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Free State Tax Preparation Online

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Free State Tax Preparation Online

Free state tax preparation online 10. Free state tax preparation online   Business Bad Debts Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Definition of Business Bad DebtAccrual method. Free state tax preparation online Cash method. Free state tax preparation online Debt acquired from a decedent. Free state tax preparation online Liquidation. Free state tax preparation online Types of Business Bad Debts When a Debt Becomes Worthless How To Claim a Business Bad DebtSpecific Charge-Off Method Nonaccrual-Experience Method Recovery of a Bad DebtNet operating loss (NOL) carryover. Free state tax preparation online Introduction You have a bad debt if you cannot collect money owed to you. Free state tax preparation online A bad debt is either a business bad debt or a nonbusiness bad debt. Free state tax preparation online This chapter discusses only business bad debts. Free state tax preparation online Generally, a business bad debt is one that comes from operating your trade or business. Free state tax preparation online You can deduct business bad debts on Schedule C (Form 1040) or your applicable business income tax return. Free state tax preparation online All other bad debts are nonbusiness bad debts and are deductible only as short-term capital losses. Free state tax preparation online For more information on nonbusiness bad debts, see Publication 550. Free state tax preparation online Topics - This chapter discusses: Definition of business bad debt When a debt becomes worthless How to claim a business bad debt Recovery of a bad debt Useful Items - You may want to see: Publication 525 Taxable and Nontaxable Income 536 Net Operating Losses (NOLs) for Individuals, Estates, and Trusts 544 Sales and Other Dispositions of Assets 550 Investment Income and Expenses 556 Examination of Returns, Appeal Rights, and Claims for Refund Form (and Instructions) Schedule C (Form 1040) Profit or Loss From Business 1040X Amended U. Free state tax preparation online S. Free state tax preparation online Individual Income Tax Return 1045 Application for Tentative Refund 1139 Corporation Application for Tentative Refund 3115 Application for Change in Accounting Method See chapter 12 for information about getting publications and forms. Free state tax preparation online Definition of Business Bad Debt A business bad debt is a loss from the worthlessness of a debt that was either: Created or acquired in your trade or business, or Closely related to your trade or business when it became partly or totally worthless. Free state tax preparation online A debt is closely related to your trade or business if your primary motive for incurring the debt is business related. Free state tax preparation online Bad debts of a corporation (other than an S corporation) are always business bad debts. Free state tax preparation online Credit sales. Free state tax preparation online   Business bad debts are mainly the result of credit sales to customers. Free state tax preparation online Goods that have been sold, but not yet paid for, and services that have been performed, but not yet paid for, are recorded in your books as either accounts receivable or notes receivable. Free state tax preparation online After a reasonable period of time, if you have tried to collect the amount due, but are unable to do so, the uncollectible part becomes a business bad debt. Free state tax preparation online   Accounts or notes receivable valued at fair market value (FMV) when received are deductible only at that value, even though the FMV may be less than the face value. Free state tax preparation online If you purchased an account receivable for less than its face value, and the receivable subsequently becomes worthless, the most you are allowed to deduct is the amount you paid to acquire it. Free state tax preparation online    You can claim a business bad debt deduction only if the amount owed to you was previously included in gross income. Free state tax preparation online This applies to amounts owed to you from all sources of taxable income, including sales, services, rents, and interest. Free state tax preparation online Accrual method. Free state tax preparation online   If you use the accrual method of accounting, you generally report income as you earn it. Free state tax preparation online You can only claim a bad debt deduction for an uncollectible receivable if you have previously included the uncollectible amount in income. Free state tax preparation online   If you qualify, you can use the nonaccrual-experience method of accounting discussed later. Free state tax preparation online Under this method, you do not have to accrue income that, based on your experience, you do not expect to collect. Free state tax preparation online Cash method. Free state tax preparation online   If you use the cash method of accounting, you generally report income when you receive payment. Free state tax preparation online You cannot claim a bad debt deduction for amounts owed to you because you never included those amounts in income. Free state tax preparation online For example, a cash basis architect cannot claim a bad debt deduction if a client fails to pay the bill because the architect's fee was never included in income. Free state tax preparation online Debts from a former business. Free state tax preparation online   If you sell your business but retain its receivables, these debts are business debts because they arose out of your trade or business. Free state tax preparation online If any of these receivables subsequently become worthless, the loss is still a business bad debt. Free state tax preparation online Debt acquired from a decedent. Free state tax preparation online   The character of a loss from debts of a business acquired from a decedent is determined in the same way as debts acquired on the purchase of a business. Free state tax preparation online The executor of the decedent's estate treats any loss from the debts as a business bad debt if the debts were closely related to the decedent's trade or business when they became worthless. Free state tax preparation online Otherwise, a loss from these debts becomes a nonbusiness bad debt for the decedent's estate. Free state tax preparation online Liquidation. Free state tax preparation online   If you liquidate your business and some of the accounts receivable that you retain become worthless, they become business bad debts. Free state tax preparation online Types of Business Bad Debts Business bad debts may result from the following. Free state tax preparation online Loans to clients and suppliers. Free state tax preparation online   If you loan money to a client, supplier, employee, or distributor for a business reason and you are unable to collect the loan after attempting to do so, you have a business bad debt. Free state tax preparation online Debts owed by political parties. Free state tax preparation online   If a political party (or other organization that accepts contributions or spends money to influence elections) owes you money and the debt becomes worthless, you can claim a bad debt deduction only if all of the following requirements are met. Free state tax preparation online You use the accrual method of accounting. Free state tax preparation online The debt arose from the sale of goods or services in the ordinary course of your trade or business. Free state tax preparation online More than 30% of your receivables accrued in the year of the sale were from sales to political parties. Free state tax preparation online You made substantial and continuing efforts to collect on the debt. Free state tax preparation online Loan or capital contribution. Free state tax preparation online   You cannot claim a bad debt deduction for a loan you made to a corporation if, based on the facts and circumstances, the loan is actually a contribution to capital. Free state tax preparation online Debts of an insolvent partner. Free state tax preparation online   If your business partnership breaks up and one of your former partners becomes insolvent, you may have to pay more than your pro rata share of the partnership's debts. Free state tax preparation online If you pay any part of the insolvent partner's share of the debts, you can claim a bad debt deduction for the amount you paid that is attributable to the insolvent partner's share. Free state tax preparation online Business loan guarantee. Free state tax preparation online   If you guarantee a debt that subsequently becomes worthless, the debt can qualify as a business bad debt if all the following requirements are met. Free state tax preparation online You made the guarantee in the course of your trade or business. Free state tax preparation online You have a legal duty to pay the debt. Free state tax preparation online You made the guarantee before the debt became worthless. Free state tax preparation online You meet this requirement if you reasonably expected you would not have to pay the debt without full reimbursement from the borrower. Free state tax preparation online You received reasonable consideration for making the guarantee. Free state tax preparation online You meet this requirement if you made the guarantee in accord with normal business practice or for a good faith business purpose. Free state tax preparation online Example. Free state tax preparation online Jane Zayne owns the Zayne Dress Company. Free state tax preparation online She guaranteed payment of a $20,000 note for Elegant Fashions, a dress outlet. Free state tax preparation online Elegant Fashions is one of Zayne's largest clients. Free state tax preparation online Elegant Fashions later defaulted on the loan. Free state tax preparation online As a result, Ms. Free state tax preparation online Zayne paid the remaining balance of the loan in full to the bank. Free state tax preparation online She can claim a business bad debt deduction only for the amount she paid, since her guarantee was made in the course of her trade or business for a good faith business purpose. Free state tax preparation online She was motivated by the desire to retain one of her better clients and keep a sales outlet. Free state tax preparation online Deductible in the year paid. Free state tax preparation online   If you make a payment on a loan you guaranteed, you can deduct it in the year paid, unless you have rights against the borrower. Free state tax preparation online Rights against a borrower. Free state tax preparation online   When you make payment on a loan you guaranteed, you may have the right to take the place of the lender. Free state tax preparation online The debt is then owed to you. Free state tax preparation online If you have this right, or some other right to demand payment from the borrower, you cannot claim a bad debt deduction until these rights become partly or totally worthless. Free state tax preparation online Joint debtor. Free state tax preparation online   If two or more debtors jointly owe you money, your inability to collect from one does not enable you to deduct a proportionate amount as a bad debt. Free state tax preparation online Sale of mortgaged property. Free state tax preparation online   If mortgaged or pledged property is sold for less than the debt, the unpaid, uncollectible balance of the debt is a bad debt. Free state tax preparation online When a Debt Becomes Worthless A debt becomes worthless when there is no longer any chance the amount owed will be paid. Free state tax preparation online This may occur when the debt is due or prior to that date. Free state tax preparation online To demonstrate worthlessness, you must only show that you have taken reasonable steps to collect the debt but were unable to do so. Free state tax preparation online It is not necessary to go to court if you can show that a judgment from the court would be uncollectible. Free state tax preparation online Bankruptcy of your debtor is generally good evidence of the worthlessness of at least a part of an unsecured and unpreferred debt. Free state tax preparation online Property received for debt. Free state tax preparation online   If you receive property in partial settlement of a debt, reduce the debt by the property's FMV, which becomes the property's basis. Free state tax preparation online You can deduct the remaining debt as a bad debt if and when it becomes worthless. Free state tax preparation online   If you later sell the property for more than its basis, any gain on the sale is due to the appreciation of the property. Free state tax preparation online It is not a recovery of a bad debt. Free state tax preparation online For information on the sale of an asset, see Publication 544. Free state tax preparation online How To Claim a Business Bad Debt There are two methods to claim a business bad debt. Free state tax preparation online The specific charge-off method. Free state tax preparation online The nonaccrual-experience method. Free state tax preparation online Generally, you must use the specific charge-off method. Free state tax preparation online However, you may use the nonaccrual-experience method if you meet the requirements discussed later under Nonaccrual-Experience Method . Free state tax preparation online Specific Charge-Off Method If you use the specific charge-off method, you can deduct specific business bad debts that become either partly or totally worthless during the tax year. Free state tax preparation online However, with respect to partly worthless bad debts, your deduction is limited to the amount you charged off on your books during the year. Free state tax preparation online Partly worthless debts. Free state tax preparation online   You can deduct specific bad debts that become partly uncollectible during the tax year. Free state tax preparation online Your tax deduction is limited to the amount you charge off on your books during the year. Free state tax preparation online You do not have to charge off and deduct your partly worthless debts annually. Free state tax preparation online You can delay the charge off until a later year. Free state tax preparation online However, you cannot deduct any part of a debt after the year it becomes totally worthless. Free state tax preparation online Significantly modified debt. Free state tax preparation online   An exception to the charge-off rule exists for debt which has been significantly modified and on which the holder recognized gain. Free state tax preparation online For more information, see Regulations section 1. Free state tax preparation online 166-3(a)(3). Free state tax preparation online Deduction disallowed. Free state tax preparation online   Generally, you can claim a partial bad debt deduction only in the year you make the charge-off on your books. Free state tax preparation online If, under audit, the IRS does not allow your deduction and the debt becomes partly worthless in a later tax year, you can deduct the amount you charged off in that year plus the disallowed amount charged off in the earlier year. Free state tax preparation online The charge-off in the earlier year, unless reversed on your books, fulfills the charge-off requirement for the later year. Free state tax preparation online Totally worthless debts. Free state tax preparation online   If a debt becomes totally worthless in the current tax year, you can deduct the entire amount, less any amount deducted in an earlier tax year when the debt was only partly worthless. Free state tax preparation online   You do not have to make an actual charge-off on your books to claim a bad debt deduction for a totally worthless debt. Free state tax preparation online However, you may want to do so. Free state tax preparation online If you do not and the IRS later rules the debt is only partly worthless, you will not be allowed a deduction for the debt in that tax year because a deduction of a partly worthless bad debt is limited to the amount actually charged off. Free state tax preparation online See Partly worthless debts, earlier. Free state tax preparation online Filing a claim for refund. Free state tax preparation online   If you did not deduct a bad debt on your original return for the year it became worthless, you can file a claim for a credit or refund. Free state tax preparation online If the bad debt was totally worthless, you must file the claim by the later of the following dates. Free state tax preparation online 7 years from the date your original return was due (not including extensions). Free state tax preparation online 2 years from the date you paid the tax. Free state tax preparation online   If the claim is for a partly worthless bad debt, you must file the claim by the later of the following dates. Free state tax preparation online 3 years from the date you filed your original return. Free state tax preparation online 2 years from the date you paid the tax. Free state tax preparation online You may have longer to file the claim if you were unable to manage your financial affairs due to a physical or mental impairment. Free state tax preparation online Such an impairment requires proof of existence. Free state tax preparation online   For details and more information about filing a claim, see Publication 556. Free state tax preparation online Use one of the following forms to file a claim. Free state tax preparation online For more information, see the instructions for the applicable form. Free state tax preparation online Table 10-1. Free state tax preparation online Forms Used To File a Claim IF you filed as a. Free state tax preparation online . Free state tax preparation online . Free state tax preparation online THEN file. Free state tax preparation online . Free state tax preparation online . Free state tax preparation online Sole proprietor or farmer Form 1040X Corporation Form 1120X S corporation Form 1120S and check box H(4) Partnership Form 1065X if filing on paper or  Form 1065 and check box G(5) if filing electronically Nonaccrual-Experience Method If you use an accrual method of accounting and qualify under the rules explained in this section, you can use the nonaccrual-experience method for bad debts. Free state tax preparation online Under this method, you do not accrue service related income you expect to be uncollectible. Free state tax preparation online Because the expected uncollectible amounts are not included in income, these amounts are not later deducted from income. Free state tax preparation online Generally, you can use the nonaccrual-experience method for accounts receivable for services you performed only if: The services are provided in the fields of accounting, actuarial science, architecture, consulting, engineering, health, law, or the performing arts, or You meet the $5 million gross receipts test for all prior years. Free state tax preparation online Service related income. Free state tax preparation online   You can use the nonaccrual-experience method only for amounts earned by performing services. Free state tax preparation online You cannot use this method for amounts owed to you from activities such as lending money, selling goods, or acquiring receivables or other rights to receive payment. Free state tax preparation online Gross receipts test. Free state tax preparation online   To find out if you meet the $5 million gross receipts test for all prior years, you must figure the average annual gross receipts for each prior year. Free state tax preparation online If your average annual gross receipts for any year exceeds $5 million, you cannot use the non-accural experience method. Free state tax preparation online   The average annual gross receipts for any year is the average of gross receipts from the year in question and the 2 previous years. Free state tax preparation online For example, if you were figuring the average annual gross receipts for 2013, you would average your gross receipts for 2011, 2012, and 2013. Free state tax preparation online Interest or penalty charged. Free state tax preparation online   Generally, you cannot use the nonaccrual-experience method for amounts due on which you charge interest or a late payment penalty. Free state tax preparation online However, do not treat a discount offered for early payment as the charging of interest or a penalty if both the following apply. Free state tax preparation online You otherwise accrue the full amount due as gross income at the time you provide the services. Free state tax preparation online You treat the discount allowed for early payment as an adjustment to gross income in the year of payment. Free state tax preparation online Change in accounting method. Free state tax preparation online   Generally, you must obtain consent to change to a nonaccrual-experience method (other than one of the safe harbor methods) or to change from one method to another. Free state tax preparation online See Form 3115 and the Instructions for Form 3115 for more information. Free state tax preparation online Recovery of a Bad Debt If you claim a deduction for a bad debt on your income tax return and later recover (collect) all or part of it, you may have to include all or part of the recovery in gross income. Free state tax preparation online The amount you include is limited to the amount you actually deducted. Free state tax preparation online However, you can exclude the amount deducted that did not reduce your tax. Free state tax preparation online Report the recovery as “Other income” on the appropriate business form or schedule. Free state tax preparation online See Recoveries in Publication 525 for more information. Free state tax preparation online Net operating loss (NOL) carryover. Free state tax preparation online   If a bad debt deduction increases an NOL carryover that has not expired before the beginning of the tax year in which the recovery takes place, you treat the deduction as having reduced your tax. Free state tax preparation online A bad debt deduction that contributes to a NOL helps lower taxes in the year to which you carry the NOL. Free state tax preparation online For more information about NOLs, see Publication 536. Free state tax preparation online Also, see the Instructions for Form 1045, and the Instructions for Form 1139. 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The Free State Tax Preparation Online

Free state tax preparation online Internal Revenue Bulletin:  2009-17  April 27, 2009  Rev. Free state tax preparation online Proc. Free state tax preparation online 2009-24 Table of Contents SECTION 1. Free state tax preparation online PURPOSE SECTION 2. Free state tax preparation online BACKGROUND SECTION 3. Free state tax preparation online SCOPE SECTION 4. Free state tax preparation online APPLICATION. Free state tax preparation online 01 In General. Free state tax preparation online . Free state tax preparation online 02 Limitations on Depreciation Deductions for Certain Automobiles. Free state tax preparation online . Free state tax preparation online 03 Inclusions in Income of Lessees of Passenger Automobiles. Free state tax preparation online SECTION 5. Free state tax preparation online EFFECTIVE DATE SECTION 6. Free state tax preparation online DRAFTING INFORMATION SECTION 1. Free state tax preparation online PURPOSE . Free state tax preparation online 01 This revenue procedure provides: (1) limitations on depreciation deductions for owners of passenger automobiles first placed in service by the taxpayer during calendar year 2009, including a separate table of limitations on depreciation deductions for trucks and vans; and (2) the amounts to be included in income by lessees of passenger automobiles first leased by the taxpayer during calendar year 2009, including a separate table of inclusion amounts for lessees of trucks and vans. Free state tax preparation online . Free state tax preparation online 02 The tables detailing these depreciation limitations and lessee inclusion amounts reflect the automobile price inflation adjustments required by § 280F(d)(7) of the Internal Revenue Code. Free state tax preparation online SECTION 2. Free state tax preparation online BACKGROUND . Free state tax preparation online 01 For owners of passenger automobiles, § 280F(a) imposes dollar limitations on the depreciation deduction for the year that the passenger automobile is placed in service by the taxpayer and each succeeding year. Free state tax preparation online Section 280F(d)(7) requires the amounts allowable as depreciation deductions to be increased by a price inflation adjustment amount for passenger automobiles placed in service after 1988. Free state tax preparation online The method of calculating this price inflation amount for trucks and vans placed in service in or after calendar year 2003 uses a different CPI “automobile component” (the “new trucks” component) than that used in the price inflation amount calculation for other passenger automobiles (the “new cars” component), resulting in somewhat higher depreciation deductions for trucks and vans. Free state tax preparation online This change reflects the higher rate of price inflation that trucks and vans have been subject to since 1988. Free state tax preparation online . Free state tax preparation online 02 Section 168(k)(1)(A) provides a 50 percent additional first year depreciation deduction for certain new property acquired by a taxpayer after December 31, 2007, and before January 1, 2010, if no written binding contract for the acquisition of the property existed before January 1, 2008. Free state tax preparation online Section 168(k)(2)(F)(i) increases the first year depreciation allowed under § 280F(a)(1)(A) by $8,000 for passenger automobiles to which the 50 percent additional first year depreciation deduction applies. Free state tax preparation online . Free state tax preparation online 03 Section 168(k)(2)(D)(i) provides that the 50 percent additional first year depreciation deduction does not apply to any property required to be depreciated under the alternative depreciation system of § 168(g), including property described in § 280F(b)(1). Free state tax preparation online Section 168(k)(2)(D)(iii) permits a taxpayer to elect to not claim the 50 percent additional first year depreciation deduction for any class of property. Free state tax preparation online Section 168(k)(4) permits a corporation to elect to not claim the 50 percent additional first year depreciation deduction for all eligible qualified property (that is extension property or that is not extension property, as applicable) and instead to increase the business credit limitation under § 38(c) or the alternative minimum tax credit limitation under § 53(c). Free state tax preparation online Accordingly, this revenue procedure provides tables for passenger automobiles for which the 50 percent additional depreciation deduction applies and tables for passenger automobiles for which the 50 percent additional first year depreciation deduction does not apply, including passenger automobiles in a class of property for which the taxpayer “elects out” of the 50 percent additional first year depreciation deduction or passenger automobiles that are eligible qualified property to which the § 168(k)(4) election applies. Free state tax preparation online . Free state tax preparation online 04 For leased passenger automobiles, § 280F(c) requires a reduction in the deduction allowed to the lessee of the passenger automobile. Free state tax preparation online The reduction must be substantially equivalent to the limitations on the depreciation deductions imposed on owners of passenger automobiles. Free state tax preparation online Under § 1. Free state tax preparation online 280F-7(a) of the Income Tax Regulations, this reduction requires a lessee to include in gross income an inclusion amount determined by applying a formula to the amount obtained from a table. Free state tax preparation online One table applies to lessees of trucks and vans and another table applies to all other passenger automobiles. Free state tax preparation online Each table shows inclusion amounts for a range of fair market values for each taxable year after the passenger automobile is first leased. Free state tax preparation online SECTION 3. Free state tax preparation online SCOPE . Free state tax preparation online 01 The limitations on depreciation deductions in section 4. Free state tax preparation online 02(2) of this revenue procedure apply to passenger automobiles (other than leased passenger automobiles) that are placed in service by the taxpayer in calendar year 2009, and continue to apply for each taxable year that the passenger automobile remains in service. Free state tax preparation online . Free state tax preparation online 02 The tables in section 4. Free state tax preparation online 03 of this revenue procedure apply to leased passenger automobiles for which the lease term begins during calendar year 2009. Free state tax preparation online Lessees of these passenger automobiles must use these tables to determine the inclusion amount for each taxable year during which the passenger automobile is leased. Free state tax preparation online See Rev. Free state tax preparation online Proc. Free state tax preparation online 2002-14, 2002-1 C. Free state tax preparation online B. Free state tax preparation online 450, for passenger automobiles first leased before January 1, 2003, Rev. Free state tax preparation online Proc. Free state tax preparation online 2003-75, 2003-2 C. Free state tax preparation online B. Free state tax preparation online 1018, for passenger automobiles first leased during calendar year 2003, Rev. Free state tax preparation online Proc. Free state tax preparation online 2004-20, 2004-1 C. Free state tax preparation online B. Free state tax preparation online 642, for passenger automobiles first leased during calendar year 2004, Rev. Free state tax preparation online Proc. Free state tax preparation online 2005-13, 2005-1 C. Free state tax preparation online B. Free state tax preparation online 759, for passenger automobiles first leased during calendar year 2005, Rev. Free state tax preparation online Proc. Free state tax preparation online 2006-18, 2006-1 C. Free state tax preparation online B. Free state tax preparation online 645, for passenger automobiles first leased during calendar year 2006, Rev. Free state tax preparation online Proc. Free state tax preparation online 2007-30, 2007-1 C. Free state tax preparation online B. Free state tax preparation online 1104, for passenger automobiles first leased during calendar year 2007, and Rev. Free state tax preparation online Proc. Free state tax preparation online 2008-22, 2008-12 I. Free state tax preparation online R. Free state tax preparation online B. Free state tax preparation online 658, for passenger automobiles first leased during calendar year 2008. Free state tax preparation online SECTION 4. Free state tax preparation online APPLICATION . Free state tax preparation online 01 In General. Free state tax preparation online (1) Limitations on depreciation deductions for certain automobiles. Free state tax preparation online The limitations on depreciation deductions for passenger automobiles placed in service by the taxpayer for the first time during calendar year 2009 are in Tables 1 through 4 in section 4. Free state tax preparation online 02(2) of this revenue procedure. Free state tax preparation online (2) Inclusions in income of lessees of passenger automobiles. Free state tax preparation online A taxpayer first leasing a passenger automobile during calendar year 2009 must determine the inclusion amount that is added to gross income using Tables 5 and 6 in section 4. Free state tax preparation online 03 of this revenue procedure. Free state tax preparation online In addition, the taxpayer must follow the procedures of § 1. Free state tax preparation online 280F-7(a). Free state tax preparation online . Free state tax preparation online 02 Limitations on Depreciation Deductions for Certain Automobiles. Free state tax preparation online (1) Amount of the inflation adjustment. Free state tax preparation online (a) Passenger automobiles (other than trucks or vans). Free state tax preparation online Under § 280F(d)(7)(B)(i), the automobile price inflation adjustment for any calendar year is the percentage (if any) by which the CPI automobile component for October of the preceding calendar year exceeds the CPI automobile component for October 1987. Free state tax preparation online The term “CPI automobile component” is defined in § 280F(d)(7)(B)(ii) as the “automobile component” of the Consumer Price Index for all Urban Consumers published by the Department of Labor. Free state tax preparation online The new car component of the CPI was 115. Free state tax preparation online 2 for October 1987 and 134. Free state tax preparation online 837 for October 2008. Free state tax preparation online The October 2008 index exceeded the October 1987 index by 19. Free state tax preparation online 637. Free state tax preparation online The Internal Revenue Service has, therefore, determined that the automobile price inflation adjustment for 2009 for passenger automobiles (other than trucks and vans) is 17. Free state tax preparation online 05 percent (19. Free state tax preparation online 637/115. Free state tax preparation online 2 x 100%). Free state tax preparation online This adjustment is applicable to all passenger automobiles (other than trucks and vans) that are first placed in service in calendar year 2009. Free state tax preparation online The dollar limitations in § 280F(a) therefore must be multiplied by a factor of 0. Free state tax preparation online 1705, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations applicable to passenger automobiles (other than trucks and vans) for calendar year 2009. Free state tax preparation online (b) Trucks and vans. Free state tax preparation online To determine the dollar limitations applicable to trucks and vans first placed in service during calendar year 2009, the new truck component of the CPI is used instead of the new car component. Free state tax preparation online The new truck component of the CPI was 112. Free state tax preparation online 4 for October 1987 and 133. Free state tax preparation online 640 for October 2008. Free state tax preparation online The October 2008 index exceeded the October 1987 index by 21. Free state tax preparation online 24. Free state tax preparation online The Service has, therefore, determined that the automobile price inflation adjustment for 2009 for trucks and vans is 18. Free state tax preparation online 90 percent (21. Free state tax preparation online 24/112. Free state tax preparation online 4 x 100%). Free state tax preparation online This adjustment is applicable to all trucks and vans that are first placed in service in calendar year 2009. Free state tax preparation online The dollar limitations in § 280F(a) therefore must be multiplied by a factor of 0. Free state tax preparation online 1890, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations applicable to trucks and vans. Free state tax preparation online (2) Amount of the limitation. Free state tax preparation online For passenger automobiles placed in service by the taxpayer in calendar year 2009, Tables 1 through 4 contain the dollar amount of the depreciation limitation for each taxable year. Free state tax preparation online Use Table 1 for a passenger automobile (other than a truck or van) placed in service by the taxpayer in calendar year 2009, for which the 50 percent additional first year depreciation deduction does not apply, including a passenger automobile (other than a truck or van) in a class of property for which the taxpayer elects out of the 50 percent additional first year depreciation deduction or a passenger automobile that is eligible qualified property to which the § 168(k)(4) election applies. Free state tax preparation online Use Table 2 for a passenger automobile (other than a truck or van) placed in service by the taxpayer in calendar year 2009, for which the 50 percent additional first year depreciation deduction applies. Free state tax preparation online Use Table 3 for a truck or van placed in service by the taxpayer in calendar year 2009, for which the 50 percent additional first year depreciation deduction does not apply, including a truck or van in a class of property for which the taxpayer elects out of the 50 percent additional first year depreciation deduction or a truck or van that is eligible qualified property to which the § 168(k)(4) election applies. Free state tax preparation online Use Table 4 for a truck or van placed in service by the taxpayer in calendar year 2009, for which the 50 percent additional first year depreciation deduction applies. Free state tax preparation online REV. Free state tax preparation online PROC. Free state tax preparation online 2009-24 TABLE 1 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE BY THE TAXPAYER IN CALENDAR YEAR 2009, FOR WHICH THE 50 PERCENT ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $2,960 2nd Tax Year $4,800 3rd Tax Year $2,850 Each Succeeding Year $1,775 REV. Free state tax preparation online PROC. Free state tax preparation online 2009-24 TABLE 2 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE BY THE TAXPAYER IN CALENDAR YEAR 2009, FOR WHICH THE 50 PERCENT ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $10,960 2nd Tax Year $4,800 3rd Tax Year $2,850 Each Succeeding Year $1,775 REV. Free state tax preparation online PROC. Free state tax preparation online 2009-24 TABLE 3 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE BY THE TAXPAYER IN CALENDAR YEAR 2009, FOR WHICH THE 50 PERCENT ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $3,060 2nd Tax Year $4,900 3rd Tax Year $2,950 Each Succeeding Year $1,775 REV. Free state tax preparation online PROC. Free state tax preparation online 2009-24 TABLE 4 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE BY THE TAXPAYER IN CALENDAR YEAR 2009, FOR WHICH THE 50 PERCENT ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,060 2nd Tax Year $4,900 3rd Tax Year $2,950 Each Succeeding Year $1,775 . Free state tax preparation online 03 Inclusions in Income of Lessees of Passenger Automobiles. Free state tax preparation online The inclusion amounts for passenger automobiles first leased in calendar year 2009 are calculated under the procedures described in § 1. Free state tax preparation online 280F-7(a). Free state tax preparation online Lessees of passenger automobiles other than trucks and vans should use Table 5 of this revenue procedure in applying these procedures, while lessees of trucks and vans should use Table 6 of this revenue procedure. Free state tax preparation online REV. Free state tax preparation online PROC. Free state tax preparation online 2009-24 TABLE 5 DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2009 Fair Market Value of Passenger Automobile Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & Later $18,500 $19,000 9 19 28 34 38 19,000 19,500 10 21 32 38 43 19,500 20,000 11 24 36 42 48 20,000 20,500 12 27 39 46 54 20,500 21,000 13 29 43 51 58 21,000 21,500 15 31 47 55 64 21,500 22,000 16 34 50 60 68 22,000 23,000 17 38 56 66 76 23,000 24,000 20 42 64 75 86 24,000 25,000 22 47 71 84 96 25,000 26,000 24 52 78 93 107 26,000 27,000 26 58 85 101 117 27,000 28,000 29 62 93 110 127 28,000 29,000 31 67 100 119 138 29,000 30,000 33 72 108 128 147 30,000 31,000 35 77 115 137 157 31,000 32,000 38 82 122 146 167 32,000 33,000 40 87 129 155 178 33,000 34,000 42 92 137 163 188 34,000 35,000 44 97 144 172 199 35,000 36,000 47 102 151 181 208 36,000 37,000 49 107 159 189 219 37,000 38,000 51 112 166 199 228 38,000 39,000 53 117 173 208 239 39,000 40,000 56 122 180 216 250 40,000 41,000 58 127 188 225 259 41,000 42,000 60 132 195 234 269 42,000 43,000 62 137 203 242 280 43,000 44,000 65 141 210 252 290 44,000 45,000 67 146 218 260 300 45,000 46,000 69 151 225 269 311 46,000 47,000 71 157 232 278 320 47,000 48,000 74 161 240 286 331 48,000 49,000 76 166 247 296 340 49,000 50,000 78 171 255 304 351 50,000 51,000 80 176 262 313 361 51,000 52,000 83 181 269 322 371 52,000 53,000 85 186 276 331 381 53,000 54,000 87 191 284 339 392 54,000 55,000 89 196 291 349 401 55,000 56,000 92 201 298 357 412 56,000 57,000 94 206 306 365 423 57,000 58,000 96 211 313 375 432 58,000 59,000 98 216 320 384 442 59,000 60,000 101 221 327 393 452 60,000 62,000 104 228 339 406 467 62,000 64,000 109 238 353 424 488 64,000 66,000 113 248 368 441 509 66,000 68,000 118 258 382 459 529 68,000 70,000 122 268 397 476 550 70,000 72,000 127 277 413 493 570 72,000 74,000 131 288 427 511 590 74,000 76,000 136 297 442 529 610 76,000 78,000 140 307 457 546 631 78,000 80,000 145 317 471 564 651 80,000 85,000 152 335 497 595 686 85,000 90,000 164 359 534 639 737 90,000 95,000 175 384 570 683 789 95,000 100,000 186 409 607 727 839 100,000 110,000 203 446 662 793 916 110,000 120,000 226 495 736 881 1,018 120,000 130,000 248 545 809 970 1,119 130,000 140,000 271 594 883 1,058 1,220 140,000 150,000 293 644 956 1,146 1,322 150,000 160,000 316 693 1,030 1,234 1,424 160,000 170,000 338 743 1,103 1,322 1,526 170,000 180,000 361 792 1,177 1,410 1,628 180,000 190,000 383 842 1,250 1,498 1,730 190,000 200,000 406 891 1,324 1,586 1,831 200,000 210,000 428 941 1,397 1,675 1,932 210,000 220,000 451 990 1,471 1,762 2,035 220,000 230,000 473 1,040 1,544 1,851 2,136 230,000 240,000 496 1,089 1,618 1,939 2,238 240,000 And up 518 1,139 1,691 2,027 2,340 REV. Free state tax preparation online PROC. Free state tax preparation online 2009-24 TABLE 6 DOLLAR AMOUNTS FOR TRUCKS AND VANS WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2009 Fair Market Value of Electric Automobile Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th and Later $18,500 $19,000 8 17 25 30 35 19,000 19,500 9 19 29 35 40 19,500 20,000 10 22 33 38 45 20,000 20,500 11 25 36 43 50 20,500 21,000 12 27 40 48 55 21,000 21,500 13 30 43 52 60 21,500 22,000 15 32 47 56 66 22,000 23,000 16 36 52 64 72 23,000 24,000 18 41 60 72 83 24,000 25,000 21 45 68 81 93 25,000 26,000 23 50 75 90 103 26,000 27,000 25 56 82 98 114 27,000 28,000 27 61 89 107 124 28,000 29,000 30 65 97 116 134 29,000 30,000 32 70 104 125 144 30,000 31,000 34 75 112 134 154 31,000 32,000 36 80 119 143 164 32,000 33,000 39 85 126 151 175 33,000 34,000 41 90 134 160 184 34,000 35,000 43 95 141 169 195 35,000 36,000 45 100 148 178 205 36,000 37,000 48 105 155 187 215 37,000 38,000 50 110 163 195 226 38,000 39,000 52 115 170 204 236 39,000 40,000 55 120 177 213 246 40,000 41,000 57 125 185 221 256 41,000 42,000 59 130 192 231 266 42,000 43,000 61 135 199 240 276 43,000 44,000 64 139 207 249 286 44,000 45,000 66 144 215 257 296 45,000 46,000 68 149 222 266 307 46,000 47,000 70 155 229 274 317 47,000 48,000 73 159 237 283 327 48,000 49,000 75 164 244 292 338 49,000 50,000 77 169 251 301 348 50,000 51,000 79 174 259 310 357 51,000 52,000 82 179 266 318 368 52,000 53,000 84 184 273 328 378 53,000 54,000 86 189 281 336 388 54,000 55,000 88 194 288 345 399 55,000 56,000 91 199 295 354 408 56,000 57,000 93 204 302 363 419 57,000 58,000 95 209 310 371 429 58,000 59,000 97 214 317 381 439 59,000 60,000 100 219 324 389 450 60,000 62,000 103 226 336 402 465 62,000 64,000 107 236 351 420 485 64,000 66,000 112 246 365 438 505 66,000 68,000 116 256 380 455 526 68,000 70,000 121 266 394 473 546 70,000 72,000 125 276 409 491 566 72,000 74,000 130 286 423 509 586 74,000 76,000 134 296 438 526 607 76,000 78,000 139 305 454 543 627 78,000 80,000 143 316 467 561 648 80,000 85,000 151 333 493 592 684 85,000 90,000 163 357 531 635 735 90,000 95,000 174 382 567 680 785 95,000 100,000 185 407 604 724 836 100,000 110,000 202 444 659 790 912 110,000 120,000 225 493 733 878 1,014 120,000 130,000 247 543 806 966 1,116 130,000 140,000 270 592 880 1,054 1,218 140,000 150,000 292 642 953 1,143 1,319 150,000 160,000 315 691 1,027 1,230 1,421 160,000 170,000 337 741 1,100 1,319 1,522 170,000 180,000 360 790 1,174 1,407 1,624 180,000 190,000 382 840 1,247 1,495 1,726 190,000 200,000 405 889 1,321 1,583 1,828 200,000 210,000 427 939 1,394 1,671 1,930 210,000 220,000 450 988 1,468 1,759 2,031 220,000 230,000 472 1,038 1,541 1,847 2,134 230,000 240,000 495 1,087 1,615 1,935 2,235 240,000 and up 517 1,137 1,688 2,024 2,336 SECTION 5. Free state tax preparation online EFFECTIVE DATE This revenue procedure applies to passenger automobiles (other than leased passenger automobiles) that are first placed in service by a taxpayer during calendar year 2009, and to leased passenger automobiles that are first leased by a taxpayer during calendar year 2009. Free state tax preparation online SECTION 6. Free state tax preparation online DRAFTING INFORMATION The principal author of this revenue procedure is Bernard P. Free state tax preparation online Harvey of the Office of Associate Chief Counsel (Income Tax & Accounting). Free state tax preparation online For further information regarding this revenue procedure, contact Mr. Free state tax preparation online Harvey at (202) 622-4930 (not a toll-free call). Free state tax preparation online Prev  Up  Next   Home   More Internal Revenue Bulletins