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Can You Efile A 1040x

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Can You Efile A 1040x

Can you efile a 1040x Publication 517 - Introductory Material Table of Contents What's New Reminders IntroductionOrdering forms and publications. Can you efile a 1040x Tax questions. Can you efile a 1040x Useful Items - You may want to see: What's New SE tax rate. Can you efile a 1040x  For 2013 and 2014, the Old Age, Survivors, and Disability Insurance (OASDI) portion of the SE tax is 12. Can you efile a 1040x 4%. Can you efile a 1040x The Medicare (HI) portion of the SE tax remains 2. Can you efile a 1040x 9%. Can you efile a 1040x As a result, the SE tax rate returns to 15. Can you efile a 1040x 3%. Can you efile a 1040x For more information, see the Instructions for Schedule SE (Form 1040). Can you efile a 1040x Earnings subject to social security. Can you efile a 1040x  For 2013, the maximum wages and self-employment income subject to social security tax increases from $110,100 to $113,700. Can you efile a 1040x For 2014, the maximum wages and self-employment income subject to social security tax is $117,000. Can you efile a 1040x Additional Medicare Tax. Can you efile a 1040x  Beginning in 2013, a 0. Can you efile a 1040x 9% Additional Medicare Tax applies to Medicare wages, railroad retirement (RRTA) compensation, and self-employment income that are more than: $125,000 if married filing separately, $250,000 if married filing jointly, or $200,000 for any other filing status. Can you efile a 1040x For more information, see Form 8959, Additional Medicare Tax, and its separate instructions. Can you efile a 1040x Modified AGI limit for traditional IRA contributions increased. Can you efile a 1040x  For 2013, you may be able to take an IRA deduction if you were covered by a retirement plan at work and your modified AGI is: Less than $115,000 if married filing jointly or qualifying widow(er), Less than $69,000 if single or head of household, or Less than $10,000 if married filing separately. Can you efile a 1040x If you file a joint return and either you or your spouse was not covered by a retirement plan at work, you may be able to take an IRA deduction if your modified AGI is less than $188,000. Can you efile a 1040x Modified AGI limit for Roth IRA contributions increased. Can you efile a 1040x  For 2013, you may be able to contribute to your Roth IRA if your modified AGI is: Less than $188,000 if married filing jointly or qualifying widow(er), Less than $127,000 if single, head of household, or married filing separately and you did not live with your spouse at any time during the year, or Less than $10,000 if married filing separately and you lived with your spouse at any time during the year. Can you efile a 1040x Earned income credit (EIC). Can you efile a 1040x  For 2013, the maximum amount of income you can earn and still claim the EIC has increased. Can you efile a 1040x You may be able to take the EIC if you earned less than $46,227 ($51,567 for married filing jointly) and you have three or more qualifying children; $43,038 ($48,378 for married filing jointly) and you have two qualifying children; $37,870 ($43,210 for married filing jointly) and you have one qualifying child; and $14,340 ($19,680 for married filing jointly) and you do not have any qualifying children. Can you efile a 1040x Reminders Future developments. Can you efile a 1040x . Can you efile a 1040x   For the latest information about developments related to Publication 517, such as legislation enacted after it was published, go to www. Can you efile a 1040x irs. Can you efile a 1040x gov/pub517. Can you efile a 1040x Photographs of missing children. Can you efile a 1040x  The Internal Revenue Service is a proud partner with the National Center for Missing & Exploited Children. Can you efile a 1040x Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Can you efile a 1040x You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Can you efile a 1040x Introduction Three federal taxes are paid on wages and self-employment income—income tax, social security tax, and Medicare tax. Can you efile a 1040x Social security and Medicare taxes are collected under one of two systems. Can you efile a 1040x Under the Self-Employment Contributions Act (SECA), the self-employed person pays all the taxes. Can you efile a 1040x Under the Federal Insurance Contributions Act (FICA), the employee and the employer each pay half of the social security and Medicare taxes. Can you efile a 1040x No earnings are subject to both systems. Can you efile a 1040x Table 1. Can you efile a 1040x Are Your Ministerial Earnings* Covered Under FICA or SECA? Find the class to which you belong in the left column and read across the table to find if you are covered under FICA or SECA. Can you efile a 1040x Do not rely on this table alone. Can you efile a 1040x Also read the discussion for the class in the following pages. Can you efile a 1040x Class Covered under FICA? Covered under SECA? Minister NO. Can you efile a 1040x Your ministerial earnings are exempt. Can you efile a 1040x YES, if you do not have an approved exemption from the IRS. Can you efile a 1040x   NO, if you have an approved exemption. Can you efile a 1040x Member of a religious order who has not taken a vow of poverty NO. Can you efile a 1040x Your ministerial earnings are exempt. Can you efile a 1040x YES, if you do not have an approved exemption from the IRS. Can you efile a 1040x   NO, if you have an approved exemption. Can you efile a 1040x Member of a religious order who has taken a vow of poverty YES, if: Your order elected FICA coverage for its members, or You worked outside the order and the work was not required by, or done on behalf of, the order. Can you efile a 1040x   NO, if neither of the above applies. Can you efile a 1040x NO. Can you efile a 1040x Your ministerial earnings are exempt. Can you efile a 1040x Christian Science practitioner or reader NO. Can you efile a 1040x Your ministerial earnings are exempt. Can you efile a 1040x YES, if you do not have an approved exemption from the IRS. Can you efile a 1040x   NO, if you have an approved exemption. Can you efile a 1040x Religious worker (church employee) YES, if your employer did not elect to exclude you. Can you efile a 1040x    NO, if your employer elected to exclude you. Can you efile a 1040x YES, if your employer elected to exclude you from FICA. Can you efile a 1040x   NO, if you are covered under FICA. Can you efile a 1040x Member of a recognized religious sect YES, if you are an employee and do not have an approved exemption from the IRS. Can you efile a 1040x    NO, if you have an approved exemption. Can you efile a 1040x YES, if you are self-employed and do not have an approved exemption from the IRS. Can you efile a 1040x   NO, if you have an approved exemption. Can you efile a 1040x * Ministerial earnings are the self-employment earnings that result from ministerial services, defined and discussed later. Can you efile a 1040x In addition, all wages and self-employment income that are subject to Medicare tax are subject to a 0. Can you efile a 1040x 9% Additional Medicare Tax if they are paid in excess of the applicable threshold for an individual's filing status. Can you efile a 1040x Additional Medicare Tax applies to Medicare wages, railroad retirement (RRTA) compensation, and self-employment income that are more than: $125,000 if married filing separately, $250,000 if married filing jointly, or $200,000 for any other filing status. Can you efile a 1040x Medicare wages and self-employment income are combined to determine if income exceeds the threshold. Can you efile a 1040x A self-employment loss is not considered for purposes of this tax. Can you efile a 1040x RRTA compensation is separately compared to the threshold. Can you efile a 1040x There is no employer match for Additional Medicare Tax. Can you efile a 1040x For more information, see Form 8959, Additional Medicare Tax, and its separate instructions. Can you efile a 1040x This publication contains information for the following classes of taxpayers. Can you efile a 1040x Ministers. Can you efile a 1040x Members of a religious order. Can you efile a 1040x Christian Science practitioners and readers. Can you efile a 1040x Religious workers (church employees). Can you efile a 1040x Members of a recognized religious sect. Can you efile a 1040x Note. Can you efile a 1040x Unless otherwise noted, in this publication references to members of the clergy include ministers, members of a religious order (but not members of a recognized religious sect), and Christian Science practitioners and readers. Can you efile a 1040x This publication covers the following topics about the collection of social security and Medicare taxes from members of the clergy, religious workers, and members of a recognized religious sect. Can you efile a 1040x Which earnings are taxed under FICA and which under SECA. Can you efile a 1040x See Table 1 above. Can you efile a 1040x How a member of the clergy can apply for an exemption from self-employment tax. Can you efile a 1040x How a member of a recognized religious sect can apply for an exemption from both self-employment tax and FICA taxes. Can you efile a 1040x How a member of the clergy or religious worker figures net earnings from self-employment. Can you efile a 1040x This publication also covers certain income tax rules of interest to ministers and members of a religious order. Can you efile a 1040x A Comprehensive Example shows filled-in forms for a minister who has income taxed under SECA, other income taxed under FICA, and income tax reporting of items specific to a minister. Can you efile a 1040x In the back of Publication 517 is a set of worksheets that you can use to figure the amount of your taxable ministerial income and allowable deductions. Can you efile a 1040x You will find these worksheets right after the Comprehensive Example . Can you efile a 1040x Note. Can you efile a 1040x In this publication, the term “church” is generally used in its generic sense and not in reference to any particular religion. Can you efile a 1040x Comments and suggestions. Can you efile a 1040x   We welcome your comments about this publication and your suggestions for future editions. Can you efile a 1040x   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Can you efile a 1040x NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Can you efile a 1040x Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Can you efile a 1040x   You can send your comments from www. Can you efile a 1040x irs. Can you efile a 1040x gov/formspubs/. Can you efile a 1040x Click on “More Information” and then on “Give us feedback”. Can you efile a 1040x   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Can you efile a 1040x Ordering forms and publications. Can you efile a 1040x   Visit www. Can you efile a 1040x irs. Can you efile a 1040x gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Can you efile a 1040x Internal Revenue Service 1201 N. Can you efile a 1040x Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Can you efile a 1040x   If you have a tax question, check the information available on IRS. Can you efile a 1040x gov or call 1-800-829-1040. Can you efile a 1040x We cannot answer tax questions sent to either of the above addresses. Can you efile a 1040x Useful Items - You may want to see: Publication 54 Tax Guide for U. Can you efile a 1040x S. Can you efile a 1040x Citizens and Resident Aliens Abroad 525 Taxable and Nontaxable Income 529 Miscellaneous Deductions 535 Business Expenses 590 Individual Retirement Arrangements (IRAs) 596 Earned Income Credit (EIC) Form (and Instructions) SS-8 Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding SS-16 Certificate of Election of Coverage Under the Federal Insurance Contributions Act Schedule C (Form 1040) Profit or Loss From Business (Sole Proprietorship) Schedule C-EZ (Form 1040) Net Profit From Business (Sole Proprietorship) Schedule SE (Form 1040) Self-Employment Tax 1040-ES Estimated Tax for Individuals 1040X Amended U. Can you efile a 1040x S. Can you efile a 1040x Individual Income Tax Return 4029 Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits 4361 Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners 8274 Certification by Churches and Qualified Church-Controlled Organizations Electing Exemption From Employer Social Security and Medicare Taxes 8959 Additional Medicare Tax Ordering publications and forms. Can you efile a 1040x   See How To Get Tax Help , near the end of this publication, for information about getting these publications and forms. Can you efile a 1040x Prev  Up  Next   Home   More Online Publications
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Tax Relief for Victims of Floods in Nebraska

Updated 11/21/11 to add the Omaha Indian Reservation and Thurston county.
Updated 9/8/11 to add Lincoln, Nemaha and Richardson counties.

MIL-2011-06-NE, Aug. 17, 2011

Victims of flooding beginning on May 24, 2011 in parts of Nebraska may qualify for tax relief from the Internal Revenue Service.

The President has declared Boyd, Burt, Cass, Dakota, Dixon, Douglas, Knox, Lincoln, Nemaha, Richardson, Sarpy, Thurston and Washington counties and the Omaha Indian Reservation a federal disaster area. Individuals who reside or have a business in these localities may qualify for tax relief.

As a result, the IRS has postponed until Aug. 1, 2011, certain deadlines occurring from May 24 to Aug. 1 that affect taxpayers who live or have a business in the disaster area. This includes the June 15 deadline for making estimated tax payments.

In addition, the IRS is abating the failure-to-deposit penalties for employment and excise tax deposits due on or after May 24 and on or before June 8, 2011, as long as the deposits were made by June 8, 2011.

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 1-866-562-5227 to request this tax relief.

Covered Disaster Area

The areas listed above constitute a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and are entitled to the relief detailed below.

Affected Taxpayers

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

Grant of Relief

Under section 7508A, the IRS has given affected taxpayers until Aug. 1, 2011, to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after May 24 and on or before Aug. 1, 2011.

The IRS also gives affected taxpayers until Aug. 1 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after May 24 and on or before Aug. 1.

This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after May 24 and on or before June 8, provided the taxpayer made these deposits by June 8.

Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.

Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation, "Nebraska Flooding," at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Taxpayers may download forms and publications or order them by calling 1-800-TAX-FORM (1-800-829-3676). The IRS toll-free number for general tax questions is 1-800-829-1040.

Related Information: Recent IRS Disaster Relief Announcements
 

 

Page Last Reviewed or Updated: 20-Feb-2014

The Can You Efile A 1040x

Can you efile a 1040x 3. Can you efile a 1040x   Rent Expense Table of Contents Introduction Topics - This chapter discusses: RentConditional sales contract. Can you efile a 1040x Leveraged leases. Can you efile a 1040x Leveraged leases of limited-use property. Can you efile a 1040x Taxes on Leased Property Cost of Getting a Lease Improvements by Lessee Capitalizing Rent Expenses Introduction This chapter discusses the tax treatment of rent or lease payments you make for property you use in your business but do not own. Can you efile a 1040x It also discusses how to treat other kinds of payments you make that are related to your use of this property. Can you efile a 1040x These include payments you make for taxes on the property. Can you efile a 1040x Topics - This chapter discusses: The definition of rent Taxes on leased property The cost of getting a lease Improvements by the lessee Capitalizing rent expenses Rent Rent is any amount you pay for the use of property you do not own. Can you efile a 1040x In general, you can deduct rent as an expense only if the rent is for property you use in your trade or business. Can you efile a 1040x If you have or will receive equity in or title to the property, the rent is not deductible. Can you efile a 1040x Unreasonable rent. Can you efile a 1040x   You cannot take a rental deduction for unreasonable rent. Can you efile a 1040x Ordinarily, the issue of reasonableness arises only if you and the lessor are related. Can you efile a 1040x Rent paid to a related person is reasonable if it is the same amount you would pay to a stranger for use of the same property. Can you efile a 1040x Rent is not unreasonable just because it is figured as a percentage of gross sales. Can you efile a 1040x For examples of related persons, see Related persons in chapter 2, Publication 544. Can you efile a 1040x Rent on your home. Can you efile a 1040x   If you rent your home and use part of it as your place of business, you may be able to deduct the rent you pay for that part. Can you efile a 1040x You must meet the requirements for business use of your home. Can you efile a 1040x For more information, see Business use of your home in chapter 1. Can you efile a 1040x Rent paid in advance. Can you efile a 1040x   Generally, rent paid in your trade or business is deductible in the year paid or accrued. Can you efile a 1040x If you pay rent in advance, you can deduct only the amount that applies to your use of the rented property during the tax year. Can you efile a 1040x You can deduct the rest of your payment only over the period to which it applies. Can you efile a 1040x Example 1. Can you efile a 1040x You are a calendar year taxpayer and you leased a building for 5 years beginning July 1. Can you efile a 1040x Your rent is $12,000 per year. Can you efile a 1040x You paid the first year's rent ($12,000) on June 30. Can you efile a 1040x You can deduct only $6,000 (6/12 × $12,000) for the rent that applies to the first year. Can you efile a 1040x Example 2. Can you efile a 1040x You are a calendar year taxpayer. Can you efile a 1040x Last January you leased property for 3 years for $6,000 a year. Can you efile a 1040x You paid the full $18,000 (3 × $6,000) during the first year of the lease. Can you efile a 1040x Each year you can deduct only $6,000, the part of the lease that applies to that year. Can you efile a 1040x Canceling a lease. Can you efile a 1040x   You generally can deduct as rent an amount you pay to cancel a business lease. Can you efile a 1040x Lease or purchase. Can you efile a 1040x   There may be instances in which you must determine whether your payments are for rent or for the purchase of the property. Can you efile a 1040x You must first determine whether your agreement is a lease or a conditional sales contract. Can you efile a 1040x Payments made under a conditional sales contract are not deductible as rent expense. Can you efile a 1040x Conditional sales contract. Can you efile a 1040x   Whether an agreement is a conditional sales contract depends on the intent of the parties. Can you efile a 1040x Determine intent based on the provisions of the agreement and the facts and circumstances that exist when you make the agreement. Can you efile a 1040x No single test, or special combination of tests, always applies. Can you efile a 1040x However, in general, an agreement may be considered a conditional sales contract rather than a lease if any of the following is true. Can you efile a 1040x The agreement applies part of each payment toward an equity interest you will receive. Can you efile a 1040x You get title to the property after you make a stated amount of required payments. Can you efile a 1040x The amount you must pay to use the property for a short time is a large part of the amount you would pay to get title to the property. Can you efile a 1040x You pay much more than the current fair rental value of the property. Can you efile a 1040x You have an option to buy the property at a nominal price compared to the value of the property when you may exercise the option. Can you efile a 1040x Determine this value when you make the agreement. Can you efile a 1040x You have an option to buy the property at a nominal price compared to the total amount you have to pay under the agreement. Can you efile a 1040x The agreement designates part of the payments as interest, or that part is easy to recognize as interest. Can you efile a 1040x Leveraged leases. Can you efile a 1040x   Leveraged lease transactions may not be considered leases. Can you efile a 1040x Leveraged leases generally involve three parties: a lessor, a lessee, and a lender to the lessor. Can you efile a 1040x Usually the lease term covers a large part of the useful life of the leased property, and the lessee's payments to the lessor are enough to cover the lessor's payments to the lender. Can you efile a 1040x   If you plan to take part in what appears to be a leveraged lease, you may want to get an advance ruling. Can you efile a 1040x Revenue Procedure 2001-28 on page 1156 of Internal Revenue Bulletin 2001-19 contains the guidelines the IRS will use to determine if a leveraged lease is a lease for federal income tax purposes. Can you efile a 1040x Revenue Procedure 2001-29 on page 1160 of the same Internal Revenue Bulletin provides the information required to be furnished in a request for an advance ruling on a leveraged lease transaction. Can you efile a 1040x Internal Revenue Bulletin 2001-19 is available at www. Can you efile a 1040x irs. Can you efile a 1040x gov/pub/irs-irbs/irb01-19. Can you efile a 1040x pdf. Can you efile a 1040x   In general, Revenue Procedure 2001-28 provides that, for advance ruling purposes only, the IRS will consider the lessor in a leveraged lease transaction to be the owner of the property and the transaction to be a valid lease if all the factors in the revenue procedure are met, including the following. Can you efile a 1040x The lessor must maintain a minimum unconditional “at risk” equity investment in the property (at least 20% of the cost of the property) during the entire lease term. Can you efile a 1040x The lessee may not have a contractual right to buy the property from the lessor at less than fair market value when the right is exercised. Can you efile a 1040x The lessee may not invest in the property, except as provided by Revenue Procedure 2001-28. Can you efile a 1040x The lessee may not lend any money to the lessor to buy the property or guarantee the loan used by the lessor to buy the property. Can you efile a 1040x The lessor must show that it expects to receive a profit apart from the tax deductions, allowances, credits, and other tax attributes. Can you efile a 1040x   The IRS may charge you a user fee for issuing a tax ruling. Can you efile a 1040x For more information, see Revenue Procedure 2014-1 available at  www. Can you efile a 1040x irs. Can you efile a 1040x gov/irb/2014-1_IRB/ar05. Can you efile a 1040x html. Can you efile a 1040x Leveraged leases of limited-use property. Can you efile a 1040x   The IRS will not issue advance rulings on leveraged leases of so-called limited-use property. Can you efile a 1040x Limited-use property is property not expected to be either useful to or usable by a lessor at the end of the lease term except for continued leasing or transfer to a lessee. Can you efile a 1040x See Revenue Procedure 2001-28 for examples of limited-use property and property that is not limited-use property. Can you efile a 1040x Leases over $250,000. Can you efile a 1040x   Special rules are provided for certain leases of tangible property. Can you efile a 1040x The rules apply if the lease calls for total payments of more than $250,000 and any of the following apply. Can you efile a 1040x Rents increase during the lease. Can you efile a 1040x Rents decrease during the lease. Can you efile a 1040x Rents are deferred (rent is payable after the end of the calendar year following the calendar year in which the use occurs and the rent is allocated). Can you efile a 1040x Rents are prepaid (rent is payable before the end of the calendar year preceding the calendar year in which the use occurs and the rent is allocated). Can you efile a 1040x These rules do not apply if your lease specifies equal amounts of rent for each month in the lease term and all rent payments are due in the calendar year to which the rent relates (or in the preceding or following calendar year). Can you efile a 1040x   Generally, if the special rules apply, you must use an accrual method of accounting (and time value of money principles) for your rental expenses, regardless of your overall method of accounting. Can you efile a 1040x In addition, in certain cases in which the IRS has determined that a lease was designed to achieve tax avoidance, you must take rent and stated or imputed interest into account under a constant rental accrual method in which the rent is treated as accruing ratably over the entire lease term. Can you efile a 1040x For details, see section 467 of the Internal Revenue Code. Can you efile a 1040x Taxes on Leased Property If you lease business property, you can deduct as additional rent any taxes you have to pay to or for the lessor. Can you efile a 1040x When you can deduct these taxes as additional rent depends on your accounting method. Can you efile a 1040x Cash method. Can you efile a 1040x   If you use the cash method of accounting, you can deduct the taxes as additional rent only for the tax year in which you pay them. Can you efile a 1040x Accrual method. Can you efile a 1040x   If you use an accrual method of accounting, you can deduct taxes as additional rent for the tax year in which you can determine all the following. Can you efile a 1040x That you have a liability for taxes on the leased property. Can you efile a 1040x How much the liability is. Can you efile a 1040x That economic performance occurred. Can you efile a 1040x   The liability and amount of taxes are determined by state or local law and the lease agreement. Can you efile a 1040x Economic performance occurs as you use the property. Can you efile a 1040x Example 1. Can you efile a 1040x Oak Corporation is a calendar year taxpayer that uses an accrual method of accounting. Can you efile a 1040x Oak leases land for use in its business. Can you efile a 1040x Under state law, owners of real property become liable (incur a lien on the property) for real estate taxes for the year on January 1 of that year. Can you efile a 1040x However, they do not have to pay these taxes until July 1 of the next year (18 months later) when tax bills are issued. Can you efile a 1040x Under the terms of the lease, Oak becomes liable for the real estate taxes in the later year when the tax bills are issued. Can you efile a 1040x If the lease ends before the tax bill for a year is issued, Oak is not liable for the taxes for that year. Can you efile a 1040x Oak cannot deduct the real estate taxes as rent until the tax bill is issued. Can you efile a 1040x This is when Oak's liability under the lease becomes fixed. Can you efile a 1040x Example 2. Can you efile a 1040x The facts are the same as in Example 1 except that, according to the terms of the lease, Oak becomes liable for the real estate taxes when the owner of the property becomes liable for them. Can you efile a 1040x As a result, Oak will deduct the real estate taxes as rent on its tax return for the earlier year. Can you efile a 1040x This is the year in which Oak's liability under the lease becomes fixed. Can you efile a 1040x Cost of Getting a Lease You may either enter into a new lease with the lessor of the property or get an existing lease from another lessee. Can you efile a 1040x Very often when you get an existing lease from another lessee, you must pay the previous lessee money to get the lease, besides having to pay the rent on the lease. Can you efile a 1040x If you get an existing lease on property or equipment for your business, you generally must amortize any amount you pay to get that lease over the remaining term of the lease. Can you efile a 1040x For example, if you pay $10,000 to get a lease and there are 10 years remaining on the lease with no option to renew, you can deduct $1,000 each year. Can you efile a 1040x The cost of getting an existing lease of tangible property is not subject to the amortization rules for section 197 intangibles discussed in chapter 8. Can you efile a 1040x Option to renew. Can you efile a 1040x   The term of the lease for amortization includes all renewal options plus any other period for which you and the lessor reasonably expect the lease to be renewed. Can you efile a 1040x However, this applies only if less than 75% of the cost of getting the lease is for the term remaining on the purchase date (not including any period for which you may choose to renew, extend, or continue the lease). Can you efile a 1040x Allocate the lease cost to the original term and any option term based on the facts and circumstances. Can you efile a 1040x In some cases, it may be appropriate to make the allocation using a present value computation. Can you efile a 1040x For more information, see Regulations section 1. Can you efile a 1040x 178-1(b)(5). Can you efile a 1040x Example 1. Can you efile a 1040x You paid $10,000 to get a lease with 20 years remaining on it and two options to renew for 5 years each. Can you efile a 1040x Of this cost, you paid $7,000 for the original lease and $3,000 for the renewal options. Can you efile a 1040x Because $7,000 is less than 75% of the total $10,000 cost of the lease (or $7,500), you must amortize the $10,000 over 30 years. Can you efile a 1040x That is the remaining life of your present lease plus the periods for renewal. Can you efile a 1040x Example 2. Can you efile a 1040x The facts are the same as in Example 1, except that you paid $8,000 for the original lease and $2,000 for the renewal options. Can you efile a 1040x You can amortize the entire $10,000 over the 20-year remaining life of the original lease. Can you efile a 1040x The $8,000 cost of getting the original lease was not less than 75% of the total cost of the lease (or $7,500). Can you efile a 1040x Cost of a modification agreement. Can you efile a 1040x   You may have to pay an additional “rent” amount over part of the lease period to change certain provisions in your lease. Can you efile a 1040x You must capitalize these payments and amortize them over the remaining period of the lease. Can you efile a 1040x You cannot deduct the payments as additional rent, even if they are described as rent in the agreement. Can you efile a 1040x Example. Can you efile a 1040x You are a calendar year taxpayer and sign a 20-year lease to rent part of a building starting on January 1. Can you efile a 1040x However, before you occupy it, you decide that you really need less space. Can you efile a 1040x The lessor agrees to reduce your rent from $7,000 to $6,000 per year and to release the excess space from the original lease. Can you efile a 1040x In exchange, you agree to pay an additional rent amount of $3,000, payable in 60 monthly installments of $50 each. Can you efile a 1040x   You must capitalize the $3,000 and amortize it over the 20-year term of the lease. Can you efile a 1040x Your amortization deduction each year will be $150 ($3,000 ÷ 20). Can you efile a 1040x You cannot deduct the $600 (12 × $50) that you will pay during each of the first 5 years as rent. Can you efile a 1040x Commissions, bonuses, and fees. Can you efile a 1040x   Commissions, bonuses, fees, and other amounts you pay to get a lease on property you use in your business are capital costs. Can you efile a 1040x You must amortize these costs over the term of the lease. Can you efile a 1040x Loss on merchandise and fixtures. Can you efile a 1040x   If you sell at a loss merchandise and fixtures that you bought solely to get a lease, the loss is a cost of getting the lease. Can you efile a 1040x You must capitalize the loss and amortize it over the remaining term of the lease. Can you efile a 1040x Improvements by Lessee If you add buildings or make other permanent improvements to leased property, depreciate the cost of the improvements using the modified accelerated cost recovery system (MACRS). Can you efile a 1040x Depreciate the property over its appropriate recovery period. Can you efile a 1040x You cannot amortize the cost over the remaining term of the lease. Can you efile a 1040x If you do not keep the improvements when you end the lease, figure your gain or loss based on your adjusted basis in the improvements at that time. Can you efile a 1040x For more information, see the discussion of MACRS in Publication 946, How To Depreciate Property. Can you efile a 1040x Assignment of a lease. Can you efile a 1040x   If a long-term lessee who makes permanent improvements to land later assigns all lease rights to you for money and you pay the rent required by the lease, the amount you pay for the assignment is a capital investment. Can you efile a 1040x If the rental value of the leased land increased since the lease began, part of your capital investment is for that increase in the rental value. Can you efile a 1040x The rest is for your investment in the permanent improvements. Can you efile a 1040x   The part that is for the increased rental value of the land is a cost of getting a lease, and you amortize it over the remaining term of the lease. Can you efile a 1040x You can depreciate the part that is for your investment in the improvements over the recovery period of the property as discussed earlier, without regard to the lease term. Can you efile a 1040x Capitalizing Rent Expenses Under the uniform capitalization rules, you must capitalize the direct costs and part of the indirect costs for certain production or resale activities. Can you efile a 1040x Include these costs in the basis of property you produce or acquire for resale, rather than claiming them as a current deduction. Can you efile a 1040x You recover the costs through depreciation, amortization, or cost of goods sold when you use, sell, or otherwise dispose of the property. Can you efile a 1040x Indirect costs include amounts incurred for renting or leasing equipment, facilities, or land. Can you efile a 1040x Uniform capitalization rules. Can you efile a 1040x   You may be subject to the uniform capitalization rules if you do any of the following, unless the property is produced for your use other than in a business or an activity carried on for profit. Can you efile a 1040x Produce real property or tangible personal property. Can you efile a 1040x For this purpose, tangible personal property includes a film, sound recording, video tape, book, or similar property. Can you efile a 1040x Acquire property for resale. Can you efile a 1040x However, these rules do not apply to the following property. Can you efile a 1040x Personal property you acquire for resale if your average annual gross receipts are $10 million or less for the 3 prior tax years. Can you efile a 1040x Property you produce if you meet either of the following conditions. Can you efile a 1040x Your indirect costs of producing the property are $200,000 or less. Can you efile a 1040x You use the cash method of accounting and do not account for inventories. Can you efile a 1040x Example 1. Can you efile a 1040x You rent construction equipment to build a storage facility. Can you efile a 1040x If you are subject to the uniform capitalization rules, you must capitalize as part of the cost of the building the rent you paid for the equipment. Can you efile a 1040x You recover your cost by claiming a deduction for depreciation on the building. Can you efile a 1040x Example 2. Can you efile a 1040x You rent space in a facility to conduct your business of manufacturing tools. Can you efile a 1040x If you are subject to the uniform capitalization rules, you must include the rent you paid to occupy the facility in the cost of the tools you produce. Can you efile a 1040x More information. Can you efile a 1040x   For more information on these rules, see Uniform Capitalization Rules in Publication 538 and the regulations under Internal Revenue Code section 263A. Can you efile a 1040x Prev  Up  Next   Home   More Online Publications