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Free Amended Tax Return

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Free Amended Tax Return

Free amended tax return 6. Free amended tax return   How To Figure Cost of Goods Sold Table of Contents Introduction Figuring Cost of Goods Sold on Schedule C, Lines 35 Through 42Line 35 Inventory at Beginning of Year Line 36 Purchases Less Cost of Items Withdrawn for Personal Use Line 37 Cost of Labor Line 38 Materials and Supplies Line 39 Other Costs Line 40 Add Lines 35 through 39 Line 41 Inventory at End of Year Line 42 Cost of Goods Sold Introduction If you make or buy goods to sell, you can deduct the cost of goods sold from your gross receipts on Schedule C. Free amended tax return However, to determine these costs, you must value your inventory at the beginning and end of each tax year. Free amended tax return This chapter applies to you if you are a manufacturer, wholesaler, or retailer or if you are engaged in any business that makes, buys, or sells goods to produce income. Free amended tax return This chapter does not apply to a personal service business, such as the business of a doctor, lawyer, carpenter, or painter. Free amended tax return However, if you work in a personal service business and also sell or charge for the materials and supplies normally used in your business, this chapter applies to you. Free amended tax return If you must account for an inventory in your business, you must generally use an accrual method of accounting for your purchases and sales. Free amended tax return For more information, see chapter 2. Free amended tax return Figuring Cost of Goods Sold on Schedule C, Lines 35 Through 42 Figure your cost of goods sold by filling out lines 35 through 42 of Schedule C. Free amended tax return These lines are reproduced below and are explained in the discussion that follows. Free amended tax return 35 Inventory at beginning of year. Free amended tax return If different from last year's closing inventory, attach explanation   36 Purchases less cost of items withdrawn for personal use   37 Cost of labor. Free amended tax return Do not include any amounts paid to yourself   38 Materials and supplies   39 Other costs   40 Add lines 35 through 39   41 Inventory at end of year   42 Cost of goods sold. Free amended tax return Subtract line 41 from line 40. Free amended tax return  Enter the result here and on line 4   Line 35 Inventory at Beginning of Year If you are a merchant, beginning inventory is the cost of merchandise on hand at the beginning of the year that you will sell to customers. Free amended tax return If you are a manufacturer or producer, it includes the total cost of raw materials, work in process, finished goods, and materials and supplies used in manufacturing the goods (see Inventories in chapter 2). Free amended tax return Opening inventory usually will be identical to the closing inventory of the year before. Free amended tax return You must explain any difference in a schedule attached to your return. Free amended tax return Donation of inventory. Free amended tax return   If you contribute inventory (property that you sell in the course of your business), the amount you can claim as a contribution deduction is the smaller of its fair market value on the day you contributed it or its basis. Free amended tax return The basis of donated inventory is any cost incurred for the inventory in an earlier year that you would otherwise include in your opening inventory for the year of the contribution. Free amended tax return You must remove the amount of your contribution deduction from your opening inventory. Free amended tax return It is not part of the cost of goods sold. Free amended tax return   If the cost of donated inventory is not included in your opening inventory, the inventory's basis is zero and you cannot claim a charitable contribution deduction. Free amended tax return Treat the inventory's cost as you would ordinarily treat it under your method of accounting. Free amended tax return For example, include the purchase price of inventory bought and donated in the same year in the cost of goods sold for that year. Free amended tax return   A special rule may apply to certain donations of food inventory. Free amended tax return See Publication 526, Charitable Contributions. Free amended tax return Example 1. Free amended tax return You are a calendar year taxpayer who uses an accrual method of accounting. Free amended tax return In 2013, you contributed property from inventory to a church. Free amended tax return It had a fair market value of $600. Free amended tax return The closing inventory at the end of 2012 properly included $400 of costs due to the acquisition of the property, and in 2012, you properly deducted $50 of administrative and other expenses attributable to the property as business expenses. Free amended tax return The charitable contribution allowed for 2013 is $400 ($600 − $200). Free amended tax return The $200 is the amount that would be ordinary income if you had sold the contributed inventory at fair market value on the date of the gift. Free amended tax return The cost of goods sold you use in determining gross income for 2013 must not include the $400. Free amended tax return You remove that amount from opening inventory for 2013. Free amended tax return Example 2. Free amended tax return If, in Example 1, you acquired the contributed property in 2013 at a cost of $400, you would include the $400 cost of the property in figuring the cost of goods sold for 2013 and deduct the $50 of administrative and other expenses attributable to the property for that year. Free amended tax return You would not be allowed any charitable contribution deduction for the contributed property. Free amended tax return Line 36 Purchases Less Cost of Items Withdrawn for Personal Use If you are a merchant, use the cost of all merchandise you bought for sale. Free amended tax return If you are a manufacturer or producer, this includes the cost of all raw materials or parts purchased for manufacture into a finished product. Free amended tax return Trade discounts. Free amended tax return   The differences between the stated prices of articles and the actual prices you pay for them are called trade discounts. Free amended tax return You must use the prices you pay (not the stated prices) in figuring your cost of purchases. Free amended tax return Do not show the discount amount separately as an item in gross income. Free amended tax return   An automobile dealer must record the cost of a car in inventory reduced by any manufacturer's rebate that represents a trade discount. Free amended tax return Cash discounts. Free amended tax return   Cash discounts are amounts your suppliers let you deduct from your purchase invoices for prompt payments. Free amended tax return There are two methods of accounting for cash discounts. Free amended tax return You can either credit them to a separate discount account or deduct them from total purchases for the year. Free amended tax return Whichever method you use, you must be consistent. Free amended tax return If you want to change your method of figuring inventory cost, you must file Form 3115, Application for Change in Accounting Method. Free amended tax return For more information, see Change in Accounting Method in chapter 2. Free amended tax return   If you credit cash discounts to a separate account, you must include this credit balance in your business income at the end of the tax year. Free amended tax return If you use this method, do not reduce your cost of goods sold by the cash discounts. Free amended tax return Purchase returns and allowances. Free amended tax return   You must deduct all returns and allowances from your total purchases during the year. Free amended tax return Merchandise withdrawn from sale. Free amended tax return   If you withdraw merchandise for your personal or family use, you must exclude this cost from the total amount of merchandise you bought for sale. Free amended tax return Do this by crediting the purchases or sales account with the cost of merchandise you withdraw for personal use. Free amended tax return You must also charge the amount to your drawing account. Free amended tax return   A drawing account is a separate account you should keep to record the business income you withdraw to pay for personal and family expenses. Free amended tax return As stated above, you also use it to record withdrawals of merchandise for personal or family use. Free amended tax return This account is also known as a “withdrawals account” or “personal account. Free amended tax return ” Line 37 Cost of Labor Labor costs are usually an element of cost of goods sold only in a manufacturing or mining business. Free amended tax return Small merchandisers (wholesalers, retailers, etc. Free amended tax return ) usually do not have labor costs that can properly be charged to cost of goods sold. Free amended tax return In a manufacturing business, labor costs properly allocable to the cost of goods sold include both the direct and indirect labor used in fabricating the raw material into a finished, saleable product. Free amended tax return Direct labor. Free amended tax return   Direct labor costs are the wages you pay to those employees who spend all their time working directly on the product being manufactured. Free amended tax return They also include a part of the wages you pay to employees who work directly on the product part time if you can determine that part of their wages. Free amended tax return Indirect labor. Free amended tax return   Indirect labor costs are the wages you pay to employees who perform a general factory function that does not have any immediate or direct connection with making the saleable product, but that is a necessary part of the manufacturing process. Free amended tax return Other labor. Free amended tax return   Other labor costs not properly chargeable to the cost of goods sold can be deducted as selling or administrative expenses. Free amended tax return Generally, the only kinds of labor costs properly chargeable to your cost of goods sold are the direct or indirect labor costs and certain other costs treated as overhead expenses properly charged to the manufacturing process, as discussed later under Line 39 Other Costs. Free amended tax return Line 38 Materials and Supplies Materials and supplies, such as hardware and chemicals, used in manufacturing goods are charged to cost of goods sold. Free amended tax return Those that are not used in the manufacturing process are treated as deferred charges. Free amended tax return You deduct them as a business expense when you use them. Free amended tax return Business expenses are discussed in chapter 8. Free amended tax return Line 39 Other Costs Examples of other costs incurred in a manufacturing or mining process that you charge to your cost of goods sold are as follows. Free amended tax return Containers. Free amended tax return   Containers and packages that are an integral part of the product manufactured are a part of your cost of goods sold. Free amended tax return If they are not an integral part of the manufactured product, their costs are shipping or selling expenses. Free amended tax return Freight-in. Free amended tax return   Freight-in, express-in, and cartage-in on raw materials, supplies you use in production, and merchandise you purchase for sale are all part of cost of goods sold. Free amended tax return Overhead expenses. Free amended tax return   Overhead expenses include expenses such as rent, heat, light, power, insurance, depreciation, taxes, maintenance, labor, and supervision. Free amended tax return The overhead expenses you have as direct and necessary expenses of the manufacturing operation are included in your cost of goods sold. Free amended tax return Line 40 Add Lines 35 through 39 The total of lines 35 through 39 equals the cost of the goods available for sale during the year. Free amended tax return Line 41 Inventory at End of Year Subtract the value of your closing inventory (including, as appropriate, the allocable parts of the cost of raw materials and supplies, direct labor, and overhead expenses) from line 40. Free amended tax return Inventory at the end of the year is also known as closing or ending inventory. Free amended tax return Your ending inventory will usually become the beginning inventory of your next tax year. Free amended tax return Line 42 Cost of Goods Sold When you subtract your closing inventory (inventory at the end of the year) from the cost of goods available for sale, the remainder is your cost of goods sold during the tax year. Free amended tax return Prev  Up  Next   Home   More Online Publications
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Contact My Local Office in Utah

Face-to-face Tax Help

IRS Taxpayer Assistance Centers (TACs) are your source for personal tax help when you believe your tax issue can only be handled face-to-face. No appointment is necessary.

Keep in mind, many questions can be resolved online without waiting in line. Through IRS.gov you can:
• Set up a payment plan.
• Get a transcript of your tax return.
• Make a payment.
• Check on your refund.
• Find answers to many of your tax questions.

We are now referring all requests for tax return preparation services to other available resources. You can take advantage of free tax preparation through Free File, Free File Fillable Forms or through a volunteer site in your community. To find the nearest volunteer site location or to get more information about Free File, go to the top of the page and enter “Free Tax Help” in the Search box.

If you have a tax account issues and feel that it requires talking with someone face-to-face, visit your local TAC.

Caution:  Many of our offices are located in Federal Office Buildings. These buildings may not allow visitors to bring in cell phones with camera capabilities.

Multilingual assistance is available in every office. Hours of operation are subject to change.

Before visiting your local office click on "Services Provided" in the chart below to see what services are available.  Services are limited and not all services are available at every TAC office.  Services may vary from site to site. You can get these services on a walk-in, non-advance appointment basis.

City  Street Address  Days/Hours of Service  Telephone* 
Ogden  324 25th St.
Ogden, UT 84401 

Monday-Friday - 8:30 a.m.-4:30 p.m.
(Closed for lunch 12:00 noon - 1:00 p.m.)

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**

 

Services Provided

(801) 626-0753 
Provo  173 E. 100 North
Provo, UT 84606 

Monday-Friday - 9:00 a.m.-3:30 p.m.
(Closed for lunch 11:30 a.m. - 12:30 p.m.)

 

Services Provided

(801) 377-6971 
Salt Lake City  50 S. 200 East
Salt Lake City, UT 84111 

Monday-Friday - 8:30 a.m.-4:30 p.m.

 

Services Provided

(801) 799-6963 

* Note: The phone numbers in the chart above are not toll-free for all locations. When you call, you will reach a recorded business message with information about office hours, locations and services provided in that office. If face-to-face assistance is not a priority for you, you may also get help with IRS letters or resolve tax account issues by phone, toll free at 1-800-829-1040 (individuals) or 1-800-829-4933 (businesses).

For information on where to file your tax return please see Where to File Addresses.

The Taxpayer Advocate Service:  Call (801) 799-6958 in Salt Lake City or 1-877-777-4778 elsewhere, or see Publication 1546, The Taxpayer Advocate Service of the IRS. 

For further information, see Tax Topic 104.

Partnerships

IRS and organizations all over the country are partnering to assist taxpayers. Through these partnerships, organizations are also achieving their own goals. These mutually beneficial partnerships are strengthening outreach efforts and bringing education and assistance to millions.

For more information about these programs for individuals and families, contact the Stakeholder Partnerships, Education and Communication Office at:

Internal Revenue Service
50 South 200 East, MS 6610SLC
Salt Lake City, UT 84111

For more information about these programs for businesses, your local Stakeholder Liaison office establishes relationships with organizations representing small business and self-employed taxpayers. They provide information about the policies, practices and procedures the IRS uses to ensure compliance with the tax laws. To establish a relationship with us, use this list to find a contact in your state:

Stakeholder Liaison (SL) Phone Numbers for Organizations Representing Small Businesses and Self-employed Taxpayers.

Page Last Reviewed or Updated: 28-Mar-2014

The Free Amended Tax Return

Free amended tax return 7. Free amended tax return   Costs You Can Deduct or Capitalize Table of Contents What's New Introduction Topics - This chapter discusses: Useful Items - You may want to see: Carrying Charges Research and Experimental CostsProduct. Free amended tax return Costs not included. Free amended tax return Intangible Drilling Costs Exploration CostsPartnerships and S corporations. Free amended tax return Development Costs Circulation Costs Business Start-Up and Organizational Costs Reforestation Costs Retired Asset Removal Costs Barrier Removal CostsOther barrier removals. Free amended tax return Film and Television Production Costs What's New Film and television productions costs. Free amended tax return  The election to expense film and television production costs does not apply to productions that begin after December 31, 2013. Free amended tax return See Film and Television Production Costs , later. Free amended tax return Introduction This chapter discusses costs you can elect to deduct or capitalize. Free amended tax return You generally deduct a cost as a current business expense by subtracting it from your income in either the year you incur it or the year you pay it. Free amended tax return If you capitalize a cost, you may be able to recover it over a period of years through periodic deductions for amortization, depletion, or depreciation. Free amended tax return When you capitalize a cost, you add it to the basis of property to which it relates. Free amended tax return A partnership, corporation, estate, or trust makes the election to deduct or capitalize the costs discussed in this chapter except for exploration costs for mineral deposits. Free amended tax return Each individual partner, shareholder, or beneficiary elects whether to deduct or capitalize exploration costs. Free amended tax return You may be subject to the alternative minimum tax (AMT) if you deduct research and experimental, intangible drilling, exploration, development, circulation, or business organizational costs. Free amended tax return For more information on the alternative minimum tax, see the instructions for the following forms. Free amended tax return Form 6251, Alternative Minimum Tax—Individuals. Free amended tax return Form 4626, Alternative Minimum Tax—Corporations. Free amended tax return Topics - This chapter discusses: Carrying charges Research and experimental costs Intangible drilling costs Exploration costs Development costs Circulation costs Qualified disaster expenses Business start-up and organizational costs Reforestation costs Retired asset removal costs Barrier removal costs Film and television production costs Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets Form (and Instructions) 3468 Investment Credit 8826 Disabled Access Credit See chapter 12 for information about getting publications and forms. Free amended tax return Carrying Charges Carrying charges include the taxes and interest you pay to carry or develop real property or to carry, transport, or install personal property. Free amended tax return Certain carrying charges must be capitalized under the uniform capitalization rules. Free amended tax return (For information on capitalization of interest, see chapter 4 . Free amended tax return ) You can elect to capitalize carrying charges not subject to the uniform capitalization rules, but only if they are otherwise deductible. Free amended tax return You can elect to capitalize carrying charges separately for each project you have and for each type of carrying charge. Free amended tax return For unimproved and unproductive real property, your election is good for only 1 year. Free amended tax return You must decide whether to capitalize carrying charges each year the property remains unimproved and unproductive. Free amended tax return For other real property, your election to capitalize carrying charges remains in effect until construction or development is completed. Free amended tax return For personal property, your election is effective until the date you install or first use it, whichever is later. Free amended tax return How to make the election. Free amended tax return   To make the election to capitalize a carrying charge, attach a statement to your original tax return for the year the election is to be effective indicating which charges you are electing to capitalize. Free amended tax 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 return (excluding extensions). Free amended tax return Attach the statement to the amended return and write “Filed pursuant to section 301. Free amended tax return 9100-2” on the statement. Free amended tax return File the amended return at the same address you filed the original return. Free amended tax return Research and Experimental Costs The costs of research and experimentation are generally capital expenses. Free amended tax return However, you can elect to deduct these costs as a current business expense. Free amended tax return Your election to deduct these costs is binding for the year it is made and for all later years unless you get IRS approval to make a change. Free amended tax return If you meet certain requirements, you may elect to defer and amortize research and experimental costs. Free amended tax return For information on electing to defer and amortize these costs, see Research and Experimental Costs in chapter 8. Free amended tax return Research and experimental costs defined. Free amended tax return   Research and experimental costs are reasonable costs you incur in your trade or business for activities intended to provide information that would eliminate uncertainty about the development or improvement of a product. Free amended tax return Uncertainty exists if the information available to you does not establish how to develop or improve a product or the appropriate design of a product. Free amended tax return Whether costs qualify as research and experimental costs depends on the nature of the activity to which the costs relate rather than on the nature of the product or improvement being developed or the level of technological advancement. Free amended tax return      The costs of obtaining a patent, including attorneys' fees paid or incurred in making and perfecting a patent application, are research and experimental costs. Free amended tax return However, costs paid or incurred to obtain another's patent are not research and experimental costs. Free amended tax return Product. Free amended tax return   The term “product” includes any of the following items. Free amended tax return Formula. Free amended tax return Invention. Free amended tax return Patent. Free amended tax return Pilot model. Free amended tax return Process. Free amended tax return Technique. Free amended tax return Property similar to the items listed above. Free amended tax return It also includes products used by you in your trade or business or held for sale, lease, or license. Free amended tax return Costs not included. Free amended tax return   Research and experimental costs do not include expenses for any of the following activities. Free amended tax return Advertising or promotions. Free amended tax return Consumer surveys. Free amended tax return Efficiency surveys. Free amended tax return Management studies. Free amended tax return Quality control testing. Free amended tax return Research in connection with literary, historical, or similar projects. Free amended tax return The acquisition of another's patent, model, production, or process. Free amended tax return When and how to elect. Free amended tax return   You make the election to deduct research and experimental costs by deducting them on your tax return for the year in which you first pay or incur research and experimental costs. Free amended tax return If you do not make the election to deduct research and experimental costs in the first year in which you pay or incur the costs, you can deduct the costs in a later year only with approval from the IRS. Free amended tax return Deducting or Amortizing Research and Experimentation Costs IF you . Free amended tax return . Free amended tax return . Free amended tax return THEN . Free amended tax return . Free amended tax return . Free amended tax return Elect to deduct research and experimental costs as a current business expense Deduct all research and experimental costs in the first year you pay or incur the costs and all later years. Free amended tax return Do not deduct research and experimental costs as a current business expense If you meet the requirements, amortize them over at least 60 months, starting with the month you first receive an economic benefit from the research. Free amended tax return See Research and Experimental Costs in chapter 8. Free amended tax return Research credit. Free amended tax return   If you pay or incur qualified research expenses, you may be able to take the research credit. Free amended tax return For more information see Form 6765, Credit for Increasing Research Activities and its instructions. Free amended tax return Intangible Drilling Costs The costs of developing oil, gas, or geothermal wells are ordinarily capital expenditures. Free amended tax return You can usually recover them through depreciation or depletion. Free amended tax return However, you can elect to deduct intangible drilling costs (IDCs) as a current business expense. Free amended tax return These are certain drilling and development costs for wells in the United States in which you hold an operating or working interest. Free amended tax return You can deduct only costs for drilling or preparing a well for the production of oil, gas, or geothermal steam or hot water. Free amended tax return You can elect to deduct only the costs of items with no salvage value. Free amended tax return These include wages, fuel, repairs, hauling, and supplies related to drilling wells and preparing them for production. Free amended tax return Your cost for any drilling or development work done by contractors under any form of contract is also an IDC. Free amended tax return However, see Amounts paid to contractor that must be capitalized , later. Free amended tax return You can also elect to deduct the cost of drilling exploratory bore holes to determine the location and delineation of offshore hydrocarbon deposits if the shaft is capable of conducting hydrocarbons to the surface on completion. Free amended tax return It does not matter whether there is any intent to produce hydrocarbons. Free amended tax return If you do not elect to deduct your IDCs as a current business expense, you can elect to deduct them over the 60-month period beginning with the month they were paid or incurred. Free amended tax return Amounts paid to contractor that must be capitalized. Free amended tax return   Amounts paid to a contractor must be capitalized if they are either: Amounts properly allocable to the cost of depreciable property, or Amounts paid only out of production or proceeds from production if these amounts are depletable income to the recipient. Free amended tax return How to make the election. Free amended tax return   You elect to deduct IDCs as a current business expense by taking the deduction on your income tax return for the first tax year you have eligible costs. Free amended tax return No formal statement is required. Free amended tax return If you file Schedule C (Form 1040), enter these costs under “Other expenses. Free amended tax return ”   For oil and gas wells, your election is binding for the year it is made and for all later years. Free amended tax return For geothermal wells, your election can be revoked by the filing of an amended return on which you do not take the deduction. Free amended tax return You can file the amended return for the year up to the normal time of expiration for filing a claim for credit or refund, generally, within 3 years after the date you filed the original return or within 2 years after the date you paid the tax, whichever is later. Free amended tax return Energy credit for costs of geothermal wells. Free amended tax return   If you capitalize the drilling and development costs of geothermal wells that you place in service during the tax year, you may be able to claim a business energy credit. Free amended tax return See the Instructions for Form 3468 for more information. Free amended tax return Nonproductive well. Free amended tax return   If you capitalize your IDCs, you have another option if the well is nonproductive. Free amended tax return You can deduct the IDCs of the nonproductive well as an ordinary loss. Free amended tax return You must indicate and clearly state your election on your tax return for the year the well is completed. Free amended tax return Once made, the election for oil and gas wells is binding for all later years. Free amended tax return You can revoke your election for a geothermal well by filing an amended return that does not claim the loss. Free amended tax return Costs incurred outside the United States. Free amended tax return   You cannot deduct as a current business expense all the IDCs paid or incurred for an oil, gas, or geothermal well located outside the United States. Free amended tax return However, you can elect to include the costs in the adjusted basis of the well to figure depletion or depreciation. Free amended tax return If you do not make this election, you can deduct the costs over the 10-year period beginning with the tax year in which you paid or incurred them. Free amended tax return These rules do not apply to a nonproductive well. Free amended tax return Exploration Costs The costs of determining the existence, location, extent, or quality of any mineral deposit are ordinarily capital expenditures if the costs lead to the development of a mine. Free amended tax return You recover these costs through depletion as the mineral is removed from the ground. Free amended tax return However, you can elect to deduct domestic exploration costs paid or incurred before the beginning of the development stage of the mine (except those for oil and gas wells). Free amended tax return How to make the election. Free amended tax return   You elect to deduct exploration costs by taking the deduction on your income tax return, or on an amended income tax return, for the first tax year for which you wish to deduct the costs paid or incurred during the tax year. Free amended tax return Your return must adequately describe and identify each property or mine, and clearly state how much is being deducted for each one. Free amended tax return The election applies to the tax year you make this election and all later tax years. Free amended tax return Partnerships and S corporations. Free amended tax return   Each partner, not the partnership, elects whether to capitalize or to deduct that partner's share of exploration costs. Free amended tax return Each shareholder, not the S corporation, elects whether to capitalize or to deduct that shareholder's share of exploration costs. Free amended tax return Reduced corporate deductions for exploration costs. Free amended tax return   A corporation (other than an S corporation) can deduct only 70% of its domestic exploration costs. Free amended tax return It must capitalize the remaining 30% of costs and amortize them over the 60-month period starting with the month the exploration costs are paid or incurred. Free amended tax return A corporation may also elect to capitalize and amortize mining exploration costs over a 10-year period. Free amended tax return For more information on this method of amortization, see Internal Revenue Code section 59(e). Free amended tax return   The 30% the corporation capitalizes cannot be added to its basis in the property to figure cost depletion. Free amended tax return However, the amount amortized is treated as additional depreciation and is subject to recapture as ordinary income on a disposition of the property. Free amended tax return See Section 1250 Property under Depreciation Recapture in chapter 3 of Publication 544. Free amended tax return   These rules also apply to the deduction of development costs by corporations. Free amended tax return See Development Costs , later. Free amended tax return Recapture of exploration expenses. Free amended tax return   When your mine reaches the producing stage, you must recapture any exploration costs you elected to deduct. Free amended tax return Use either of the following methods. Free amended tax return Method 1—Include the deducted costs in gross income for the tax year the mine reaches the producing stage. Free amended tax return Your election must be clearly indicated on the return. Free amended tax return Increase your adjusted basis in the mine by the amount included in income. Free amended tax return Generally, you must elect this recapture method by the due date (including extensions) of your return. Free amended tax 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 return (excluding extensions). Free amended tax return Make the election on your amended return and write “Filed pursuant to section 301. Free amended tax return 9100-2” on the form where you are including the income. Free amended tax return File the amended return at the same address you filed the original return. Free amended tax return Method 2—Do not claim any depletion deduction for the tax year the mine reaches the producing stage and any later tax years until the depletion you would have deducted equals the exploration costs you deducted. Free amended tax return   You also must recapture deducted exploration costs if you receive a bonus or royalty from mine property before it reaches the producing stage. Free amended tax return Do not claim any depletion deduction for the tax year you receive the bonus or royalty and any later tax years until the depletion you would have deducted equals the exploration costs you deducted. Free amended tax return   Generally, if you dispose of the mine before you have fully recaptured the exploration costs you deducted, recapture the balance by treating all or part of your gain as ordinary income. Free amended tax return Under these circumstances, you generally treat as ordinary income all of your gain if it is less than your adjusted exploration costs with respect to the mine. Free amended tax return If your gain is more than your adjusted exploration costs, treat as ordinary income only a part of your gain, up to the amount of your adjusted exploration costs. Free amended tax return Foreign exploration costs. Free amended tax return   If you pay or incur exploration costs for a mine or other natural deposit located outside the United States, you cannot deduct all the costs in the current year. Free amended tax return You can elect to include the costs (other than for an oil, gas, or geothermal well) in the adjusted basis of the mineral property to figure cost depletion. Free amended tax return (Cost depletion is discussed in chapter 9 . Free amended tax return ) If you do not make this election, you must deduct the costs over the 10-year period beginning with the tax year in which you pay or incur them. Free amended tax return These rules also apply to foreign development costs. Free amended tax return Development Costs You can deduct costs paid or incurred during the tax year for developing a mine or any other natural deposit (other than an oil or gas well) located in the United States. Free amended tax return These costs must be paid or incurred after the discovery of ores or minerals in commercially marketable quantities. Free amended tax return Development costs also include depreciation on improvements used in the development of ores or minerals and costs incurred for you by a contractor. Free amended tax return Development costs do not include the costs for the acquisition or improvement of depreciable property. Free amended tax return Instead of deducting development costs in the year paid or incurred, you can elect to treat the cost as deferred expenses and deduct them ratably as the units of produced ores or minerals benefited by the expenses are sold. Free amended tax return This election applies each tax year to expenses paid or incurred in that year. Free amended tax return Once made, the election is binding for the year and cannot be revoked for any reason. Free amended tax return How to make the election. Free amended tax return   The election to deduct development costs ratably as the ores or minerals are sold must be made for each mine or other natural deposit by a clear indication on your return or by a statement filed with the IRS office where you file your return. Free amended tax return Generally, you must make the election by the due date of the return (including extensions). Free amended tax 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 return (excluding extensions). Free amended tax return Clearly indicate the election on your amended return and write “Filed pursuant to section 301. Free amended tax return 9100-2. Free amended tax return ” File the amended return at the same address you filed the original return. Free amended tax return Foreign development costs. Free amended tax return   The rules discussed earlier for foreign exploration costs apply to foreign development costs. Free amended tax return Reduced corporate deductions for development costs. Free amended tax return   The rules discussed earlier for reduced corporate deductions for exploration costs also apply to corporate deductions for development costs. Free amended tax return Circulation Costs A publisher can deduct as a current business expense the costs of establishing, maintaining, or increasing the circulation of a newspaper, magazine, or other periodical. Free amended tax return For example, a publisher can deduct the cost of hiring extra employees for a limited time to get new subscriptions through telephone calls. Free amended tax return Circulation costs are deductible even if they normally would be capitalized. Free amended tax return This rule does not apply to the following costs that must be capitalized. Free amended tax return The purchase of land or depreciable property. Free amended tax return The acquisition of circulation through the purchase of any part of the business of another publisher of a newspaper, magazine, or other periodical, including the purchase of another publisher's list of subscribers. Free amended tax return Other treatment of circulation costs. Free amended tax return   If you do not want to deduct circulation costs as a current business expense, you can elect one of the following ways to recover these costs. Free amended tax return Capitalize all circulation costs that are properly chargeable to a capital account (see chapter 1 ). Free amended tax return Amortize circulation costs over the 3-year period beginning with the tax year they were paid or incurred. Free amended tax return How to make the election. Free amended tax return   You elect to capitalize circulation costs by attaching a statement to your return for the first tax year the election applies. Free amended tax return Your election is binding for the year it is made and for all later years, unless you get IRS approval to revoke it. Free amended tax return Business Start-Up and Organizational Costs Business start-up and organizational costs are generally capital expenditures. Free amended tax return However, you can elect to deduct up to $5,000 of business start-up and $5,000 of organizational costs paid or incurred after October 22, 2004. Free amended tax return The $5,000 deduction is reduced by the amount your total start-up or organizational costs exceed $50,000. Free amended tax return Any remaining costs must be amortized. Free amended tax return For information about amortizing start-up and organizational costs, see chapter 8 . Free amended tax return Start-up costs include any amounts paid or incurred in connection with creating an active trade or business or investigating the creation or acquisition of an active trade or business. Free amended tax return Organizational costs include the costs of creating a corporation. Free amended tax return For more information on start-up and organizational costs, see chapter 8 . Free amended tax return How to make the election. Free amended tax return   You elect to deduct the start-up or organizational costs by claiming the deduction on your income tax return (filed by the due date including extensions) for the tax year in which the active trade or business begins. Free amended tax 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 return (excluding extensions). Free amended tax return Clearly indicate the election on your amended return and write “Filed pursuant to section 301. Free amended tax return 9100-2. Free amended tax return ” File the amended return at the same address you filed the original return. Free amended tax return The election applies when computing taxable income for the current tax year and all subsequent years. Free amended tax return Reforestation Costs Reforestation costs are generally capital expenditures. Free amended tax return However, you can elect to deduct up to $10,000 ($5,000 if married filing separately; $0 for a trust) of qualifying reforestation costs paid or incurred after October 22, 2004, for each qualified timber property. Free amended tax return The remaining costs can be amortized over an 84-month period. Free amended tax return For information about amortizing reforestation costs, see chapter 8 . Free amended tax return Qualifying reforestation costs are the direct costs of planting or seeding for forestation or reforestation. Free amended tax return Qualified timber property is property that contains trees in significant commercial quantities. Free amended tax return See chapter 8 for more information on qualifying reforestation costs and qualified timber property. Free amended tax return If you elect to deduct qualified reforestation costs, create and maintain separate timber accounts for each qualified timber property and include all reforestation costs and the dates each was applied. Free amended tax return Do not include this qualified timber property in any account (for example, depletion block) for which depletion is allowed. Free amended tax return How to make the election. Free amended tax return   You elect to deduct qualifying reforestation costs by claiming the deduction on your timely filed income tax return (including extensions) for the tax year the expenses were paid or incurred. Free amended tax return If Form T (Timber), Forest Activities Schedule, is required, complete Part IV of Form T. Free amended tax return If Form T is not required, attach a statement containing the following information for each qualified timber property for which an election is being made. Free amended tax return The unique stand identification numbers. Free amended tax return The total number of acres reforested during the tax year. Free amended tax return The nature of the reforestation treatments. Free amended tax return The total amounts of qualified reforestation expenditures eligible to be amortized or deducted. Free amended tax return   If you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Free amended tax return Clearly indicate the election on your amended return and write “Filed pursuant to section 301. Free amended tax return 9100-2. Free amended tax return ” File the amended return at the same address you filed the original return. Free amended tax return The election applies when computing taxable income for the current tax year and all subsequent years. Free amended tax return   For additional information on reforestation costs, see chapter 8 . Free amended tax return Recapture. Free amended tax return   This deduction may have to be recaptured as ordinary income under section 1245 when you sell or otherwise dispose of the property that would have received an addition to basis if you had not elected to deduct the expenditure. Free amended tax return For more information on recapturing the deduction, see Depreciation Recapture in Publication 544. Free amended tax return Retired Asset Removal Costs If you retire and remove a depreciable asset in connection with the installation or production of a replacement asset, you can deduct the costs of removing the retired asset. Free amended tax return However, if you replace a component (part) of a depreciable asset, capitalize the removal costs if the replacement is an improvement and deduct the costs if the replacement is a repair. Free amended tax return Barrier Removal Costs The cost of an improvement to a business asset is normally a capital expense. Free amended tax return However, you can elect to deduct the costs of making a facility or public transportation vehicle more accessible to and usable by those who are disabled or elderly. Free amended tax return You must own or lease the facility or vehicle for use in connection with your trade or business. Free amended tax return A facility is all or any part of buildings, structures, equipment, roads, walks, parking lots, or similar real or personal property. Free amended tax return A public transportation vehicle is a vehicle, such as a bus or railroad car, that provides transportation service to the public (including service for your customers, even if you are not in the business of providing transportation services). Free amended tax return You cannot deduct any costs that you paid or incurred to completely renovate or build a facility or public transportation vehicle or to replace depreciable property in the normal course of business. Free amended tax return Deduction limit. Free amended tax return   The most you can deduct as a cost of removing barriers to the disabled and the elderly for any tax year is $15,000. Free amended tax return However, you can add any costs over this limit to the basis of the property and depreciate these excess costs. Free amended tax return Partners and partnerships. Free amended tax return   The $15,000 limit applies to a partnership and also to each partner in the partnership. Free amended tax return A partner can allocate the $15,000 limit in any manner among the partner's individually incurred costs and the partner's distributive share of partnership costs. Free amended tax return If the partner cannot deduct the entire share of partnership costs, the partnership can add any costs not deducted to the basis of the improved property. Free amended tax return   A partnership must be able to show that any amount added to basis was not deducted by the partner and that it was over a partner's $15,000 limit (as determined by the partner). Free amended tax return If the partnership cannot show this, it is presumed that the partner was able to deduct the distributive share of the partnership's costs in full. Free amended tax return Example. Free amended tax return Emilio Azul's distributive share of ABC partnership's deductible expenses for the removal of architectural barriers was $14,000. Free amended tax return Emilio had $12,000 of similar expenses in his sole proprietorship. Free amended tax return He elected to deduct $7,000 of them. Free amended tax return Emilio allocated the remaining $8,000 of the $15,000 limit to his share of ABC's expenses. Free amended tax return Emilio can add the excess $5,000 of his own expenses to the basis of the property used in his business. Free amended tax return Also, if ABC can show that Emilio could not deduct $6,000 ($14,000 – $8,000) of his share of the partnership's expenses because of how Emilio applied the limit, ABC can add $6,000 to the basis of its property. Free amended tax return Qualification standards. Free amended tax return   You can deduct your costs as a current expense only if the barrier removal meets the guidelines and requirements issued by the Architectural and Transportation Barriers Compliance Board under the Americans with Disabilities Act (ADA) of 1990. Free amended tax return You can view the Americans with Disabilities Act at www. Free amended tax return ada. Free amended tax return gov/pubs/ada. Free amended tax return htm. Free amended tax return   The following is a list of some architectural barrier removal costs that can be deducted. Free amended tax return Ground and floor surfaces. Free amended tax return Walks. Free amended tax return Parking lots. Free amended tax return Ramps. Free amended tax return Entrances. Free amended tax return Doors and doorways. Free amended tax return Stairs. Free amended tax return Floors. Free amended tax return Toilet rooms. Free amended tax return Water fountains. Free amended tax return Public telephones. Free amended tax return Elevators. Free amended tax return Controls. Free amended tax return Signage. Free amended tax return Alarms. Free amended tax return Protruding objects. Free amended tax return Symbols of accessibility. Free amended tax return You can find the ADA guidelines and requirements for architectural barrier removal at www. Free amended tax return usdoj. Free amended tax return gov/crt/ada/reg3a. Free amended tax return html. Free amended tax return   The costs for removal of transportation barriers from rail facilities, buses, and rapid and light rail vehicles are deductible. Free amended tax return You can find the guidelines and requirements for transportation barrier removal at www. Free amended tax return fta. Free amended tax return dot. Free amended tax return gov. Free amended tax return   Also, you can access the ADA website at www. Free amended tax return ada. Free amended tax return gov for additional information. Free amended tax return Other barrier removals. Free amended tax return   To be deductible, expenses of removing any barrier not covered by the above standards must meet all three of the following tests. Free amended tax return The removed barrier must be a substantial barrier to access or use of a facility or public transportation vehicle by persons who have a disability or are elderly. Free amended tax return The removed barrier must have been a barrier for at least one major group of persons who have a disability or are elderly (such as people who are blind, deaf, or wheelchair users). Free amended tax return The barrier must be removed without creating any new barrier that significantly impairs access to or use of the facility or vehicle by a major group of persons who have a disability or are elderly. Free amended tax return How to make the election. Free amended tax return   If you elect to deduct your costs for removing barriers to the disabled or the elderly, claim the deduction on your income tax return (partnership return for partnerships) for the tax year the expenses were paid or incurred. Free amended tax return Identify the deduction as a separate item. Free amended tax return The election applies to all the qualifying costs you have during the year, up to the $15,000 limit. Free amended tax return If you make this election, you must maintain adequate records to support your deduction. Free amended tax return   For your election to be valid, you generally must file your return by its due date, including extensions. Free amended tax 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 return (excluding extensions). Free amended tax return Clearly indicate the election on your amended return and write “Filed pursuant to section 301. Free amended tax return 9100-2. Free amended tax return ” File the amended return at the same address you filed the original return. Free amended tax return Your election is irrevocable after the due date, including extensions, of your return. Free amended tax return Disabled access credit. Free amended tax return   If you make your business accessible to persons with disabilities and your business is an eligible small business, you may be able to claim the disabled access credit. Free amended tax return If you choose to claim the credit, you must reduce the amount you deduct or capitalize by the amount of the credit. Free amended tax return   For more information, see Form 8826, Disabled Access Credit. Free amended tax return Film and Television Production Costs Film and television production costs are generally capital expenses. Free amended tax return However, you can elect to deduct costs paid or incurred for certain productions commencing before January 1, 2014. Free amended tax return For more information, see section 181 of the Internal Revenue Code and the related Treasury Regulations. Free amended tax return Prev  Up  Next   Home   More Online Publications