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

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

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

3. E-File for FREE

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

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

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

File 1040ez Online

2011 1040ez Tax FormIncome TaxHow Do You File 2011 TaxesIrs Ez FormFree File For State Income TaxAmend 1040ez Tax FormFile State Taxes Online Free 20132012 Ez Tax Form1040ez 2010 InstructionsIncome Tax 2012Amend 2012 Tax Return FreeMinimum Income To File TaxesWhich Tax Form 2012 Best Use 27000$ YearFile Taxes Online For Free1040ez Form Booklet1040ez Form Free FileFile Federal And State Income Tax For FreeAmended Tax Return FormsWww Myfreetaxes Com SpringfieldmoIrs Tax AmendmentFile A 1040ezEfile 2012 TaxesIrsFederal Tax PreparationFile State Tax Return OnlyAmended Tax Return Form 2012Free Online Tax PreparationFederal Income Tax Ez FormPrintiable State Tax FormDownload 1040ez Federal Tax FormSelf Employed Tax FilingEz Form 10401040 NrezH&r Block Military Tax1040 Tax Form For 2012Irs 1040ez FormFederal Tax Forms 2012How Do I File A 2012 Tax ReturnFree File State Income Tax1040ez Instructions

File 1040ez Online

File 1040ez online 8. File 1040ez online   Amortization Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: How To Deduct Amortization Starting a BusinessBusiness Start-Up Costs Costs of Organizing a Corporation Costs of Organizing a Partnership How To Amortize Getting a Lease Section 197 IntangiblesSection 197 Intangibles Defined Assets That Are Not Section 197 Intangibles Safe Harbor for Creative Property Costs Anti-Churning Rules Incorrect Amount of Amortization Deducted Disposition of Section 197 Intangibles Reforestation Costs Geological and Geophysical Costs Pollution Control FacilitiesNew identifiable treatment facility. File 1040ez online Research and Experimental Costs Optional Write-off of Certain Tax Preferences Introduction Amortization is a method of recovering (deducting) certain capital costs over a fixed period of time. File 1040ez online It is similar to the straight line method of depreciation. File 1040ez online The various amortizable costs covered in this chapter are included in the list below. File 1040ez online However, this chapter does not discuss amortization of bond premium. File 1040ez online For information on that topic, see chapter 3 of Publication 550, Investment Income and Expenses. File 1040ez online Topics - This chapter discusses: Deducting amortization Amortizing costs of starting a business Amortizing costs of getting a lease Amortizing costs of section 197 intangibles Amortizing reforestation costs Amortizing costs of geological and geophysical costs Amortizing costs of pollution control facilities Amortizing costs of research and experimentation Amortizing costs of certain tax preferences Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets 550 Investment Income and Expenses 946 How To Depreciate Property Form (and Instructions) 4562 Depreciation and Amortization 4626 Alternative Minimum Tax—Corporations 6251 Alternative Minimum Tax—Individuals See chapter 12 for information about getting publications and forms. File 1040ez online How To Deduct Amortization To deduct amortization that begins during the current tax year, complete Part VI of Form 4562 and attach it to your income tax return. File 1040ez online To report amortization from previous years, in addition to amortization that begins in the current year, list on Form 4562 each item separately. File 1040ez online For example, in 2012, you began to amortize a lease. File 1040ez online In 2013, you began to amortize a second lease. File 1040ez online Report amortization from the new lease on line 42 of your 2013 Form 4562. File 1040ez online Report amortization from the 2012 lease on line 43 of your 2013 Form 4562. File 1040ez online If you do not have any new amortizable expenses for the current year, you are not required to complete Form 4562 (unless you are claiming depreciation). File 1040ez online Report the current year's deduction for amortization that began in a prior year directly on the “Other deduction” or “Other expense line” of your return. File 1040ez online Starting a Business When you start a business, treat all eligible costs you incur before you begin operating the business as capital expenditures which are part of your basis in the business. File 1040ez online Generally, you recover costs for particular assets through depreciation deductions. File 1040ez online However, you generally cannot recover other costs until you sell the business or otherwise go out of business. File 1040ez online For a discussion on how to treat these costs, see If your attempt to go into business is unsuccessful under Capital Expenses in chapter 1. File 1040ez online For costs paid or incurred after September 8, 2008, you can deduct a limited amount of start-up and organizational costs. File 1040ez online The costs that are not deducted currently can be amortized ratably over a 180-month period. File 1040ez online The amortization period starts with the month you begin operating your active trade or business. File 1040ez online You are not required to attach a statement to make this election. File 1040ez online You can choose to forgo this election by affirmatively electing to capitalize your start-up costs on your income tax return filed by the due date (including extensions) for the tax year in which the active trade or business begins. File 1040ez online Once made, the election to either amortize or capitalize start-up costs is irrevocable and applies to all start-up costs that are related to your trade or business. File 1040ez online See Regulations sections 1. File 1040ez online 195-1, 1. File 1040ez online 248-1, and 1. File 1040ez online 709-1. File 1040ez online For costs paid or incurred after October 22, 2004, and before September 9, 2008, you can elect to deduct a limited amount of business start-up and organizational costs in the year your active trade or business begins. File 1040ez online Any costs not deducted can be amortized ratably over a 180-month period, beginning with the month you begin business. File 1040ez online If the election is made, you must attach any statement required by Regulations sections 1. File 1040ez online 195-1(b), 1. File 1040ez online 248-1(c), and 1. File 1040ez online 709-1(c), as in effect before September 9, 2008. File 1040ez online Note. File 1040ez online You can apply the provisions of Regulations sections 1. File 1040ez online 195-1, 1. File 1040ez online 248-1, and 1. File 1040ez online 709-1 to all business start-up and organizational costs paid or incurred after October 22, 2004, provided the period of limitations on assessment has not expired for the year of the election. File 1040ez online Otherwise, the provisions under Regulations sections 1. File 1040ez online 195-1(b), 1. File 1040ez online 248-1(c), and 1. File 1040ez online 709-1(c), as in effect before September 9, 2008, will apply. File 1040ez online For costs paid or incurred before October 23, 2004, you can elect to amortize business start-up and organization costs over an amortization period of 60 months or more. File 1040ez online See How To Make the Election , later. File 1040ez online The cost must qualify as one of the following. File 1040ez online A business start-up cost. File 1040ez online An organizational cost for a corporation. File 1040ez online An organizational cost for a partnership. File 1040ez online Business Start-Up Costs Start-up costs are amounts paid or incurred for: (a) creating an active trade or business; or (b) investigating the creation or acquisition of an active trade or business. File 1040ez online Start-up costs include amounts paid or incurred in connection with an existing activity engaged in for profit; and for the production of income in anticipation of the activity becoming an active trade or business. File 1040ez online Qualifying costs. File 1040ez online   A start-up cost is amortizable if it meets both of the following tests. File 1040ez online It is a cost you could deduct if you paid or incurred it to operate an existing active trade or business (in the same field as the one you entered into). File 1040ez online It is a cost you pay or incur before the day your active trade or business begins. File 1040ez online   Start-up costs include amounts paid for the following: An analysis or survey of potential markets, products, labor supply, transportation facilities, etc. File 1040ez online Advertisements for the opening of the business. File 1040ez online Salaries and wages for employees who are being trained and their instructors. File 1040ez online Travel and other necessary costs for securing prospective distributors, suppliers, or customers. File 1040ez online Salaries and fees for executives and consultants, or for similar professional services. File 1040ez online Nonqualifying costs. File 1040ez online   Start-up costs do not include deductible interest, taxes, or research and experimental costs. File 1040ez online See Research and Experimental Costs , later. File 1040ez online Purchasing an active trade or business. File 1040ez online   Amortizable start-up costs for purchasing an active trade or business include only investigative costs incurred in the course of a general search for or preliminary investigation of the business. File 1040ez online These are costs that help you decide whether to purchase a business. File 1040ez online Costs you incur in an attempt to purchase a specific business are capital expenses that you cannot amortize. File 1040ez online Example. File 1040ez online On June 1st, you hired an accounting firm and a law firm to assist you in the potential purchase of XYZ, Inc. File 1040ez online They researched XYZ's industry and analyzed the financial projections of XYZ, Inc. File 1040ez online In September, the law firm prepared and submitted a letter of intent to XYZ, Inc. File 1040ez online The letter stated that a binding commitment would result only after a purchase agreement was signed. File 1040ez online The law firm and accounting firm continued to provide services including a review of XYZ's books and records and the preparation of a purchase agreement. File 1040ez online On October 22nd, you signed a purchase agreement with XYZ, Inc. File 1040ez online All amounts paid or incurred to investigate the business before October 22nd are amortizable investigative costs. File 1040ez online Amounts paid on or after that date relate to the attempt to purchase the business and therefore must be capitalized. File 1040ez online Disposition of business. File 1040ez online   If you completely dispose of your business before the end of the amortization period, you can deduct any remaining deferred start-up costs. File 1040ez online However, you can deduct these deferred start-up costs only to the extent they qualify as a loss from a business. File 1040ez online Costs of Organizing a Corporation Amounts paid to organize a corporation are the direct costs of creating the corporation. File 1040ez online Qualifying costs. File 1040ez online   To qualify as an organizational cost, it must be: For the creation of the corporation, Chargeable to a capital account (see chapter 1), Amortized over the life of the corporation if the corporation had a fixed life, and Incurred before the end of the first tax year in which the corporation is in business. File 1040ez online   A corporation using the cash method of accounting can amortize organizational costs incurred within the first tax year, even if it does not pay them in that year. File 1040ez online   Examples of organizational costs include: The cost of temporary directors. File 1040ez online The cost of organizational meetings. File 1040ez online State incorporation fees. File 1040ez online The cost of legal services. File 1040ez online Nonqualifying costs. File 1040ez online   The following items are capital expenses that cannot be amortized: Costs for issuing and selling stock or securities, such as commissions, professional fees, and printing costs. File 1040ez online Costs associated with the transfer of assets to the corporation. File 1040ez online Costs of Organizing a Partnership The costs to organize a partnership are the direct costs of creating the partnership. File 1040ez online Qualifying costs. File 1040ez online   A partnership can amortize an organizational cost only if it meets all the following tests. File 1040ez online It is for the creation of the partnership and not for starting or operating the partnership trade or business. File 1040ez online It is chargeable to a capital account (see chapter 1). File 1040ez online It could be amortized over the life of the partnership if the partnership had a fixed life. File 1040ez online It is incurred by the due date of the partnership return (excluding extensions) for the first tax year in which the partnership is in business. File 1040ez online However, if the partnership uses the cash method of accounting and pays the cost after the end of its first tax year, see Cash method partnership under How To Amortize, later. File 1040ez online It is for a type of item normally expected to benefit the partnership throughout its entire life. File 1040ez online   Organizational costs include the following fees. File 1040ez online Legal fees for services incident to the organization of the partnership, such as negotiation and preparation of the partnership agreement. File 1040ez online Accounting fees for services incident to the organization of the partnership. File 1040ez online Filing fees. File 1040ez online Nonqualifying costs. File 1040ez online   The following costs cannot be amortized. File 1040ez online The cost of acquiring assets for the partnership or transferring assets to the partnership. File 1040ez online The cost of admitting or removing partners, other than at the time the partnership is first organized. File 1040ez online The cost of making a contract concerning the operation of the partnership trade or business including a contract between a partner and the partnership. File 1040ez online The costs for issuing and marketing interests in the partnership such as brokerage, registration, and legal fees and printing costs. File 1040ez online These “syndication fees” are capital expenses that cannot be depreciated or amortized. File 1040ez online Liquidation of partnership. File 1040ez online   If a partnership is liquidated before the end of the amortization period, the unamortized amount of qualifying organizational costs can be deducted in the partnership's final tax year. File 1040ez online However, these costs can be deducted only to the extent they qualify as a loss from a business. File 1040ez online How To Amortize Deduct start-up and organizational costs in equal amounts over the applicable amortization period (discussed earlier). File 1040ez online You can choose an amortization period for start-up costs that is different from the period you choose for organizational costs, as long as both are not less than the applicable amortization period. File 1040ez online Once you choose an amortization period, you cannot change it. File 1040ez online To figure your deduction, divide your total start-up or organizational costs by the months in the amortization period. File 1040ez online The result is the amount you can deduct for each month. File 1040ez online Cash method partnership. File 1040ez online   A partnership using the cash method of accounting can deduct an organizational cost only if it has been paid by the end of the tax year. File 1040ez online However, any cost the partnership could have deducted as an organizational cost in an earlier tax year (if it had been paid that year) can be deducted in the tax year of payment. File 1040ez online How To Make the Election To elect to amortize start-up or organizational costs, you must complete and attach Form 4562 to your return for the first tax year you are in business. File 1040ez online You may also be required to attach an accompanying statement (described later) to your return. File 1040ez online For start-up or organizational costs paid or incurred after September 8, 2008, an accompanying statement is not required. File 1040ez online Generally, for start-up or organizational costs paid or incurred before September 9, 2008, and after October 22, 2004, unless you choose to apply Regulations sections 1. File 1040ez online 195-1, 1. File 1040ez online 248-1, and 1. File 1040ez online 709-1, you must also attach an accompanying statement to elect to amortize the costs. File 1040ez online If you have both start-up and organizational costs, attach a separate statement (if required) to your return for each type of cost. File 1040ez online See Starting a Business , earlier, for more information. File 1040ez online Generally, you must file the return by the due date (including any extensions). File 1040ez online However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). File 1040ez online For more information, see the instructions for Part VI of Form 4562. File 1040ez online You can choose to forgo the election to amortize by affirmatively electing to capitalize your start-up or organizational costs on your income tax return filed by the due date (including extensions) for the tax year in which the active trade or business begins. File 1040ez online Note. File 1040ez online The election to either amortize or capitalize start-up or organizational costs is irrevocable and applies to all start-up and organizational costs that are related to the trade or business. File 1040ez online If your business is organized as a corporation or partnership, only the corporation or partnership can elect to amortize its start-up or organizational costs. File 1040ez online A shareholder or partner cannot make this election. File 1040ez online You, as a shareholder or partner, cannot amortize any costs you incur in setting up your corporation or partnership. File 1040ez online Only the corporation or partnership can amortize these costs. File 1040ez online However, you, as an individual, can elect to amortize costs you incur to investigate an interest in an existing partnership. File 1040ez online These costs qualify as business start-up costs if you acquire the partnership interest. File 1040ez online Start-up costs election statement. File 1040ez online   If you elect to amortize your start-up costs, attach a separate statement (if required) that contains the following information. File 1040ez online A description of the business to which the start-up costs relate. File 1040ez online A description of each start-up cost incurred. File 1040ez online The month your active business began (or was acquired). File 1040ez online The number of months in your amortization period (which is generally 180 months). File 1040ez online Filing the statement early. File 1040ez online   You can elect to amortize your start-up costs by filing the statement with a return for any tax year before the year your active business begins. File 1040ez online If you file the statement early, the election becomes effective in the month of the tax year your active business begins. File 1040ez online Revised statement. File 1040ez online   You can file a revised statement to include any start-up costs not included in your original statement. File 1040ez online However, you cannot include on the revised statement any cost you previously treated on your return as a cost other than a start-up cost. File 1040ez online You can file the revised statement with a return filed after the return on which you elected to amortize your start-up costs. File 1040ez online Organizational costs election statement. File 1040ez online   If you elect to amortize your corporation's or partnership's organizational costs, attach a separate statement (if required) that contains the following information. File 1040ez online A description of each cost. File 1040ez online The amount of each cost. File 1040ez online The date each cost was incurred. File 1040ez online The month your corporation or partnership began active business (or acquired the business). File 1040ez online The number of months in your amortization period (which is generally 180 months). File 1040ez online Partnerships. File 1040ez online   The statement prepared for a cash basis partnership must also indicate the amount paid before the end of the year for each cost. File 1040ez online   You do not need to separately list any partnership organizational cost that is less than $10. File 1040ez online Instead, you can list the total amount of these costs with the dates the first and last costs were incurred. File 1040ez online   After a partnership makes the election to amortize organizational costs, it can later file an amended return to include additional organizational costs not included in the partnership's original return and statement. File 1040ez online Getting a Lease If you get a lease for business property, you may recover the cost of acquiring the lease by amortizing it over the term of the lease. File 1040ez online The term of the lease for amortization purposes generally includes all renewal options (and any other period for which you and the lessor reasonably expect the lease to be renewed). File 1040ez online However, renewal periods are not included if 75% or more of the cost of acquiring the lease is for the term of the lease remaining on the acquisition date (not including any period for which you may choose to renew, extend, or continue the lease). File 1040ez online For more information on the costs of getting a lease, see Cost of Getting a Lease in  chapter 3. File 1040ez online How to amortize. File 1040ez online   Enter your deduction in Part VI of Form 4562 if you are deducting amortization that begins during the current year, or on the appropriate line of your tax return if you are not otherwise required to file Form 4562. File 1040ez online Section 197 Intangibles Generally, you may amortize the capitalized costs of “section 197 intangibles” (defined later) ratably over a 15-year period. File 1040ez online You must amortize these costs if you hold the section 197 intangibles in connection with your trade or business or in an activity engaged in for the production of income. File 1040ez online You may not be able to amortize section 197 intangibles acquired in a transaction that did not result in a significant change in ownership or use. File 1040ez online See Anti-Churning Rules, later. File 1040ez online Your amortization deduction each year is the applicable part of the intangible's adjusted basis (for purposes of determining gain), figured by amortizing it ratably over 15 years (180 months). File 1040ez online The 15-year period begins with the later of: The month the intangible is acquired, or The month the trade or business or activity engaged in for the production of income begins. File 1040ez online You cannot deduct amortization for the month you dispose of the intangible. File 1040ez online If you pay or incur an amount that increases the basis of an amortizable section 197 intangible after the 15-year period begins, amortize it over the remainder of the 15-year period beginning with the month the basis increase occurs. File 1040ez online You are not allowed any other depreciation or amortization deduction for an amortizable section 197 intangible. File 1040ez online Tax-exempt use property subject to a lease. File 1040ez online   The amortization period for any section 197 intangible leased under a lease agreement entered into after March 12, 2004, to a tax-exempt organization, governmental unit, or foreign person or entity (other than a partnership), shall not be less than 125 percent of the lease term. File 1040ez online Cost attributable to other property. File 1040ez online   The rules for section 197 intangibles do not apply to any amount that is included in determining the cost of property that is not a section 197 intangible. File 1040ez online For example, if the cost of computer software is not separately stated from the cost of hardware or other tangible property and you consistently treat it as part of the cost of the hardware or other tangible property, these rules do not apply. File 1040ez online Similarly, none of the cost of acquiring real property held for the production of rental income is considered the cost of goodwill, going concern value, or any other section 197 intangible. File 1040ez online Section 197 Intangibles Defined The following assets are section 197 intangibles and must be amortized over 180 months: Goodwill; Going concern value; Workforce in place; Business books and records, operating systems, or any other information base, including lists or other information concerning current or prospective customers; A patent, copyright, formula, process, design, pattern, know-how, format, or similar item; A customer-based intangible; A supplier-based intangible; Any item similar to items (3) through (7); A license, permit, or other right granted by a governmental unit or agency (including issuances and renewals); A covenant not to compete entered into in connection with the acquisition of an interest in a trade or business; Any franchise, trademark, or trade name; and A contract for the use of, or a term interest in, any item in this list. File 1040ez online You cannot amortize any of the intangibles listed in items (1) through (8) that you created rather than acquired unless you created them in acquiring assets that make up a trade or business or a substantial part of a trade or business. File 1040ez online Goodwill. File 1040ez online   This is the value of a trade or business based on expected continued customer patronage due to its name, reputation, or any other factor. File 1040ez online Going concern value. File 1040ez online   This is the additional value of a trade or business that attaches to property because the property is an integral part of an ongoing business activity. File 1040ez online It includes value based on the ability of a business to continue to function and generate income even though there is a change in ownership (but does not include any other section 197 intangible). File 1040ez online It also includes value based on the immediate use or availability of an acquired trade or business, such as the use of earnings during any period in which the business would not otherwise be available or operational. File 1040ez online Workforce in place, etc. File 1040ez online   This includes the composition of a workforce (for example, its experience, education, or training). File 1040ez online It also includes the terms and conditions of employment, whether contractual or otherwise, and any other value placed on employees or any of their attributes. File 1040ez online   For example, you must amortize the part of the purchase price of a business that is for the existence of a highly skilled workforce. File 1040ez online Also, you must amortize the cost of acquiring an existing employment contract or relationship with employees or consultants. File 1040ez online Business books and records, etc. File 1040ez online   This includes the intangible value of technical manuals, training manuals or programs, data files, and accounting or inventory control systems. File 1040ez online It also includes the cost of customer lists, subscription lists, insurance expirations, patient or client files, and lists of newspaper, magazine, radio, and television advertisers. File 1040ez online Patents, copyrights, etc. File 1040ez online   This includes package design, computer software, and any interest in a film, sound recording, videotape, book, or other similar property, except as discussed later under Assets That Are Not Section 197 Intangibles . File 1040ez online Customer-based intangible. File 1040ez online   This is the composition of market, market share, and any other value resulting from the future provision of goods or services because of relationships with customers in the ordinary course of business. File 1040ez online For example, you must amortize the part of the purchase price of a business that is for the existence of the following intangibles. File 1040ez online A customer base. File 1040ez online A circulation base. File 1040ez online An undeveloped market or market growth. File 1040ez online Insurance in force. File 1040ez online A mortgage servicing contract. File 1040ez online An investment management contract. File 1040ez online Any other relationship with customers involving the future provision of goods or services. File 1040ez online   Accounts receivable or other similar rights to income for goods or services provided to customers before the acquisition of a trade or business are not section 197 intangibles. File 1040ez online Supplier-based intangible. File 1040ez online   A supplier-based intangible is the value resulting from the future acquisitions, (through contract or other relationships with suppliers in the ordinary course of business) of goods or services that you will sell or use. File 1040ez online The amount you pay or incur for supplier-based intangibles includes, for example, any portion of the purchase price of an acquired trade or business that is attributable to the existence of a favorable relationship with persons providing distribution services (such as a favorable shelf or display space or a retail outlet), or the existence of favorable supply contracts. File 1040ez online Do not include any amount required to be paid for the goods or services to honor the terms of the agreement or other relationship. File 1040ez online Also, see Assets That Are Not Section 197 Intangibles below. File 1040ez online Government-granted license, permit, etc. File 1040ez online   This is any right granted by a governmental unit or an agency or instrumentality of a governmental unit. File 1040ez online For example, you must amortize the capitalized costs of acquiring (including issuing or renewing) a liquor license, a taxicab medallion or license, or a television or radio broadcasting license. File 1040ez online Covenant not to compete. File 1040ez online   Section 197 intangibles include a covenant not to compete (or similar arrangement) entered into in connection with the acquisition of an interest in a trade or business, or a substantial portion of a trade or business. File 1040ez online An interest in a trade or business includes an interest in a partnership or a corporation engaged in a trade or business. File 1040ez online   An arrangement that requires the former owner to perform services (or to provide property or the use of property) is not similar to a covenant not to compete to the extent the amount paid under the arrangement represents reasonable compensation for those services or for that property or its use. File 1040ez online Franchise, trademark, or trade name. File 1040ez online   A franchise, trademark, or trade name is a section 197 intangible. File 1040ez online You must amortize its purchase or renewal costs, other than certain contingent payments that you can deduct currently. File 1040ez online For information on currently deductible contingent payments, see chapter 11. File 1040ez online Professional sports franchise. File 1040ez online   A franchise engaged in professional sports and any intangible assets acquired in connection with acquiring the franchise (including player contracts) is a section 197 intangible amortizable over a 15-year period. File 1040ez online Contract for the use of, or a term interest in, a section 197 intangible. File 1040ez online   Section 197 intangibles include any right under a license, contract, or other arrangement providing for the use of any section 197 intangible. File 1040ez online It also includes any term interest in any section 197 intangible, whether the interest is outright or in trust. File 1040ez online Assets That Are Not Section 197 Intangibles The following assets are not section 197 intangibles. File 1040ez online Any interest in a corporation, partnership, trust, or estate. File 1040ez online Any interest under an existing futures contract, foreign currency contract, notional principal contract, interest rate swap, or similar financial contract. File 1040ez online Any interest in land. File 1040ez online Most computer software. File 1040ez online (See Computer software , later. File 1040ez online ) Any of the following assets not acquired in connection with the acquisition of a trade or business or a substantial part of a trade or business. File 1040ez online An interest in a film, sound recording, video tape, book, or similar property. File 1040ez online A right to receive tangible property or services under a contract or from a governmental agency. File 1040ez online An interest in a patent or copyright. File 1040ez online Certain rights that have a fixed duration or amount. File 1040ez online (See Rights of fixed duration or amount , later. File 1040ez online ) An interest under either of the following. File 1040ez online An existing lease or sublease of tangible property. File 1040ez online A debt that was in existence when the interest was acquired. File 1040ez online A right to service residential mortgages unless the right is acquired in connection with the acquisition of a trade or business or a substantial part of a trade or business. File 1040ez online Certain transaction costs incurred by parties to a corporate organization or reorganization in which any part of a gain or loss is not recognized. File 1040ez online Intangible property that is not amortizable under the rules for section 197 intangibles can be depreciated if it meets certain requirements. File 1040ez online You generally must use the straight line method over its useful life. File 1040ez online For certain intangibles, the depreciation period is specified in the law and regulations. File 1040ez online For example, the depreciation period for computer software that is not a section 197 intangible is generally 36 months. File 1040ez online For more information on depreciating intangible property, see Intangible Property under What Method Can You Use To Depreciate Your Property? in chapter 1 of Publication 946. File 1040ez online Computer software. File 1040ez online   Section 197 intangibles do not include the following types of computer software. File 1040ez online Software that meets all the following requirements. File 1040ez online It is, or has been, readily available for purchase by the general public. File 1040ez online It is subject to a nonexclusive license. File 1040ez online It has not been substantially modified. File 1040ez online This requirement is considered met if the cost of all modifications is not more than the greater of 25% of the price of the publicly available unmodified software or $2,000. File 1040ez online Software that is not acquired in connection with the acquisition of a trade or business or a substantial part of a trade or business. File 1040ez online Computer software defined. File 1040ez online   Computer software includes all programs designed to cause a computer to perform a desired function. File 1040ez online It also includes any database or similar item that is in the public domain and is incidental to the operation of qualifying software. File 1040ez online Rights of fixed duration or amount. File 1040ez online   Section 197 intangibles do not include any right under a contract or from a governmental agency if the right is acquired in the ordinary course of a trade or business (or in an activity engaged in for the production of income) but not as part of a purchase of a trade or business and either: Has a fixed life of less than 15 years, or Is of a fixed amount that, except for the rules for section 197 intangibles, would be recovered under a method similar to the unit-of-production method of cost recovery. File 1040ez online However, this does not apply to the following intangibles. File 1040ez online Goodwill. File 1040ez online Going concern value. File 1040ez online A covenant not to compete. File 1040ez online A franchise, trademark, or trade name. File 1040ez online A customer-related information base, customer-based intangible, or similar item. File 1040ez online Safe Harbor for Creative Property Costs If you are engaged in the trade or business of film production, you may be able to amortize the creative property costs for properties not set for production within 3 years of the first capitalized transaction. File 1040ez online You may amortize these costs ratably over a 15-year period beginning on the first day of the second half of the tax year in which you properly write off the costs for financial accounting purposes. File 1040ez online If, during the 15-year period, you dispose of the creative property rights, you must continue to amortize the costs over the remainder of the 15-year period. File 1040ez online Creative property costs include costs paid or incurred to acquire and develop screenplays, scripts, story outlines, motion picture production rights to books and plays, and other similar properties for purposes of potential future film development, production, and exploitation. File 1040ez online Amortize these costs using the rules of Revenue Procedure 2004-36. File 1040ez online For more information, see Revenue Procedure 2004-36, 2004-24 I. File 1040ez online R. File 1040ez online B. File 1040ez online 1063, available at  www. File 1040ez online irs. File 1040ez online gov/irb/2004-24_IRB/ar16. File 1040ez online html. File 1040ez online A change in the treatment of creative property costs is a change in method of accounting. File 1040ez online Anti-Churning Rules Anti-churning rules prevent you from amortizing most section 197 intangibles if the transaction in which you acquired them did not result in a significant change in ownership or use. File 1040ez online These rules apply to goodwill and going concern value, and to any other section 197 intangible that is not otherwise depreciable or amortizable. File 1040ez online Under the anti-churning rules, you cannot use 15-year amortization for the intangible if any of the following conditions apply. File 1040ez online You or a related person (defined later) held or used the intangible at any time from July 25, 1991, through August 10, 1993. File 1040ez online You acquired the intangible from a person who held it at any time during the period in (1) and, as part of the transaction, the user did not change. File 1040ez online You granted the right to use the intangible to a person (or a person related to that person) who held or used it at any time during the period in (1). File 1040ez online This applies only if the transaction in which you granted the right and the transaction in which you acquired the intangible are part of a series of related transactions. File 1040ez online See Related person , later, for more information. File 1040ez online Exceptions. File 1040ez online   The anti-churning rules do not apply in the following situations. File 1040ez online You acquired the intangible from a decedent and its basis was stepped up to its fair market value. File 1040ez online The intangible was amortizable as a section 197 intangible by the seller or transferor you acquired it from. File 1040ez online This exception does not apply if the transaction in which you acquired the intangible and the transaction in which the seller or transferor acquired it are part of a series of related transactions. File 1040ez online The gain-recognition exception, discussed later, applies. File 1040ez online Related person. File 1040ez online   For purposes of the anti-churning rules, the following are related persons. File 1040ez online An individual and his or her brothers, sisters, half-brothers, half-sisters, spouse, ancestors (parents, grandparents, etc. File 1040ez online ), and lineal descendants (children, grandchildren, etc. File 1040ez online ). File 1040ez online A corporation and an individual who owns, directly or indirectly, more than 20% of the value of the corporation's outstanding stock. File 1040ez online Two corporations that are members of the same controlled group as defined in section 1563(a) of the Internal Revenue Code, except that “more than 20%” is substituted for “at least 80%” in that definition and the determination is made without regard to subsections (a)(4) and (e)(3)(C) of section 1563. File 1040ez online (For an exception, see section 1. File 1040ez online 197-2(h)(6)(iv) of the regulations. File 1040ez online ) A trust fiduciary and a corporation if more than 20% of the value of the corporation's outstanding stock is owned, directly or indirectly, by or for the trust or grantor of the trust. File 1040ez online The grantor and fiduciary, and the fiduciary and beneficiary, of any trust. File 1040ez online The fiduciaries of two different trusts, and the fiduciaries and beneficiaries of two different trusts, if the same person is the grantor of both trusts. File 1040ez online The executor and beneficiary of an estate. File 1040ez online A tax-exempt educational or charitable organization and a person who directly or indirectly controls the organization (or whose family members control it). File 1040ez online A corporation and a partnership if the same persons own more than 20% of the value of the outstanding stock of the corporation and more than 20% of the capital or profits interest in the partnership. File 1040ez online Two S corporations, and an S corporation and a regular corporation, if the same persons own more than 20% of the value of the outstanding stock of each corporation. File 1040ez online Two partnerships if the same persons own, directly or indirectly, more than 20% of the capital or profits interests in both partnerships. File 1040ez online A partnership and a person who owns, directly or indirectly, more than 20% of the capital or profits interests in the partnership. File 1040ez online Two persons who are engaged in trades or businesses under common control (as described in section 41(f)(1) of the Internal Revenue Code). File 1040ez online When to determine relationship. File 1040ez online   Persons are treated as related if the relationship existed at the following time. File 1040ez online In the case of a single transaction, immediately before or immediately after the transaction in which the intangible was acquired. File 1040ez online In the case of a series of related transactions (or a series of transactions that comprise a qualified stock purchase under section 338(d)(3) of the Internal Revenue Code), immediately before the earliest transaction or immediately after the last transaction. File 1040ez online Ownership of stock. File 1040ez online   In determining whether an individual directly or indirectly owns any of the outstanding stock of a corporation, the following rules apply. File 1040ez online Rule 1. File 1040ez online   Stock directly or indirectly owned by or for a corporation, partnership, estate, or trust is considered owned proportionately by or for its shareholders, partners, or beneficiaries. File 1040ez online Rule 2. File 1040ez online   An individual is considered to own the stock directly or indirectly owned by or for his or her family. File 1040ez online Family includes only brothers and sisters, half-brothers and half-sisters, spouse, ancestors, and lineal descendants. File 1040ez online Rule 3. File 1040ez online   An individual owning (other than by applying Rule 2) any stock in a corporation is considered to own the stock directly or indirectly owned by or for his or her partner. File 1040ez online Rule 4. File 1040ez online   For purposes of applying Rule 1, 2, or 3, treat stock constructively owned by a person under Rule 1 as actually owned by that person. File 1040ez online Do not treat stock constructively owned by an individual under Rule 2 or 3 as owned by the individual for reapplying Rule 2 or 3 to make another person the constructive owner of the stock. File 1040ez online Gain-recognition exception. File 1040ez online   This exception to the anti-churning rules applies if the person you acquired the intangible from (the transferor) meets both of the following requirements. File 1040ez online That person would not be related to you (as described under Related person , earlier) if the 20% test for ownership of stock and partnership interests were replaced by a 50% test. File 1040ez online That person chose to recognize gain on the disposition of the intangible and pay income tax on the gain at the highest tax rate. File 1040ez online See chapter 2 in Publication 544 for information on making this choice. File 1040ez online   If this exception applies, the anti-churning rules apply only to the amount of your adjusted basis in the intangible that is more than the gain recognized by the transferor. File 1040ez online Notification. File 1040ez online   If the person you acquired the intangible from chooses to recognize gain under the rules for this exception, that person must notify you in writing by the due date of the return on which the choice is made. File 1040ez online Anti-abuse rule. File 1040ez online   You cannot amortize any section 197 intangible acquired in a transaction for which the principal purpose was either of the following. File 1040ez online To avoid the requirement that the intangible be acquired after August 10, 1993. File 1040ez online To avoid any of the anti-churning rules. File 1040ez online More information. File 1040ez online   For more information about the anti-churning rules, including additional rules for partnerships, see Regulations section 1. File 1040ez online 197-2(h). File 1040ez online Incorrect Amount of Amortization Deducted If you later discover that you deducted an incorrect amount for amortization for a section 197 intangible in any year, you may be able to make a correction for that year by filing an amended return. File 1040ez online See Amended Return , next. File 1040ez online If you are not allowed to make the correction on an amended return, you can change your accounting method to claim the correct amortization. File 1040ez online See Changing Your Accounting Method , later. File 1040ez online Amended Return If you deducted an incorrect amount for amortization, you can file an amended return to correct the following. File 1040ez online A mathematical error made in any year. File 1040ez online A posting error made in any year. File 1040ez online An amortization deduction for a section 197 intangible for which you have not adopted a method of accounting. File 1040ez online When to file. File 1040ez online   If an amended return is allowed, you must file it by the later of the following dates. File 1040ez online 3 years from the date you filed your original return for the year in which you did not deduct the correct amount. File 1040ez online (A return filed early is considered filed on the due date. File 1040ez online ) 2 years from the time you paid your tax for that year. File 1040ez online Changing Your Accounting Method Generally, you must get IRS approval to change your method of accounting. File 1040ez online File Form 3115, Application for Change in Accounting Method, to request a change to a permissible method of accounting for amortization. File 1040ez online The following are examples of a change in method of accounting for amortization. File 1040ez online A change in the amortization method, period of recovery, or convention of an amortizable asset. File 1040ez online A change in the accounting for amortizable assets from a single asset account to a multiple asset account (pooling), or vice versa. File 1040ez online A change in the accounting for amortizable assets from one type of multiple asset account to a different type of multiple asset account. File 1040ez online Changes in amortization that are not a change in method of accounting include the following: A change in computing amortization in the tax year in which your use of the asset changes. File 1040ez online An adjustment in the useful life of an amortizable asset. File 1040ez online Generally, the making of a late amortization election or the revocation of a timely valid amortization election. File 1040ez online Any change in the placed-in-service date of an amortizable asset. File 1040ez online See Regulations section 1. File 1040ez online 446-1(e)(2)(ii)(a) for more information and examples. File 1040ez online Automatic approval. File 1040ez online   In some instances, you may be able to get automatic approval from the IRS to change your method of accounting for amortization. File 1040ez online For a list of automatic accounting method changes, see the Instructions for Form 3115. File 1040ez online Also see the Instructions for Form 3115 for more information on getting approval, automatic approval procedures, and a list of exceptions to the automatic approval process. File 1040ez online For more information, see Revenue Procedure 2006-12, as modified by Revenue Procedure 2006-37, and Revenue Procedure 2008-52, as amplified, clarified, and modified by Revenue Procedure 2009-39, as clarified and modified by Revenue Procedure 2011-14, as modified and amplified by Revenue Procedure 2011-22, as modified by Revenue Procedure 2012-39, or any successor. File 1040ez online See Revenue Procedure 2006-12, 2006-3 I. File 1040ez online R. File 1040ez online B. File 1040ez online 310, available at  www. File 1040ez online irs. File 1040ez online gov/irb/2006-03_IRB/ar14. File 1040ez online html. File 1040ez online  See Revenue Procedure 2006-37, 2006-38 I. File 1040ez online R. File 1040ez online B. File 1040ez online 499, available at  www. File 1040ez online irs. File 1040ez online gov/irb/2006-38_IRB/ar10. File 1040ez online html. File 1040ez online  See Revenue Procedure 2008-52, 2008-36 I. File 1040ez online R. File 1040ez online B. File 1040ez online 587, available at www. File 1040ez online irs. File 1040ez online gov/irb/2008-36_IRB/ar09. File 1040ez online html. File 1040ez online  See Revenue Procedure 2009-39, 2009-38 I. File 1040ez online R. File 1040ez online B. File 1040ez online 371, available at  www. File 1040ez online irs. File 1040ez online gov/irb/2009-38_IRB/ar08. File 1040ez online html. File 1040ez online  See Revenue Procedure 2011-14, 2011-4 I. File 1040ez online R. File 1040ez online B. File 1040ez online 330, available at  www. File 1040ez online irs. File 1040ez online gov/irb/2011-04_IRB/ar08. File 1040ez online html. File 1040ez online  See Revenue Procedure 2011-22, 2011-18 I. File 1040ez online R. File 1040ez online B. File 1040ez online 737, available at  www. File 1040ez online irs. File 1040ez online gov/irb/2011-18_IRB/ar08. File 1040ez online html. File 1040ez online Also, see Revenue Procedure 2012-39, 2012-41 I. File 1040ez online R. File 1040ez online B. File 1040ez online 470 available at www. File 1040ez online irs. File 1040ez online gov/irb/2012-41_IRB/index. File 1040ez online html. File 1040ez online Disposition of Section 197 Intangibles A section 197 intangible is treated as depreciable property used in your trade or business. File 1040ez online If you held the intangible for more than 1 year, any gain on its disposition, up to the amount of allowable amortization, is ordinary income (section 1245 gain). File 1040ez online If multiple section 197 intangibles are disposed of in a single transaction or a series of related transactions, treat all of the section 197 intangibles as if they were a single asset for purposes of determining the amount of gain that is ordinary income. File 1040ez online Any remaining gain, or any loss, is a section 1231 gain or loss. File 1040ez online If you held the intangible 1 year or less, any gain or loss on its disposition is an ordinary gain or loss. File 1040ez online For more information on ordinary or capital gain or loss on business property, see chapter 3 in Publication 544. File 1040ez online Nondeductible loss. File 1040ez online   You cannot deduct any loss on the disposition or worthlessness of a section 197 intangible that you acquired in the same transaction (or series of related transactions) as other section 197 intangibles you still have. File 1040ez online Instead, increase the adjusted basis of each remaining amortizable section 197 intangible by a proportionate part of the nondeductible loss. File 1040ez online Figure the increase by multiplying the nondeductible loss on the disposition of the intangible by the following fraction. File 1040ez online The numerator is the adjusted basis of each remaining intangible on the date of the disposition. File 1040ez online The denominator is the total adjusted bases of all remaining amortizable section 197 intangibles on the date of the disposition. File 1040ez online Covenant not to compete. File 1040ez online   A covenant not to compete, or similar arrangement, is not considered disposed of or worthless before you dispose of your entire interest in the trade or business for which you entered into the covenant. File 1040ez online Nonrecognition transfers. File 1040ez online   If you acquire a section 197 intangible in a nonrecognition transfer, you are treated as the transferor with respect to the part of your adjusted basis in the intangible that is not more than the transferor's adjusted basis. File 1040ez online You amortize this part of the adjusted basis over the intangible's remaining amortization period in the hands of the transferor. File 1040ez online Nonrecognition transfers include transfers to a corporation, partnership contributions and distributions, like-kind exchanges, and involuntary conversions. File 1040ez online   In a like-kind exchange or involuntary conversion of a section 197 intangible, you must continue to amortize the part of your adjusted basis in the acquired intangible that is not more than your adjusted basis in the exchanged or converted intangible over the remaining amortization period of the exchanged or converted intangible. File 1040ez online Amortize over a new 15-year period the part of your adjusted basis in the acquired intangible that is more than your adjusted basis in the exchanged or converted intangible. File 1040ez online Example. File 1040ez online You own a section 197 intangible you have amortized for 4 full years. File 1040ez online It has a remaining unamortized basis of $30,000. File 1040ez online You exchange the asset plus $10,000 for a like-kind section 197 intangible. File 1040ez online The nonrecognition provisions of like-kind exchanges apply. File 1040ez online You amortize $30,000 of the $40,000 adjusted basis of the acquired intangible over the 11 years remaining in the original 15-year amortization period for the transferred asset. File 1040ez online You amortize the other $10,000 of adjusted basis over a new 15-year period. File 1040ez online For more information, see Regulations section 1. File 1040ez online 197-2(g). File 1040ez online Reforestation Costs You can elect to deduct a limited amount of reforestation costs paid or incurred during the tax year. File 1040ez online See Reforestation Costs in chapter 7. File 1040ez online You can elect to amortize the qualifying costs that are not deducted currently over an 84-month period. File 1040ez online There is no limit on the amount of your amortization deduction for reforestation costs paid or incurred during the tax year. File 1040ez online The election to amortize reforestation costs incurred by a partnership, S corporation, or estate must be made by the partnership, corporation, or estate. File 1040ez online A partner, shareholder, or beneficiary cannot make that election. File 1040ez online A partner's or shareholder's share of amortizable costs is figured under the general rules for allocating items of income, loss, deduction, etc. File 1040ez online , of a partnership or S corporation. File 1040ez online The amortizable costs of an estate are divided between the estate and the income beneficiary based on the income of the estate allocable to each. File 1040ez online Qualifying costs. File 1040ez online   Reforestation costs are the direct costs of planting or seeding for forestation or reforestation. File 1040ez online Qualifying costs include only those costs you must capitalize and include in the adjusted basis of the property. File 1040ez online They include costs for the following items. File 1040ez online Site preparation. File 1040ez online Seeds or seedlings. File 1040ez online Labor. File 1040ez online Tools. File 1040ez online Depreciation on equipment used in planting and seeding. File 1040ez online Qualifying costs do not include costs for which the government reimburses you under a cost-sharing program, unless you include the reimbursement in your income. File 1040ez online Qualified timber property. File 1040ez online   Qualified timber property is property that contains trees in significant commercial quantities. File 1040ez online It can be a woodlot or other site that you own or lease. File 1040ez online The property qualifies only if it meets all of the following requirements. File 1040ez online It is located in the United States. File 1040ez online It is held for the growing and cutting of timber you will either use in, or sell for use in, the commercial production of timber products. File 1040ez online It consists of at least one acre planted with tree seedlings in the manner normally used in forestation or reforestation. File 1040ez online Qualified timber property does not include property on which you have planted shelter belts or ornamental trees, such as Christmas trees. File 1040ez online Amortization period. File 1040ez online   The 84-month amortization period starts on the first day of the first month of the second half of the tax year you incur the costs (July 1 for a calendar year taxpayer), regardless of the month you actually incur the costs. File 1040ez online You can claim amortization deductions for no more than 6 months of the first and last (eighth) tax years of the period. File 1040ez online Life tenant and remainderman. File 1040ez online   If one person holds the property for life with the remainder going to another person, the life tenant is entitled to the full amortization for qualifying reforestation costs incurred by the life tenant. File 1040ez online Any remainder interest in the property is ignored for amortization purposes. File 1040ez online Recapture. File 1040ez online   If you dispose of qualified timber property within 10 years after the tax year you incur qualifying reforestation expenses, report any gain as ordinary income up to the amortization you took. File 1040ez online See chapter 3 of Publication 544 for more information. File 1040ez online How to make the election. File 1040ez online   To elect to amortize qualifying reforestation costs, complete Part VI of Form 4562 and attach a statement that contains the following information. File 1040ez online A description of the costs and the dates you incurred them. File 1040ez online A description of the type of timber being grown and the purpose for which it is grown. File 1040ez online Attach a separate statement for each property for which you amortize reforestation costs. File 1040ez online   Generally, you must make the election on a timely filed return (including extensions) for the tax year in which you incurred the costs. File 1040ez online However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). File 1040ez online Attach Form 4562 and the statement to the amended return and write “Filed pursuant to section 301. File 1040ez online 9100-2” on Form 4562. File 1040ez online File the amended return at the same address you filed the original return. File 1040ez online Revoking the election. File 1040ez online   You must get IRS approval to revoke your election to amortize qualifying reforestation costs. File 1040ez online Your application to revoke the election must include your name, address, the years for which your election was in effect, and your reason for revoking it. File 1040ez online Please provide your daytime telephone number (optional), in case we need to contact you. File 1040ez online You, or your duly authorized representative, must sign the application and file it at least 90 days before the due date (without extensions) for filing your income tax return for the first tax year for which your election is to end. File 1040ez online    Send the application to: Internal Revenue Service Associate Chief Counsel Passthroughs and Special Industries CC:PSI:6 1111 Constitution Ave. File 1040ez online NW, IR-5300 Washington, DC 20224 Geological and Geophysical Costs You can amortize the cost of geological and geophysical expenses paid or incurred in connection with oil and gas exploration or development within the United States. File 1040ez online These costs can be amortized ratably over a 24-month period beginning on the mid-point of the tax year in which the expenses were paid or incurred. File 1040ez online For major integrated oil companies (as defined in section 167(h)(5)), these costs must be amortized ratably over a 5-year period for costs paid or incurred after May 17, 2006 (a 7-year period for costs paid or incurred after December 19, 2007). File 1040ez online If you retire or abandon the property during the amortization period, no amortization deduction is allowed in the year of retirement or abandonment. File 1040ez online Pollution Control Facilities You can elect to amortize the cost of a certified pollution control facility over 60 months. File 1040ez online However, see Atmospheric pollution control facilities for an exception. File 1040ez online The cost of a pollution control facility that is not eligible for amortization can be depreciated under the regular rules for depreciation. File 1040ez online Also, you can claim a special depreciation allowance on a certified pollution control facility that is qualified property even if you elect to amortize its cost. File 1040ez online You must reduce its cost (amortizable basis) by the amount of any special allowance you claim. File 1040ez online See chapter 3 of Publication 946. File 1040ez online A certified pollution control facility is a new identifiable treatment facility used in connection with a plant or other property in operation before 1976, to reduce or control water or atmospheric pollution or contamination. File 1040ez online The facility must do so by removing, changing, disposing, storing, or preventing the creation or emission of pollutants, contaminants, wastes, or heat. File 1040ez online The facility must be certified by state and federal certifying authorities. File 1040ez online The facility must not significantly increase the output or capacity, extend the useful life, or reduce the total operating costs of the plant or other property. File 1040ez online Also, it must not significantly change the nature of the manufacturing or production process or facility. File 1040ez online The federal certifying authority will not certify your property to the extent it appears you will recover (over the property's useful life) all or part of its cost from the profit based on its operation (such as through sales of recovered wastes). File 1040ez online The federal certifying authority will describe the nature of the potential cost recovery. File 1040ez online You must then reduce the amortizable basis of the facility by this potential recovery. File 1040ez online New identifiable treatment facility. File 1040ez online   A new identifiable treatment facility is tangible depreciable property that is identifiable as a treatment facility. File 1040ez online It does not include a building and its structural components unless the building is exclusively a treatment facility. File 1040ez online Atmospheric pollution control facilities. File 1040ez online   Certain atmospheric pollution control facilities can be amortized over 84 months. File 1040ez online To qualify, the following must apply. File 1040ez online The facility must be acquired and placed in service after April 11, 2005. File 1040ez online If acquired, the original use must begin with you after April 11, 2005. File 1040ez online The facility must be used in connection with an electric generation plant or other property placed in operation after December 31, 1975, that is primarily coal fired. File 1040ez online If you construct, reconstruct, or erect the facility, only the basis attributable to the construction, reconstruction, or erection completed after April 11, 2005, qualifies. File 1040ez online Basis reduction for corporations. File 1040ez online   A corporation must reduce the amortizable basis of a pollution control facility by 20% before figuring the amortization deduction. File 1040ez online More information. File 1040ez online   For more information on the amortization of pollution control facilities, see Code sections 169 and 291(c) and the related regulations. File 1040ez online Research and Experimental Costs You can elect to amortize your research and experimental costs, deduct them as current business expenses, or write them off over a 10-year period (see Optional write-off method below). File 1040ez online If you elect to amortize these costs, deduct them in equal amounts over 60 months or more. File 1040ez online The amortization period begins the month you first receive an economic benefit from the costs. File 1040ez online For a definition of “research and experimental costs” and information on deducting them as current business expenses, see chapter 7. File 1040ez online Optional write-off method. File 1040ez online   Rather than amortize these costs or deduct them as a current expense, you have the option of deducting (writing off) research and experimental costs ratably over a 10-year period beginning with the tax year in which you incurred the costs. File 1040ez online For more information, see Optional Write-off of Certain Tax Preferences , later, and section 59(e) of the Internal Revenue Code. File 1040ez online Costs you can amortize. File 1040ez online   You can amortize costs chargeable to a capital account (see chapter 1) if you meet both of the following requirements. File 1040ez online You paid or incurred the costs in your trade or business. File 1040ez online You are not deducting the costs currently. File 1040ez online How to make the election. File 1040ez online   To elect to amortize research and experimental costs, complete Part VI of Form 4562 and attach it to your income tax return. File 1040ez online Generally, you must file the return by the due date (including extensions). File 1040ez online However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). File 1040ez online Attach Form 4562 to the amended return and write “Filed pursuant to section 301. File 1040ez online 9100-2” on Form 4562. File 1040ez online File the amended return at the same address you filed the original return. File 1040ez online   Your election is binding for the year it is made and for all later years unless you obtain approval from the IRS to change to a different method. File 1040ez online Optional Write-off of Certain Tax Preferences You can elect to amortize certain tax preference items over an optional period beginning in the tax year in which you incurred the costs. File 1040ez online If you make this election, there is no AMT adjustment. File 1040ez online The applicable costs and the optional recovery periods are as follows: Circulation costs — 3 years, Intangible drilling and development costs — 60 months, Mining exploration and development costs — 10 years, and Research and experimental costs — 10 years. File 1040ez online How to make the election. File 1040ez online   To elect to amortize qualifying costs over the optional recovery period, complete Part VI of Form 4562 and attach a statement containing the following information to your return for the tax year in which the election begins: Your name, address, and taxpayer identification number; and The type of cost and the specific amount of the cost for which you are making the election. File 1040ez online   Generally, the election must be made on a timely filed return (including extensions) for the tax year in which you incurred the costs. File 1040ez online However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). File 1040ez online Attach Form 4562 to the amended return and write “Filed pursuant to section 301. File 1040ez online 9100-2” on Form 4562. File 1040ez online File the amended return at the same address you filed the original return. File 1040ez online Revoking the election. File 1040ez online   You must obtain consent from the IRS to revoke your election. File 1040ez online Your request to revoke the election must be submitted to the IRS in the form of a letter ruling before the end of the tax year in which the optional recovery period ends. File 1040ez online The request must contain all of the information necessary to demonstrate the rare and unusual circumstances that would justify granting revocation. File 1040ez online If the request for revocation is approved, any unamortized costs are deductible in the year the revocation is effective. File 1040ez online Prev  Up  Next   Home   More Online Publications
Español

The File 1040ez Online

File 1040ez online 4. File 1040ez online   Limit on Elective Deferrals Table of Contents Excess elective deferrals. File 1040ez online General Limit 15-Year RuleYears of Service Figuring the Limit on Elective DeferralsExample The second and final component of MAC is the limit on elective deferrals. File 1040ez online This is a limit on the amount of contributions that can be made to your account through a salary reduction agreement. File 1040ez online A salary reduction agreement is an agreement between you and your employer that allows for a portion of your compensation to be directly invested in a 403(b) account on your behalf. File 1040ez online You can enter into more than one salary reduction agreement during a year. File 1040ez online More than one 403(b) account. File 1040ez online If, for any year, elective deferrals are contributed to more than one 403(b) account for you (whether or not with the same employer), you must combine all the elective deferrals to determine whether the total is more than the limit for that year. File 1040ez online 403(b) plan and another retirement plan. File 1040ez online If, during the year, contributions in the form of elective deferrals are made to other retirement plans on your behalf, you must combine all of the elective deferrals to determine if they are more than your limit on elective deferrals. File 1040ez online The limit on elective deferrals applies to amounts contributed to: 401(k) plans, to the extent excluded from income, Roth contribution programs, Section 501(c)(18) plans, to the extent excluded from income, Savings incentive match plan for employees (SIMPLE plans), Simplified employee pension (SEP) plans, and All 403(b) plans. File 1040ez online Roth contribution program. File 1040ez online   Your 403(b) plan may allow you to designate all or a portion of your elective deferrals as Roth contributions. File 1040ez online Elective deferrals designated as Roth contributions must be maintained in a separate Roth account and are not excludable from your gross income. File 1040ez online   The maximum amount of contributions allowed under a Roth contribution program is your limit on elective deferrals, less your elective deferrals not designated as Roth contributions. File 1040ez online For more information on the Roth contribution program, see Publication 560, Retirement Plans for Small Business. File 1040ez online Excess elective deferrals. File 1040ez online   If the amount contributed is more than the allowable limit, you must include the excess that is not a Roth contribution in your gross income for the year contributed. File 1040ez online General Limit Under the general limit on elective deferrals, the most that can be contributed to your 403(b) account through a salary reduction agreement is $17,500 for 2013 and 2014. File 1040ez online This limit applies without regard to community property laws. File 1040ez online 15-Year Rule If you have at least 15 years of service with an educational organization (such as a public or private school), hospital, home health service agency, health and welfare service agency, church, or convention or association of churches (or associated organization), the limit on elective deferrals to your 403(b) account is increased by the least of: $3,000, $15,000, reduced by the sum of: The additional pre-tax elective deferrals made in prior years because of this rule, plus The aggregate amount of designated Roth contributions permitted for prior years because of this rule, or $5,000 times the number of your years of service for the organization, minus the total elective deferrals made by your employer on your behalf for earlier years. File 1040ez online If you qualify for the 15-year rule, your elective deferrals under this limit can be as high as $20,500 for 2013 and 2014. File 1040ez online To determine whether you have 15 years of service with your employer, see Years of Service , next. File 1040ez online Years of Service To determine if you are eligible for the increased limit on elective deferrals, you will first need to figure your years of service. File 1040ez online How you figure your years of service depends on whether you were a full-time or a part-time employee, whether you worked for the full year or only part of the year, and whether you have worked for your employer for an entire year. File 1040ez online You must figure years of service for each year during which you worked for the employer who is maintaining your 403(b) account. File 1040ez online If more than one employer maintains a 403(b) account for you in the same year, you must figure years of service separately for each employer. File 1040ez online Definition Your years of service are the total number of years you have worked as a full time employee for the employer maintaining your 403(b) account as of the end of the year. File 1040ez online Figuring Your Years of Service Take the following rules into account when figuring your years of service. File 1040ez online Status of employer. File 1040ez online   Your years of service include only periods during which your employer was a qualified employer. File 1040ez online Your plan administrator can tell you whether or not your employer was qualified during all your periods of service. File 1040ez online Service with one employer. File 1040ez online   Generally, you cannot count service for any employer other than the one who maintains your 403(b) account. File 1040ez online Church employee. File 1040ez online   If you are a church employee, treat all of your years of service with related church organizations as years of service with the same employer. File 1040ez online For more information about church employees, see chapter 5. File 1040ez online Self-employed ministers. File 1040ez online   If you are a self-employed minister, your years of service include full and part years in which you have been treated as employed by a tax-exempt organization that is a qualified employer. File 1040ez online Total years of service. File 1040ez online   When figuring prior years of service, figure each year individually and then add the individual years of service to determine your total years of service. File 1040ez online Example. File 1040ez online The annual work period for full-time teachers employed by ABC Public Schools is September through December and February through May. File 1040ez online Marsha began working with ABC schools in September 2009. File 1040ez online She has always worked full-time for each annual work period. File 1040ez online At the end of 2013, Marsha had 4. File 1040ez online 5 years of service with ABC Public Schools, as shown in Table 4-1. File 1040ez online Table 4-1. File 1040ez online Marsha's Years of Service Note. File 1040ez online This table shows how Marsha figures her years of service, as explained in the previous example. File 1040ez online Year Period Worked Portion of Work Period Years of Service 2009 Sept. File 1040ez online –Dec. File 1040ez online . File 1040ez online 5 year . File 1040ez online 5 year 2010 Feb. File 1040ez online –May . File 1040ez online 5 year 1 year Sept. File 1040ez online –Dec. File 1040ez online . File 1040ez online 5 year 2011 Feb. File 1040ez online –May . File 1040ez online 5 year 1 year Sept. File 1040ez online –Dec. File 1040ez online . File 1040ez online 5 year 2012 Feb. File 1040ez online –May . File 1040ez online 5 year 1 year Sept. File 1040ez online –Dec. File 1040ez online . File 1040ez online 5 year 2013 Feb. File 1040ez online –May . File 1040ez online 5 year 1 year Sept. File 1040ez online –Dec. File 1040ez online . File 1040ez online 5 year Total years of service 4. File 1040ez online 5 years Full-time or part-time. File 1040ez online   To figure your years of service, you must analyze each year individually and determine whether you worked full-time for the full year or something other than full-time. File 1040ez online When determining whether you worked full-time or something other than full-time, use your employer's annual work period as the standard. File 1040ez online Employer's annual work period. File 1040ez online   Your employer's annual work period is the usual amount of time an individual working full-time in a specific position is required to work. File 1040ez online Generally, this period of time is expressed in days, weeks, months, or semesters, and can span 2 calendar years. File 1040ez online Note. File 1040ez online You cannot accumulate more than 1 year of service in a 12-month period. File 1040ez online Example. File 1040ez online All full-time teachers at ABC Public Schools are required to work both the September through December semester and the February through May semester. File 1040ez online Therefore, the annual work period for full-time teachers employed by ABC Public Schools is September through December and February through May. File 1040ez online Teachers at ABC Public Schools who work both semesters in the same calendar year are considered working a full year of service in that calendar year. File 1040ez online Full-Time Employee for the Full Year Count each full year during which you were employed full-time as 1 year of service. File 1040ez online In determining whether you were employed full-time, compare the amount of work you were required to perform with the amount of work normally required of others who held the same position with the same employer and who generally received most of their pay from the position. File 1040ez online How to compare. File 1040ez online   You can use any method that reasonably and accurately reflects the amount of work required. File 1040ez online For example, if you are a teacher, you can use the number of hours of classroom instruction as a measure of the amount of work required. File 1040ez online   In determining whether positions with the same employer are the same, consider all of the facts and circumstances concerning the positions, including the work performed, the methods by which pay is determined, and the descriptions (or titles) of the positions. File 1040ez online Example. File 1040ez online An assistant professor employed in the English department of a university will be considered a full-time employee if the amount of work that he or she is required to perform is the same as the amount of work normally required of assistant professors of English at that university who get most of their pay from that position. File 1040ez online   If no one else works for your employer in the same position, compare your work with the work normally required of others who held the same position with similar employers or similar positions with your employer. File 1040ez online Full year of service. File 1040ez online   A full year of service for a particular position means the usual annual work period of anyone employed full-time in that general type of work at that place of employment. File 1040ez online Example. File 1040ez online If a doctor works for a hospital 12 months of a year except for a 1-month vacation, the doctor will be considered as employed for a full year if the other doctors at that hospital also work 11 months of the year with a 1-month vacation. File 1040ez online Similarly, if the usual annual work period at a university consists of the fall and spring semesters, an instructor at that university who teaches these semesters will be considered as working a full year. File 1040ez online Other Than Full-Time for the Full Year If, during any year, you were employed full-time for only part of your employer's annual work period, part-time for the entire annual work period, or part-time for only part of the work period, your year of service for that year is a fraction of your employer's annual work period. File 1040ez online Full-time for part of the year. File 1040ez online   If, during a year, you were employed full-time for only part of your employer's annual work period, figure the fraction for that year as follows: The numerator (top number) is the number of weeks, months, or semesters you were a full-time employee. File 1040ez online The denominator (bottom number) is the number of weeks, months, or semesters considered the normal annual work period for the position. File 1040ez online Example. File 1040ez online Jason was employed as a full-time instructor by a local college for the 4 months of the 2013 spring semester (February 2013 through May 2013). File 1040ez online The annual work period for the college is 8 months (February through May and July through October). File 1040ez online Given these facts, Jason was employed full-time for part of the annual work period and provided ½ of a year of service. File 1040ez online Jason's years of service computation for 2013 is as follows: Number of months Jason worked = 4 = 1 Number of months in annual work period 8 2 Part-time for the full year. File 1040ez online   If, during a year, you were employed part-time for the employer's entire annual work period, you figure the fraction for that year as follows: The numerator (top number) is the number of hours or days you worked. File 1040ez online The denominator (bottom number) is the number of hours or days normally required of someone holding the same position who works full-time. File 1040ez online Example. File 1040ez online Vance teaches one course at a local medical school. File 1040ez online He teaches 3 hours per week for two semesters. File 1040ez online Other faculty members at the same school teach 9 hours per week for two semesters. File 1040ez online The annual work period of the medical school is two semesters. File 1040ez online An instructor teaching 9 hours a week for two semesters is considered a full-time employee. File 1040ez online Given these facts, Vance has worked part-time for a full annual work period. File 1040ez online Vance has completed 1/3 of a year of service, figured as shown below. File 1040ez online Number of hours per week Vance worked = 3 = 1 Number of hours per week considered full-time 9 3 Part-time for part of the year. File 1040ez online   If, during any year, you were employed part-time for only part of your employer's annual work period, you figure your fraction for that year by multiplying two fractions. File 1040ez online   Figure the first fraction as though you had worked full-time for part of the annual work period. File 1040ez online The fraction is as follows: The numerator (top number) is the number of weeks, months, or semesters you were a full-time employee. File 1040ez online The denominator (bottom number) is the number of weeks, months, or semesters considered the normal annual work period for the position. File 1040ez online   Figure the second fraction as though you had worked part-time for the entire annual work period. File 1040ez online The fraction is as follows: The numerator (top number) is the number of hours or days you worked. File 1040ez online The denominator (bottom number) is the number of hours or days normally required of someone holding the same position who works full-time. File 1040ez online   Once you have figured these two fractions, multiply them together to determine the fraction representing your partial year of service for the year. File 1040ez online Example. File 1040ez online Maria, an attorney, teaches a course for one semester at a law school. File 1040ez online She teaches 3 hours per week. File 1040ez online The annual work period for teachers at the school is two semesters. File 1040ez online All full-time instructors at the school are required to teach 12 hours per week. File 1040ez online Based on these facts, Maria is employed part-time for part of the annual work period. File 1040ez online Her year of service for this year is determined by multiplying two fractions. File 1040ez online Her computation is as follows: Maria's first fraction Number of semesters Maria worked = 1 Number of semesters in annual work period 2 Maria's second fraction Number of hours Maria worked per week = 3 = 1 Number of hours per week considered full-time 12 4 Maria would multiply these fractions to obtain the fractional year of service: 1 x 1 = 1         2 4 8         Figuring the Limit on Elective Deferrals You can use Part II of Worksheet 1 in chapter 9 to figure the limit on elective deferrals. File 1040ez online Example Floyd has figured his limit on annual additions. File 1040ez online The only other component needed before he can determine his MAC for 2014 is his limit on elective deferrals. File 1040ez online Figuring Floyd's limit on elective deferrals. File 1040ez online   Floyd has been employed with his current employer for less than 15 years. File 1040ez online He is not eligible for the special 15-year increase. File 1040ez online Therefore, his limit on elective deferrals for 2014 is $17,500 as shown in Table 4-2. File 1040ez online Floyd's employer will not make any nonelective contributions to his 403(b) account and Floyd will not make any after-tax contributions. File 1040ez online Additionally, Floyd's employer does not offer a Roth contribution program. File 1040ez online Figuring Floyd's MAC Floyd has determined that his limit on annual additions for 2014 is $52,000 and his limit on elective deferrals is $17,500. File 1040ez online Because elective deferrals are the only contributions made to Floyd's account, the maximum amount that can be contributed to a 403(b) account on Floyd's behalf in 2014 is $17,500, the lesser of both limits. File 1040ez online Table 4-2. File 1040ez online Worksheet 1. File 1040ez online Maximum Amount Contributable (MAC) Note. File 1040ez online Use this worksheet to figure your MAC. File 1040ez online Part I. File 1040ez online Limit on Annual Additions     1. File 1040ez online Enter your includible compensation for your most recent year of service 1. File 1040ez online $70,475 2. File 1040ez online Maximum: For 2013 enter $51,000 For 2014 enter $52,000 2. File 1040ez online 52,000 3. File 1040ez online Enter the lesser of line 1 or line 2. File 1040ez online This is your limit on annual additions 3. File 1040ez online 52,000   Caution: If you had only nonelective contributions, skip Part II and enter the amount from line 3 on line 18. File 1040ez online     Part II. File 1040ez online Limit on Elective Deferrals     4. File 1040ez online Maximum contribution: For 2013, enter $17,500 For 2014, enter $17,500 4. File 1040ez online 17,500   Note. File 1040ez online If you have at least 15 years of service with a qualifying organization, complete lines 5 through 17. File 1040ez online If not, enter zero (-0-) on line 16 and go to line 17. File 1040ez online     5. File 1040ez online Amount per year of service 5. File 1040ez online 5,000 6. File 1040ez online Enter your years of service 6. File 1040ez online   7. File 1040ez online Multiply line 5 by line 6 7. File 1040ez online   8. File 1040ez online Enter the total of all elective deferrals made for you by the qualifying organization for prior years 8. File 1040ez online   9. File 1040ez online Subtract line 8 from line 7. File 1040ez online If zero or less, enter zero (-0-) 9. File 1040ez online   10. File 1040ez online Maximum increase in limit for long service 10. File 1040ez online 15,000 11. File 1040ez online Enter the total of additional pre-tax elective deferrals made in prior years under the 15-year rule 11. File 1040ez online   12. File 1040ez online Enter the aggregate amount of all designated Roth contributions permitted for prior years under the 15-year rule 12. File 1040ez online   13. File 1040ez online Add lines 11 and 12 13. File 1040ez online   14. File 1040ez online Subtract line 13 from line 10 14. File 1040ez online   15. File 1040ez online Maximum additional contributions 15. File 1040ez online 3,000 16. File 1040ez online Enter the least of lines 9, 14, or 15. File 1040ez online This is your increase in the limit for long service 16. File 1040ez online -0- 17. File 1040ez online Add lines 4 and 16. File 1040ez online This is your limit on elective deferrals 17. File 1040ez online 17,500   Part III. File 1040ez online Maximum Amount Contributable     18. File 1040ez online If you had only nonelective contributions, enter the amount from line 3. File 1040ez online This is your MAC. File 1040ez online    If you had only elective deferrals, enter the lesser of lines 3 or 17. File 1040ez online This is your MAC. File 1040ez online    If you had both elective deferrals and nonelective contributions, enter the amount from line 3. File 1040ez online This is your MAC. File 1040ez online (Use the amount on line 17 to determine if you have excess elective deferrals as explained in chapter 7. File 1040ez online ) 18. File 1040ez online $17,500 Prev  Up  Next   Home   More Online Publications