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Filing An Ammended Return

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Filing An Ammended Return

Filing an ammended return Publication 536 - Introductory Material Table of Contents Reminders IntroductionOrdering forms and publications. Filing an ammended return Tax questions. Filing an ammended return Useful Items - You may want to see: Reminders Future developments. Filing an ammended return  For the latest developments related to Publication 536, such as legislation enacted after we release it, go to www. Filing an ammended return irs. Filing an ammended return gov/pub536. Filing an ammended return Photographs of missing children. Filing an ammended return  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Filing an ammended return Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Filing an ammended return You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Filing an ammended return Introduction If your deductions for the year are more than your income for the year, you may have a net operating loss (NOL). Filing an ammended return An NOL year is the year in which an NOL occurs. Filing an ammended return You can use an NOL by deducting it from your income in another year or years. Filing an ammended return What this publication covers. Filing an ammended return   This publication discusses NOLs for individuals, estates, and trusts. Filing an ammended return It covers: How to figure an NOL, When to use an NOL, How to claim an NOL deduction, and How to figure an NOL carryover. Filing an ammended return To have an NOL, your loss must generally be caused by deductions from your: Trade or business, Work as an employee, Casualty and theft losses, Moving expenses, or Rental property. Filing an ammended return A loss from operating a business is the most common reason for an NOL. Filing an ammended return Partnerships and S corporations generally cannot use an NOL. Filing an ammended return However, partners or shareholders can use their separate shares of the partnership's or S corporation's business income and business deductions to figure their individual NOLs. Filing an ammended return Keeping records. Filing an ammended return   You should keep records for any tax year that generates an NOL for 3 years after you have used the carryback/carryforward or 3 years after the carryforward expires. Filing an ammended return    You should attach all required documents to the Form 1045 or Form 1040X. Filing an ammended return For details, see the instructions for Form 1045 or Form 1040X. Filing an ammended return What is not covered in this publication?   The following topics are not covered in this publication. Filing an ammended return Bankruptcies. Filing an ammended return See Publication 908, Bankruptcy Tax Guide. Filing an ammended return NOLs of corporations. Filing an ammended return See Publication 542, Corporations. Filing an ammended return Section references. Filing an ammended return   Section references are to the Internal Revenue Code unless otherwise noted. Filing an ammended return Comments and suggestions. Filing an ammended return   We welcome your comments about this publication and your suggestions for future editions. Filing an ammended return   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Filing an ammended return NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Filing an ammended return Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Filing an ammended return   You can send your comments from www. Filing an ammended return irs. Filing an ammended return gov/formspubs/. Filing an ammended return Click on “More Information. Filing an ammended return ” and then on “Comment on Tax Forms and Publications. Filing an ammended return ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Filing an ammended return Ordering forms and publications. Filing an ammended return   Visit www. Filing an ammended return irs. Filing an ammended return gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Filing an ammended return Internal Revenue Service 1201 N. Filing an ammended return Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Filing an ammended return   If you have a tax question, check the information available on IRS. Filing an ammended return gov or call 1-800-829-1040. Filing an ammended return We cannot answer tax questions sent to either of the above addresses. Filing an ammended return Useful Items - You may want to see: Form (and Instructions) 1040X Amended U. Filing an ammended return S. Filing an ammended return Individual Income Tax Return 1045 Application for Tentative Refund   See How To Get Tax Help near the end of this publication for information about getting these forms. Filing an ammended return Prev  Up  Next   Home   More Online Publications
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Small Business Health Care Tax Credit for Small Employers

 

 

Small employer? Get the credit you deserve.

     If you are a small employer. . .

              with fewer than 25 full-time equivalent employees,
              pay an average wage of less than $50,000 a year, and
               pay at least half of employee health insurance premiums

 

                               . . .then there is a tax credit that may put money in your pocket.

 

 

What You Need to Know about the Small Business Health Care Tax Credit

How will the credit make a difference for you?                 

For tax years 2010 through 2013, the maximum credit is 35 percent of premiums paid for small business employers and 25 percent of premiums paid for small tax-exempt employers such as charities.

 

For tax years beginning in 2014 or later, there will be changes to the credit:

 

  • The maximum credit will increase to 50 percent of premiums paid for small business employers and 35 percent of premiums paid for small tax-exempt employers. 
  • To be eligible for the credit, a small employer must pay premiums on behalf of employees enrolled in a qualified health plan offered through a Small Business Health Options Program (SHOP) Marketplace.
  • The credit will be available to eligible employers for two consecutive taxable years.

 

Here’s what this means for you. If you pay $50,000 a year toward workers’ health care premiums — and if you qualify for a 15 percent credit, you save... $7,500. If you save $7,500 a year from tax year 2010 through 2013, that’s total savings of $30,000. If, in 2014, you qualify for a slightly larger credit, say 20 percent, your savings go from $7,500 a year to $10,000 a year.

 

Even if you are a small business employer who did not owe tax during the year, you can carry the credit back or forward to other tax years. Also, since the amount of the health insurance premium payments is more than the total credit, eligible small businesses can still claim a business expense deduction for the premiums in excess of the credit. That’s both a credit and a deduction for employee premium payments.

 

There is good news for small tax-exempt employers too. The credit is refundable, so even if you have no taxable income, you may be eligible to receive the credit as a refund so long as it does not exceed your income tax withholding and Medicare tax liability.

 

And finally, if you can benefit from the credit this year but forgot to claim it on your tax return, there’s still time to file an amended return.

 

Click here if you want more examples of how the credit applies in different circumstances.

Can you claim the credit?

Now that you know how the credit can make a difference for your business, let’s determine if you can claim it.

To be eligible, you must cover at least 50 percent of the cost of single (not family) health care coverage for each of your employees. You must also have fewer than 25 full-time equivalent employees (FTEs). Those employees must have average wages of less than $50,000 (as adjusted for inflation beginning in 2014) per year. Remember, you will have to purchase insurance through the SHOP Marketplace to be eligible for the credit for tax years 2014 and beyond.

Let us break it down for you even more.

You are probably wondering: what IS an FTE. Basically, two half-time workers count as one FTE. That means 20 half-time employees are equivalent to 10 FTEs, which makes the number of FTEs 10, not 20.

Now let’s talk about average annual wages. Say you pay total wages of $200,000 and have 10 FTEs. To figure average annual wages you divide $200,000 by 10 — the number of FTEs — and the result is your average annual wage. The average annual wage would be $20,000.

Also, the amount of the credit you receive works on a sliding scale. The smaller the business or charity, the bigger the credit. So if you have more than 10 FTEs or if the average wage is more than $25,000 (as adjusted for inflation beginning in 2014), the amount of the credit you receive will be less.

How do you claim the credit?

You must use Form 8941, Credit for Small Employer Health Insurance Premiums, to calculate the credit. For detailed information on filling out this form, see the Instructions for Form 8941.

 

If you are a small business, include the amount as part of the general business credit on your income tax return.

 

If you are a tax-exempt organization, include the amount on line 44f of the Form 990-T, Exempt Organization Business Income Tax Return. You must file the Form 990-T in order to claim the credit, even if you don't ordinarily do so.
 

Don’t forget... if you are a small business employer, you may be able to carry the credit back or forward. And if you are a tax-exempt employer, you may be eligible for a refundable credit.

 

          

Versión en Español

Información acerca del Crédito Tributario por Cuidados de Salud para Pequeñas Empresas

Questions and Answers

Got questions? We have answers.

Small Business Health Care Tax Credit Estimator

Use the estimator to find out whether you may be eligible and get an estimate of how much you might receive.

Forms and Step-by-Step Instructions

Form 8941, Credit for Small Employer Health Insurance Premiums and Instructions for Form 8941

Additional Guidance

Additional guidance on the credit is available in Notices 2010-44, 2010-82 and Notice 2014-6. Find guidance for the 2014 changes in REG-113792-13

News Releases

Affordable Care Act News Releases, Multimedia and Legal Guidance

Widgets

IRS small business health care tax credit Widgets available on Marketing Express.

Information Flyer

Flyer on the Small Business Health Care Tax Credit for small employers.

 

 

 

 

 

 

 

Page Last Reviewed or Updated: 07-Feb-2014

The Filing An Ammended Return

Filing an ammended return Depreciation Table of Contents Introduction Special Depreciation AllowanceQualified Property Election Not To Claim the Allowance Rules for Returns Filed Before June 1, 2002 Passenger Automobiles New York Liberty Zone BenefitsSpecial Liberty Zone Depreciation Allowance Increased Section 179 Deduction Liberty Zone Leasehold Improvement Property If you depreciate business property that you acquired and placed in service after September 10, 2001, new law contains provisions that may affect your depreciation deduction for that property. Filing an ammended return Publication 946, How To Depreciate Property, contains information on depreciation. Filing an ammended return However, Publication 946 does not contain the new provisions because it was printed before the law was enacted. Filing an ammended return The new provisions are in the Supplement to Publication 946, which is reprinted below. Filing an ammended return Supplement to Publication 946 How To Depreciate Property   Introduction After Publication 946 was printed, the Job Creation and Worker Assistance Act of 2002 was signed into law by the President. Filing an ammended return The new law made several changes in the tax rules explained in the publication. Filing an ammended return Some of the changes apply to property placed in service during 2001. Filing an ammended return This supplemental publication describes those changes and explains what you should do if you are affected by them. Filing an ammended return The situations and examples in Publication 946 do not reflect any of the changes made by the Job Creation and Worker Assistance Act of 2002. Filing an ammended return The new law contains the following provisions. Filing an ammended return 30% depreciation deductions (special depreciation allowance and special New York Liberty Zone (Liberty Zone) depreciation allowance) for the year qualified property is placed in service after September 10, 2001. Filing an ammended return An increased dollar limit on the section 179 deduction for qualified Liberty Zone property purchased after September 10, 2001. Filing an ammended return A shorter recovery period for qualified Liberty Zone leasehold improvement property placed in service after September 10, 2001. Filing an ammended return An increase in the maximum depreciation deduction for 2001 for a qualified passenger automobile placed in service after September 10, 2001. Filing an ammended return If you believe you qualify for an increased deduction under any of these new rules, you must file the revised 2001 Form 4562 (dated March 2002) for 2001 calendar or fiscal years and 2000 fiscal years ending after September 10, 2001. Filing an ammended return If you have already filed a tax return, this supplemental publication explains how to claim these benefits and how to elect not to claim the special depreciation allowance or special Liberty Zone depreciation allowance. Filing an ammended return See Table 2 at the end of the supplement for an overview of the rules that apply if you filed your return before June 1, 2002. Filing an ammended return Special Depreciation Allowance You can take a special depreciation allowance for qualified property you place in service after September 10, 2001. Filing an ammended return The allowance is an additional deduction of 30% of the property's depreciable basis. Filing an ammended return To figure the depreciable basis, you must first multiply the property's cost or other basis by the percentage of business/investment use and then reduce that amount by any section 179 deduction and certain other deductions and credits for the property. Filing an ammended return See What Is the Basis for Depreciation? on page 23 in Publication 946 for more information on figuring depreciable basis. Filing an ammended return The allowance is deductible for both regular tax and alternative minimum tax (AMT) purposes. Filing an ammended return There is no AMT adjustment required for any depreciation figured on the remaining basis of the property. Filing an ammended return In the year you claim the allowance (generally the year you place the property in service), you must reduce the depreciable basis of the property by the allowance before figuring your regular depreciation deduction. Filing an ammended return Example 1. Filing an ammended return On November 1, 2001, you bought and placed in service in your business qualified property that cost $100,000. Filing an ammended return You did not elect to claim a section 179 deduction. Filing an ammended return You can deduct 30% of the cost ($30,000) as a special depreciation allowance for 2001. Filing an ammended return You use the remaining $70,000 of cost to figure your regular depreciation deduction for 2001 and later years. Filing an ammended return Example 2. Filing an ammended return The facts are the same as in Example 1, except that you choose to deduct $24,000 of the property's cost as a section 179 deduction. Filing an ammended return You use the remaining $76,000 of cost to figure your special depreciation allowance of $22,800 ($76,000 × 30%). Filing an ammended return You use the remaining $53,200 of cost to figure your regular depreciation deduction for 2001 and later years. Filing an ammended return Qualified Property To qualify for the special depreciation allowance, your property must meet the following requirements. Filing an ammended return It is new property of one of the following types. Filing an ammended return Property depreciated under the modified accelerated cost recovery system (MACRS) with a recovery period of 20 years or less. Filing an ammended return See Can You Use MACRS To Depreciate Your Property and Which Recovery Period Applies? on pages 7 and 23, respectively, in Publication 946. Filing an ammended return Water utility property. Filing an ammended return See 25-year property on page 22 in Publication 946. Filing an ammended return Computer software that is not a section 197 intangible as described in Computer software on page 5 in Publication 946. Filing an ammended return (The cost of some computer software is treated as part of the cost of hardware and is depreciated under MACRS. Filing an ammended return ) Qualified leasehold improvement property (defined later). Filing an ammended return It meets the following tests (explained later under Tests To Be Met). Filing an ammended return Acquisition date test. Filing an ammended return Placed in service date test. Filing an ammended return Original use test. Filing an ammended return It is not excepted property (explained later under Excepted Property). Filing an ammended return Qualified leasehold improvement property. Filing an ammended return    Generally, this is any improvement to an interior part of a building that is nonresidential real property, provided all of the following requirements are met. Filing an ammended return The improvement is made under or pursuant to a lease by the lessee (or any sublessee) or the lessor of that part of the building. Filing an ammended return That part of the building is to be occupied exclusively by the lessee (or any sublessee) of that part. Filing an ammended return The improvement is placed in service more than 3 years after the date the building was first placed in service. Filing an ammended return   However, a qualified leasehold improvement does not include any improvement for which the expenditure is attributable to any of the following. Filing an ammended return The enlargement of the building. Filing an ammended return Any elevator or escalator. Filing an ammended return Any structural component benefiting a common area. Filing an ammended return The internal structural framework of the building. Filing an ammended return   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. Filing an ammended return However, a binding commitment between related persons is not treated as a lease. Filing an ammended return Related persons. Filing an ammended return   For this purpose, the following are related persons. Filing an ammended return Members of an affiliated group. Filing an ammended return The persons listed in items (1) through (9) under Related persons on page 8 of Publication 946 (except that “80% or more” should be substituted for “more than 10%” each place it appears). Filing an ammended return An executor and a beneficiary of the same estate. Filing an ammended return Tests To Be Met To qualify for the special depreciation allowance, the property must meet all of the following tests. Filing an ammended return Acquisition date test. Filing an ammended return    Generally, you must have acquired the property either: After September 10, 2001, and before September 11, 2004, but only if no written binding contract for the acquisition was in effect before September 11, 2001, or Pursuant to a written binding contract entered into after September 10, 2001, and before September 11, 2004. Filing an ammended return   Property you manufacture, construct, or produce for your own use meets this test if you began the manufacture, construction, or production of the property after September 10, 2001, and before September 11, 2004. Filing an ammended return Placed in service date test. Filing an ammended return   Generally, the property must be placed in service for use in your trade or business or for the production of income after September 10, 2001, and before January 1, 2005. Filing an ammended return   If you sold property you placed in service after September 10, 2001, and you leased it back within 3 months after the property was originally placed in service, the property is treated as placed in service no earlier than the date it is used under the leaseback. Filing an ammended return Original use test. Filing an ammended return   The original use of the property must have begun with you after September 10, 2001. Filing an ammended return “Original use” means the first use to which the property is put, whether or not by you. Filing an ammended return Additional capital expenditures you incurred after September 10, 2001, to recondition or rebuild your property meet the original use test. Filing an ammended return Excepted Property The following property does not qualify for the special depreciation allowance. Filing an ammended return Property used by any person before September 11, 2001. Filing an ammended return Property required to be depreciated using ADS. Filing an ammended return This includes listed property used 50% or less in a qualified business use. Filing an ammended return Qualified New York Liberty Zone leasehold improvement property (defined next). Filing an ammended return Qualified New York Liberty Zone leasehold improvement property. Filing an ammended return   This is any qualified leasehold improvement property (as defined earlier) if all of the following requirements are met. Filing an ammended return The improvement is to a building located in the New York Liberty Zone (defined later under New York Liberty Zone Benefits). Filing an ammended return The improvement is placed in service after September 10, 2001, and before January 1, 2007. Filing an ammended return No written binding contract for the improvement was in effect before September 11, 2001. Filing an ammended return Election Not To Claim the Allowance You can elect not to claim the special depreciation allowance for qualified property. Filing an ammended return If you make this election for any property, it applies to all property in the same property class placed in service during the year. Filing an ammended return To make this election, attach a statement to your return indicating you elect not to claim the allowance and the class of property for which you are making the election. Filing an ammended return When to make election. Filing an ammended return   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. Filing an ammended return   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). Filing an ammended return Attach the election statement to the amended return. Filing an ammended return At the top of the election statement, write “Filed pursuant to section 301. Filing an ammended return 9100–2. Filing an ammended return ” Revoking an election. Filing an ammended return   Once you elect not to deduct the special depreciation allowance for a class of property, you cannot revoke the election without IRS consent. Filing an ammended return A request to revoke the election is subject to a user fee. Filing an ammended return Rules for Returns Filed Before June 1, 2002 The following rules apply if you placed qualified property in service after September 10, 2001, and filed your return before June 1, 2002. Filing an ammended return The rules apply to returns for the following years. Filing an ammended return 2000 fiscal years that end after September 10, 2001. Filing an ammended return 2001 calendar and fiscal years. Filing an ammended return Claiming the allowance. Filing an ammended return   If you did not claim the allowance on your return and did not make the election not to claim the allowance, you can do either of the following to claim the allowance. Filing an ammended return File an amended return by the due date (not including extensions) of your return for the year following the year the property was placed in service. Filing an ammended return Write “Filed Pursuant to Rev. Filing an ammended return Proc. Filing an ammended return 2002–33” at the top of the amended return. Filing an ammended return File Form 3115, Application for Change in Accounting Method, with your return for the year following the year the property was placed in service. Filing an ammended return Your return must be filed by the due date (including extensions). Filing an ammended return Write “Automatic Change Filed Under Rev. Filing an ammended return Proc. Filing an ammended return 2002–33” on the appropriate line of Form 3115. Filing an ammended return You must also file a copy (with signature) of the completed Form 3115 with the IRS National Office no later than when you file the original with your return. Filing an ammended return For more information about filing Form 3115, including the address to send it to, see Revenue Procedure 2002–9, Revenue Procedure 2002–19, and Revenue Procedure 2002–33. Filing an ammended return Example 1. Filing an ammended return You are an individual and you use the calendar year. Filing an ammended return You placed qualified property in service for your business in December 2001. Filing an ammended return You filed your 2001 income tax return before April 15, 2002. Filing an ammended return You did not claim the special depreciation allowance for the property and did not make the election not to claim the allowance. Filing an ammended return You can claim the special allowance by filing an amended 2001 return by April 15, 2003, with “Filed Pursuant to Rev. Filing an ammended return Proc. Filing an ammended return 2002–33” at the top of the amended return. Filing an ammended return You must file an amended return by April 15, 2003, even if you get an extension of time to file your 2002 tax return. Filing an ammended return Example 2. Filing an ammended return The facts concerning your 2001 return are the same as in Example 1. Filing an ammended return In addition, you got an automatic 4-month extension of time (to August 15, 2003) to file your 2002 return. Filing an ammended return You can claim the special allowance by filing a Form 3115 (with “Filed Pursuant to Rev. Filing an ammended return Proc. Filing an ammended return 2002–33” on the appropriate line) with your 2002 return by August 15, 2003. Filing an ammended return You must also file a copy of this Form 3115 with the IRS National Office no later than when you file your 2002 return. Filing an ammended return Electing not to claim the allowance. Filing an ammended return   Generally, you have elected not to claim the special depreciation allowance for a class of property if you: Filed your return timely (including extensions) for the year you placed qualified property in service and indicated on a statement with the return that you are not claiming the allowance, or Filed your return timely and filed an amended return within 6 months of the due date of the original return (not including extensions) and indicated on a statement with the amended return that you are not claiming the allowance. Filing an ammended return The statement must indicate that you are not deducting the special depreciation allowance and the class of property to which the election applies. Filing an ammended return The statement can be either attached to or written on the return. Filing an ammended return You can, for example, write “not deducting 30%” on Form 4562. Filing an ammended return Deemed election. Filing an ammended return   If you have not followed either of the procedures described above to elect not to claim the allowance, you may still be treated as making the election. Filing an ammended return You will be treated as making the election if you meet both of the following conditions. Filing an ammended return You filed your return for the year you placed the property in service and claimed depreciation, but not the special allowance, for any class of property. Filing an ammended return You do not file an amended return or a Form 3115 within the time prescribed for claiming the special allowance. Filing an ammended return See Claiming the allowance, earlier. Filing an ammended return Passenger Automobiles The limit on your depreciation deduction (including any section 179 deduction) for any passenger automobile that is qualified property (defined earlier) placed in service after September 10, 2001, and for which you claim the special depreciation allowance is increased. Filing an ammended return Generally, the limit is increased from $3,060 to $7,660. Filing an ammended return However, if the automobile is a qualified electric car, the limit is increased from $9,280 to $23,080 ($22,980 if placed in service in 2002). Filing an ammended return Table 1 shows the maximum deduction amounts for 2001. Filing an ammended return Table 1. Filing an ammended return Maximum Deduction for 2001 Qualified Vehicle Placed in Service Before Sept. Filing an ammended return 11 Placed in Service After Sept. Filing an ammended return 10 Passenger automobile $3,060 $7,660 Electric car 9,280 23,080 1 1$22,980 if you place an electric car in service in 2002. Filing an ammended return Election not to claim the allowance. Filing an ammended return   The increased maximum depreciation deduction does not apply if you elected not to claim the special depreciation allowance as explained earlier under Election Not To Claim the Allowance and Rules for Returns Filed Before June 1, 2002. Filing an ammended return New York Liberty Zone Benefits Several benefits are available for property you place in service in the New York Liberty Zone (Liberty Zone). Filing an ammended return They include a special depreciation allowance for the year you place the property in service, an increased section 179 deduction, and the classification of certain leasehold improvement property as 5-year property. Filing an ammended return Area defined. Filing an ammended return   The New York Liberty Zone is the area located on or south of Canal Street, East Broadway (east of its intersection with Canal Street), or Grand Street (east of its intersection with East Broadway) in the Borough of Manhattan in the City of New York, New York. Filing an ammended return Special Liberty Zone Depreciation Allowance You can take a special depreciation allowance for qualified Liberty Zone property you place in service after September 10, 2001. Filing an ammended return The allowance is an additional deduction of 30% of the property's depreciable basis. Filing an ammended return To figure the depreciable basis, you must first multiply the property's cost or other basis by the percentage of business/investment use and then reduce that amount by any section 179 deduction and certain other deductions and credits for the property. Filing an ammended return See What Is the Basis for Depreciation? on page 23 in Publication 946 for more information on figuring depreciable basis. Filing an ammended return The allowance is deductible for both regular tax and alternative minimum tax (AMT) purposes. Filing an ammended return There is no AMT adjustment required for any depreciation figured on the remaining basis of the property. Filing an ammended return In the year you claim the allowance (generally the year you place the property in service), you must reduce the depreciable basis of the property by the allowance before figuring your regular depreciation deduction. Filing an ammended return You cannot claim the special Liberty Zone depreciation allowance for property eligible for the special depreciation allowance explained earlier in Qualified Property under Special Depreciation Allowance. Filing an ammended return Qualified property is eligible for only one special depreciation allowance. Filing an ammended return Example 1. Filing an ammended return On November 1, 2001, you bought and placed in service in your business, which is in the Liberty Zone, qualified Liberty Zone property that cost $200,000. Filing an ammended return You did not elect to claim a section 179 deduction. Filing an ammended return You can deduct 30% of the cost ($60,000) as a special Liberty Zone depreciation allowance for 2001. Filing an ammended return You use the remaining $140,000 of cost to figure your regular depreciation deduction for 2001 and later years. Filing an ammended return Example 2. Filing an ammended return The facts are the same as in Example 1, except that you choose to deduct $59,000 of the property's cost as a section 179 deduction. Filing an ammended return (See Increased Section 179 Deduction, later, for information concerning how this section 179 deduction amount is figured). Filing an ammended return You use the remaining $141,000 of cost to figure your special Liberty Zone depreciation allowance of $42,300 ($141,000 × 30%). Filing an ammended return You use the remaining $98,700 of cost to figure your regular depreciation deduction for 2001 and later years. Filing an ammended return Qualified Liberty Zone Property For a 2001 calendar or fiscal year and a 2000 fiscal year that ends after September 10, 2001, property qualifies for the special Liberty Zone depreciation allowance if it meets the following requirements. Filing an ammended return It is one of the following types of property. Filing an ammended return Used property depreciated under MACRS with a recovery period of 20 years or less. Filing an ammended return See Can You Use MACRS To Depreciate Your Property and Which Recovery Period Applies? on pages 7 and 23, respectively, in Publication 946. Filing an ammended return Used water utility property. Filing an ammended return See 25-year property on page 22 in Publication 946. Filing an ammended return Used computer software that is not a section 197 intangible as described in Computer software on page 5 in Publication 946. Filing an ammended return (The cost of some computer software is treated as part of the cost of hardware and is depreciated under MACRS. Filing an ammended return ) Certain nonresidential real property and residential rental property (defined later). Filing an ammended return It meets the following tests (explained later under Tests to be met). Filing an ammended return Acquisition date test. Filing an ammended return Placed in service date test. Filing an ammended return Substantial use test. Filing an ammended return Original use test. Filing an ammended return It is not excepted property (explained later under Excepted property). Filing an ammended return Nonresidential real property and residential rental property. Filing an ammended return   This property is qualifying property only to the extent it rehabilitates real property damaged, or replaces real property destroyed or condemned, as a result of the terrorist attack of September 11, 2001. Filing an ammended return Property is treated as replacing destroyed or condemned property if, as part of an integrated plan, such property replaces real property included in a continuous area that includes real property destroyed or condemned. Filing an ammended return   For these purposes, real property is considered destroyed (or condemned) only if an entire building or structure was destroyed (or condemned) as a result of the terrorist attack. Filing an ammended return Otherwise, the property is considered damaged real property. Filing an ammended return For example, if certain structural components of a building (such as walls, floors, or plumbing fixtures) are damaged or destroyed as a result of the terrorist attack, but the building is not destroyed (or condemned), then only costs related to replacing the damaged or destroyed structural components qualify for the special Liberty Zone depreciation allowance. Filing an ammended return Tests to be met. Filing an ammended return   To qualify for the special Liberty Zone depreciation allowance, your property must meet all of the following tests. Filing an ammended return Acquisition date test. Filing an ammended return   You must have acquired the property by purchase after September 10, 2001, and there must not have been a binding written contract for the acquisition in effect before September 11, 2001. Filing an ammended return   For information on the acquisition of property by purchase, see Property Acquired by Purchase on page 15 of Publication 946. Filing an ammended return   Property you manufacture, construct, or produce for your own use meets this test if you began the manufacture, construction, or production of the property after September 10, 2001. Filing an ammended return Placed in service date test. Filing an ammended return   Generally, the property must be placed in service for use in your trade or business or for the production of income before January 1, 2007 (January 1, 2010, in the case of qualifying nonresidential real property and residential rental property). Filing an ammended return   If you sold property you placed in service after September 10, 2001, and you leased it back within 3 months after the property was originally placed in service, the property is treated as placed in service no earlier than the date it is used under the leaseback. Filing an ammended return Substantial use test. Filing an ammended return   Substantially all use of the property must be in the Liberty Zone and in the active conduct of your trade or business in the Liberty Zone. Filing an ammended return Original use test. Filing an ammended return   The original use of the property in the Liberty Zone must have begun with you after September 10, 2001. Filing an ammended return   Used property can be qualified Liberty Zone property if it has not previously been used within the Liberty Zone. Filing an ammended return Also, additional capital expenditures you incurred after September 10, 2001, to recondition or rebuild your property meet the original use test if the original use of the property in the Liberty Zone began with you. Filing an ammended return Excepted property. Filing an ammended return   The following property does not qualify for the special Liberty Zone depreciation allowance. Filing an ammended return Property eligible for the special depreciation allowance explained earlier in Qualified Property under Special Depreciation Allowance. Filing an ammended return Property required to be depreciated using ADS. Filing an ammended return This includes listed property used 50% or less in a qualified business use. Filing an ammended return Qualified New York Liberty Zone leasehold improvement property (defined earlier in Excepted Property under Special Depreciation Allowance). Filing an ammended return Example. Filing an ammended return In December 2001, you bought and placed in service in your business in the Liberty Zone the following property. Filing an ammended return New office furniture with a MACRS recovery period of 7 years. Filing an ammended return A used computer with a MACRS recovery period of 5 years. Filing an ammended return The computer had not previously been used within the Liberty Zone. Filing an ammended return Because the office furniture is new property, it qualifies for the special depreciation allowance, but not the special Liberty Zone depreciation allowance. Filing an ammended return Because the computer is used property that had not previously been used in the Liberty Zone, it qualifies for the special Liberty Zone depreciation allowance, but not the special depreciation allowance. Filing an ammended return Election Not To Claim the Liberty Zone Allowance You can elect not to claim the special Liberty Zone depreciation allowance for qualified property. Filing an ammended return If you make this election for any property, it applies to all property in the same property class placed in service during the year. Filing an ammended return To make this election, attach a statement to your return indicating you elect not to claim the allowance and the class of property for which you are making the election. Filing an ammended return When to make the election. Filing an ammended return   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. Filing an ammended return   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). Filing an ammended return Attach the election statement to the amended return. Filing an ammended return At the top of the election statement, write “Filed pursuant to section 301. Filing an ammended return 9100–2. Filing an ammended return ” Revoking an election. Filing an ammended return   Once you elect not to deduct the special Liberty Zone depreciation allowance for a class of property, you cannot revoke the election without IRS consent. Filing an ammended return A request to revoke the election is subject to a user fee. Filing an ammended return Returns filed before June 1, 2002. Filing an ammended return   The rules that apply to the special depreciation allowance discussed earlier in Rules for Returns Filed Before June 1, 2002 under Special Depreciation Allowance also apply to the special Liberty Zone depreciation allowance. Filing an ammended return Increased Section 179 Deduction Under section 179 of the Internal Revenue Code, you can choose to recover all or part of the cost of certain qualifying property, up to a limit, by deducting it in the year you place the property in service. Filing an ammended return For tax years beginning in 2000, that limit was $20,000. Filing an ammended return For tax years beginning in 2001 and 2002, that limit is generally $24,000. Filing an ammended return If the cost of qualifying section 179 property placed in service in a year is over $200,000, you must reduce the dollar limit (but not below zero) by the amount of the cost over $200,000. Filing an ammended return Increased Dollar Limit The dollar limit on the section 179 deduction is increased for certain property placed in service in the Liberty Zone. Filing an ammended return The increase is the smaller of the following amounts. Filing an ammended return $35,000. Filing an ammended return The cost of section 179 property that is qualified Liberty Zone property placed in service during the year. Filing an ammended return If you use the revised 2001 Form 4562 (dated March 2002) for a tax year beginning in 2000, you must reduce the section 179 dollar limit to $20,000 before adding the additional amount for qualified property. Filing an ammended return Qualified property. Filing an ammended return   To qualify for the increased section 179 deduction, your property must be section 179 property that is either: Qualified Liberty Zone property, or Property that would be qualified Liberty Zone property except that it is eligible for the special depreciation allowance. Filing an ammended return Qualified Liberty Zone property is explained earlier in Qualified Liberty Zone Property under Special Liberty Zone Depreciation Allowance. Filing an ammended return Property eligible for the special depreciation allowance is explained earlier in Qualified Property under Special Depreciation Allowance. Filing an ammended return For information on the requirements that must be met for property to qualify for the section 179 deduction, see What Property Qualifies? on page 14 of Publication 946. Filing an ammended return Example 1. Filing an ammended return In 2002, you place in service in your business, which is in the Liberty Zone, qualified property (defined earlier) costing $25,000. Filing an ammended return Because this cost is less than $35,000, the dollar limit on the section 179 deduction is increased by $25,000 to $49,000 ($24,000 + $25,000). Filing an ammended return Example 2. Filing an ammended return In 2002, you place in service in your business, which is in the Liberty Zone, qualified property (defined earlier) costing $75,000. Filing an ammended return Because $35,000 is less than the cost of the property you place in service, the dollar limit on the section 179 deduction you can claim is increased by $35,000 to $59,000 ($24,000 + $35,000). Filing an ammended return Reduced Dollar Limit Generally, you must reduce the dollar limit for a year by the cost of qualifying section 179 property placed in service in the year that is more than $200,000. Filing an ammended return However, if the cost of your Liberty Zone property exceeds $200,000, you take into account only 50% (instead of 100%) of the cost of qualified property placed in service in a year. Filing an ammended return Example. Filing an ammended return In 2002, you place in service in your business, which is in the Liberty Zone, qualified property costing $460,000. Filing an ammended return Your increased dollar limit is $59,000 ($35,000 + $24,000). Filing an ammended return Because 50% of the cost of the property you place in service ($230,000) is $30,000 more than $200,000, you must reduce your $59,000 dollar limit to $29,000 ($59,000 - $30,000). Filing an ammended return Recapture Rules Rules similar to those explained on page 20 of Publication 946 under When Must You Recapture the Deduction? apply with respect to any qualified property you stop using in the Liberty Zone. Filing an ammended return Returns Filed Before June 1, 2002 If you filed a return before June 1, 2002, and did not deduct the increased section 179 amount for qualified property placed in service after September 10, 2001, you can deduct the increased amount by filing an amended return by the due date (not including extensions) of the return for the year after the year the property was placed in service. Filing an ammended return This rule applies to returns for the following years. Filing an ammended return 2000 fiscal years that end after September 10, 2001. Filing an ammended return 2001 calendar and fiscal years. Filing an ammended return On the amended return, write “Filed Pursuant to Rev. Filing an ammended return Proc. Filing an ammended return 2002–33. Filing an ammended return ” Liberty Zone Leasehold Improvement Property Qualified Liberty Zone leasehold improvement property (described earlier in Qualified Property under Special Depreciation Allowance) is 5-year property. Filing an ammended return This means that it is depreciated over a recovery period of 5 years. Filing an ammended return For information about recovery periods, see Which Recovery Period Applies? on page 23 of Publication 946. Filing an ammended return The straight-line method must be used with respect to qualified Liberty Zone leasehold improvement property. Filing an ammended return Under ADS, the recovery period for qualified Liberty Zone leasehold improvement property is 9 years. Filing an ammended return Returns Filed Before June 1, 2002 If you filed either of the following returns before June 1, 2002, and did not depreciate qualified Liberty Zone leasehold improvement property placed in service during the tax year as 5-year property using the straight line method, you should file an amended return before you file your return for the year after the year the property was placed in service. Filing an ammended return Your 2000 fiscal year return (for a 2000 fiscal year that ends after September 10, 2001). Filing an ammended return Your 2001 calendar or fiscal year return. Filing an ammended return On the amended return, write “Filed Pursuant to Rev. Filing an ammended return Proc. Filing an ammended return 2002–33. Filing an ammended return ” Table 2. Filing an ammended return Rules for Returns Filed Before June 1, 2002 Note:This chart highlights the rules for returns affected by the Job Creation and Worker Assistance Act of 2002 that were filed before June 1, 2002, without accounting for any of the new benefits under the law. Filing an ammended return See the text for definitions and examples. Filing an ammended return Do not rely on this chart alone. Filing an ammended return IF you want to. Filing an ammended return . Filing an ammended return . Filing an ammended return THEN you. Filing an ammended return . Filing an ammended return . Filing an ammended return BY. Filing an ammended return . Filing an ammended return . Filing an ammended return claim the special depreciation allowance or special Liberty Zone depreciation allowance • must file an amended return • the due date (not including extensions) of your return for the year after the year the property was placed in service, or • must file Form 3115, Application for Change in Accounting Method, with your return for the year after the year the property was placed in service • the due date (including extensions) of your return for the year after the year the property was placed in service, and • must file a copy of your completed Form 3115 with the IRS National Office • the date you file the original Form 3115 with your return for the year after the year the property was placed in service. Filing an ammended return elect not to claim the special depreciation allowance or the special Liberty Zone depreciation allowance 1 • must have filed your return timely for the year the property was placed in service, and   • must file an amended return stating you are not claiming the allowance • the date that is 6 months after the due date of the original return (not including extensions). Filing an ammended return deduct the increased section 179 amount • must file an amended return • the due date (not including extensions) of your return for the year after the year the property was placed in service. Filing an ammended return use a 5-year recovery period for depreciating qualified Liberty Zone leasehold improvement property • should file an amended return • the date you file your return for the year after the year the property was placed in service. Filing an ammended return 1See also Deemed election under Rules for Returns Filed Before June 1, 2002, earlier. 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