his sole proprietorship's section 179 costs, and notes that information in his books and records. 2012 tax forms 1040 ez However, his deduction is limited to his business taxable income of $80,000 ($50,000 from Beech Partnership, plus $35,000 from Cedar Partnership minus $5,000 loss from his sole proprietorship). 2012 tax forms 1040 ez He carries over $45,000 ($125,000 − $80,000) of the elected section 179 costs to 2014. 2012 tax forms 1040 ez He allocates the carryover amount to the cost of section 179 property placed in service in his sole proprietorship, and notes that allocation in his books and records. 2012 tax forms 1040 ez Different tax years. 2012 tax forms 1040 ez   For purposes of the business income limit, if the partner's tax year and that of the partnership differ, the partner's share of the partnership's taxable income for a tax year is generally the partner's distributive share for the partnership tax year that ends with or within the partner's tax year. 2012 tax forms 1040 ez Example. 2012 tax forms 1040 ez John and James Oak are equal partners in Oak Partnership. 2012 tax forms 1040 ez Oak Partnership uses a tax year ending January 31. 2012 tax forms 1040 ez John and James both use a tax year ending December 31. 2012 tax forms 1040 ez For its tax year ending January 31, 2013, Oak Partnership's taxable income from the active conduct of its business is $80,000, of which $70,000 was earned during 2012. 2012 tax forms 1040 ez John and James each include $40,000 (each partner's entire share) of partnership taxable income in computing their business income limit for the 2013 tax year. 2012 tax forms 1040 ez Adjustment of partner's basis in partnership. 2012 tax forms 1040 ez   A partner must reduce the basis of his or her partnership interest by the total amount of section 179 expenses allocated from the partnership even if the partner cannot currently deduct the total amount. 2012 tax forms 1040 ez If the partner disposes of his or her partnership interest, the partner's basis for determining gain or loss is increased by any outstanding carryover of disallowed section 179 expenses allocated from the partnership. 2012 tax forms 1040 ez Adjustment of partnership's basis in section 179 property. 2012 tax forms 1040 ez   The basis of a partnership's section 179 property must be reduced by the section 179 deduction elected by the partnership. 2012 tax forms 1040 ez This reduction of basis must be made even if a partner cannot deduct all or part of the section 179 deduction allocated to that partner by the partnership because of the limits. 2012 tax forms 1040 ez S Corporations Generally, the rules that apply to a partnership and its partners also apply to an S corporation and its shareholders. 2012 tax forms 1040 ez The deduction limits apply to an S corporation and to each shareholder. 2012 tax forms 1040 ez The S corporation allocates its deduction to the shareholders who then take their section 179 deduction subject to the limits. 2012 tax forms 1040 ez Figuring taxable income for an S corporation. 2012 tax forms 1040 ez   To figure taxable income (or loss) from the active conduct by an S corporation of any trade or business, you total the net income and losses from all trades or businesses actively conducted by the S corporation during the year. 2012 tax forms 1040 ez   To figure the net income (or loss) from a trade or business actively conducted by an S corporation, you take into account the items from that trade or business that are passed through to the shareholders and used in determining each shareholder's tax liability. 2012 tax forms 1040 ez However, you do not take into account any credits, tax-exempt income, the section 179 deduction, and deductions for compensation paid to shareholder-employees. 2012 tax forms 1040 ez For purposes of determining the total amount of S corporation items, treat deductions and losses as negative income. 2012 tax forms 1040 ez In figuring the taxable income of an S corporation, disregard any limits on the amount of an S corporation item that must be taken into account when figuring a shareholder's taxable income. 2012 tax forms 1040 ez Other Corporations A corporation's taxable income from its active conduct of any trade or business is its taxable income figured with the following changes. 2012 tax forms 1040 ez It is figured before deducting the section 179 deduction, any net operating loss deduction, and special deductions (as reported on the corporation's income tax return). 2012 tax forms 1040 ez It is adjusted for items of income or deduction included in the amount figured in 1, above, not derived from a trade or business actively conducted by the corporation during the tax year. 2012 tax forms 1040 ez How Do You Elect the Deduction? You elect to take the section 179 deduction by completing Part I of Form 4562. 2012 tax forms 1040 ez If you elect the deduction for listed property (described in chapter 5), complete Part V of Form 4562 before completing Part I. 2012 tax forms 1040 ez For property placed in service in 2013, file Form 4562 with either of the following. 2012 tax forms 1040 ez Your original 2013 tax return, whether or not you file it timely. 2012 tax forms 1040 ez An amended return for 2013 filed within the time prescribed by law. 2012 tax forms 1040 ez An election made on an amended return must specify the item of section 179 property to which the election applies and the part of the cost of each such item to be taken into account. 2012 tax forms 1040 ez The amended return must also include any resulting adjustments to taxable income. 2012 tax forms 1040 ez You must keep records that show the specific identification of each piece of qualifying section 179 property. 2012 tax forms 1040 ez These records must show how you acquired the property, the person you acquired it from, and when you placed it in service. 2012 tax forms 1040 ez Election for certain qualified section 179 real property. 2012 tax forms 1040 ez   You can elect to expense certain qualified real property that you placed in service as section 179 property for tax years beginning in 2013. 2012 tax forms 1040 ez If you elect to treat this property as section 179 property, you must elect the application of the special rules for qualified real property described in section 179(f) of the Internal Revenue Code. 2012 tax forms 1040 ez   To make the election, attach a statement indicating you are “electing the application of section 179(f) of the Internal Revenue Code” with either of the following. 2012 tax forms 1040 ez Your original 2013 tax return, whether or not you file it timely. 2012 tax forms 1040 ez An amended return for 2013 filed within the time prescribed by law. 2012 tax forms 1040 ez The amended return must also include any adjustments to taxable income. 2012 tax forms 1040 ez   The statement should indicate your election to expense certain qualified real property under section 179(f) on your return. 2012 tax forms 1040 ez It must specify one or more of the three types of qualified property (described under Qualified real property ) to which the election applies, the cost of each such type, and the portion of the cost of each such property to be taken into account. 2012 tax forms 1040 ez Also, report this on line 6 of Form 4562. 2012 tax forms 1040 ez    The maximum section 179 expense deduction that can be taken for qualified section 179 real property is limited to $250,000. 2012 tax forms 1040 ez Revoking an election. 2012 tax forms 1040 ez   An election (or any specification made in the election) to take a section 179 deduction for 2013 can be revoked without IRS approval by filing an amended return. 2012 tax forms 1040 ez The amended return must be filed within the time prescribed by law. 2012 tax forms 1040 ez The amended return must also include any resulting adjustments to taxable income. 2012 tax forms 1040 ez Once made, the revocation is irrevocable. 2012 tax forms 1040 ez When Must You Recapture the Deduction? You may have to recapture the section 179 deduction if, in any year during the property's recovery period, the percentage of business use drops to 50% or less. 2012 tax forms 1040 ez In the year the business use drops to 50% or less, you include the recapture amount as ordinary income in Part IV of Form 4797. 2012 tax forms 1040 ez You also increase the basis of the property by the recapture amount. 2012 tax forms 1040 ez Recovery periods for property are discussed under Which Recovery Period Applies in chapter 4 . 2012 tax forms 1040 ez If you sell, exchange, or otherwise dispose of the property, do not figure the recapture amount under the rules explained in this discussion. 2012 tax forms 1040 ez Instead, use the rules for recapturing depreciation explained in chapter 3 of Publication 544 under Section 1245 Property. 2012 tax forms 1040 ez For qualified real property (described earlier), see Notice 2013-59 for determining the portion of the gain that is attributable to section 1245 property upon the sale or other disposition of qualified real property. 2012 tax forms 1040 ez If the property is listed property (described in chapter 5 ), do not figure the recapture amount under the rules explained in this discussion when the percentage of business use drops to 50% or less. 2012 tax forms 1040 ez Instead, use the rules for recapturing excess depreciation in chapter 5 under What Is the Business-Use Requirement. 2012 tax forms 1040 ez Figuring the recapture amount. 2012 tax forms 1040 ez   To figure the amount to recapture, take the following steps. 2012 tax forms 1040 ez Figure the depreciation that would have been allowable on the section 179 deduction you claimed. 2012 tax forms 1040 ez Begin with the year you placed the property in service and include the year of recapture. 2012 tax forms 1040 ez Subtract the depreciation figured in (1) from the section 179 deduction you claimed. 2012 tax forms 1040 ez The result is the amount you must recapture. 2012 tax forms 1040 ez Example. 2012 tax forms 1040 ez In January 2011, Paul Lamb, a calendar year taxpayer, bought and placed in service section 179 property costing $10,000. 2012 tax forms 1040 ez The property is not listed property. 2012 tax forms 1040 ez The property is 3-year property. 2012 tax forms 1040 ez He elected a $5,000 section 179 deduction for the property and also elected not to claim a special depreciation allowance. 2012 tax forms 1040 ez He used the property only for business in 2011 and 2012. 2012 tax forms 1040 ez In 2013, he used the property 40% for business and 60% for personal use. 2012 tax forms 1040 ez He figures his recapture amount as follows. 2012 tax forms 1040 ez Section 179 deduction claimed (2011) $5,000. 2012 tax forms 1040 ez 00 Minus: Allowable depreciation using Table A-1 (instead of section 179 deduction):   2011 $1,666. 2012 tax forms 1040 ez 50   2012 2,222. 2012 tax forms 1040 ez 50   2013 ($740. 2012 tax forms 1040 ez 50 × 40% (business)) 296. 2012 tax forms 1040 ez 20 4,185. 2012 tax forms 1040 ez 20 2013 — Recapture amount $ 814. 2012 tax forms 1040 ez 80 Paul must include $814. 2012 tax forms 1040 ez 80 in income for 2013. 2012 tax forms 1040 ez If any qualified zone property placed in service during the year ceases to be used in an empowerment zone by an enterprise zone business in a later year, the benefit of the increased section 179 deduction must be reported as other income on your return. 2012 tax forms 1040 ez Prev  Up  Next   Home   More Online Publications