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File 2009 Taxes Online

File 2009 taxes online 3. File 2009 taxes online   Claiming the Special Depreciation Allowance Table of Contents Introduction What Is Qualified Property?Qualified Reuse and Recycling Property Qualified Cellulosic Biofuel Plant Property Qualified Disaster Assistance Property Certain Qualified Property Acquired After December 31, 2007 Election to Accelerate Certain Credits in Lieu of the Special Depreciation Allowance How Much Can You Deduct? How Can You Elect Not To Claim an Allowance? When Must You Recapture an Allowance? Introduction You can take a special depreciation allowance to recover part of the cost of qualified property (defined next), placed in service during the tax year. File 2009 taxes online The allowance applies only for the first year you place the property in service. File 2009 taxes online For qualified property placed in service in 2013, you can take an additional 50% special allowance. File 2009 taxes online The allowance is an additional deduction you can take after any section 179 deduction and before you figure regular depreciation under MACRS for the year you place the property in service. File 2009 taxes online This chapter explains what is qualified property. File 2009 taxes online It also includes rules regarding how to figure an allowance, how to elect not to claim an allowance, and when you must recapture an allowance. File 2009 taxes online Corporations can elect to accelerate certain minimum tax credits in lieu of claiming the special depreciation allowance for eligible qualified property. File 2009 taxes online See Election to Accelerate Certain Credits in Lieu of the Special Depreciation Allowance , later. File 2009 taxes online See chapter 6 for information about getting publications and forms. File 2009 taxes online What Is Qualified Property? Your property is qualified property if it is one of the following. File 2009 taxes online Qualified reuse and recycling property. File 2009 taxes online Qualified cellulosic biofuel plant property. File 2009 taxes online Qualified disaster assistance property. File 2009 taxes online Certain qualified property acquired after December 31, 2007. File 2009 taxes online The following discussions provide information about the types of qualified property listed above for which you can take the special depreciation allowance. File 2009 taxes online Qualified Reuse and Recycling Property You can take a 50% special depreciation allowance for qualified reuse and recycling property. File 2009 taxes online Qualified reuse and recycling property is any machinery or equipment (not including buildings or real estate), along with any appurtenance, that is used exclusively to collect, distribute, or recycle qualified reuse and recyclable materials (as defined in section 168(m)(3)(B) of the Internal Revenue Code). File 2009 taxes online Qualified reuse and recycling property also includes software necessary to operate such equipment. File 2009 taxes online The property must meet the following requirements. File 2009 taxes online The property must be depreciated under MACRS. File 2009 taxes online The property must have a useful life of at least 5 years. File 2009 taxes online The original use of the property must begin with you after August 31, 2008. File 2009 taxes online You must have acquired the property by purchase (as discussed under Property Acquired by Purchase in chapter 2 ) after August 31, 2008, with no binding written contract for the acquisition in effect before September 1, 2008. File 2009 taxes online The property must be placed in service for use in your trade or business after August 31, 2008. File 2009 taxes online Excepted Property Qualified reuse and recycling property does not include any of the following. File 2009 taxes online Any rolling stock or other equipment used to transport reuse or recyclable materials. File 2009 taxes online Property required to be depreciated using the Alternative Depreciation System (ADS). File 2009 taxes online For other property required to be depreciated using ADS, see Required use of ADS under Which Depreciation System (GDS or ADS) Applies , in chapter 4 . File 2009 taxes online Other bonus depreciation property to which section 168(k) of the Internal Revenue Code applies. File 2009 taxes online Property for which you elected not to claim any special depreciation allowance (discussed later). File 2009 taxes online Property placed in service and disposed of in the same tax year. File 2009 taxes online Property converted from business use to personal use in the same tax year acquired. File 2009 taxes online Property converted from personal use to business use in the same or later tax year may be qualified reuse and recycling property. File 2009 taxes online Qualified Cellulosic Biofuel Plant Property You can take a 50% special depreciation allowance for qualified cellulosic biofuel plant property. File 2009 taxes online Cellulosic biofuel is any liquid fuel which is produced from any lignocellulosic or hemicellulosic matter that is available on a renewable or recurring basis. File 2009 taxes online Examples include bagasse (from sugar cane), corn stalks, and switchgrass. File 2009 taxes online The property must meet the following requirements. File 2009 taxes online The property is used in the United States solely to produce cellulosic biofuel. File 2009 taxes online The original use of the property must begin with you after December 20, 2006. File 2009 taxes online You must have acquired the property by purchase (as discussed under Property Acquired by Purchase in chapter 2 ) after December 20, 2006, with no binding written contract for acquisition in effect before December 21, 2006. File 2009 taxes online The property must be placed in service for use in your trade or business or for the production of income after October 3, 2008, and before January 3, 2013. File 2009 taxes online Note. File 2009 taxes online For property placed in service after January 2, 2013, and before January 1, 2014, you can take a 50% special depreciation allowance for qualified second generation biofuel plant property that is used solely in the United States to produce second generation biofuel (as defined in section 40(b)(6)(E)). File 2009 taxes online The other requirements for qualified second generation biofuel plant property to be eligible for the special depreciation allowance are identical to the requirements discussed for Qualified Cellulosic Biofuel Plant Property above. File 2009 taxes online Special Rules Sale-leaseback. File 2009 taxes online   If you sold qualified cellulosic biofuel plant property you placed in service after October 3, 2008, and leased it back within 3 months after you originally placed it in service, the property is treated as originally placed in service no earlier than the date it is used by you under the leaseback. File 2009 taxes online   The property will not qualify for the special allowance if the lessee or a related person to the lessee or lessor had a written binding contract in effect for the acquisition of the property before December 21, 2006. File 2009 taxes online Syndicated leasing transactions. File 2009 taxes online   If qualified cellulosic biofuel plant property is originally placed in service by a lessor after October 3, 2008, the property is sold within 3 months of the date it was placed in service, and the user of the property does not change, then the property is treated as originally placed in service by the taxpayer no earlier than the date of the last sale. File 2009 taxes online   Multiple units of property subject to the same lease will be treated as originally placed in service no earlier than the date of sale if the property is sold within 3 months after the final unit is placed in service and the period between the times the first and last units are placed in service does not exceed 12 months. File 2009 taxes online Excepted Property Qualified cellulosic biofuel plant property does not include any of the following. File 2009 taxes online Property placed in service and disposed of in the same tax year. File 2009 taxes online Property converted from business use to personal use in the same tax year it is acquired. File 2009 taxes online Property converted from personal use to business use in the same or later tax year may be qualified cellulosic biomass ethanol plant property. File 2009 taxes online Property required to be depreciated using the Alternative Depreciation System (ADS). File 2009 taxes online For other property required to be depreciated using ADS, see Required use of ADS under Which Depreciation System (GDS or ADS) Applies , in chapter 4 . File 2009 taxes online Property any portion of which is financed with the proceeds of any obligation the interest on which is exempt from tax under section 103 of the Internal Revenue Code. File 2009 taxes online Property for which you elected not to claim any special depreciation allowance (discussed later). File 2009 taxes online Property for which a deduction was taken under section 179C for certain qualified refinery property. File 2009 taxes online Other bonus depreciation property to which section 168(k) of the Internal Revenue Code applies. File 2009 taxes online Qualified Disaster Assistance Property You can take a 50% special depreciation allowance for qualified disaster assistance property placed in service in federally declared disaster areas in which the disaster occurred in 2009. File 2009 taxes online A list of the federally declared disaster areas is available at the FEMA website at www. File 2009 taxes online fema. File 2009 taxes online gov. File 2009 taxes online Your property is qualified disaster assistance property if it meets the following requirements. File 2009 taxes online The property is nonresidential real property or residential real property placed in service before January 1, 2014, in a federally declared disaster area in which the disaster occurred in 2009. File 2009 taxes online You must have acquired the property by purchase (as discussed under Property Acquired by Purchase in chapter 2 ) on or after the applicable disaster date, with no binding written contract for the acquisition in effect before the applicable disaster date. File 2009 taxes online The property must rehabilitate property damaged, or replace property destroyed or condemned, as a result of the applicable federally declared disaster. File 2009 taxes online The property must be similar in nature to, and located in the same county as, the rehabilitated or replaced property. File 2009 taxes online The original use of the property within the applicable disaster area must have begun with you on or after the applicable disaster date. File 2009 taxes online The property is placed in service by you on or before the date which is the last day of the fourth calendar year. File 2009 taxes online Substantially all (80% or more) of the use of the property must be in the active conduct of your trade or business in a federally declared disaster area, occurring in 2009. File 2009 taxes online It is not excepted property (explained later in Excepted Property ). File 2009 taxes online Special Rules Sale-leaseback. File 2009 taxes online   If you sold qualified disaster assistance property you placed in service after the applicable disaster date and leased it back within 3 months after you originally placed it in service, the property is treated as originally placed in service no earlier than the date it is used by you under the leaseback. File 2009 taxes online   The property will not qualify for the special allowance if the lessee or a related person to the lessee or lessor had a written binding contract in effect for the acquisition of the property before the applicable disaster date. File 2009 taxes online Syndicated leasing transactions. File 2009 taxes online   If qualified disaster assistance property is originally placed in service by a lessor after the applicable disaster date, the property is sold within 3 months of the date it was placed in service, and the user of the property does not change, then the property is treated as originally placed in service by the taxpayer no earlier than the date of the last sale. File 2009 taxes online   Multiple units of property subject to the same lease will be treated as originally placed in service no earlier than the date of sale if the property is sold within 3 months after the final unit is placed in service and the period between the times the first and last units are placed in service does not exceed 12 months. File 2009 taxes online Excepted Property Qualified disaster assistance property does not include any of the following. File 2009 taxes online Property required to be depreciated using the Alternative Depreciation System (ADS). File 2009 taxes online For other property required to be depreciated using ADS, see Required use of ADS under Which Depreciation System (GDS or ADS) Applies , in chapter 4 . File 2009 taxes online Property any portion of which is financed with the proceeds of a tax-exempt obligation under section 103 of the Internal Revenue Code. File 2009 taxes online Any qualified revitalization building (defined later) placed in service before January 1, 2010, for which you have elected to claim a commercial revitalization deduction for qualified revitalization expenditures. File 2009 taxes online Any property used in connection with any private or commercial golf course, country club, massage parlor, hot tub facility, suntan facility, or any store, the principal business of which is the sale of alcoholic beverages for consumption off premises. File 2009 taxes online Any property for which the special allowance under section 168(k) or section 1400N(d) of the Internal Revenue Code applies. File 2009 taxes online Property for which you elected not to claim any special depreciation allowance (discussed later). File 2009 taxes online Property placed in service and disposed of in the same tax year. File 2009 taxes online Property converted from business use to personal use in the same tax year acquired. File 2009 taxes online Property converted from personal use to business use in the same or later tax year may be qualified disaster assistance property. File 2009 taxes online Any gambling or animal racing property (defined later). File 2009 taxes online Qualified revitalization building. File 2009 taxes online   This is a commercial building and its structural components that you placed in service in a renewal community before January 1, 2010. File 2009 taxes online If the building is new, the original use of the building must begin with you. File 2009 taxes online If the building is not new, you must substantially rehabilitate the building and then place it in service. File 2009 taxes online For more information, including definitions of substantially rehabilitated building and qualified revitalization expenditure, see section 1400I(b) of the Internal Revenue Code. File 2009 taxes online Gambling or animal racing property. File 2009 taxes online   Gambling or animal racing property includes the following personal and real property. File 2009 taxes online Any equipment, furniture, software, or other property used directly in connection with gambling, the racing of animals, or the on-site viewing of such racing. File 2009 taxes online Any real property determined by square footage (other than any portion that is less than 100 square feet) that is dedicated to gambling, the racing of animals, or the on-site viewing of such racing. File 2009 taxes online Certain Qualified Property Acquired After December 31, 2007 You can take a 50% special depreciation deduction allowance for certain qualified property acquired after December 31, 2007. File 2009 taxes online Your property is qualified property if it meets the following requirements. File 2009 taxes online It is one of the following types of property. File 2009 taxes online Tangible property depreciated under MACRS with a recovery period of 20 years or less. File 2009 taxes online Water utility property. File 2009 taxes online Computer software that is readily available for purchase by the general public, is subject to a nonexclusive license, and has not been substantially modified. File 2009 taxes online (The cost of some computer software is treated as part of the cost of hardware and is depreciated under MACRS. File 2009 taxes online ) Qualified leasehold improvement property (defined under Qualified leasehold improvement property later). File 2009 taxes online You must have acquired the property after December 31, 2007, with no binding written contract for the acquisition in effect before January 1, 2008. File 2009 taxes online The property must be placed in service for use in your trade or business or for the production of income before January 1, 2014 (before January 1, 2015, for certain property with a long production period and certain aircraft (defined next)). File 2009 taxes online The original use of the property must begin with you after December 31, 2007. File 2009 taxes online It is not excepted property (explained later in Excepted property). File 2009 taxes online Qualified leasehold improvement property. File 2009 taxes online    Generally, this is any improvement to an interior part of a building that is nonresidential real property, if all the following requirements are met. File 2009 taxes online The improvement is made under or according to a lease by the lessee (or any sublessee) or the lessor of that part of the building. File 2009 taxes online That part of the building is to be occupied exclusively by the lessee (or any sublessee) of that part. File 2009 taxes online The improvement is placed in service more than 3 years after the date the building was first placed in service by any person. File 2009 taxes online The improvement is section 1250 property. File 2009 taxes online See chapter 3 in Publication 544, Sales and Other Dispositions of Assets, for the definition of section 1250 property. File 2009 taxes online   However, a qualified leasehold improvement does not include any improvement for which the expenditure is attributable to any of the following. File 2009 taxes online The enlargement of the building. File 2009 taxes online Any elevator or escalator. File 2009 taxes online Any structural component benefiting a common area. File 2009 taxes online The internal structural framework of the building. File 2009 taxes online   Generally, a binding commitment to enter into a lease is treated as a lease and the parties to the commitment are treated as the lessor and lessee. File 2009 taxes online However, a lease between related persons is not treated as a lease. File 2009 taxes online Related persons. File 2009 taxes online   For this purpose, the following are related persons. File 2009 taxes online Members of an affiliated group. File 2009 taxes online An individual and a member of his or her family, including only a spouse, child, parent, brother, sister, half-brother, half-sister, ancestor, and lineal descendant. File 2009 taxes online A corporation and an individual who directly or indirectly owns 80% or more of the value of the outstanding stock of that corporation. File 2009 taxes online Two corporations that are members of the same controlled group. File 2009 taxes online A trust fiduciary and a corporation if 80% or more of the value of the outstanding stock is directly or indirectly owned by or for the trust or grantor of the trust. File 2009 taxes online The grantor and fiduciary, and the fiduciary and beneficiary, of any trust. File 2009 taxes 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 2009 taxes online A tax-exempt educational or charitable organization and any person (or, if that person is an individual, a member of that person's family) who directly or indirectly controls the organization. File 2009 taxes online Two S corporations, and an S corporation and a regular corporation, if the same persons own 80% or more of the value of the outstanding stock of each corporation. File 2009 taxes online A corporation and a partnership if the same persons own both of the following. File 2009 taxes online 80% or more of the value of the outstanding stock of the corporation. File 2009 taxes online 80% or more of the capital or profits interest in the partnership. File 2009 taxes online The executor and beneficiary of any estate. File 2009 taxes online Long Production Period Property To be qualified property, long production period property must meet the following requirements. File 2009 taxes online It must meet the requirements in (2)-(5), above. File 2009 taxes online The property has a recovery period of at least 10 years or is transportation property. File 2009 taxes online Transportation property is tangible personal property used in the trade or business of transporting persons or property. File 2009 taxes online The property is subject to section 263A of the Internal Revenue Code. File 2009 taxes online The property has an estimated production period exceeding 1 year and an estimated production cost exceeding $1,000,000. File 2009 taxes online Noncommercial Aircraft To be qualified property, noncommercial aircraft must meet the following requirements. File 2009 taxes online It must meet the requirements in (2)-(5), above. File 2009 taxes online The aircraft must not be tangible personal property used in the trade or business of transporting persons or property (except for agricultural or firefighting purposes). File 2009 taxes online The aircraft must be purchased (as discussed under Property Acquired by Purchase in chapter 2 ) by a purchaser who at the time of the contract for purchase, makes a nonrefundable deposit of the lesser of 10% of the cost or $100,000. File 2009 taxes online The aircraft must have an estimated production period exceeding four months and a cost exceeding $200,000. File 2009 taxes online Special Rules Sale-leaseback. File 2009 taxes online   If you sold qualified property you placed in service after December 31, 2007, and leased it back within 3 months after you originally placed in service, the property is treated as originally placed in service no earlier than the date it is used by you under the leaseback. File 2009 taxes online   The property will not qualify for the special depreciation allowance if the lessee or a related person to the lessee or lessor had a written binding contract in effect for the acquisition of the property before January 1, 2008. File 2009 taxes online Syndicated leasing transactions. File 2009 taxes online   If qualified property is originally placed in service by a lessor after December 31, 2007, the property is sold within 3 months of the date it was placed in service, and the user of the property does not change, then the property is treated as originally placed in service by the taxpayer no earlier than the date of the last sale. File 2009 taxes online   Multiple units of property subject to the same lease will be treated as originally placed in service no earlier than the date of the last sale if the property is sold within 3 months after the final unit is placed in service and the period between the time the first and last units are placed in service does not exceed 12 months. File 2009 taxes online Excepted Property Qualified property does not include any of the following. File 2009 taxes online Property placed in service and disposed of in the same tax year. File 2009 taxes online Property converted from business use to personal use in the same tax year acquired. File 2009 taxes online Property converted from personal use to business use in the same or later tax year may be qualified property. File 2009 taxes online Property required to be depreciated under the Alternative Depreciation System (ADS). File 2009 taxes online This includes listed property used 50% or less in a qualified business use. File 2009 taxes online For other property required to be depreciated using ADS, see Required use of ADS under Which Depreciation System (GDS or ADS) Applies , in chapter 4 . File 2009 taxes online Qualified restaurant property (as defined in section 168(e)(7) of the Internal Revenue Code). File 2009 taxes online Qualified retail improvement property (as defined in section 168(e)(8) of the Internal Revenue Code). File 2009 taxes online Property for which you elected not to claim any special depreciation allowance (discussed later). File 2009 taxes online Property for which you elected to accelerate certain credits in lieu of the special depreciation allowance (discussed next). File 2009 taxes online Election to Accelerate Certain Credits in Lieu of the Special Depreciation Allowance An election made by a corporation to claim pre-2006 unused minimum tax credits in lieu of claiming the special depreciation allowance for either its first tax year ending after March 31, 2008, its first tax year ending after December 31, 2008, or its first tax year ending after December 31, 2010, continues to apply to round 2 extension property (as defined in section 168(k)(4)(I)(iv)), unless the corporation made an election not to apply the section 168(k)(4) election to round 2 extension property for its first tax year ending after December 31, 2010. File 2009 taxes online For 2013, round 2 extension property generally is long production period and noncommercial aircraft if acquired after March 31, 2008, and placed in service after December 31, 2012, but before January 1, 2014. File 2009 taxes online An election made by a corporation to claim pre-2006 unused minimum tax credits in lieu of claiming the special depreciation allowance for either its first tax year ending after March 31, 2008, its first tax year ending after December 31, 2008, or its first tax year ending after December 31, 2010, continues to apply to round 3 extension property (as defined in section 168(k)(4)(J)(iv)), unless the corporation makes an election not to apply the section 168(k)(4) election to round 3 extension property. File 2009 taxes online If a corporation did not make a section 168(k)(4) election for either its first tax year ending after March 31, 2008, its first tax year ending after December 31, 2008, or its first tax year ending after December 31, 2010, the corporation may elect for its first tax year ending after December 31, 2012, to claim pre-2006 unused minimum tax credits in lieu of claiming the special depreciation allowance for only round 3 extension property. File 2009 taxes online If you make an election to accelerate these credits in lieu of claiming the special depreciation allowance for eligible property, you must not take the 50% special depreciation allowance for the property and must depreciate the basis in the property under MACRS using the straight line method. File 2009 taxes online See Which Depreciation Method Applies in chapter 4 . File 2009 taxes online Once made, the election cannot be revoked without IRS consent. File 2009 taxes online Additional guidance. File 2009 taxes online   For additional guidance on the election to accelerate the research or minimum tax credit in lieu of claiming the special depreciation allowance, see Rev. File 2009 taxes online Proc. File 2009 taxes online 2008-65 on page 1082 of Internal Revenue Bulletin 2008-44, available at www. File 2009 taxes online irs. File 2009 taxes online gov/pub/irs-irbs/irb08-44. File 2009 taxes online pdf, Rev. File 2009 taxes online Proc. File 2009 taxes online 2009-16 on page 449 of Internal Revenue Bulletin 2009-06, available at www. File 2009 taxes online irs. File 2009 taxes online gov/pub/irs-irbs/irb09-06. File 2009 taxes online pdf, and Rev. File 2009 taxes online Proc. File 2009 taxes online 2009-33 on page 150 of Internal Revenue Bulletin 2009-29, available at www. File 2009 taxes online irs. File 2009 taxes online gov/pub/irs-irbs/irb09-29. File 2009 taxes online pdf. File 2009 taxes online Also, see Form 3800, General Business Credit; Form 8827, Credit for Prior Year Minimum Tax — Corporations; and related instructions. File 2009 taxes online   Additional guidance regarding the election to accelerate the minimum tax credit in lieu of claiming the special depreciation allowance for round 2 extension property and round 3 extension property may also be available in later Internal Revenue Bulletins available at www. File 2009 taxes online irs. File 2009 taxes online gov/irb. File 2009 taxes online How Much Can You Deduct? Figure the special depreciation allowance by multiplying the depreciable basis of qualified reuse and recycling property, qualified cellulosic biofuel plant property, qualified disaster assistance property, and certain qualified property acquired after December 31, 2007, by 50%. File 2009 taxes online For qualified property other than listed property, enter the special allowance on line 14 in Part II of Form 4562. File 2009 taxes online For qualified property that is listed property, enter the special allowance on line 25 in Part V of Form 4562. File 2009 taxes online If you place qualified property in service in a short tax year, you can take the full amount of a special depreciation allowance. File 2009 taxes online Depreciable basis. File 2009 taxes online   This is the property's cost or other basis multiplied by the percentage of business/investment use, reduced by the total amount of any credits and deductions allocable to the property. File 2009 taxes online   The following are examples of some credits and deductions that reduce depreciable basis. File 2009 taxes online Any section 179 deduction. File 2009 taxes online Any deduction for removal of barriers to the disabled and the elderly. File 2009 taxes online Any disabled access credit, enhanced oil recovery credit, and credit for employer-provided childcare facilities and services. File 2009 taxes online Basis adjustment to investment credit property under section 50(c) of the Internal Revenue Code. File 2009 taxes online   For additional credits and deductions that affect basis, see section 1016 of the Internal Revenue Code. File 2009 taxes online   For information about how to determine the cost or other basis of property, see What Is the Basis of Your Depreciable Property in chapter 1 . File 2009 taxes online For a discussion of business/investment use, see Partial business or investment use under Property Used in Your Business or Income-Producing Activity in chapter 1 . File 2009 taxes online Depreciating the remaining cost. File 2009 taxes online   After you figure your special depreciation allowance for your qualified property, you can use the remaining cost to figure your regular MACRS depreciation deduction (discussed in chapter 4 . File 2009 taxes online Therefore, you must reduce the depreciable basis of the property by the special depreciation allowance before figuring your regular MACRS depreciation deduction. File 2009 taxes online Example. File 2009 taxes online On November 1, 2013, Tom Brown bought and placed in service in his business qualified property that cost $450,000. File 2009 taxes online He did not elect to claim a section 179 deduction. File 2009 taxes online He deducts 50% of the cost ($225,000) as a special depreciation allowance for 2013. File 2009 taxes online He uses the remaining $225,000 of cost to figure his regular MACRS depreciation deduction for 2013 and later years. File 2009 taxes online Like-kind exchanges and involuntary conversions. File 2009 taxes online   If you acquire qualified property in a like-kind exchange or involuntary conversion, the carryover basis of the acquired property is eligible for a special depreciation allowance. File 2009 taxes online After you figure your special allowance, you can use the remaining carryover basis to figure your regular MACRS depreciation deduction. File 2009 taxes online In the year you claim the allowance (the year you place in service the property received in the exchange or dispose of involuntarily converted property), you must reduce the carryover basis of the property by the allowance before figuring your regular MACRS depreciation deduction. File 2009 taxes online See Figuring the Deduction for Property Acquired in a Nontaxable Exchange , in chapter 4 under How Is the Depreciation Deduction Figured . File 2009 taxes online The excess basis (the part of the acquired property's basis that exceeds its carryover basis) is also eligible for a special depreciation allowance. File 2009 taxes online How Can You Elect Not To Claim an Allowance? You can elect, for any class of property, not to deduct any special allowances for all property in such class placed in service during the tax year. File 2009 taxes online To make an election, attach a statement to your return indicating what election you are making and the class of property for which you are making the election. File 2009 taxes online When to make election. File 2009 taxes online   Generally, you must make the election on a timely filed tax return (including extensions) for the year in which you place the property in service. File 2009 taxes 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 original return (not including extensions). File 2009 taxes online Attach the election statement to the amended return. File 2009 taxes online On the amended return, write “Filed pursuant to section 301. File 2009 taxes online 9100-2. File 2009 taxes online ” Revoking an election. File 2009 taxes online   Once you elect not to deduct a special depreciation allowance for a class of property, you cannot revoke the election without IRS consent. File 2009 taxes online A request to revoke the election is a request for a letter ruling. File 2009 taxes online If you elect not to have any special allowance apply, the property may be subject to an alternative minimum tax adjustment for depreciation. File 2009 taxes online When Must You Recapture an Allowance? When you dispose of property for which you claimed a special depreciation allowance, any gain on the disposition is generally recaptured (included in income) as ordinary income up to the amount of the special depreciation allowance previously allowed or allowable. File 2009 taxes online See When Do You Recapture MACRS Depreciation in chapter 4 or more information. File 2009 taxes online Recapture of allowance deducted for qualified GO Zone property. File 2009 taxes online   If, in any year after the year you claim the special depreciation allowance for qualified GO Zone property (including specified GO Zone extension property), the property ceases to be used in the GO Zone, you may have to recapture as ordinary income the excess benefit you received from claiming the special depreciation allowance. File 2009 taxes online For additional guidance, see Notice 2008-25 on page 484 of Internal Revenue Bulletin 2008-9. File 2009 taxes online Qualified cellulosic biomass ethanol plant property and qualified cellulosic biofuel plant property. File 2009 taxes online   If, in any year after the year you claim the special depreciation allowance for any qualified cellulosic biomass ethanol plant property or qualified biofuel plant property, the property ceases to be qualified cellulosic biomass ethanol plant property or qualified biofuel plant property, you may have to recapture as ordinary income the excess benefit you received from claiming the special depreciation allowance. File 2009 taxes online Recapture of allowance for qualified Recovery Assistance property. File 2009 taxes online   If, in any year after the year you claim the special depreciation allowance for qualified Recovery Assistance property, the property ceases to be used in the Kansas disaster area, you may have to recapture as ordinary income the excess benefit you received from claiming the special depreciation allowance. File 2009 taxes online For additional guidance, see Notice 2008-67 on page 307 of Internal Revenue Bulletin 2008-32. File 2009 taxes online Recapture of allowance for qualified disaster assistance property. File 2009 taxes online   If, in any year after the year you claim the special depreciation allowance for qualified disaster assistance property, the property ceases to be used in the applicable disaster area, you may have to recapture as ordinary income the excess benefit you received from claiming the special depreciation allowance. File 2009 taxes online   For additional guidance, see Notice 2008-67 on page 307 of Internal Revenue Bulletin 2008-32. File 2009 taxes online Prev  Up  Next   Home   More Online Publications
 
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General FAQs on Payment Card and Third Party Network Transactions

I received Form 1099-K. How do I report it on my tax return?

Separate reporting of these transactions is not required. However, you should follow the return instructions on the form you are completing to report your gross receipts or sales. You should report items that qualify as a trade or business expense on the appropriate line item of Schedules C, E and F.

What is a participating payee?

A participating payee is:

  • Any person who accepts a payment card as payment, or
  • Any person who accepts payment made by a third party settlement organization on behalf of the purchaser or customer.

Why is this reporting necessary?

This reporting is required by law. Third party information reporting has been shown to increase voluntary tax compliance and improve collections and assessments within IRS.

How are reportable transactions to be reported to IRS?

Gross payment card and third party network transaction amounts are reported on the Form 1099-K, Payment Card and Third Party Network Transactions.

What information must be reported on the Form 1099-K?

The gross amount of reportable payment transactions for the calendar year and its corresponding months are required to be reported for each payee. The reporting of both annual and monthly amounts is necessary to resolve differences between information returns and tax returns of fiscal year filers. The name, address and taxpayer identification number of each participating payee must also be included on the form.

When are Forms 1099-K due?

Information reporting for payment card and third party network transactions is due to the IRS on the last day of February of the year following the transactions. If filing electronically, it is due the first day of April of the year following the transactions.

May Forms 1099-K be filed electronically?

Yes. Those required to file may do so through the FIRE (Filing Information Returns Electronically) system. If a payment settlement entity has more than 250 individual information returns to file in any calendar year, they all must be submitted electronically. Existing users may log into FIRE. New users may create an account and test their file before submitting.

For more information, review Publication 1220, Specifications for Filing Forms 1097, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G Electronically. If you are considering filing on paper, review General Instructions for Certain Information Returns.

What are payee statements and when are they due?

Every payment settlement entity required to file a Form 1099-K must also furnish to each participating payee a written statement with the same information reported to the IRS. The statements must be furnished to the payee by January 31 of the year following the transactions.

May payee statements be furnished to participating payees electronically?

Yes. With the participating payee’s prior consent, payee statements may be provided electronically. This consent may be granted electronically. (See Treasury regulations section 1.6050W-2 for instructions for receiving consent from payees.) If a payee statement is furnished electronically, an email address for the reporting entity may be provided in lieu of a phone number.

Is there a de minimis exception for Forms 1099-K by third party settlement organizations?  

There is a “de minimis” exception from reporting for a third party settlement organization with respect to third party network transactions. If payments to a participating payee exceed $20,000 and exceed 200 transactions within the calendar year they must file for that participating payee.

Does the de minimis exception described above apply to payment card transactions?

No. The “de minimis” exception does not apply to payment card transactions settled by merchant acquiring entities.

What constitutes the "gross amount" of reportable transactions?

The "gross amount" of reportable transactions means the total unadjusted dollar amount of aggregate payment transactions for each participating payee.  

Are foreign payment settlement entities subject to the reporting requirements?

Yes. The statute and regulations establish that a "payment settlement entity" may be a domestic or foreign entity.

Are payment settlement entities required to report the transactions of governmental units, whether state or federal?

Yes. The term "participating payees" includes any governmental unit.

What is payment card and third party network reporting?

Under section 6050W of the Internal Revenue Code, payment settlement entities (merchant acquiring entities and third party settlement organizations) must report payment card and third party network transactions. This reporting requirement began in early 2012 for payment card and third party network transactions that occurred in 2011.

Are purchases made with stored-value cards or gift cards reportable transactions?

It depends.

  • Purchases are not reportable when the card is accepted as payment by the issuer or someone who is related to the issuer of the card (such as a subsidiary company or the company itself). Under these circumstances, the stored-value cards do not fit the definition of a "payment card" and purchases made with such cards are therefore not reportable. 
  • Purchases are reportable when the stored-value card is accepted by a network of persons unrelated to the issuer and each other.

For the definition of unrelated person see section 267(b) of the Internal Revenue Code, including the application of section 267(b) and (e)(3), or section 707(b)(1).

If transactions are already reportable on other information returns, must they be reported again by payment settlement entities?

No. If a transaction is reportable by a PSE both under section 6041 or section 6041 A(a) and under section 6050W, the transaction must be reported on a Form 1099-K and not a Form 1099-MISC.

If a worker at a trade or business is an independent contractor, and the independent contractor swipes payment cards on behalf of the trade or business in the normal course of business (in other words, the trade or business, not the independent contractor, receives the proceeds), should the trade or business report payments to the worker on Form 1099-K or Form 1099-MISC?

In this situation, the trade or business should continue to report payments made to independent contractors on Form 1099-MISC as they have done in the past. However, the business will receive a Form 1099-K for these payment card transactions from the payment settlement entity.

How can payee TINs be verified?

Verification of payee TINs is done through the Taxpayer Identification Number (TIN) Matching Program.   

For further information please visit General Instructions for Certain Information Returns - Introductory Material or call 1-866-255-0654.

Can the entity responsible for filing Form 1099-K contract with a third party to prepare and file these returns?

Yes. However, the entity responsible for filing (i.e., the entity that submits the instructions to transfer funds) is liable for any applicable penalties under sections 6721 and 6722 if the reporting requirements are not met. In addition, the name, address and Taxpayer Identification Number of the entity responsible for filing must be reported on the Form 1099-K in the box for the filer's information.

What is Form 1099-K?

The Form 1099-K, Payment Card and Third Party Network Transactions, is an information return that reports the gross amount of reportable transactions for the calendar year to the IRS.

If you receive a Form 1099-K, you should retain it for your records and may use it to assist you in completing your tax returns.

I filed Form 1099-K last year. What changes will I see on my 2013 Form 1099-K?

IRS modified calendar year 2013 Form 1099-K to improve compliance effectiveness. These changes include:

  • Box 3 (Number of payment transactions) is no longer optional for calendar year 2013 and should reflect the number of purchase transactions (not including refund transactions) processed through the payment card or the third party network.
  • Box 4 (Federal income tax withheld) was added to reflect amounts that may have been withheld by the payer, such as backup withholding. The recipient of the Form 1099-K should include this amount on their income tax return as tax withheld.
  • Boxes 6, 7 & 8 were added to be consistent with other information returns and reflect the State, State ID Number and State Income Tax Withheld, respectively.

What are payment settlement entities?

A payment settlement entity is an entity that makes payment in settlement of a payment card transaction or third party network transaction. Payment Settlement Entities are often referred to as “PSEs” and can take one of two forms:

  • Merchant Acquiring Entity: A bank or other organization that has the contractual obligation to make payment to participating payees in settlement of payment card transactions
  • Third Party Settlement Organization: The central organization that has the contractual obligation to make payment to participating payees of third party network transactions

If I use a payment card (or a third party settlement organization) to pay for a purchase, do these payment card reporting rules affect me and will I receive a Form 1099-K?

No. Individuals will not receive a Form 1099-K for making a purchase. These provisions affect only businesses or entities that accept payment cards or use third party network settlement organizations for payment of goods or services.

Do payment settlement entities adjust the "gross amount" to account for fees, refunds, charge-backs or other costs and refunded amounts?

No. The "gross amount" is the total unadjusted dollar amount of the payment transactions for a participating payee. This amount is not to be adjusted to account for any fees, refunds, or any other amounts.

What do I do with the information on Form 1099-K?

The Form 1099-K is an information return. Use this information return in conjunction with your other tax records to determine your correct tax. To get further information on record keeping, check out Publication 552, for individuals or Publication 583, Starting a Business and Keeping Record.  

How will IRS use the data?

The IRS will use the data from the Form 1099-K to develop:

  • Taxpayer education and outreach products and services.
  • New examination and collection approaches.    

What do I do if I think my Form 1099-K is incorrect?

If you believe the information on a Form 1099-K is incorrect, the form has been issued in error, or you have a question relating to the form, contact the filer, whose name appears in the upper left corner on the front of the form.

Or you may contact the payer, or PSE, whose name and phone number are shown in the lower left corner of the form. If you cannot get this form corrected, you may attach an explanation to your tax return and report your income correctly.

To get the further information on Information Returns, check out the General Instructions for Certain Information Returns.

Where can I call if I have a question on the Form 1099-K?

Payors who have questions about the Form 1099-K itself, may call the IRS at 1-866-455-7438. Payees who have questions about the information on a Form 1099-K they have received should contact the filer, whose name appears in the upper left corner on the form.  

I own a small business and also have a not-for-profit hobby. I do not accept payment cards for payment for either, but I do use a credit card and third party settlement organization to make purchases for both. Do the payment card reporting rules affect me?

No. The provisions for payment settlement entity reporting affect only those businesses or entities that accept these forms of payment for goods or services.

Since you do not accept these forms of payments, you will not receive a Form 1099-K for your sales.

Additionally, you will not receive a Form 1099-K for your purchases. Individuals and businesses only receive Form 1099-K for receiving payment for goods and services in reportable transactions.

I occasionally sell items on an Internet auction site and accept payment cards. How do the payment settlement entity reporting rules affect me?

If you accept payment cards as a form of payment, you will receive a Form 1099-K for the gross amount of proceeds for the goods or services purchased from you through the use of a payment card in a calendar year. Further, if you accept payments from a third party settlement organization, you should receive a Form 1099-K from that organization only if:

  • The total number of your transactions exceeds 200 

AND 

  • The aggregate value exceeds $20,000 in a calendar year.

If I have a holiday craft business and accept payment cards for payments, how do the payment settlement entity reporting rules affect me?

If you are set up to accept payment cards as a form of payment, you will receive a Form 1099-K for the gross amount of the proceeds for the goods or services purchased from you through the use of a payment card in a calendar year. Further, if you accept payments from a third party settlement organization, you should receive a Form 1099-K only if:

  • the total number of your transactions exceeds 200 

AND

  • the aggregate value exceeds $20,000 in a calendar year.

 

Page Last Reviewed or Updated: 20-Mar-2014

The File 2009 Taxes Online

File 2009 taxes online 2. File 2009 taxes online   Withholding Tax Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Income Tax Withholding Statement. File 2009 taxes online 30% Flat Rate Withholding Social Security and Medicare TaxesGeneral Information Bilateral Social Security (Totalization) Agreements Topics - This chapter discusses: Withholding income tax from the pay of U. File 2009 taxes online S. File 2009 taxes online citizens, Withholding tax at a flat rate, and Social security and Medicare taxes. File 2009 taxes online Useful Items - You may want to see: Publication 505 Tax Withholding and Estimated Tax Form (and Instructions) 673 Statement For Claiming Exemption From Withholding on Foreign Earned Income Eligible for the Exclusion Provided by Section 911 W-4 Employee's Withholding Allowance Certificate W-9 Request for Taxpayer Identification Number and Certification See chapter 7 for information about getting this publication and these forms. File 2009 taxes online Income Tax Withholding U. File 2009 taxes online S. File 2009 taxes online employers generally must withhold U. File 2009 taxes online S. File 2009 taxes online income tax from the pay of U. File 2009 taxes online S. File 2009 taxes online citizens working abroad unless the employer is required by foreign law to withhold foreign income tax. File 2009 taxes online Foreign earned income exclusion. File 2009 taxes online   Your employer does not have to withhold U. File 2009 taxes online S. 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