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Can You File 2011 Taxes Now

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Can You File 2011 Taxes Now

Can you file 2011 taxes now Index A Abatement of interest (see Interest, abatement) Appeal rights, Appeal Rights, Appeals to the Courts, Tax Court, District Court and Court of Federal Claims (see also Tax Court) Assistance (see Tax help) Authorization, third party, Third party authorization. Can you file 2011 taxes now B Burden of proof, Burden of proof. Can you file 2011 taxes now C Civil action (see Waivers, tax suits, civil action) Claim for refund, Claims for Refund Disallowance, Explanation of Any Claim for Refund Disallowance Estates on installment method, Claim for refund by estates electing the installment method of payment. Can you file 2011 taxes now Periods of financial disability, Periods of financial disability. Can you file 2011 taxes now Comments on publication, Comments and suggestions. Can you file 2011 taxes now Communications, privileged, Confidentiality privilege. Can you file 2011 taxes now , Confidentiality privilege. Can you file 2011 taxes now Confidentiality, Confidentiality privilege. Can you file 2011 taxes now , Confidentiality privilege. Can you file 2011 taxes now D Disability (see Financial disability, periods of) Disaster areas, abatement of interest, Abatement of Interest for Individuals Affected by Presidentially Declared Disasters or Military or Terrorist Actions E Employment status, Tax Court review of, Jurisdiction for determination of employment status. Can you file 2011 taxes now Estates Claim for refund, Claim for refund by estates electing the installment method of payment. Can you file 2011 taxes now Examination of returns, Examination of Returns F Fast track mediation, Fast track mediation. Can you file 2011 taxes now Financial disability, periods of Claim for refund, Periods of financial disability. Can you file 2011 taxes now Form 8379, Injured spouse exception. Can you file 2011 taxes now 8857, Form 8857. Can you file 2011 taxes now Free tax services, Free help with your tax return. Can you file 2011 taxes now H Help (see Tax help) I Injured spouse, Injured spouse exception. Can you file 2011 taxes now Innocent spouse relief, Tax Court review of request for relief from joint and several liability on a joint return. Can you file 2011 taxes now , Relief from joint and several liability on a joint return. Can you file 2011 taxes now Installment agreement, Installment Agreement Request Installment method Estates, claim for refund by, Claim for refund by estates electing the installment method of payment. Can you file 2011 taxes now Interest Abatement Disaster areas, Abatement of Interest for Individuals Affected by Presidentially Declared Disasters or Military or Terrorist Actions Error or delay by IRS, Abatement of Interest Due to Error or Delay by the IRS Terrorist attacks, Abatement of Interest for Individuals Affected by Presidentially Declared Disasters or Military or Terrorist Actions Netting, overlapping underpayments and overpayments, Interest Netting Suspended, Suspension of interest and penalties. Can you file 2011 taxes now J Joint and several liability, relief from, Tax Court review of request for relief from joint and several liability on a joint return. Can you file 2011 taxes now , Relief from joint and several liability on a joint return. Can you file 2011 taxes now L Losses Disaster area, Disaster area claims for refund. Can you file 2011 taxes now Low Income Taxpayer Clinics, Low Income Taxpayer Clinics. Can you file 2011 taxes now M Mediation, fast track, Fast track mediation. Can you file 2011 taxes now More information, Useful Items - You may want to see: N Notice of deficiency Timely mailing, Suspension of interest and penalties. Can you file 2011 taxes now Notices Third party contacts, Notice of IRS contact of third parties. Can you file 2011 taxes now O Offer in compromise, Offer in Compromise Overpayments Offsets against state tax, Offset of past-due state income tax obligations against overpayments. Can you file 2011 taxes now P Penalties, suspended, Suspension of interest and penalties. Can you file 2011 taxes now Practitioners, federally authorized Confidential communications, Confidentiality privilege. Can you file 2011 taxes now , Confidentiality privilege. Can you file 2011 taxes now Presidentially declared disaster, Disaster area claims for refund. Can you file 2011 taxes now Publications (see Tax help) R Refund, Claims for Refund, Periods of financial disability. Can you file 2011 taxes now , Offset of past-due state income tax obligations against overpayments. Can you file 2011 taxes now Reduced, Reduced Refund Refund deadline postponement, Postponed refund deadlines. Can you file 2011 taxes now Refund or credit before court decision, Refund or Credit of Overpayments Before Final Determination Rights Communications, privileged, Confidentiality privilege. Can you file 2011 taxes now , Confidentiality privilege. Can you file 2011 taxes now Requests to waive, Prohibition on requests to taxpayers to give up rights to bring civil action. Can you file 2011 taxes now S Suggestions for publication, Comments and suggestions. Can you file 2011 taxes now T Tax Court, Appeals to the Courts, Tax Court Employment status, review of, Jurisdiction for determination of employment status. Can you file 2011 taxes now Innocent spouse relief, review of request for, Tax Court review of request for relief from joint and several liability on a joint return. Can you file 2011 taxes now Refund or credit before decision, Refund or Credit of Overpayments Before Final Determination Tax help, How To Get Tax Help Taxpayer Advocate, Taxpayer Advocate Service. Can you file 2011 taxes now Taxpayer Advocate Service, Taxpayer Advocate Service. Can you file 2011 taxes now Terrorist attacks, abatement of interest, Abatement of Interest for Individuals Affected by Presidentially Declared Disasters or Military or Terrorist Actions Third party authorization, Third party authorization. Can you file 2011 taxes now TTY/TDD information, How To Get Tax Help W Waivers Tax suits, civil action, Prohibition on requests to taxpayers to give up rights to bring civil action. Can you file 2011 taxes now Z Zero rate, overlapping periods of interest (see Interest, netting) Prev  Up     Home   More Online Publications
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Centro Informativo para camioneros

English

Si usted opera un camión u otro vehículo bajo la categoría de vehículo pesado en las carreteras públicas, tiene que presentar el Formulario 2290(SP), Declaración del Impuesto sobre el uso de Vehículos Pesados en las Carreteras, (Heavy Highway Vehicle use Tax Return) y pagar el impuesto sobre artículos de uso y consumo.

Información para los contribuyentes que no presentaron y pagaron el Impuesto sobre el Uso de Vehículos Pesados en las Carreteras para el periodo del 1 de julio del 2011 al 30 de junio del 2012

El IRS envío cartas a contribuyentes que entendemos puedan tener la responsabilidad de presentar y pagar el Impuesto sobre el Uso de Vehículos Pesados en las Carreteras (Formulario 2290(SP) para el periodo del 1 de julio del 2011 al 30 de junio del 2012, pero que aún no lo han hecho. Si usted recibe tal carta, por favor responda según descrito en la misma.

La fecha de vencimiento para presentar el Formulario 2290(SP) y para pagar el Impuesto sobre el Uso de Vehículos Pesados en las Carreteras, para el periodo del 1 de julio del 2011 al 30 de junio del 2012, fue extendido al 30 de noviembre del 2011 debido a la extensión tardía de dicho impuesto. Ya que el IRS no pudo proveer el Anexo 1 sellado hasta el 1 de noviembre del 2011, los estados fueron instruidos a aceptar de los contribuyentes el Anexo 1 sellado por el IRS con fecha para el periodo tributario del 1 de julio del 2010 al 30 de junio del 2011. Algunos contribuyentes pueden haber evitado el presentar y pagar su Impuesto sobre el Uso de Vehículos Pesados en las Carreteras para el periodo del 1 de julio del 2011 al 30 de junio del 2012.

Para más información, visite la página web Impuesto sobre el uso de las carreteras; Presentación y Pago para el Periodo Tributario Comenzando el 1 de julio del 2011 (Highway Use Tax; Filing and Payment for Taxable Period Beginning July 1, 2011), en inglés, en IRS.gov.

Nosotros animamos a todos los contribuyentes responsables por el Impuesto sobre el Uso de Vehículos Pesados en las Carreteras a que utilicen presentar el formulario electrónicamente mediante e-file, incluyendo a aquellos contribuyentes que necesiten presentar para el año en curso o cualquiera de los tres años previos.

Presentar y pagar el impuesto sobre el uso de vehículos pesados en carretera

Formulario 2290 (SP) e-file para la presentación electrónica

Usted deberá tener un Número de Identificación del Empleador, (EIN por sus siglas en inglés) a fin de presentar el Formulario 2290.  Solicite su EIN en línea (en inglés).

La presentación electrónica se requiere para todo contribuyente que reporta 25 o mas vehículos, y recomendamos la presentación electrónica del Formulario 2290 para todo contribuyente.  Utilice la presentación e-file y su Anexo 1 estará disponible por medio de su preparador e-file (en inglés) casi inmediatamente después de que aceptemos su Formulario 2290 presentado electrónicamente.  Y usted puede presentar por e-file su declaración desde su propia computadora, 24 horas del día, 7 días a la semana.

Al imprimir su Anexo 1, le recomendamos utilice una impresora de alta calidad la cual muestre la marca de agua a fin de evitar problemas con su Departamento de Motores y Vehículos.

Presentación en formularios de papel

A los contribuyentes que no se les requiere presentar por e-file pueden presentar el Formulario 2290 en papel. 

Maneras de pagar el impuesto sobre el uso de vehículos pesados

Existen tres maneras de pagar el impuesto, el cual deberá pagarse en su totalidad con su Formulario 2290:

  • Retiro electrónico de fondos (débito directo) si presenta electrónicamente.
  • EFTPS el sistema de pago electrónico del impuesto federal. EFTPS está disponible 24 horas al día, 7 días a la semana
  • Cheque o giro postal si utiliza el Formulario 2290-V, Cupón de pago, enviándolo al domicilio que aparece el las instrucciones del Formulario 2290.

Internal Revenue Service 
P.O. Box 804525 Cincinnati, 
OH 45280-4525

Ayuda con el Formulario 2290

Usted puede llamar por teléfono para solicitar ayuda de lunes – viernes, entre las 8:00 AM y las 6:00 PM, horario del este.

  • Desde los Estados Unidos, al 866-699-4096 (número libre de cargos)
  • Desde Canadá o México, al 859-669-5733 (este número no es libre de cargos)

Formularios e Información

Preguntas frecuentes

Cómo Evitar Problemas

Avoiding Problems (evitando problemas), en inglés.  Esta sección provee información sobre el mantenimiento de registros, fraudes y estafas, y otra información valiosa para administrar su negocio.

Publicaciones sobre la industria de camiones

El artículo que está importando puede estar sujeto al 12 por ciento del impuesto sobre artículos de uso y consumo (utilice el Formulario 720, Quarterly Federal Excise Tax Return, (Declaración federal trimestral de impuestos sobre artículos de uso y consumo), en inglés.

Información general para los negocios

 Tax Information for All Small Businesses (Información tributaria para todos los pequeños negocios), en inglés

Esta sección provee información general para los pequeños negocios, la cual es muy útil para todas las industrias y profesiones. Incluye enlaces a productos para pequeños negocios, impuestos sobre nómina, presentación electrónica y  pagos, reducción de la carga tributaria del contribuyente, evitar transacciones tributarias abusivas y muchos otros temas.

Worker Classification (Independent Contractors vs. Employees) (Clasificación de trabajadores (contratistas independientes vs. empleados)), en inglés

¿Es usted, o ayuda usted, a contratistas independientes o empleados? Antes de que conozca cómo tratar los pagos por servicios, primero debe conocer la relación de negocios que existe entre usted y la persona que lleva a cabo los servicios.

 

Page Last Reviewed or Updated: 26-Mar-2014

The Can You File 2011 Taxes Now

Can you file 2011 taxes now 3. Can you file 2011 taxes now   Investment Expenses Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Limits on DeductionsPassive activity. Can you file 2011 taxes now Other income (nonpassive income). Can you file 2011 taxes now Expenses. Can you file 2011 taxes now Additional information. Can you file 2011 taxes now Interest ExpensesInvestment Interest Limit on Deduction Bond Premium AmortizationSpecial rules to determine amounts payable on a bond. Can you file 2011 taxes now Basis. Can you file 2011 taxes now How To Figure Amortization Choosing To Amortize How To Report Amortization Expenses of Producing IncomeFees to buy or sell. Can you file 2011 taxes now Including mutual fund or REMIC expenses in income. Can you file 2011 taxes now Nondeductible ExpensesUsed as collateral. Can you file 2011 taxes now Short-sale expenses. Can you file 2011 taxes now Expenses for both tax-exempt and taxable income. Can you file 2011 taxes now State income taxes. Can you file 2011 taxes now Nondeductible amount. Can you file 2011 taxes now Basis adjustment. Can you file 2011 taxes now How To Report Investment Expenses When To Report Investment Expenses Topics - This chapter discusses: Limits on Deductions , Interest Expenses , Bond Premium Amortization , Expenses of Producing Income , Nondeductible Expenses , How To Report Investment Expenses , and When To Report Investment Expenses . Can you file 2011 taxes now Useful Items - You may want to see: Publication 535 Business Expenses 925 Passive Activity and At-Risk Rules 929 Tax Rules for Children and Dependents Form (and Instructions) Schedule A (Form 1040) Itemized Deductions 4952 Investment Interest Expense Deduction See chapter 5, How To Get Tax Help , for information about getting these publications and forms. Can you file 2011 taxes now Limits on Deductions Your deductions for investment expenses may be limited by: The at-risk rules, The passive activity loss limits, The limit on investment interest, or The 2% limit on certain miscellaneous itemized deductions. Can you file 2011 taxes now The at-risk rules and passive activity rules are explained briefly in this section. Can you file 2011 taxes now The limit on investment interest is explained later in this chapter under Interest Expenses . Can you file 2011 taxes now The 2% limit is explained later in this chapter under Expenses of Producing Income . Can you file 2011 taxes now At-risk rules. Can you file 2011 taxes now   Special at-risk rules apply to most income-producing activities. Can you file 2011 taxes now These rules limit the amount of loss you can deduct to the amount you risk losing in the activity. Can you file 2011 taxes now Generally, this is the cash and the adjusted basis of property you contribute to the activity. Can you file 2011 taxes now It also includes money you borrow for use in the activity if you are personally liable for repayment or if you use property not used in the activity as security for the loan. Can you file 2011 taxes now For more information, see Publication 925. Can you file 2011 taxes now Passive activity losses and credits. Can you file 2011 taxes now   The amount of losses and tax credits you can claim from passive activities is limited. Can you file 2011 taxes now Generally, you are allowed to deduct passive activity losses only up to the amount of your passive activity income. Can you file 2011 taxes now Also, you can use credits from passive activities only against tax on the income from passive activities. Can you file 2011 taxes now There are exceptions for certain activities, such as rental real estate activities. Can you file 2011 taxes now Passive activity. Can you file 2011 taxes now   A passive activity generally is any activity involving the conduct of any trade or business in which you do not materially participate and any rental activity. Can you file 2011 taxes now However, if you are involved in renting real estate, the activity is not a passive activity if both of the following are true. Can you file 2011 taxes now More than one-half of the personal services you perform during the year in all trades or businesses are performed in real property trades or businesses in which you materially participate. Can you file 2011 taxes now You perform more than 750 hours of services during the year in real property trades or businesses in which you materially participate. Can you file 2011 taxes now  The term “trade or business” generally means any activity that involves the conduct of a trade or business, is conducted in anticipation of starting a trade or business, or involves certain research or experimental expenditures. Can you file 2011 taxes now However, it does not include rental activities or certain activities treated as incidental to holding property for investment. Can you file 2011 taxes now   You are considered to materially participate in an activity if you are involved on a regular, continuous, and substantial basis in the operations of the activity. Can you file 2011 taxes now Other income (nonpassive income). Can you file 2011 taxes now    Generally, you can use losses from passive activities only to offset income from passive activities. Can you file 2011 taxes now You cannot use passive activity losses to offset your other income, such as your wages or your portfolio income. Can you file 2011 taxes now Portfolio income includes gross income from interest, dividends, annuities, or royalties that is not derived in the ordinary course of a trade or business. Can you file 2011 taxes now It also includes gains or losses (not derived in the ordinary course of a trade or business) from the sale or trade of property (other than an interest in a passive activity) producing portfolio income or held for investment. Can you file 2011 taxes now This includes capital gain distributions from mutual funds (and other regulated investment companies) and real estate investment trusts. Can you file 2011 taxes now   You cannot use passive activity losses to offset Alaska Permanent Fund dividends. Can you file 2011 taxes now Expenses. Can you file 2011 taxes now   Do not include in the computation of your passive activity income or loss: Expenses (other than interest) that are clearly and directly allocable to your portfolio income, or Interest expense properly allocable to portfolio income. Can you file 2011 taxes now However, this interest and other expenses may be subject to other limits. Can you file 2011 taxes now These limits are explained in the rest of this chapter. Can you file 2011 taxes now Additional information. Can you file 2011 taxes now   For more information about determining and reporting income and losses from passive activities, see Publication 925. Can you file 2011 taxes now Interest Expenses This section discusses interest expenses you may be able to deduct as an investor. Can you file 2011 taxes now For information on business interest, see chapter 4 of Publication 535. Can you file 2011 taxes now You cannot deduct personal interest expenses other than qualified home mortgage interest, as explained in Publication 936, Home Mortgage Interest Deduction, and interest on certain student loans, as explained in Publication 970. Can you file 2011 taxes now Investment Interest If you borrow money to buy property you hold for investment, the interest you pay is investment interest. Can you file 2011 taxes now You can deduct investment interest subject to the limit discussed later. Can you file 2011 taxes now However, you cannot deduct interest you incurred to produce tax-exempt income. Can you file 2011 taxes now See Tax-exempt income under Nondeductible Expenses, later. Can you file 2011 taxes now You also cannot deduct interest expenses on straddles discussed under Interest expense and carrying charges on straddles , later. Can you file 2011 taxes now Investment interest does not include any qualified home mortgage interest or any interest taken into account in computing income or loss from a passive activity. Can you file 2011 taxes now Investment property. Can you file 2011 taxes now   Property held for investment includes property that produces interest, dividends, annuities, or royalties not derived in the ordinary course of a trade or business. Can you file 2011 taxes now It also includes property that produces gain or loss (not derived in the ordinary course of a trade or business) from the sale or trade of property producing these types of income or held for investment (other than an interest in a passive activity). Can you file 2011 taxes now Investment property also includes an interest in a trade or business activity in which you did not materially participate (other than a passive activity). Can you file 2011 taxes now Partners, shareholders, and beneficiaries. Can you file 2011 taxes now   To determine your investment interest, combine your share of investment interest from a partnership, S corporation, estate, or trust with your other investment interest. Can you file 2011 taxes now Allocation of Interest Expense If you borrow money for business or personal purposes as well as for investment, you must allocate the debt among those purposes. Can you file 2011 taxes now Only the interest expense on the part of the debt used for investment purposes is treated as investment interest. Can you file 2011 taxes now The allocation is not affected by the use of property that secures the debt. Can you file 2011 taxes now Example 1. Can you file 2011 taxes now You borrow $10,000 and use $8,000 to buy stock. Can you file 2011 taxes now You use the other $2,000 to buy items for your home. Can you file 2011 taxes now Since 80% of the debt is used for, and allocated to, investment purposes, 80% of the interest on that debt is investment interest. Can you file 2011 taxes now The other 20% is nondeductible personal interest. Can you file 2011 taxes now Debt proceeds received in cash. Can you file 2011 taxes now   If you receive debt proceeds in cash, the proceeds are generally not treated as investment property. Can you file 2011 taxes now Debt proceeds deposited in account. Can you file 2011 taxes now   If you deposit debt proceeds in an account, that deposit is treated as investment property, regardless of whether the account bears interest. Can you file 2011 taxes now But, if you withdraw the funds and use them for another purpose, you must reallocate the debt to determine the amount considered to be for investment purposes. Can you file 2011 taxes now Example 2. Can you file 2011 taxes now Assume in Example 1 that you borrowed the money on March 1 and immediately bought the stock for $8,000. Can you file 2011 taxes now You did not buy the household items until June 1. Can you file 2011 taxes now You had deposited the $2,000 in the bank. Can you file 2011 taxes now You had no other transactions on the bank account until June. Can you file 2011 taxes now You did not sell the stock, and you made no principal payments on the debt. Can you file 2011 taxes now You paid interest from another account. Can you file 2011 taxes now The $8,000 is treated as being used for an investment purpose. Can you file 2011 taxes now The $2,000 is treated as being used for an investment purpose for the 3-month period. Can you file 2011 taxes now Your total interest expense for 3 months on this debt is investment interest. Can you file 2011 taxes now In June, when you spend the $2,000 for household items, you must begin to allocate 80% of the debt and the interest expense to investment purposes and 20% to personal purposes. Can you file 2011 taxes now Amounts paid within 30 days. Can you file 2011 taxes now   If you receive loan proceeds in cash or if the loan proceeds are deposited in an account, you can treat any payment (up to the amount of the proceeds) made from any account you own, or from cash, as made from those proceeds. Can you file 2011 taxes now This applies to any payment made within 30 days before or after the proceeds are received in cash or deposited in your account. Can you file 2011 taxes now   If you received the loan proceeds in cash, you can treat the payment as made on the date you received the cash instead of the date you actually made the payment. Can you file 2011 taxes now Payments on debt may require new allocation. Can you file 2011 taxes now   As you repay a debt used for more than one purpose, you must reallocate the balance. Can you file 2011 taxes now You must first reduce the amount allocated to personal purposes by the repayment. Can you file 2011 taxes now You then reallocate the rest of the debt to find what part is for investment purposes. Can you file 2011 taxes now Example 3. Can you file 2011 taxes now If, in Example 2 , you repay $500 on November 1, the entire repayment is applied against the amount allocated to personal purposes. Can you file 2011 taxes now The debt balance is now allocated as $8,000 for investment purposes and $1,500 for personal purposes. Can you file 2011 taxes now Until the next reallocation is necessary, 84% ($8,000 ÷ $9,500) of the debt and the interest expense is allocated to investment. Can you file 2011 taxes now Pass-through entities. Can you file 2011 taxes now   If you use borrowed funds to buy an interest in a partnership or S corporation, then the interest on those funds must be allocated based on the assets of the entity. Can you file 2011 taxes now If you contribute to the capital of the entity, you can make the allocation using any reasonable method. Can you file 2011 taxes now Additional allocation rules. Can you file 2011 taxes now   For more information about allocating interest expense, see chapter 4 of Publication 535. Can you file 2011 taxes now When To Deduct Investment Interest If you use the cash method of accounting, you must pay the interest before you can deduct it. Can you file 2011 taxes now If you use an accrual method of accounting, you can deduct interest over the period it accrues, regardless of when you pay it. Can you file 2011 taxes now For an exception, see Unpaid expenses owed to related party under When To Report Investment Expenses, later in this chapter. Can you file 2011 taxes now Example. Can you file 2011 taxes now You borrowed $1,000 on August 26, 2013, payable in 90 days at 12% interest. Can you file 2011 taxes now On November 26, 2013, you paid this with a new note for $1,030, due on February 26, 2014. Can you file 2011 taxes now If you use the cash method of accounting, you cannot deduct any part of the $30 interest on your return for 2013 because you did not actually pay it. Can you file 2011 taxes now If you use an accrual method, you may be able to deduct a portion of the interest on the loans through December 31, 2013, on your return for 2013. Can you file 2011 taxes now Interest paid in advance. Can you file 2011 taxes now   Generally, if you pay interest in advance for a period that goes beyond the end of the tax year, you must spread the interest over the tax years to which it belongs under the OID rules discussed in chapter 1. Can you file 2011 taxes now You can deduct in each year only the interest for that year. Can you file 2011 taxes now Interest on margin accounts. Can you file 2011 taxes now   If you are a cash method taxpayer, you can deduct interest on margin accounts to buy taxable securities as investment interest in the year you paid it. Can you file 2011 taxes now You are considered to have paid interest on these accounts only when you actually pay the broker or when payment becomes available to the broker through your account. Can you file 2011 taxes now Payment may become available to the broker through your account when the broker collects dividends or interest for your account, or sells securities held for you or received from you. Can you file 2011 taxes now   You cannot deduct any interest on money borrowed for personal reasons. Can you file 2011 taxes now Limit on interest deduction for market discount bonds. Can you file 2011 taxes now   The amount you can deduct for interest expense you paid or accrued during the year to buy or carry a market discount bond may be limited. Can you file 2011 taxes now This limit does not apply if you accrue the market discount and include it in your income currently. Can you file 2011 taxes now   Under this limit, the interest is deductible only to the extent it is more than: The total interest and OID includible in gross income for the bond for the year, plus The market discount for the number of days you held the bond during the year. Can you file 2011 taxes now Figure the amount in (2) above using the rules for figuring accrued market discount in chapter 1 under Market Discount Bonds . Can you file 2011 taxes now Interest not deducted due to limit. Can you file 2011 taxes now   In the year you dispose of the bond, you can deduct any interest expense you were not allowed to deduct in earlier years because of the limit. Can you file 2011 taxes now Choosing to deduct disallowed interest expense before the year of disposition. Can you file 2011 taxes now   You can choose to deduct disallowed interest expense in any year before the year you dispose of the bond, up to your net interest income from the bond during the year. Can you file 2011 taxes now The rest of the disallowed interest expense remains deductible in the year you dispose of the bond. Can you file 2011 taxes now Net interest income. Can you file 2011 taxes now   This is the interest income (including OID) from the bond that you include in income for the year, minus the interest expense paid or accrued during the year to purchase or carry the bond. Can you file 2011 taxes now Limit on interest deduction for short-term obligations. Can you file 2011 taxes now   If the current income inclusion rules discussed in chapter 1 under Discount on Short-Term Obligations do not apply to you, the amount you can deduct for interest expense you paid or accrued during the year to buy or carry a short-term obligation is limited. Can you file 2011 taxes now   The interest is deductible only to the extent it is more than: The amount of acquisition discount or OID on the obligation for the tax year, plus The amount of any interest payable on the obligation for the year that is not included in income because of your accounting method (other than interest taken into account in determining the amount of acquisition discount or OID). Can you file 2011 taxes now The method of determining acquisition discount and OID for short-term obligations is discussed in chapter 1 under Discount on Short-Term Obligations . Can you file 2011 taxes now Interest not deducted due to limit. Can you file 2011 taxes now   In the year you dispose of the obligation, or, if you choose, in another year in which you have net interest income from the obligation, you can deduct any interest expense you were not allowed to deduct for an earlier year because of the limit. Can you file 2011 taxes now Follow the same rules provided in the earlier discussion under Limit on interest deduction for market discount bonds , earlier. Can you file 2011 taxes now Limit on Deduction Generally, your deduction for investment interest expense is limited to your net investment income. Can you file 2011 taxes now You can carry over the amount of investment interest you could not deduct because of this limit to the next tax year. Can you file 2011 taxes now The interest carried over is treated as investment interest paid or accrued in that next year. Can you file 2011 taxes now You can carry over disallowed investment interest to the next tax year even if it is more than your taxable income in the year the interest was paid or accrued. Can you file 2011 taxes now Net Investment Income Determine the amount of your net investment income by subtracting your investment expenses (other than interest expense) from your investment income. Can you file 2011 taxes now Investment income. Can you file 2011 taxes now   This generally includes your gross income from property held for investment (such as interest, dividends, annuities, and royalties). Can you file 2011 taxes now Investment income does not include Alaska Permanent Fund dividends. Can you file 2011 taxes now It also does not include qualified dividends or net capital gain unless you choose to include them. Can you file 2011 taxes now Choosing to include qualified dividends. Can you file 2011 taxes now   Investment income generally does not include qualified dividends, discussed in chapter 1. Can you file 2011 taxes now However, you can choose to include all or part of your qualified dividends in investment income. Can you file 2011 taxes now   You make this choice by completing Form 4952, line 4g, according to its instructions. Can you file 2011 taxes now   If you choose to include any of your qualified dividends in investment income, you must reduce your qualified dividends that are eligible for the lower capital gains tax rates by the same amount. Can you file 2011 taxes now Choosing to include net capital gain. Can you file 2011 taxes now    Investment income generally does not include net capital gain from disposing of investment property (including capital gain distributions from mutual funds). Can you file 2011 taxes now However, you can choose to include all or part of your net capital gain in investment income. Can you file 2011 taxes now   You make this choice by completing Form 4952, line 4g, according to its instructions. Can you file 2011 taxes now   If you choose to include any of your net capital gain in investment income, you must reduce your net capital gain that is eligible for the lower capital gains tax rates by the same amount. Can you file 2011 taxes now   For more information about the capital gains rates, see Capital Gain Tax Rates in chapter 4. Can you file 2011 taxes now    Before making either choice, consider the overall effect on your tax liability. Can you file 2011 taxes now Compare your tax if you make one or both of these choices with your tax if you do not. Can you file 2011 taxes now Investment income of child reported on parent's return. Can you file 2011 taxes now   Investment income includes the part of your child's interest and dividend income you choose to report on your return. Can you file 2011 taxes now If the child does not have qualified dividends, Alaska Permanent Fund dividends, or capital gain distributions, this is the amount on line 6 of Form 8814. Can you file 2011 taxes now Include it on line 4a of Form 4952. Can you file 2011 taxes now Example. Can you file 2011 taxes now Your 8-year-old son has interest income of $2,200, which you choose to report on your own return. Can you file 2011 taxes now You enter $2,200 on Form 8814, lines 1a and 4, and $200 on lines 6 and 12 and complete Part II. Can you file 2011 taxes now Also enter $200 on Form 1040, line 21. Can you file 2011 taxes now Your investment income includes this $200. Can you file 2011 taxes now Child's qualified dividends. Can you file 2011 taxes now   If part of the amount you report is your child's qualified dividends, that part (which is reported on Form 1040, line 9b) generally does not count as investment income. Can you file 2011 taxes now However, you can choose to include all or part of it in investment income, as explained under Choosing to include qualified dividends , earlier. Can you file 2011 taxes now   Your investment income also includes the amount on Form 8814, line 12 (or, if applicable, the reduced amount figured next under Child's Alaska Permanent Fund dividends). Can you file 2011 taxes now Child's Alaska Permanent Fund dividends. Can you file 2011 taxes now   If part of the amount you report is your child's Alaska Permanent Fund dividends, that part does not count as investment income. Can you file 2011 taxes now To figure the amount of your child's income that you can consider your investment income, start with the amount on Form 8814, line 6. Can you file 2011 taxes now Multiply that amount by a percentage that is equal to the Alaska Permanent Fund dividends divided by the total amount on Form 8814, line 4. Can you file 2011 taxes now Subtract the result from the amount on Form 8814, line 12. Can you file 2011 taxes now Example. Can you file 2011 taxes now Your 10-year-old child has taxable interest income of $4,000 and Alaska Permanent Fund dividends of $2,000. Can you file 2011 taxes now You choose to report this on your return. Can you file 2011 taxes now You enter $4,000 on Form 8814, line 1a, $2,000 on line 2a, and $6,000 on line 4. Can you file 2011 taxes now You then enter $4,000 on Form 8814, lines 6 and 12, and Form 1040, line 21. Can you file 2011 taxes now You figure the amount of your child's income that you can consider your investment income as follows: $4,000 − ($4,000 × ($2,000 ÷ $6,000)) = $2,667 You include the result, $2,667, on Form 4952, line 4a. Can you file 2011 taxes now Child's capital gain distributions. Can you file 2011 taxes now   If part of the amount you report is your child's capital gain distributions, that part (which is reported on Schedule D (Form 1040), line 13, or Form 1040, line 13) generally does not count as investment income. Can you file 2011 taxes now However, you can choose to include all or part of it in investment income, as explained in Choosing to include net capital gain , earlier. Can you file 2011 taxes now   Your investment income also includes the amount on Form 8814, line 12 (or, if applicable, the reduced amount figured under Child's Alaska Permanent Fund dividends , earlier). Can you file 2011 taxes now Investment expenses. Can you file 2011 taxes now   Investment expenses are your allowed deductions (other than interest expense) directly connected with the production of investment income. Can you file 2011 taxes now Investment expenses that are included as a miscellaneous itemized deduction on Schedule A (Form 1040) are allowable deductions after applying the 2% limit that applies to miscellaneous itemized deductions. Can you file 2011 taxes now Use the smaller of: The investment expenses included on Schedule A (Form 1040), line 23, or The amount on Schedule A (Form 1040), line 27. Can you file 2011 taxes now See Expenses of Producing Income , later, for a discussion of the 2% limit. Can you file 2011 taxes now Losses from passive activities. Can you file 2011 taxes now   Income or expenses that you used in computing income or loss from a passive activity are not included in determining your investment income or investment expenses (including investment interest expense). Can you file 2011 taxes now See Publication 925 for information about passive activities. Can you file 2011 taxes now Example. Can you file 2011 taxes now Ted is a partner in a partnership that operates a business. Can you file 2011 taxes now However, he does not materially participate in the partnership's business. Can you file 2011 taxes now Ted's interest in the partnership is considered a passive activity. Can you file 2011 taxes now Ted's investment income from interest and dividends (other than qualified dividends) is $10,000. Can you file 2011 taxes now His investment expenses (other than interest) are $3,200 after taking into account the 2% limit on miscellaneous itemized deductions. Can you file 2011 taxes now His investment interest expense is $8,000. Can you file 2011 taxes now Ted also has income from the partnership of $2,000. Can you file 2011 taxes now Ted figures his net investment income and the limit on his investment interest expense deduction in the following way: Total investment income $10,000 Minus: Investment expenses (other than interest) 3,200 Net investment income $6,800 Deductible investment interest expense for the year $6,800 The $2,000 of income from the passive activity is not used in determining Ted's net investment income. Can you file 2011 taxes now His investment interest deduction for the year is limited to $6,800, the amount of his net investment income. Can you file 2011 taxes now Form 4952 Use Form 4952 to figure your deduction for investment interest. Can you file 2011 taxes now See Form 4952 for more information. Can you file 2011 taxes now Exception to use of Form 4952. Can you file 2011 taxes now   You do not have to complete Form 4952 or attach it to your return if you meet all of the following tests. Can you file 2011 taxes now Your investment interest expense is not more than your investment income from interest and ordinary dividends minus any qualified dividends. Can you file 2011 taxes now You do not have any other deductible investment expenses. Can you file 2011 taxes now You have no carryover of investment interest expense from 2012. Can you file 2011 taxes now   If you meet all of these tests, you can deduct all of your investment interest. Can you file 2011 taxes now    Bond Premium Amortization If you pay a premium to buy a bond, the premium is part of your basis in the bond. Can you file 2011 taxes now If the bond yields taxable interest, you can choose to amortize the premium. Can you file 2011 taxes now This generally means that each year, over the life of the bond, you use a part of the premium to reduce the amount of interest includible in your income. Can you file 2011 taxes now If you make this choice, you must reduce your basis in the bond by the amortization for the year. Can you file 2011 taxes now If the bond yields tax-exempt interest, you must amortize the premium. Can you file 2011 taxes now This amortized amount is not deductible in determining taxable income. Can you file 2011 taxes now However, each year you must reduce your basis in the bond (and tax-exempt interest otherwise reportable on Form 1040, line 8b) by the amortization for the year. Can you file 2011 taxes now Bond premium. Can you file 2011 taxes now   Bond premium is the amount by which your basis in the bond right after you get it is more than the total of all amounts payable on the bond after you get it (other than payments of qualified stated interest). Can you file 2011 taxes now For example, a bond with a maturity value of $1,000 generally would have a $50 premium if you buy it for $1,050. Can you file 2011 taxes now Special rules to determine amounts payable on a bond. Can you file 2011 taxes now   For special rules that apply to determine the amounts payable on a variable rate bond, an inflation-indexed debt instrument, a bond that provides for certain alternative payment schedules (for example, a bond callable prior to the stated maturity date of the bond), or a bond that provides for remote or incidental contingencies, see Regulations section 1. Can you file 2011 taxes now 171-3. Can you file 2011 taxes now Basis. Can you file 2011 taxes now   In general, your basis for figuring bond premium amortization is the same as your basis for figuring any loss on the sale of the bond. Can you file 2011 taxes now However, you may need to use a different basis for: Convertible bonds, Bonds you got in a trade, and Bonds whose basis has to be determined using the basis of the person who transferred the bond to you. Can you file 2011 taxes now See Regulations section 1. Can you file 2011 taxes now 171-1(e). Can you file 2011 taxes now Dealers. Can you file 2011 taxes now   A dealer in taxable bonds (or anyone who holds them mainly for sale to customers in the ordinary course of a trade or business or who would properly include bonds in inventory at the close of the tax year) cannot claim a deduction for amortizable bond premium. Can you file 2011 taxes now   See section 75 of the Internal Revenue Code for the treatment of bond premium by a dealer in tax-exempt bonds. Can you file 2011 taxes now How To Figure Amortization For bonds issued after September 27, 1985, you must amortize bond premium using a constant yield method on the basis of the bond's yield to maturity, determined by using the bond's basis and compounding at the close of each accrual period. Can you file 2011 taxes now Constant yield method. Can you file 2011 taxes now   Figure the bond premium amortization for each accrual period as follows. Can you file 2011 taxes now Step 1: Determine your yield. Can you file 2011 taxes now   Your yield is the discount rate that, when used in figuring the present value of all remaining payments to be made on the bond (including payments of qualified stated interest), produces an amount equal to your basis in the bond. Can you file 2011 taxes now Figure the yield as of the date you got the bond. Can you file 2011 taxes now It must be constant over the term of the bond and must be figured to at least two decimal places when expressed as a percentage. Can you file 2011 taxes now   If you do not know the yield, consult your broker or tax advisor. Can you file 2011 taxes now Databases available to them are likely to show the yield at the date of purchase. Can you file 2011 taxes now Step 2: Determine the accrual periods. Can you file 2011 taxes now   You can choose the accrual periods to use. Can you file 2011 taxes now They may be of any length and may vary in length over the term of the bond, but each accrual period can be no longer than 1 year and each scheduled payment of principal or interest must occur either on the first or the final day of an accrual period. Can you file 2011 taxes now The computation is simplest if accrual periods are the same as the intervals between interest payment dates. Can you file 2011 taxes now Step 3: Determine the bond premium for the accrual period. Can you file 2011 taxes now   To do this, multiply your adjusted acquisition price at the beginning of the accrual period by your yield. Can you file 2011 taxes now Then subtract the result from the qualified stated interest for the period. Can you file 2011 taxes now   Your adjusted acquisition price at the beginning of the first accrual period is the same as your basis. Can you file 2011 taxes now After that, it is your basis decreased by the amount of bond premium amortized for earlier periods and the amount of any payment previously made on the bond other than a payment of qualified stated interest. Can you file 2011 taxes now Example. Can you file 2011 taxes now On February 1, 2012, you bought a taxable bond for $110,000. Can you file 2011 taxes now The bond has a stated principal amount of $100,000, payable at maturity on February 1, 2019, making your premium $10,000 ($110,000 − $100,000). Can you file 2011 taxes now The bond pays qualified stated interest of $10,000 on February 1 of each year. Can you file 2011 taxes now Your yield is 8. Can you file 2011 taxes now 07439% compounded annually. Can you file 2011 taxes now You choose to use annual accrual periods ending on February 1 of each year. Can you file 2011 taxes now To find your bond premium amortization for the accrual period ending on February 1, 2013, you multiply the adjusted acquisition price at the beginning of the period ($110,000) by your yield. Can you file 2011 taxes now When you subtract the result ($8,881. Can you file 2011 taxes now 83) from the qualified stated interest for the period ($10,000), you find that your bond premium amortization for the period is $1,118. Can you file 2011 taxes now 17. Can you file 2011 taxes now Special rules to figure amortization. Can you file 2011 taxes now   For special rules to figure the bond premium amortization on a variable rate bond, an inflation-indexed debt instrument, a bond that provides for certain alternative payment schedules (for example, a bond callable prior to the stated maturity date of the bond), or a bond that provides for remote or incidental contingencies, see Regulations section 1. Can you file 2011 taxes now 171-3. Can you file 2011 taxes now Bonds Issued Before September 28, 1985 For these bonds, you can amortize bond premium using any reasonable method. Can you file 2011 taxes now Reasonable methods include: The straight-line method, and The Revenue Ruling 82-10 method. Can you file 2011 taxes now Straight-line method. Can you file 2011 taxes now   Under this method, the amount of your bond premium amortization is the same each month. Can you file 2011 taxes now Divide the number of months you held the bond during the year by the number of months from the beginning of the tax year (or, if later, the date of acquisition) to the date of maturity or earlier call date. Can you file 2011 taxes now Then multiply the result by the bond premium (reduced by any bond premium amortization claimed in earlier years). Can you file 2011 taxes now This gives you your bond premium amortization for the year. Can you file 2011 taxes now Revenue Ruling 82-10 method. Can you file 2011 taxes now   Under this method, the amount of your bond premium amortization increases each month over the life of the bond. Can you file 2011 taxes now This method is explained in Revenue Ruling 82-10, 1982-1 C. Can you file 2011 taxes now B. Can you file 2011 taxes now 46. Can you file 2011 taxes now Choosing To Amortize You choose to amortize the premium on taxable bonds by reporting the amortization for the year on your income tax return for the first tax year you want the choice to apply. Can you file 2011 taxes now You should attach a statement to your return that you are making this choice under section 171. Can you file 2011 taxes now See How To Report Amortization, next. Can you file 2011 taxes now This choice is binding for the year you make it and for later tax years. Can you file 2011 taxes now It applies to all taxable bonds you own in the year you make the choice and also to those you acquire in later years. Can you file 2011 taxes now You can change your decision to amortize bond premium only with the written approval of the IRS. Can you file 2011 taxes now To request approval, use Form 3115. Can you file 2011 taxes now For more information on requesting approval, see section 5 of the Appendix to Revenue Procedure 2011-14 in Internal Revenue Bulletin 2011-4. Can you file 2011 taxes now You can find Revenue Procedure 2011-14 at www. Can you file 2011 taxes now irs. Can you file 2011 taxes now gov/irb/2011-04_IRB/ar08. Can you file 2011 taxes now html. Can you file 2011 taxes now How To Report Amortization Subtract the bond premium amortization from your interest income from these bonds. Can you file 2011 taxes now Report the bond's interest on Schedule B (Form 1040A or 1040), line 1. Can you file 2011 taxes now Under your last entry on line 1, put a subtotal of all interest listed on line 1. Can you file 2011 taxes now Below this subtotal, print “ABP Adjustment,” and the total interest you received. Can you file 2011 taxes now Subtract this amount from the subtotal, and enter the result on line 2. Can you file 2011 taxes now Bond premium amortization more than interest. Can you file 2011 taxes now   If the amount of your bond premium amortization for an accrual period is more than the qualified stated interest for the period, you can deduct the difference as a miscellaneous itemized deduction on Schedule A (Form 1040), line 28. Can you file 2011 taxes now    But your deduction is limited to the amount by which your total interest inclusions on the bond in prior accrual periods is more than your total bond premium deductions on the bond in prior periods. Can you file 2011 taxes now Any amount you cannot deduct because of this limit can be carried forward to the next accrual period. Can you file 2011 taxes now Pre-1998 election to amortize bond premium. Can you file 2011 taxes now   Generally, if you first elected to amortize bond premium before 1998, the above treatment of the premium does not apply to bonds you acquired before 1988. Can you file 2011 taxes now Bonds acquired before October 23, 1986. Can you file 2011 taxes now   The amortization of the premium on these bonds is a miscellaneous itemized deduction not subject to the 2%-of-adjusted-gross-income limit. Can you file 2011 taxes now Bonds acquired after October 22, 1986, but before 1988. Can you file 2011 taxes now    The amortization of the premium on these bonds is investment interest expense subject to the investment interest limit, unless you choose to treat it as an offset to interest income on the bond. Can you file 2011 taxes now Expenses of Producing Income You deduct investment expenses (other than interest expenses) as miscellaneous itemized deductions on Schedule A (Form 1040). Can you file 2011 taxes now To be deductible, these expenses must be ordinary and necessary expenses paid or incurred: To produce or collect income, or To manage property held for producing income. Can you file 2011 taxes now The expenses must be directly related to the income or income-producing property, and the income must be taxable to you. Can you file 2011 taxes now The deduction for most income-producing expenses is subject to a 2% limit that also applies to certain other miscellaneous itemized deductions. Can you file 2011 taxes now The amount deductible is limited to the total of these miscellaneous deductions that is more than 2% of your adjusted gross income. Can you file 2011 taxes now For information on how to report expenses of producing income, see How To Report Investment Expenses , later. Can you file 2011 taxes now Attorney or accounting fees. Can you file 2011 taxes now   You can deduct attorney or accounting fees that are necessary to produce or collect taxable income. Can you file 2011 taxes now However, in some cases, attorney or accounting fees are part of the basis of property. Can you file 2011 taxes now See Basis of Investment Property in chapter 4. Can you file 2011 taxes now Automatic investment service and dividend reinvestment plans. Can you file 2011 taxes now   A bank may offer its checking account customers an automatic investment service so that, for a charge, each customer can choose to invest a part of the checking account each month in common stock. Can you file 2011 taxes now Or a bank that is a dividend disbursing agent for a number of publicly-owned corporations may set up an automatic dividend reinvestment service. Can you file 2011 taxes now Through that service, cash dividends are reinvested in more shares of stock after the bank deducts a service charge. Can you file 2011 taxes now   A corporation in which you own stock also may have a dividend reinvestment plan. Can you file 2011 taxes now This plan lets you choose to use your dividends to buy more shares of stock in the corporation instead of receiving the dividends in cash. Can you file 2011 taxes now   You can deduct the monthly service charge you pay to a bank to participate in an automatic investment service. Can you file 2011 taxes now If you participate in a dividend reinvestment plan, you can deduct any service charge subtracted from your cash dividends before the dividends are used to buy more shares of stock. Can you file 2011 taxes now Deduct the charges in the year you pay them. Can you file 2011 taxes now Clerical help and office rent. Can you file 2011 taxes now   You can deduct office expenses, such as rent and clerical help, you incurred in connection with your investments and collecting the taxable income on your investments. Can you file 2011 taxes now Cost of replacing missing securities. Can you file 2011 taxes now   To replace your taxable securities that are mislaid, lost, stolen, or destroyed, you may have to post an indemnity bond. Can you file 2011 taxes now You can deduct the premium you pay to buy the indemnity bond and the related incidental expenses. Can you file 2011 taxes now   You may, however, get a refund of part of the bond premium if the missing securities are recovered within a specified time. Can you file 2011 taxes now Under certain types of insurance policies, you can recover some of the expenses. Can you file 2011 taxes now   If you receive the refund in the tax year you pay the amounts, you can deduct only the difference between the expenses paid and the amount refunded. Can you file 2011 taxes now If the refund is made in a later tax year, you must include the refund in income in the year you received it, but only to the extent that the expenses decreased your tax in the year you deducted them. Can you file 2011 taxes now Fees to collect income. Can you file 2011 taxes now   You can deduct fees you pay to a broker, bank, trustee, or similar agent to collect investment income, such as your taxable bond or mortgage interest, or your dividends on shares of stock. Can you file 2011 taxes now Fees to buy or sell. Can you file 2011 taxes now   You cannot deduct a fee you pay to a broker to acquire investment property, such as stocks or bonds. Can you file 2011 taxes now You must add the fee to the cost of the property. Can you file 2011 taxes now See Basis of Investment Property in chapter 4. Can you file 2011 taxes now    You cannot deduct any broker's fees, commissions, or option premiums you pay (or that were netted out) in connection with the sale of investment property. Can you file 2011 taxes now They can be used only to figure gain or loss from the sale. Can you file 2011 taxes now See Reporting Capital Gains and Losses , in chapter 4, for more information about the treatment of these sale expenses. Can you file 2011 taxes now Investment counsel and advice. Can you file 2011 taxes now   You can deduct fees you pay for counsel and advice about investments that produce taxable income. Can you file 2011 taxes now This includes amounts you pay for investment advisory services. Can you file 2011 taxes now Safe deposit box rent. Can you file 2011 taxes now   You can deduct rent you pay for a safe deposit box if you use the box to store taxable income-producing stocks, bonds, or other investment-related papers and documents. Can you file 2011 taxes now If you also use the box to store tax-exempt securities or personal items, you can deduct only part of the rent. Can you file 2011 taxes now See Tax-exempt income under Nondeductible Expenses, later, to figure what part you can deduct. Can you file 2011 taxes now State and local transfer taxes. Can you file 2011 taxes now   You cannot deduct the state and local transfer taxes you pay when you buy or sell securities. Can you file 2011 taxes now If you pay these transfer taxes when you buy securities, you must treat them as part of the cost of the property. Can you file 2011 taxes now If you pay these transfer taxes when you sell securities, you must treat them as a reduction in the amount realized. Can you file 2011 taxes now Trustee's commissions for revocable trust. Can you file 2011 taxes now   If you set up a revocable trust and have its income distributed to you, you can deduct the commission you pay the trustee for managing the trust to the extent it is to produce or collect taxable income or to manage property. Can you file 2011 taxes now However, you cannot deduct any part of the commission used for producing or collecting tax-exempt income or for managing property that produces tax-exempt income. Can you file 2011 taxes now   If you are a cash-basis taxpayer and pay the commissions for several years in advance, you must deduct a part of the commission each year. Can you file 2011 taxes now You cannot deduct the entire amount in the year you pay it. Can you file 2011 taxes now Investment expenses from pass-through entities. Can you file 2011 taxes now   If you hold an interest in a partnership, S corporation, real estate mortgage investment conduit (REMIC), or a nonpublicly offered mutual fund, you can deduct your share of that entity's investment expenses. Can you file 2011 taxes now A partnership or S corporation will show your share of these expenses on your Schedule K-1 (Form 1065) or Schedule K-1 (Form 1120S). Can you file 2011 taxes now A nonpublicly offered mutual fund will indicate your share of these expenses in box 5 of Form 1099-DIV (or substitute statement). Can you file 2011 taxes now Publicly-offered mutual funds are discussed later. Can you file 2011 taxes now   If you hold an interest in a REMIC, any expenses relating to your residual interest investment will be shown on Schedule Q (Form 1066), line 3b. Can you file 2011 taxes now Any expenses relating to your regular interest investment will appear in box 5 of Form 1099-INT (or substitute statement) or box 9 of Form 1099-OID (or substitute statement). Can you file 2011 taxes now   Report your share of these investment expenses on Schedule A (Form 1040), subject to the 2% limit, in the same manner as your other investment expenses. Can you file 2011 taxes now Including mutual fund or REMIC expenses in income. Can you file 2011 taxes now   Your share of the investment expenses of a REMIC or a nonpublicly offered mutual fund, as described above, are considered to be indirect deductions through that pass-through entity. Can you file 2011 taxes now You must include in your gross income an amount equal to the expenses allocated to you, whether or not you are able to claim a deduction for those expenses. Can you file 2011 taxes now If you are a shareholder in a nonpublicly offered mutual fund, you must include on your return the full amount of ordinary dividends or other distributions of stock, as shown in box 1a of Form 1099-DIV (or substitute statement). Can you file 2011 taxes now If you are a residual interest holder in a REMIC, you must report as ordinary income on Schedule E (Form 1040) the total amounts shown on Schedule Q (Form 1066), lines 1b and 3b. Can you file 2011 taxes now If you are a REMIC regular interest holder, you must include the amount of any expense allocation you received on Form 1040, line 8a. Can you file 2011 taxes now Publicly-offered mutual funds. Can you file 2011 taxes now   Most mutual funds are publicly offered. Can you file 2011 taxes now These mutual funds, generally, are traded on an established securities exchange. Can you file 2011 taxes now These funds do not pass investment expenses through to you. Can you file 2011 taxes now Instead, the dividend income they report to you in box 1a of Form 1099-DIV (or substitute statement) is already reduced by your share of investment expenses. Can you file 2011 taxes now As a result, you cannot deduct the expenses on your return. Can you file 2011 taxes now   Include the amount from box 1a of Form 1099-DIV (or substitute statement) in your income. Can you file 2011 taxes now    A publicly offered mutual fund is one that: Is continuously offered pursuant to a public offering, Is regularly traded on an established securities market, and Is held by or for no fewer than 500 persons at any time during the year. Can you file 2011 taxes now Contact your mutual fund if you are not sure whether it is publicly offered. Can you file 2011 taxes now Nondeductible Expenses Some expenses that you incur as an investor are not deductible. Can you file 2011 taxes now Stockholders' meetings. Can you file 2011 taxes now   You cannot deduct transportation and other expenses you pay to attend stockholders' meetings of companies in which you have no interest other than owning stock. Can you file 2011 taxes now This is true even if your purpose in attending is to get information that would be useful in making further investments. Can you file 2011 taxes now Investment-related seminar. Can you file 2011 taxes now   You cannot deduct expenses for attending a convention, seminar, or similar meeting for investment purposes. Can you file 2011 taxes now Single-premium life insurance, endowment, and annuity contracts. Can you file 2011 taxes now   You cannot deduct interest on money you borrow to buy or carry a single-premium life insurance, endowment, or annuity contract. Can you file 2011 taxes now Used as collateral. Can you file 2011 taxes now   If you use a single premium annuity contract as collateral to obtain or continue a mortgage loan, you cannot deduct any interest on the loan that is collateralized by the annuity contract. Can you file 2011 taxes now Figure the amount of interest expense disallowed by multiplying the current interest rate on the mortgage loan by the lesser of the amount of the annuity contract used as collateral or the amount of the loan. Can you file 2011 taxes now Borrowing on insurance. Can you file 2011 taxes now   Generally, you cannot deduct interest on money you borrow to buy or carry a life insurance, endowment, or annuity contract if you plan to systematically borrow part or all of the increases in the cash value of the contract. Can you file 2011 taxes now This rule applies to the interest on the total amount borrowed to buy or carry the contract, not just the interest on the borrowed increases in the cash value. Can you file 2011 taxes now Tax-exempt income. Can you file 2011 taxes now   You cannot deduct expenses you incur to produce tax-exempt income. Can you file 2011 taxes now Nor can you deduct interest on money you borrow to buy tax-exempt securities or shares in a mutual fund or other regulated investment company that distributes only exempt-interest dividends. Can you file 2011 taxes now Short-sale expenses. Can you file 2011 taxes now   The rule disallowing a deduction for interest expenses on tax-exempt securities applies to amounts you pay in connection with personal property used in a short sale or amounts paid by others for the use of any collateral in connection with the short sale. Can you file 2011 taxes now However, it does not apply to the expenses you incur if you deposit cash as collateral for the property used in the short sale and the cash does not earn a material return during the period of the sale. Can you file 2011 taxes now Short sales are discussed in Short Sales in chapter 4. Can you file 2011 taxes now Expenses for both tax-exempt and taxable income. Can you file 2011 taxes now   You may have expenses that are for both tax-exempt and taxable income. Can you file 2011 taxes now If you cannot specifically identify what part of the expenses is for each type of income, you can divide the expenses, using reasonable proportions based on facts and circumstances. Can you file 2011 taxes now You must attach a statement to your return showing how you divided the expenses and stating that each deduction claimed is not based on tax-exempt income. Can you file 2011 taxes now   One accepted method for dividing expenses is to do it in the same proportion that each type of income is to the total income. Can you file 2011 taxes now If the expenses relate in part to capital gains and losses, include the gains, but not the losses, in figuring this proportion. Can you file 2011 taxes now To find the part of the expenses that is for the tax-exempt income, divide your tax-exempt income by the total income and multiply your expenses by the result. Can you file 2011 taxes now Example. Can you file 2011 taxes now You received $6,000 interest; $4,800 was tax-exempt and $1,200 was taxable. Can you file 2011 taxes now In earning this income, you had $500 of expenses. Can you file 2011 taxes now You cannot specifically identify the amount of each expense item that is for each income item, so you must divide your expenses. Can you file 2011 taxes now 80% ($4,800 tax-exempt interest divided by $6,000 total interest) of your expenses is for the tax-exempt income. Can you file 2011 taxes now You cannot deduct $400 (80% of $500) of the expenses. Can you file 2011 taxes now You can deduct $100 (the rest of the expenses) because they are for the taxable interest. Can you file 2011 taxes now State income taxes. Can you file 2011 taxes now   If you itemize your deductions, you can deduct, as taxes, state income taxes on interest income that is exempt from federal income tax. Can you file 2011 taxes now But you cannot deduct, as either taxes or investment expenses, state income taxes on other exempt income. Can you file 2011 taxes now Interest expense and carrying charges on straddles. Can you file 2011 taxes now   You cannot deduct interest and carrying charges allocable to personal property that is part of a straddle. Can you file 2011 taxes now The nondeductible interest and carrying charges are added to the basis of the straddle property. Can you file 2011 taxes now However, this treatment does not apply if: All the offsetting positions making up the straddle either consist of one or more qualified covered call options and the optioned stock, or consist of section 1256 contracts (and the straddle is not part of a larger straddle); or The straddle is a hedging transaction. Can you file 2011 taxes now  For information about straddles, including definitions of the terms used in this discussion, see Straddles in chapter 4. Can you file 2011 taxes now   Interest includes any amount you pay or incur in connection with personal property used in a short sale. Can you file 2011 taxes now However, you must first apply the rules discussed in Payments in lieu of dividends under Short Sales in chapter 4. Can you file 2011 taxes now   To determine the interest on market discount bonds and short-term obligations that are part of a straddle, you must first apply the rules discussed under Limit on interest deduction for market discount bonds and Limit on interest deduction for short-term obligations (both under Interest Expenses, earlier). Can you file 2011 taxes now Nondeductible amount. Can you file 2011 taxes now   Figure the nondeductible interest and carrying charges on straddle property as follows. Can you file 2011 taxes now Add: Interest on indebtedness incurred or continued to buy or carry the personal property, and All other amounts (including charges to insure, store, or transport the personal property) paid or incurred to carry the personal property. Can you file 2011 taxes now Subtract from the amount in (1): Interest (including OID) includible in gross income for the year on the personal property, Any income from the personal property treated as ordinary income on the disposition of short-term government obligations or as ordinary income under the market discount and short-term bond provisions — see Discount on Debt Instruments in chapter 1, The dividends includible in gross income for the year from the personal property, and Any payment on a loan of the personal property for use in a short sale that is includible in gross income. Can you file 2011 taxes now Basis adjustment. Can you file 2011 taxes now   Add the nondeductible amount to the basis of your straddle property. Can you file 2011 taxes now How To Report Investment Expenses To deduct your investment expenses, you must itemize deductions on Schedule A (Form 1040). Can you file 2011 taxes now Enter your deductible investment interest expense on Schedule A (Form1040), line 14. Can you file 2011 taxes now Include any deductible short sale expenses. Can you file 2011 taxes now (See Short Sales in chapter 4 for information on these expenses. Can you file 2011 taxes now ) Also attach a completed Form 4952 if you used that form to figure your investment interest expense. Can you file 2011 taxes now Enter the total amount of your other investment expenses (other than interest expenses) on Schedule A (Form 1040), line 23. Can you file 2011 taxes now List the type and amount of each expense on the dotted lines next to line 23. Can you file 2011 taxes now (If necessary, you can show the required information on an attached statement. Can you file 2011 taxes now ) For information on how to report amortizable bond premium, see Bond Premium Amortization , earlier in this chapter. Can you file 2011 taxes now When To Report Investment Expenses If you use the cash method to report income and expenses, you generally deduct your expenses, except for certain prepaid interest, in the year you pay them. Can you file 2011 taxes now If you use an accrual method, you generally deduct your expenses when you incur a liability for them, rather than when you pay them. Can you file 2011 taxes now Also see When To Deduct Investment Interest , earlier in this chapter. Can you file 2011 taxes now Unpaid expenses owed to related party. Can you file 2011 taxes now   If you use an accrual method, you cannot deduct interest and other expenses owed to a related cash-basis person until payment is made and the amount is includible in the gross income of that person. Can you file 2011 taxes now The relationship, for purposes of this rule, is determined as of the end of the tax year for which the interest or expense would otherwise be deductible. Can you file 2011 taxes now If a deduction is denied under this rule, this rule will continue to apply even if your relationship with the person ceases to exist before the amount is includible in the gross income of that person. Can you file 2011 taxes now   This rule generally applies to those relationships listed in chapter 4 under Related Party Transactions . Can you file 2011 taxes now It also applies to accruals by partnerships to partners, partners to partnerships, shareholders to S corporations, and S corporations to shareholders. Can you file 2011 taxes now   The postponement of deductions for unpaid expenses and interest under the related party rule does not apply to OID, regardless of when payment is made. Can you file 2011 taxes now This rule also does not apply to loans with below-market interest rates or to certain payments for the use of property and services when the lender or recipient has to include payments periodically in income, even if a payment has not been made. Can you file 2011 taxes now Prev  Up  Next   Home   More Online Publications