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How To File Taxes From 2011

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How To File Taxes From 2011

How to file taxes from 2011 9. How to file taxes from 2011   Depletion Table of Contents Introduction Topics - This chapter discusses: Who Can Claim Depletion? Mineral PropertyCost Depletion Percentage Depletion Oil and Gas Wells Mines and Geothermal Deposits Lessor's Gross Income TimberTimber units. How to file taxes from 2011 Depletion unit. How to file taxes from 2011 Introduction Depletion is the using up of natural resources by mining, drilling, quarrying stone, or cutting timber. How to file taxes from 2011 The depletion deduction allows an owner or operator to account for the reduction of a product's reserves. How to file taxes from 2011 There are two ways of figuring depletion: cost depletion and percentage depletion. How to file taxes from 2011 For mineral property, you generally must use the method that gives you the larger deduction. How to file taxes from 2011 For standing timber, you must use cost depletion. How to file taxes from 2011 Topics - This chapter discusses: Who can claim depletion Mineral property Timber Who Can Claim Depletion? If you have an economic interest in mineral property or standing timber, you can take a deduction for depletion. How to file taxes from 2011 More than one person can have an economic interest in the same mineral deposit or timber. How to file taxes from 2011 In the case of leased property, the depletion deduction is divided between the lessor and the lessee. How to file taxes from 2011 You have an economic interest if both the following apply. How to file taxes from 2011 You have acquired by investment any interest in mineral deposits or standing timber. How to file taxes from 2011 You have a legal right to income from the extraction of the mineral or cutting of the timber to which you must look for a return of your capital investment. How to file taxes from 2011 A contractual relationship that allows you an economic or monetary advantage from products of the mineral deposit or standing timber is not, in itself, an economic interest. How to file taxes from 2011 A production payment carved out of, or retained on the sale of, mineral property is not an economic interest. How to file taxes from 2011 Individuals, corporations, estates, and trusts who claim depletion deductions may be liable for alternative minimum tax. How to file taxes from 2011 Basis adjustment for depletion. How to file taxes from 2011   You must reduce the basis of your property by the depletion allowed or allowable, whichever is greater. How to file taxes from 2011 Mineral Property Mineral property includes oil and gas wells, mines, and other natural deposits (including geothermal deposits). How to file taxes from 2011 For this purpose, the term “property” means each separate interest you own in each mineral deposit in each separate tract or parcel of land. How to file taxes from 2011 You can treat two or more separate interests as one property or as separate properties. How to file taxes from 2011 See section 614 of the Internal Revenue Code and the related regulations for rules on how to treat separate mineral interests. How to file taxes from 2011 There are two ways of figuring depletion on mineral property. How to file taxes from 2011 Cost depletion. How to file taxes from 2011 Percentage depletion. How to file taxes from 2011 Generally, you must use the method that gives you the larger deduction. How to file taxes from 2011 However, unless you are an independent producer or royalty owner, you generally cannot use percentage depletion for oil and gas wells. How to file taxes from 2011 See Oil and Gas Wells , later. How to file taxes from 2011 Cost Depletion To figure cost depletion you must first determine the following. How to file taxes from 2011 The property's basis for depletion. How to file taxes from 2011 The total recoverable units of mineral in the property's natural deposit. How to file taxes from 2011 The number of units of mineral sold during the tax year. How to file taxes from 2011 Basis for depletion. How to file taxes from 2011   To figure the property's basis for depletion, subtract all the following from the property's adjusted basis. How to file taxes from 2011 Amounts recoverable through: Depreciation deductions, Deferred expenses (including deferred exploration and development costs), and Deductions other than depletion. How to file taxes from 2011 The residual value of land and improvements at the end of operations. How to file taxes from 2011 The cost or value of land acquired for purposes other than mineral production. How to file taxes from 2011 Adjusted basis. How to file taxes from 2011   The adjusted basis of your property is your original cost or other basis, plus certain additions and improvements, and minus certain deductions such as depletion allowed or allowable and casualty losses. How to file taxes from 2011 Your adjusted basis can never be less than zero. How to file taxes from 2011 See Publication 551, Basis of Assets, for more information on adjusted basis. How to file taxes from 2011 Total recoverable units. How to file taxes from 2011   The total recoverable units is the sum of the following. How to file taxes from 2011 The number of units of mineral remaining at the end of the year (including units recovered but not sold). How to file taxes from 2011 The number of units of mineral sold during the tax year (determined under your method of accounting, as explained next). How to file taxes from 2011   You must estimate or determine recoverable units (tons, pounds, ounces, barrels, thousands of cubic feet, or other measure) of mineral products using the current industry method and the most accurate and reliable information you can obtain. How to file taxes from 2011 You must include ores and minerals that are developed, in sight, blocked out, or assured. How to file taxes from 2011 You must also include probable or prospective ores or minerals that are believed to exist based on good evidence. How to file taxes from 2011 But see Elective safe harbor for owners of oil and gas property , later. How to file taxes from 2011 Number of units sold. How to file taxes from 2011   You determine the number of units sold during the tax year based on your method of accounting. How to file taxes from 2011 Use the following table to make this determination. How to file taxes from 2011    IF you  use . How to file taxes from 2011 . How to file taxes from 2011 . How to file taxes from 2011 THEN the units sold during the year are . How to file taxes from 2011 . How to file taxes from 2011 . How to file taxes from 2011 The cash method of accounting The units sold for which you receive payment during the tax year (regardless of the year of sale). How to file taxes from 2011 An accrual method of accounting The units sold based on your inventories and method of accounting for inventory. How to file taxes from 2011   The number of units sold during the tax year does not include any for which depletion deductions were allowed or allowable in earlier years. How to file taxes from 2011 Figuring the cost depletion deduction. How to file taxes from 2011   Once you have figured your property's basis for depletion, the total recoverable units, and the number of units sold during the tax year, you can figure your cost depletion deduction by taking the following steps. How to file taxes from 2011 Step Action Result 1 Divide your property's basis for depletion by total recoverable units. How to file taxes from 2011 Rate per unit. How to file taxes from 2011 2 Multiply the rate per unit by units sold during the tax year. How to file taxes from 2011 Cost depletion deduction. How to file taxes from 2011 You must keep accounts for the depletion of each property and adjust these accounts each year for units sold and depletion claimed. How to file taxes from 2011 Elective safe harbor for owners of oil and gas property. How to file taxes from 2011   Instead of using the method described earlier to determine the total recoverable units, you can use an elective safe harbor. How to file taxes from 2011 If you choose the elective safe harbor, the total recoverable units equal 105% of a property's proven reserves (both developed and undeveloped). How to file taxes from 2011 For details, see Revenue Procedure 2004-19 on page 563 of Internal Revenue Bulletin 2004-10, available at www. How to file taxes from 2011 irs. How to file taxes from 2011 gov/pub/irs-irbs/irb04-10. How to file taxes from 2011 pdf. How to file taxes from 2011   To make the election, attach a statement to your timely filed (including extensions) original return for the first tax year for which the safe harbor is elected. How to file taxes from 2011 The statement must indicate that you are electing the safe harbor provided by Revenue Procedure 2004-19. How to file taxes from 2011 The election, if made, is effective for the tax year in which it is made and all later years. How to file taxes from 2011 It cannot be revoked for the tax year in which it is elected, but may be revoked in a later year. How to file taxes from 2011 Once revoked, it cannot be re-elected for the next 5 years. How to file taxes from 2011 Percentage Depletion To figure percentage depletion, you multiply a certain percentage, specified for each mineral, by your gross income from the property during the tax year. How to file taxes from 2011 The rates to be used and other rules for oil and gas wells are discussed later under Independent Producers and Royalty Owners and under Natural Gas Wells . How to file taxes from 2011 Rates and other rules for percentage depletion of other specific minerals are found later in Mines and Geothermal Deposits . How to file taxes from 2011 Gross income. How to file taxes from 2011   When figuring percentage depletion, subtract from your gross income from the property the following amounts. How to file taxes from 2011 Any rents or royalties you paid or incurred for the property. How to file taxes from 2011 The part of any bonus you paid for a lease on the property allocable to the product sold (or that otherwise gives rise to gross income) for the tax year. How to file taxes from 2011 A bonus payment includes amounts you paid as a lessee to satisfy a production payment retained by the lessor. How to file taxes from 2011   Use the following fraction to figure the part of the bonus you must subtract. How to file taxes from 2011 No. How to file taxes from 2011 of units sold in the tax year Recoverable units from the property × Bonus Payments For oil and gas wells and geothermal deposits, more information about the definition of gross income from the property is under Oil and Gas Wells , later. How to file taxes from 2011 For other property, more information about the definition of gross income from the property is under Mines and Geothermal Deposits , later. How to file taxes from 2011 Taxable income limit. How to file taxes from 2011   The percentage depletion deduction generally cannot be more than 50% (100% for oil and gas property) of your taxable income from the property figured without the depletion deduction and the domestic production activities deduction. How to file taxes from 2011   Taxable income from the property means gross income from the property minus all allowable deductions (except any deduction for depletion or domestic production activities) attributable to mining processes, including mining transportation. How to file taxes from 2011 These deductible items include, but are not limited to, the following. How to file taxes from 2011 Operating expenses. How to file taxes from 2011 Certain selling expenses. How to file taxes from 2011 Administrative and financial overhead. How to file taxes from 2011 Depreciation. How to file taxes from 2011 Intangible drilling and development costs. How to file taxes from 2011 Exploration and development expenditures. How to file taxes from 2011 Deductible taxes (see chapter 5), but not taxes that you capitalize or take as a credit. How to file taxes from 2011 Losses sustained. How to file taxes from 2011   The following rules apply when figuring your taxable income from the property for purposes of the taxable income limit. How to file taxes from 2011 Do not deduct any net operating loss deduction from the gross income from the property. How to file taxes from 2011 Corporations do not deduct charitable contributions from the gross income from the property. How to file taxes from 2011 If, during the year, you dispose of an item of section 1245 property that was used in connection with mineral property, reduce any allowable deduction for mining expenses by the part of any gain you must report as ordinary income that is allocable to the mineral property. How to file taxes from 2011 See section 1. How to file taxes from 2011 613-5(b)(1) of the regulations for information on how to figure the ordinary gain allocable to the property. How to file taxes from 2011 Oil and Gas Wells You cannot claim percentage depletion for an oil or gas well unless at least one of the following applies. How to file taxes from 2011 You are either an independent producer or a royalty owner. How to file taxes from 2011 The well produces natural gas that is either sold under a fixed contract or produced from geopressured brine. How to file taxes from 2011 If you are an independent producer or royalty owner, see Independent Producers and Royalty Owners , next. How to file taxes from 2011 For information on the depletion deduction for wells that produce natural gas that is either sold under a fixed contract or produced from geopressured brine, see Natural Gas Wells , later. How to file taxes from 2011 Independent Producers and Royalty Owners If you are an independent producer or royalty owner, you figure percentage depletion using a rate of 15% of the gross income from the property based on your average daily production of domestic crude oil or domestic natural gas up to your depletable oil or natural gas quantity. How to file taxes from 2011 However, certain refiners, as explained next, and certain retailers and transferees of proven oil and gas properties, as explained next, cannot claim percentage depletion. How to file taxes from 2011 For information on figuring the deduction, see Figuring percentage depletion , later. How to file taxes from 2011 Refiners who cannot claim percentage depletion. How to file taxes from 2011   You cannot claim percentage depletion if you or a related person refine crude oil and you and the related person refined more than 75,000 barrels on any day during the tax year based on average (rather than actual) daily refinery runs for the tax year. How to file taxes from 2011 The average daily refinery run is computed by dividing total refinery runs for the tax year by the total number of days in the tax year. How to file taxes from 2011 Related person. How to file taxes from 2011   You and another person are related persons if either of you holds a significant ownership interest in the other person or if a third person holds a significant ownership interest in both of you. How to file taxes from 2011 For example, a corporation, partnership, estate, or trust and anyone who holds a significant ownership interest in it are related persons. How to file taxes from 2011 A partnership and a trust are related persons if one person holds a significant ownership interest in each of them. How to file taxes from 2011 For purposes of the related person rules, significant ownership interest means direct or indirect ownership of 5% or more in any one of the following. How to file taxes from 2011 The value of the outstanding stock of a corporation. How to file taxes from 2011 The interest in the profits or capital of a partnership. How to file taxes from 2011 The beneficial interests in an estate or trust. How to file taxes from 2011 Any interest owned by or for a corporation, partnership, trust, or estate is considered to be owned directly both by itself and proportionately by its shareholders, partners, or beneficiaries. How to file taxes from 2011 Retailers who cannot claim percentage depletion. How to file taxes from 2011   You cannot claim percentage depletion if both the following apply. How to file taxes from 2011 You sell oil or natural gas or their by-products directly or through a related person in any of the following situations. How to file taxes from 2011 Through a retail outlet operated by you or a related person. How to file taxes from 2011 To any person who is required under an agreement with you or a related person to use a trademark, trade name, or service mark or name owned by you or a related person in marketing or distributing oil, natural gas, or their by-products. How to file taxes from 2011 To any person given authority under an agreement with you or a related person to occupy any retail outlet owned, leased, or controlled by you or a related person. How to file taxes from 2011 The combined gross receipts from sales (not counting resales) of oil, natural gas, or their by-products by all retail outlets taken into account in (1) are more than $5 million for the tax year. How to file taxes from 2011   For the purpose of determining if this rule applies, do not count the following. How to file taxes from 2011 Bulk sales (sales in very large quantities) of oil or natural gas to commercial or industrial users. How to file taxes from 2011 Bulk sales of aviation fuels to the Department of Defense. How to file taxes from 2011 Sales of oil or natural gas or their by-products outside the United States if none of your domestic production or that of a related person is exported during the tax year or the prior tax year. How to file taxes from 2011 Related person. How to file taxes from 2011   To determine if you and another person are related persons, see Related person under Refiners who cannot claim percentage depletion, earlier. How to file taxes from 2011 Sales through a related person. How to file taxes from 2011   You are considered to be selling through a related person if any sale by the related person produces gross income from which you may benefit because of your direct or indirect ownership interest in the person. How to file taxes from 2011   You are not considered to be selling through a related person who is a retailer if all the following apply. How to file taxes from 2011 You do not have a significant ownership interest in the retailer. How to file taxes from 2011 You sell your production to persons who are not related to either you or the retailer. How to file taxes from 2011 The retailer does not buy oil or natural gas from your customers or persons related to your customers. How to file taxes from 2011 There are no arrangements for the retailer to acquire oil or natural gas you produced for resale or made available for purchase by the retailer. How to file taxes from 2011 Neither you nor the retailer knows of or controls the final disposition of the oil or natural gas you sold or the original source of the petroleum products the retailer acquired for resale. How to file taxes from 2011 Transferees who cannot claim percentage depletion. How to file taxes from 2011   You cannot claim percentage depletion if you received your interest in a proven oil or gas property by transfer after 1974 and before October 12, 1990. How to file taxes from 2011 For a definition of the term “transfer,” see section 1. How to file taxes from 2011 613A-7(n) of the regulations. How to file taxes from 2011 For a definition of the term “interest in proven oil or gas property,” see section 1. How to file taxes from 2011 613A-7(p) of the regulations. How to file taxes from 2011 Figuring percentage depletion. How to file taxes from 2011   Generally, as an independent producer or royalty owner, you figure your percentage depletion by computing your average daily production of domestic oil or gas and comparing it to your depletable oil or gas quantity. How to file taxes from 2011 If your average daily production does not exceed your depletable oil or gas quantity, you figure your percentage depletion by multiplying the gross income from the oil or gas property (defined later) by 15%. How to file taxes from 2011 If your average daily production of domestic oil or gas exceeds your depletable oil or gas quantity, you must make an allocation as explained later under Average daily production. How to file taxes from 2011   In addition, there is a limit on the percentage depletion deduction. How to file taxes from 2011 See Taxable income limit , later. How to file taxes from 2011 Average daily production. How to file taxes from 2011   Figure your average daily production by dividing your total domestic production of oil or gas for the tax year by the number of days in your tax year. How to file taxes from 2011 Partial interest. How to file taxes from 2011   If you have a partial interest in the production from a property, figure your share of the production by multiplying total production from the property by your percentage of interest in the revenues from the property. How to file taxes from 2011   You have a partial interest in the production from a property if you have a net profits interest in the property. How to file taxes from 2011 To figure the share of production for your net profits interest, you must first determine your percentage participation (as measured by the net profits) in the gross revenue from the property. How to file taxes from 2011 To figure this percentage, you divide the income you receive for your net profits interest by the gross revenue from the property. How to file taxes from 2011 Then multiply the total production from the property by your percentage participation to figure your share of the production. How to file taxes from 2011 Example. How to file taxes from 2011 Javier Robles owns oil property in which Pablo Olmos owns a 20% net profits interest. How to file taxes from 2011 During the year, the property produced 10,000 barrels of oil, which Javier sold for $200,000. How to file taxes from 2011 Javier had expenses of $90,000 attributable to the property. How to file taxes from 2011 The property generated a net profit of $110,000 ($200,000 − $90,000). How to file taxes from 2011 Pablo received income of $22,000 ($110,000 × . How to file taxes from 2011 20) for his net profits interest. How to file taxes from 2011 Pablo determined his percentage participation to be 11% by dividing $22,000 (the income he received) by $200,000 (the gross revenue from the property). How to file taxes from 2011 Pablo determined his share of the oil production to be 1,100 barrels (10,000 barrels × 11%). How to file taxes from 2011 Depletable oil or natural gas quantity. How to file taxes from 2011   Generally, your depletable oil quantity is 1,000 barrels. How to file taxes from 2011 Your depletable natural gas quantity is 6,000 cubic feet multiplied by the number of barrels of your depletable oil quantity that you choose to apply. How to file taxes from 2011 If you claim depletion on both oil and natural gas, you must reduce your depletable oil quantity (1,000 barrels) by the number of barrels you use to figure your depletable natural gas quantity. How to file taxes from 2011 Example. How to file taxes from 2011 You have both oil and natural gas production. How to file taxes from 2011 To figure your depletable natural gas quantity, you choose to apply 360 barrels of your 1000-barrel depletable oil quantity. How to file taxes from 2011 Your depletable natural gas quantity is 2. How to file taxes from 2011 16 million cubic feet of gas (360 × 6000). How to file taxes from 2011 You must reduce your depletable oil quantity to 640 barrels (1000 − 360). How to file taxes from 2011 If you have production from marginal wells, see section 613A(c)(6) of the Internal Revenue Code to figure your depletable oil or natural gas quantity. How to file taxes from 2011 Also, see Notice 2012-50, available at www. How to file taxes from 2011 irs. How to file taxes from 2011 gov/irb/2012–31_IRB/index. How to file taxes from 2011 html. How to file taxes from 2011 Business entities and family members. How to file taxes from 2011   You must allocate the depletable oil or gas quantity among the following related persons in proportion to each entity's or family member's production of domestic oil or gas for the year. How to file taxes from 2011 Corporations, trusts, and estates if 50% or more of the beneficial interest is owned by the same or related persons (considering only persons that own at least 5% of the beneficial interest). How to file taxes from 2011 You and your spouse and minor children. How to file taxes from 2011 A related person is anyone mentioned in the related persons discussion under Nondeductible loss in chapter 2 of Publication 544, except that for purposes of this allocation, item (1) in that discussion includes only an individual, his or her spouse, and minor children. How to file taxes from 2011 Controlled group of corporations. How to file taxes from 2011   Members of the same controlled group of corporations are treated as one taxpayer when figuring the depletable oil or natural gas quantity. How to file taxes from 2011 They share the depletable quantity. How to file taxes from 2011 A controlled group of corporations is defined in section 1563(a) of the Internal Revenue Code, except that, for this purpose, the stock ownership requirement in that definition is “more than 50%” rather than “at least 80%. How to file taxes from 2011 ” Gross income from the property. How to file taxes from 2011   For purposes of percentage depletion, gross income from the property (in the case of oil and gas wells) is the amount you receive from the sale of the oil or gas in the immediate vicinity of the well. How to file taxes from 2011 If you do not sell the oil or gas on the property, but manufacture or convert it into a refined product before sale or transport it before sale, the gross income from the property is the representative market or field price (RMFP) of the oil or gas, before conversion or transportation. How to file taxes from 2011   If you sold gas after you removed it from the premises for a price that is lower than the RMFP, determine gross income from the property for percentage depletion purposes without regard to the RMFP. How to file taxes from 2011   Gross income from the property does not include lease bonuses, advance royalties, or other amounts payable without regard to production from the property. How to file taxes from 2011 Average daily production exceeds depletable quantities. How to file taxes from 2011   If your average daily production for the year is more than your depletable oil or natural gas quantity, figure your allowance for depletion for each domestic oil or natural gas property as follows. How to file taxes from 2011 Figure your average daily production of oil or natural gas for the year. How to file taxes from 2011 Figure your depletable oil or natural gas quantity for the year. How to file taxes from 2011 Figure depletion for all oil or natural gas produced from the property using a percentage depletion rate of 15%. How to file taxes from 2011 Multiply the result figured in (3) by a fraction, the numerator of which is the result figured in (2) and the denominator of which is the result figured in (1). How to file taxes from 2011 This is your depletion allowance for that property for the year. How to file taxes from 2011 Taxable income limit. How to file taxes from 2011   If you are an independent producer or royalty owner of oil and gas, your deduction for percentage depletion is limited to the smaller of the following. How to file taxes from 2011 100% of your taxable income from the property figured without the deduction for depletion and the deduction for domestic production activities under section 199 of the Internal Revenue Code. How to file taxes from 2011 For a definition of taxable income from the property, see Taxable income limit , earlier, under Mineral Property. How to file taxes from 2011 65% of your taxable income from all sources, figured without the depletion allowance, the deduction for domestic production activities, any net operating loss carryback, and any capital loss carryback. How to file taxes from 2011 You can carry over to the following year any amount you cannot deduct because of the 65%-of-taxable-income limit. How to file taxes from 2011 Add it to your depletion allowance (before applying any limits) for the following year. How to file taxes from 2011 Partnerships and S Corporations Generally, each partner or S corporation shareholder, and not the partnership or S corporation, figures the depletion allowance separately. How to file taxes from 2011 (However, see Electing large partnerships must figure depletion allowance , later. How to file taxes from 2011 ) Each partner or shareholder must decide whether to use cost or percentage depletion. How to file taxes from 2011 If a partner or shareholder uses percentage depletion, he or she must apply the 65%-of-taxable-income limit using his or her taxable income from all sources. How to file taxes from 2011 Partner's or shareholder's adjusted basis. How to file taxes from 2011   The partnership or S corporation must allocate to each partner or shareholder his or her share of the adjusted basis of each oil or gas property held by the partnership or S corporation. How to file taxes from 2011 The partnership or S corporation makes the allocation as of the date it acquires the oil or gas property. How to file taxes from 2011   Each partner's share of the adjusted basis of the oil or gas property generally is figured according to that partner's interest in partnership capital. How to file taxes from 2011 However, in some cases, it is figured according to the partner's interest in partnership income. How to file taxes from 2011   The partnership or S corporation adjusts the partner's or shareholder's share of the adjusted basis of the oil and gas property for any capital expenditures made for the property and for any change in partnership or S corporation interests. How to file taxes from 2011 Recordkeeping. How to file taxes from 2011 Each partner or shareholder must separately keep records of his or her share of the adjusted basis in each oil and gas property of the partnership or S corporation. How to file taxes from 2011 The partner or shareholder must reduce his or her adjusted basis by the depletion allowed or allowable on the property each year. How to file taxes from 2011 The partner or shareholder must use that reduced adjusted basis to figure cost depletion or his or her gain or loss if the partnership or S corporation disposes of the property. How to file taxes from 2011 Reporting the deduction. How to file taxes from 2011   Information that you, as a partner or shareholder, use to figure your depletion deduction on oil and gas properties is reported by the partnership or S corporation on Schedule K-1 (Form 1065) or on Schedule K-1 (Form 1120S). How to file taxes from 2011 Deduct oil and gas depletion for your partnership or S corporation interest on Schedule E (Form 1040). How to file taxes from 2011 The depletion deducted on Schedule E is included in figuring income or loss from rental real estate or royalty properties. How to file taxes from 2011 The instructions for Schedule E explain where to report this income or loss and whether you need to file either of the following forms. How to file taxes from 2011 Form 6198, At-Risk Limitations. How to file taxes from 2011 Form 8582, Passive Activity Loss Limitations. How to file taxes from 2011 Electing large partnerships must figure depletion allowance. How to file taxes from 2011   An electing large partnership, rather than each partner, generally must figure the depletion allowance. How to file taxes from 2011 The partnership figures the depletion allowance without taking into account the 65-percent-of-taxable-income limit and the depletable oil or natural gas quantity. How to file taxes from 2011 Also, the adjusted basis of a partner's interest in the partnership is not affected by the depletion allowance. How to file taxes from 2011   An electing large partnership is one that meets both the following requirements. How to file taxes from 2011 The partnership had 100 or more partners in the preceding year. How to file taxes from 2011 The partnership chooses to be an electing large partnership. How to file taxes from 2011 Disqualified persons. How to file taxes from 2011   An electing large partnership does not figure the depletion allowance of its partners that are disqualified persons. How to file taxes from 2011 Disqualified persons must figure it themselves, as explained earlier. How to file taxes from 2011   All the following are disqualified persons. How to file taxes from 2011 Refiners who cannot claim percentage depletion (discussed under Independent Producers and Royalty Owners , earlier). How to file taxes from 2011 Retailers who cannot claim percentage depletion (discussed under Independent Producers and Royalty Owners , earlier). How to file taxes from 2011 Any partner whose average daily production of domestic crude oil and natural gas is more than 500 barrels during the tax year in which the partnership tax year ends. How to file taxes from 2011 Average daily production is discussed earlier. How to file taxes from 2011 Natural Gas Wells You can use percentage depletion for a well that produces natural gas that is either Sold under a fixed contract, or Produced from geopressured brine. How to file taxes from 2011 Natural gas sold under a fixed contract. How to file taxes from 2011   Natural gas sold under a fixed contract qualifies for a percentage depletion rate of 22%. How to file taxes from 2011 This is domestic natural gas sold by the producer under a contract that does not provide for a price increase to reflect any increase in the seller's tax liability because of the repeal of percentage depletion for gas. How to file taxes from 2011 The contract must have been in effect from February 1, 1975, until the date of sale of the gas. How to file taxes from 2011 Price increases after February 1, 1975, are presumed to take the increase in tax liability into account unless demonstrated otherwise by clear and convincing evidence. How to file taxes from 2011 Natural gas from geopressured brine. How to file taxes from 2011   Qualified natural gas from geopressured brine is eligible for a percentage depletion rate of 10%. How to file taxes from 2011 This is natural gas that is both the following. How to file taxes from 2011 Produced from a well you began to drill after September 1978 and before 1984. How to file taxes from 2011 Determined in accordance with section 503 of the Natural Gas Policy Act of 1978 to be produced from geopressured brine. How to file taxes from 2011 Mines and Geothermal Deposits Certain mines, wells, and other natural deposits, including geothermal deposits, qualify for percentage depletion. How to file taxes from 2011 Mines and other natural deposits. How to file taxes from 2011   For a natural deposit, the percentage of your gross income from the property that you can deduct as depletion depends on the type of deposit. How to file taxes from 2011   The following is a list of the percentage depletion rates for the more common minerals. How to file taxes from 2011 DEPOSITS RATE Sulphur, uranium, and, if from deposits in the United States, asbestos, lead ore, zinc ore, nickel ore, and mica 22% Gold, silver, copper, iron ore, and certain oil shale, if from deposits in the United States 15% Borax, granite, limestone, marble, mollusk shells, potash, slate, soapstone, and carbon dioxide produced from a well 14% Coal, lignite, and sodium chloride 10% Clay and shale used or sold for use in making sewer pipe or bricks or used or sold for use as sintered or burned lightweight aggregates 7½% Clay used or sold for use in making drainage and roofing tile, flower pots, and kindred products, and gravel, sand, and stone (other than stone used or sold for use by a mine owner or operator as dimension or ornamental stone) 5%   You can find a complete list of minerals and their percentage depletion rates in section 613(b) of the Internal Revenue Code. How to file taxes from 2011 Corporate deduction for iron ore and coal. How to file taxes from 2011   The percentage depletion deduction of a corporation for iron ore and coal (including lignite) is reduced by 20% of: The percentage depletion deduction for the tax year (figured without this reduction), minus The adjusted basis of the property at the close of the tax year (figured without the depletion deduction for the tax year). How to file taxes from 2011 Gross income from the property. How to file taxes from 2011   For property other than a geothermal deposit or an oil or gas well, gross income from the property means the gross income from mining. How to file taxes from 2011 Mining includes all the following. How to file taxes from 2011 Extracting ores or minerals from the ground. How to file taxes from 2011 Applying certain treatment processes described later. How to file taxes from 2011 Transporting ores or minerals (generally, not more than 50 miles) from the point of extraction to the plants or mills in which the treatment processes are applied. How to file taxes from 2011 Excise tax. How to file taxes from 2011   Gross income from mining includes the separately stated excise tax received by a mine operator from the sale of coal to compensate the operator for the excise tax the mine operator must pay to finance black lung benefits. How to file taxes from 2011 Extraction. How to file taxes from 2011   Extracting ores or minerals from the ground includes extraction by mine owners or operators of ores or minerals from the waste or residue of prior mining. How to file taxes from 2011 This does not apply to extraction from waste or residue of prior mining by the purchaser of the waste or residue or the purchaser of the rights to extract ores or minerals from the waste or residue. How to file taxes from 2011 Treatment processes. How to file taxes from 2011   The processes included as mining depend on the ore or mineral mined. How to file taxes from 2011 To qualify as mining, the treatment processes must be applied by the mine owner or operator. How to file taxes from 2011 For a listing of treatment processes considered as mining, see section 613(c)(4) of the Internal Revenue Code and the related regulations. How to file taxes from 2011 Transportation of more than 50 miles. How to file taxes from 2011   If the IRS finds that the ore or mineral must be transported more than 50 miles to plants or mills to be treated because of physical and other requirements, the additional authorized transportation is considered mining and included in the computation of gross income from mining. How to file taxes from 2011    If you wish to include transportation of more than 50 miles in the computation of gross income from mining, request an advance ruling from the IRS. How to file taxes from 2011 Include in the request the facts about the physical and other requirements that prevented the construction and operation of the plant within 50 miles of the point of extraction. How to file taxes from 2011 For more information about requesting an advance ruling, see Revenue Procedure 2013-1, available at www. How to file taxes from 2011 irs. How to file taxes from 2011 gov/irb/2013-01_IRB/ar11. How to file taxes from 2011 html. How to file taxes from 2011 Disposal of coal or iron ore. How to file taxes from 2011   You cannot take a depletion deduction for coal (including lignite) or iron ore mined in the United States if both the following apply. How to file taxes from 2011 You disposed of it after holding it for more than 1 year. How to file taxes from 2011 You disposed of it under a contract under which you retain an economic interest in the coal or iron ore. How to file taxes from 2011 Treat any gain on the disposition as a capital gain. How to file taxes from 2011 Disposal to related person. How to file taxes from 2011   This rule does not apply if you dispose of the coal or iron ore to one of the following persons. How to file taxes from 2011 A related person (as listed in chapter 2 of Publication 544). How to file taxes from 2011 A person owned or controlled by the same interests that own or control you. How to file taxes from 2011 Geothermal deposits. How to file taxes from 2011   Geothermal deposits located in the United States or its possessions qualify for a percentage depletion rate of 15%. How to file taxes from 2011 A geothermal deposit is a geothermal reservoir of natural heat stored in rocks or in a watery liquid or vapor. How to file taxes from 2011 For percentage depletion purposes, a geothermal deposit is not considered a gas well. How to file taxes from 2011   Figure gross income from the property for a geothermal steam well in the same way as for oil and gas wells. How to file taxes from 2011 See Gross income from the property , earlier, under Oil and Gas Wells. How to file taxes from 2011 Percentage depletion on a geothermal deposit cannot be more than 50% of your taxable income from the property. How to file taxes from 2011 Lessor's Gross Income In the case of leased property, the depletion deduction is divided between the lessor and the lessee. How to file taxes from 2011 A lessor's gross income from the property that qualifies for percentage depletion usually is the total of the royalties received from the lease. How to file taxes from 2011 Bonuses and advanced royalties. How to file taxes from 2011   Bonuses and advanced royalties are payments a lessee makes before production to a lessor for the grant of rights in a lease or for minerals, gas, or oil to be extracted from leased property. How to file taxes from 2011 If you are the lessor, your income from bonuses and advanced royalties received is subject to an allowance for depletion, as explained in the next two paragraphs. How to file taxes from 2011 Figuring cost depletion. How to file taxes from 2011   To figure cost depletion on a bonus, multiply your adjusted basis in the property by a fraction, the numerator of which is the bonus and the denominator of which is the total bonus and royalties expected to be received. How to file taxes from 2011 To figure cost depletion on advanced royalties, use the computation explained earlier under Cost Depletion , treating the number of units for which the advanced royalty is received as the number of units sold. How to file taxes from 2011 Figuring percentage depletion. How to file taxes from 2011   In the case of mines, wells, and other natural deposits other than gas, oil, or geothermal property, you may use the percentage rates discussed earlier under Mines and Geothermal Deposits . How to file taxes from 2011 Any bonus or advanced royalty payments are generally part of the gross income from the property to which the rates are applied in making the calculation. How to file taxes from 2011 However, for oil, gas, or geothermal property, gross income does not include lease bonuses, advanced royalties, or other amounts payable without regard to production from the property. How to file taxes from 2011 Ending the lease. How to file taxes from 2011   If you receive a bonus on a lease that ends or is abandoned before you derive any income from mineral extraction, include in income the depletion deduction you took. How to file taxes from 2011 Do this for the year the lease ends or is abandoned. How to file taxes from 2011 Also increase your adjusted basis in the property to restore the depletion deduction you previously subtracted. How to file taxes from 2011   For advanced royalties, include in income the depletion claimed on minerals for which the advanced royalties were paid if the minerals were not produced before the lease ended. How to file taxes from 2011 Include this amount in income for the year the lease ends. How to file taxes from 2011 Increase your adjusted basis in the property by the amount you include in income. How to file taxes from 2011 Delay rentals. How to file taxes from 2011   These are payments for deferring development of the property. How to file taxes from 2011 Since delay rentals are ordinary rent, they are ordinary income that is not subject to depletion. How to file taxes from 2011 These rentals can be avoided by either abandoning the lease, beginning development operations, or obtaining production. How to file taxes from 2011 Timber You can figure timber depletion only by the cost method. How to file taxes from 2011 Percentage depletion does not apply to timber. How to file taxes from 2011 Base your depletion on your cost or other basis in the timber. How to file taxes from 2011 Your cost does not include the cost of land or any amounts recoverable through depreciation. How to file taxes from 2011 Depletion takes place when you cut standing timber. How to file taxes from 2011 You can figure your depletion deduction when the quantity of cut timber is first accurately measured in the process of exploitation. How to file taxes from 2011 Figuring cost depletion. How to file taxes from 2011   To figure your cost depletion allowance, you multiply the number of timber units cut by your depletion unit. How to file taxes from 2011 Timber units. How to file taxes from 2011   When you acquire timber property, you must make an estimate of the quantity of marketable timber that exists on the property. How to file taxes from 2011 You measure the timber using board feet, log scale, cords, or other units. How to file taxes from 2011 If you later determine that you have more or less units of timber, you must adjust the original estimate. How to file taxes from 2011   The term “timber property” means your economic interest in standing timber in each tract or block representing a separate timber account. How to file taxes from 2011 Depletion unit. How to file taxes from 2011   You figure your depletion unit each year by taking the following steps. How to file taxes from 2011 Determine your cost or adjusted basis of the timber on hand at the beginning of the year. How to file taxes from 2011 Adjusted basis is defined under Cost Depletion in the discussion on Mineral Property. How to file taxes from 2011 Add to the amount determined in (1) the cost of any timber units acquired during the year and any additions to capital. How to file taxes from 2011 Figure the number of timber units to take into account by adding the number of timber units acquired during the year to the number of timber units on hand in the account at the beginning of the year and then adding (or subtracting) any correction to the estimate of the number of timber units remaining in the account. How to file taxes from 2011 Divide the result of (2) by the result of (3). How to file taxes from 2011 This is your depletion unit. How to file taxes from 2011 Example. How to file taxes from 2011 You bought a timber tract for $160,000 and the land was worth as much as the timber. How to file taxes from 2011 Your basis for the timber is $80,000. How to file taxes from 2011 Based on an estimated one million board feet (1,000 MBF) of standing timber, you figure your depletion unit to be $80 per MBF ($80,000 ÷ 1,000). How to file taxes from 2011 If you cut 500 MBF of timber, your depletion allowance would be $40,000 (500 MBF × $80). How to file taxes from 2011 When to claim depletion. How to file taxes from 2011   Claim your depletion allowance as a deduction in the year of sale or other disposition of the products cut from the timber, unless you choose to treat the cutting of timber as a sale or exchange (explained below). How to file taxes from 2011 Include allowable depletion for timber products not sold during the tax year the timber is cut as a cost item in the closing inventory of timber products for the year. How to file taxes from 2011 The inventory is your basis for determining gain or loss in the tax year you sell the timber products. How to file taxes from 2011 Example. How to file taxes from 2011 The facts are the same as in the previous example except that you sold only half of the timber products in the cutting year. How to file taxes from 2011 You would deduct $20,000 of the $40,000 depletion that year. How to file taxes from 2011 You would add the remaining $20,000 depletion to your closing inventory of timber products. How to file taxes from 2011 Electing to treat the cutting of timber as a sale or exchange. How to file taxes from 2011   You can elect, under certain circumstances, to treat the cutting of timber held for more than 1 year as a sale or exchange. How to file taxes from 2011 You must make the election on your income tax return for the tax year to which it applies. How to file taxes from 2011 If you make this election, subtract the adjusted basis for depletion from the fair market value of the timber on the first day of the tax year in which you cut it to figure the gain or loss on the cutting. How to file taxes from 2011 You generally report the gain as long-term capital gain. How to file taxes from 2011 The fair market value then becomes your basis for figuring your ordinary gain or loss on the sale or other disposition of the products cut from the timber. How to file taxes from 2011 For more information, see Timber in chapter 2 of Publication 544, Sales and Other Dispositions of Assets. How to file taxes from 2011   You may revoke an election to treat the cutting of timber as a sale or exchange without IRS's consent. How to file taxes from 2011 The prior election (and revocation) is disregarded for purposes of making a subsequent election. How to file taxes from 2011 See Form T (Timber), Forest Activities Schedule, for more information. How to file taxes from 2011 Form T. How to file taxes from 2011   Complete and attach Form T (Timber) to your income tax return if you claim a deduction for timber depletion, choose to treat the cutting of timber as a sale or exchange, or make an outright sale of timber. How to file taxes from 2011 Prev  Up  Next   Home   More Online Publications
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Understanding your CP567 Notice

We rejected your application for an Individual Taxpayer Identification Number (ITIN). You may not be eligible for an ITIN. Your documents may be invalid. We may not have received a reply when we asked for more information.

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Effective June 22, 2012, the IRS has made interim changes that affect the Individual Taxpayer Identification Number (ITIN) application process. Some of the information below, including the documentation requirements for individuals seeking an ITIN, has been superseded by these changes. Taxpayers and their representatives should review these changes, which are further explained in these Frequently Asked Questions, before requesting an ITIN.


What you need to do

  • Read your notice to see why we rejected your application.
  • Make sure you don't qualify for a Social Security number (SSN) and you qualify for an ITIN.
  • Make sure your documents are correct.
  • Send us the information we've requested.
  • Send us a new application. Fill it out completely. Answer all the questions. Attach the correct documents. Attach copies of your tax return and paperwork to it.

You may want to...


Answers to Common Questions

What is an ITIN?
It is a number for you to use on federal tax documents.

Who needs an ITIN?
A non-citizen who has to file a federal tax return or a tax reporting document and does not qualify for an SSN needs an ITIN.

What happens to the tax return I sent with the application?
We'll process your return without an ITIN. You'll need to reapply for an ITIN and attach a copy of the return to your application to get a refund.

I sent you documents when I applied for an ITIN. When will you return them?
We will return your documents within 60 days from your notice's date. Call us at the number on your notice if you don't receive your documents by then.

Whom can I talk to about my rejection?
You can call the telephone number on the top right corner of the notice.

Do I need to file a new tax return when I reapply?
No. Just attach a copy of it to the application. Indicate it is a copy. Send the application with your paperwork to the address on the notice.

Do I always need to attach a copy of my tax return to my application?
No. Not if you meet one of five exceptions. Read Publication 1915, Understanding Your IRS Individual Taxpayer Identification Number ITIN to see if you meet an exception.


Tips for next year

Consider filing your taxes electronically. Filing online can help you avoid mistakes and find credits and deductions that you may qualify for. In many cases you can file for free. Learn more about e-file.


Understanding your notice

Reading your notice
Your notice may look different from the sample because the information contained in your notice is tailored to your situation.

Notice CP567, Page 1

Notice CP567, Page 2

Printable samples of this notice (PDF)

Tax publications you may find useful

How to get help

Calling the 1-800 number listed on the top right corner of your notice is the fastest way to get your questions answered.

You can also authorize someone (such as an accountant) to contact the IRS on your behalf using this Power of Attorney and Declaration of Representative (Form 2848).

Or you may qualify for help from a Low Income Taxpayer Clinic.
 

Page Last Reviewed or Updated: 14-Mar-2014

The How To File Taxes From 2011

How to file taxes from 2011 6. How to file taxes from 2011   Retail Tax on Heavy Trucks, Trailers, and Tractors Table of Contents Highway vehicle. How to file taxes from 2011 Vehicles not considered highway vehicles. How to file taxes from 2011 Idling reduction device. How to file taxes from 2011 Separate purchase. How to file taxes from 2011 Leases. How to file taxes from 2011 Exported vehicle. How to file taxes from 2011 Tax on resale of tax-paid trailers and semitrailers. How to file taxes from 2011 Use treated as sale. How to file taxes from 2011 Sale. How to file taxes from 2011 Long-term lease. How to file taxes from 2011 Short-term lease. How to file taxes from 2011 Related person. How to file taxes from 2011 Exclusions from tax base. How to file taxes from 2011 Sales not at arm's length. How to file taxes from 2011 Installment sales. How to file taxes from 2011 Repairs and modifications. How to file taxes from 2011 Further manufacture. How to file taxes from 2011 Rail trailers and rail vans. How to file taxes from 2011 Parts and accessories. How to file taxes from 2011 Trash containers. How to file taxes from 2011 House trailers. How to file taxes from 2011 Camper coaches or bodies for self-propelled mobile homes. How to file taxes from 2011 Farm feed, seed, and fertilizer equipment. How to file taxes from 2011 Ambulances and hearses. How to file taxes from 2011 Truck-tractors. How to file taxes from 2011 Concrete mixers. How to file taxes from 2011 Registration requirement. How to file taxes from 2011 Further manufacture. How to file taxes from 2011 A tax of 12% of the sales price is imposed on the first retail sale of the following articles, including related parts and accessories sold on or in connection with, or with the sale of, the articles. How to file taxes from 2011 Truck chassis and bodies. How to file taxes from 2011 Truck trailer and semitrailer chassis and bodies. How to file taxes from 2011 Tractors of the kind chiefly used for highway transportation in combination with a trailer or semitrailer. How to file taxes from 2011 A truck is a highway vehicle primarily designed to transport its load on the same chassis as the engine, even if it is equipped to tow a vehicle, such as a trailer or semitrailer. How to file taxes from 2011 A tractor is a highway vehicle designed to tow a vehicle, such as a trailer or semitrailer. How to file taxes from 2011 A tractor may carry incidental items of cargo when towing or limited amounts of cargo when not towing. How to file taxes from 2011 A sale of a truck, truck trailer, or semitrailer is considered a sale of a chassis and a body. How to file taxes from 2011 The seller is liable for the tax. How to file taxes from 2011 Chassis or body. How to file taxes from 2011   A chassis or body is taxable only if you sell it for use as a component part of a highway vehicle that is a truck, truck trailer or semitrailer, or a tractor of the kind chiefly used for highway transportation in combination with a trailer or semitrailer. How to file taxes from 2011 Highway vehicle. How to file taxes from 2011   A highway vehicle is any self-propelled vehicle designed to carry a load over public highways, whether or not it is also designed to perform other functions. How to file taxes from 2011 Examples of vehicles designed to carry a load over public highways are passenger automobiles, motorcycles, buses, and highway-type trucks and truck tractors. How to file taxes from 2011 A vehicle is a highway vehicle even though the vehicle's design allows it to perform a highway transportation function for only one of the following. How to file taxes from 2011 A particular type of load, such as passengers, furnishings, and personal effects (as in a house, office, or utility trailer). How to file taxes from 2011 A special kind of cargo, goods, supplies, or materials. How to file taxes from 2011 Some off-highway task unrelated to highway transportation, except as discussed next. How to file taxes from 2011 Vehicles not considered highway vehicles. How to file taxes from 2011   Generally, the following kinds of vehicles are not considered highway vehicles for purposes of the retail tax. How to file taxes from 2011 Specially designed mobile machinery for nontransportation functions. How to file taxes from 2011 A self-propelled vehicle is not a highway vehicle if all the following apply. How to file taxes from 2011 The chassis has permanently mounted to it machinery or equipment used to perform certain operations (construction, manufacturing, drilling, mining, timbering, processing, farming, or similar operations) if the operation of the machinery or equipment is unrelated to transportation on or off the public highways. How to file taxes from 2011 The chassis has been specially designed to serve only as a mobile carriage and mount (and power source, if applicable) for the machinery or equipment, whether or not the machinery or equipment is in operation. How to file taxes from 2011 The chassis could not, because of its special design and without substantial structural modification, be used as part of a vehicle designed to carry any other load. How to file taxes from 2011 Vehicles specially designed for off-highway transportation. How to file taxes from 2011 A vehicle is not treated as a highway vehicle if the vehicle is specially designed for the primary function of transporting a particular type of load other than over the public highway and because of this special design, the vehicles's capability to transport a load over a public highway is substantially limited or impaired. How to file taxes from 2011 To make this determination, you can take into account the vehicle's size, whether the vehicle is subject to licensing, safety, or other requirements, and whether the vehicle can transport a load at a sustained speed of at least 25 miles per hour. How to file taxes from 2011 It does not matter that the vehicle can carry heavier loads off highway than it is allowed to carry over the highway. How to file taxes from 2011 Nontransportation trailers and semitrailers. How to file taxes from 2011 A trailer or semitrailer is not treated as a highway vehicle if it is specially designed to function only as an enclosed stationary shelter for carrying on a nontransportation function at an off-highway site. How to file taxes from 2011 For example, a trailer that is capable only of functioning as an office for an off-highway construction operation is not a highway vehicle. How to file taxes from 2011 Gross vehicle weight. How to file taxes from 2011   The tax does not apply to truck chassis and bodies suitable for use with a vehicle that has a gross vehicle weight (defined below) of 33,000 pounds or less. How to file taxes from 2011 It also does not apply to truck trailer and semitrailer chassis and bodies suitable for use with a trailer or semitrailer that has a gross vehicle weight of 26,000 pounds or less. How to file taxes from 2011 Tractors that have a gross vehicle weight of 19,500 pounds or less and a gross combined weight of 33,000 pounds or less are excluded from the 12% retail tax. How to file taxes from 2011   The following four classifications of truck body types meet the suitable for use standard and will be excluded from the retail excise tax. How to file taxes from 2011 Platform truck bodies 21 feet or less in length. How to file taxes from 2011 Dry freight and refrigerated truck van bodies 24 feet or less in length. How to file taxes from 2011 Dump truck bodies with load capacities of 8 cubic yards or less. How to file taxes from 2011 Refuse packer truck bodies with load capacities of 20 cubic yards or less. How to file taxes from 2011 For more information on these classifications, see Revenue Procedure 2005-19, which is on page 832 of I. How to file taxes from 2011 R. How to file taxes from 2011 B. How to file taxes from 2011 2005-14 at www. How to file taxes from 2011 irs. How to file taxes from 2011 gov/pub/irs-irbs/irb05-14. How to file taxes from 2011 pdf. How to file taxes from 2011   The gross vehicle weight means the maximum total weight of a loaded vehicle. How to file taxes from 2011 Generally, this maximum total weight is the gross vehicle weight rating provided by the manufacturer or determined by the seller of the completed article. How to file taxes from 2011 The seller's gross vehicle weight rating is determined solely on the basis of the strength of the chassis frame and the axle capacity and placement. How to file taxes from 2011 The seller may not take into account any readily attachable components (such as tires or rim assemblies) in determining the gross vehicle weight. How to file taxes from 2011 See Regulations section 145. How to file taxes from 2011 4051-1(e)(3) for more information. How to file taxes from 2011 Parts or accessories. How to file taxes from 2011   The tax applies to parts or accessories sold on or in connection with, or with the sale of, a taxable article. How to file taxes from 2011 For example, if at the time of the sale by the retailer, the part or accessory has been ordered from the retailer, the part or accessory will be considered as sold in connection with the sale of the vehicle. How to file taxes from 2011 The tax applies in this case whether or not the retailer bills the parts or accessories separately. How to file taxes from 2011   If the retailer sells a taxable chassis, body, or tractor without parts or accessories considered essential for the operation or appearance of the taxable article, the sale of the parts or accessories by the retailer to the purchaser is considered made in connection with the sale of the taxable article even though they are shipped separately, at the same time, or on a different date. How to file taxes from 2011 The tax applies unless there is evidence to the contrary. How to file taxes from 2011 For example, if a retailer sells to any person a chassis and the bumpers for the chassis, or sells a taxable tractor and the fifth wheel and attachments, the tax applies to the parts or accessories regardless of the method of billing or the time at which the shipments were made. How to file taxes from 2011 The tax does not apply to parts and accessories that are spares or replacements. How to file taxes from 2011   The tax imposed on parts and accessories sold on or in connection with the taxable articles listed earlier and the tax imposed on the separate purchase of parts and accessories (discussed next) for the taxable articles listed earlier do not apply to an idling reduction device or insulation that has an R value of at least R35 per inch. How to file taxes from 2011 Idling reduction device. How to file taxes from 2011   An idling reduction device is any device or system of devices that provide the tractor with services, such as heat, air conditioning, and electricity, without the use of the main drive engine while the tractor is temporarily parked or stationary. How to file taxes from 2011 The device must be affixed to the tractor and determined by the Administrator of the EPA, in consultation with the Secretary of Energy and Secretary of Transportation, to reduce idling while parked or stationary. How to file taxes from 2011 The EPA discusses idling reduction technologies on its website at www. How to file taxes from 2011 epa. How to file taxes from 2011 gov/smartway/technology/idling. How to file taxes from 2011 htm. How to file taxes from 2011 Separate purchase. How to file taxes from 2011   The tax generally applies to the price of a part or accessory and its installation if the following conditions are met. How to file taxes from 2011 The owner, lessee, or operator of any vehicle that contains a taxable article installs any part or accessory on the vehicle. How to file taxes from 2011 The installation occurs within 6 months after the vehicle is first placed in service. How to file taxes from 2011   The owners of the trade or business installing the parts or accessories are secondarily liable for the tax. How to file taxes from 2011   A vehicle is placed in service on the date the owner takes actual possession of the vehicle. How to file taxes from 2011 This date is established by a signed delivery ticket or other comparable document indicating delivery to and acceptance by the owner. How to file taxes from 2011   The tax does not apply if the installed part or accessory is a replacement part or accessory. How to file taxes from 2011 The tax also does not apply if the total price of the parts and accessories, including installation charges, during the 6-month period is $1,000 or less. How to file taxes from 2011 However, if the total price is more than $1,000, the tax applies to the cost of all parts and accessories (and installation charges) during that period. How to file taxes from 2011 Example. How to file taxes from 2011 You bought a taxable vehicle and placed it in service on April 8. How to file taxes from 2011 On May 3, you bought and installed parts and accessories at a cost of $850. How to file taxes from 2011 On July 15, you bought and installed parts and accessories for $300. How to file taxes from 2011 Tax of $138 (12% of $1,150) applies on July 15. How to file taxes from 2011 Also, tax will apply to any costs of additional parts and accessories installed on the vehicle before October 8. How to file taxes from 2011 First retail sale defined. How to file taxes from 2011   The sale of an article is treated as the first retail sale, and the seller will be liable for the tax imposed on the sale unless one of the following exceptions applies. How to file taxes from 2011 There has been a prior taxable sale, lease, or use of the article (however, see Tax on resale of tax-paid trailers and semitrailers, later). How to file taxes from 2011 The sale qualifies as a tax-free sale under section 4221 (see Sales exempt from tax, later). How to file taxes from 2011 The seller in good faith accepts from the purchaser a statement signed under penalties of perjury and executed in good faith that the purchaser intends to resell the article or lease it on a long-term basis. How to file taxes from 2011 There is no registration requirement. How to file taxes from 2011 Leases. How to file taxes from 2011   A long-term lease (a lease with a term of 1 year or more, taking into account options to renew) before a first retail sale is treated as a taxable sale. How to file taxes from 2011 The tax is imposed on the lessor at the time of the lease. How to file taxes from 2011   A short-term lease (a lease with a term of less than 1 year, taking into account options to renew) before a first retail sale is treated as a taxable use. How to file taxes from 2011 The tax is imposed on the lessor at the time of the lease. How to file taxes from 2011 Exported vehicle. How to file taxes from 2011   A vehicle exported before its first retail sale, used in a foreign country, and then returned to the United States is subject to the retail tax on its first domestic use or retail sale after importation. How to file taxes from 2011 Tax on resale of tax-paid trailers and semitrailers. How to file taxes from 2011   The tax applies to a trailer or semitrailer resold within 6 months after having been sold in a taxable sale. How to file taxes from 2011 The seller liable for the tax on the resale can claim a credit equal to the tax paid on the prior taxable sale. How to file taxes from 2011 The credit cannot exceed the tax on the resale. How to file taxes from 2011 See Regulations section 145. How to file taxes from 2011 4052-1(a)(4) for information on the conditions to allowance for the credit. How to file taxes from 2011 Use treated as sale. How to file taxes from 2011   If any person uses a taxable article before the first retail sale of the article, that person is liable for the tax as if the article had been sold at retail by that person. How to file taxes from 2011 Figure the tax on the price at which similar articles are sold in the ordinary course of trade by retailers. How to file taxes from 2011 The tax attaches when the use begins. How to file taxes from 2011   If the seller of an article regularly sells the articles at retail in arm's-length transactions, figure the tax on its use on the lowest established retail price for the articles in effect at the time of the taxable use. How to file taxes from 2011   If the seller of an article does not regularly sell the articles at retail in arm's-length transactions, a constructive price on which the tax is figured will be determined by the IRS after considering the selling practices and price structures of sellers of similar articles. How to file taxes from 2011   If a seller of an article incurs liability for tax on the use of the article and later sells or leases the article in a transaction that otherwise would be taxable, liability for tax is not incurred on the later sale or lease. How to file taxes from 2011 Presumptive retail sales price. How to file taxes from 2011   There are rules to ensure that the tax base of transactions considered to be taxable sales includes either an actual or presumed markup percentage. How to file taxes from 2011 If the person liable for tax is the vehicle's manufacturer, producer, or importer, the following discussions show how you figure the presumptive retail sales price depending on the type of transaction and the persons involved in the transaction. How to file taxes from 2011 Table 6-1 outlines the appropriate tax base calculation for various transactions. How to file taxes from 2011   The presumed markup percentage to be used for trucks and truck-tractors is 4%. How to file taxes from 2011 But for truck trailers and semitrailers and remanufactured trucks and tractors, the presumed markup percentage is zero. How to file taxes from 2011 Sale. How to file taxes from 2011   For a taxable sale by a manufacturer, producer, importer, or related person, you generally figure the tax on a tax base of the sales price plus an amount equal to the presumed markup percentage times that sales price. How to file taxes from 2011 Long-term lease. How to file taxes from 2011   In the case of a long-term lease by a manufacturer, producer, importer, or related person, figure the tax on a tax base of the constructive sales price plus an amount equal to the presumed markup percentage times the constructive sales price. How to file taxes from 2011 Short-term lease. How to file taxes from 2011   When a manufacturer, producer, importer, or related person leases an article in a short-term lease considered a taxable use, figure the tax on a constructive sales price at which those or similar articles generally are sold in the ordinary course of trade by retailers. How to file taxes from 2011   But if the lessor in this situation regularly sells articles at retail in arm's-length transactions, figure the tax on the lowest established retail price in effect at the time of the taxable use. How to file taxes from 2011   If a person other than the manufacturer, producer, importer, or related person leases an article in a short-term lease considered a taxable use, figure the tax on a tax base of the price for which the article was sold to the lessor plus the cost of parts and accessories installed by the lessor and a presumed markup percentage. How to file taxes from 2011 Related person. How to file taxes from 2011   A related person is any member of the same controlled group as the manufacturer, producer, or importer. How to file taxes from 2011 Do not treat as a related person a person that sells the articles through a permanent retail establishment in the normal course of being a retailer if that person has records to prove the article was sold for a price that included a markup equal to or greater than the presumed markup percentage. How to file taxes from 2011 Table 6-1. How to file taxes from 2011 Tax Base IF the transaction is a. How to file taxes from 2011 . How to file taxes from 2011 . How to file taxes from 2011 THEN figuring the base by using the. How to file taxes from 2011 . How to file taxes from 2011 . How to file taxes from 2011 Sale by the manufacturer, producer, importer, or related person Sales price plus (presumed markup percentage × sales price) Sale by the dealer Total consideration paid for the item including any charges incident to placing it in a condition ready for use Long-term lease by the manufacturer, producer, importer, or related person Constructive sales price plus (presumed markup percentage × constructive sales price) Short-term lease by the manufacturer, producer, importer, or related person Constructive sales price at which such or similar articles are sold Short-term lease by a lessor other than the manufacturer, producer, importer, or related person Price for which the article was sold to the lessor plus the cost of parts and accessories installed by the lessor plus a presumed markup percentage Short-term lease where the articles are regularly sold at arm's length Lowest established retail price in effect at the time of the taxable use General rule for sales by dealers to the consumer. How to file taxes from 2011   For a taxable sale, other than a long-term lease, by a person other than a manufacturer, producer, importer, or related person, your tax base is the retail sales price as discussed next under Determination of tax base. How to file taxes from 2011   When you sell an article to the consumer, generally you do not add a presumed markup to the tax base. How to file taxes from 2011 However, you do add a markup if all the following apply. How to file taxes from 2011 You do not perform any significant activities relating to the processing of the sale of a taxable article. How to file taxes from 2011 The main reason for processing the sale through you is to avoid or evade the presumed markup. How to file taxes from 2011 You do not have records proving that the article was sold for a price that included a markup equal to or greater than the presumed markup percentage. How to file taxes from 2011 In these situations, your tax base is the sales price plus an amount equal to the presumed markup percentage times that selling price. How to file taxes from 2011 Determination of tax base. How to file taxes from 2011   These rules apply to both normal retail sales price and presumptive retail sales price computations. How to file taxes from 2011 To arrive at the tax base, the price is the total consideration paid (including trade-in allowance) for the item and includes any charge incident to placing the article in a condition ready for use. How to file taxes from 2011 However, see Presumptive retail sales price, earlier. How to file taxes from 2011 Exclusions from tax base. How to file taxes from 2011   Exclude from the tax base the retail excise tax imposed on the sale. How to file taxes from 2011 Exclude any state or local retail sales tax if stated as a separate charge from the price whether the sales tax is imposed on the seller or purchaser. How to file taxes from 2011 Also exclude the value of any used component of the article furnished by the first user of the article. How to file taxes from 2011   Exclude charges for transportation, delivery, insurance, and installation (other than installation charges for parts and accessories, discussed earlier) and other expenses incurred in connection with the delivery of an article to a purchaser. How to file taxes from 2011 These expenses are those incurred in delivery from the retail dealer to the customer. How to file taxes from 2011 In the case of delivery directly from the manufacturer to the dealer's customer, include the transportation and delivery charges to the extent the charges do not exceed what it would have cost to ship the article to the dealer. How to file taxes from 2011   Exclude amounts charged for machinery or equipment that does not contribute to the highway transportation function of the vehicle, provided those charges are supported by adequate records. How to file taxes from 2011 For example, for an industrial vacuum loader vehicle, exclude amounts charged for the vacuum pump and hose, filter system, material separator, silencer or muffler, control cabinet, and ladder. How to file taxes from 2011 Similarly, for a sewer cleaning vehicle, exclude amounts charged for the high pressure water pump, hose components, and the vacuum pipe. How to file taxes from 2011 Sales not at arm's length. How to file taxes from 2011   For any taxable article sold (not at arm's length) at less than the fair market price, figure the excise tax on the price for which similar articles are sold at retail in the ordinary course of trade. How to file taxes from 2011   A sale is not at arm's length if either of the following apply. How to file taxes from 2011 One of the parties is controlled (in law or in fact) by the other or there is common control, whether or not the control is actually exercised to influence the sales price. How to file taxes from 2011 The sale is made under special arrangements between a seller and a purchaser. How to file taxes from 2011 Installment sales. How to file taxes from 2011   If the first retail sale is an installment sale, or other form of sale in which the sales price is paid in installments, tax liability arises at the time of the sale. How to file taxes from 2011 The tax is figured on the entire sales price. How to file taxes from 2011 No part of the tax is deferred because the sales price is paid in installments. How to file taxes from 2011 Repairs and modifications. How to file taxes from 2011   The tax does not apply to the sale or use of an article that has been repaired or modified unless the cost of the repairs and modifications is more than 75% of the retail price of a comparable new article. How to file taxes from 2011 This includes modifications that change the transportation function of an article or restore a wrecked article to a functional condition. How to file taxes from 2011 However, this exception generally does not apply to an article that was not subject to the tax when it was new. How to file taxes from 2011 Further manufacture. How to file taxes from 2011   The tax does not apply to the use by a person of a taxable article as material in the manufacture or production of, or as a component part of, another article to be manufactured or produced by that person. How to file taxes from 2011 Do not treat a person as engaged in the manufacture of any article merely because that person combines the article with a: Coupling device (including any fifth wheel); Wrecker crane; Loading and unloading equipment (including any crane, hoist, winch, or power liftgate); Aerial ladder or tower; Ice and snow control equipment; Earth moving, excavation, and construction equipment; Spreader; Sleeper cab; Cab shield; or Wood or metal floor. How to file taxes from 2011 Combining an article with an item in this list does not give rise to taxability. How to file taxes from 2011 However, see Parts or accessories discussed earlier. How to file taxes from 2011 Articles exempt from tax. How to file taxes from 2011   The tax on heavy trucks, trailers, and tractors does not apply to sales of the articles described in the following discussions. How to file taxes from 2011 Rail trailers and rail vans. How to file taxes from 2011   This is any chassis or body of a trailer or semitrailer designed for use both as a highway vehicle and a railroad car (including any parts and accessories designed primarily for use on and in connection with it). How to file taxes from 2011 Do not treat a piggyback trailer or semitrailer as designed for use as a railroad car. How to file taxes from 2011 Parts and accessories. How to file taxes from 2011   This is any part or accessory sold separately from the truck or trailer, except as described earlier under Parts or accessories and Separate purchase. How to file taxes from 2011 Trash containers. How to file taxes from 2011   This is any box, container, receptacle, bin, or similar article that meets all the following conditions. How to file taxes from 2011 It is designed to be used as a trash container. How to file taxes from 2011 It is not designed to carry freight other than trash. How to file taxes from 2011 It is not designed to be permanently mounted on or affixed to a truck chassis or body. How to file taxes from 2011 House trailers. How to file taxes from 2011   This is any house trailer (regardless of size) suitable for use in connection with either passenger automobiles or trucks. How to file taxes from 2011 Camper coaches or bodies for self-propelled mobile homes. How to file taxes from 2011   This is any article designed to be mounted or placed on trucks, truck chassis, or automobile chassis and to be used primarily as living quarters or camping accommodations. How to file taxes from 2011 Further, the tax does not apply to chassis specifically designed and constructed to accommodate and transport self-propelled mobile home bodies. How to file taxes from 2011 Farm feed, seed, and fertilizer equipment. How to file taxes from 2011   This is any body primarily designed to process or prepare, haul, spread, load, or unload feed, seed, or fertilizer to or on farms. How to file taxes from 2011 This exemption applies only to the farm equipment body (and parts and accessories) and not to the chassis upon which the farm equipment is mounted. How to file taxes from 2011 Ambulances and hearses. How to file taxes from 2011   This is any ambulance, hearse, or combination ambulance-hearse. How to file taxes from 2011 Truck-tractors. How to file taxes from 2011   This is any truck-tractor specifically designed for use in shifting semitrailers in and around freight yards and freight terminals. How to file taxes from 2011 Concrete mixers. How to file taxes from 2011   This is any article designed to be placed or mounted on a truck, truck trailer, or semitrailer chassis to be used to process or prepare concrete. How to file taxes from 2011 This exemption does not apply to the chassis on which the article is mounted. How to file taxes from 2011 Sales exempt from tax. How to file taxes from 2011   The following sales are ordinarily exempt from tax. How to file taxes from 2011 Sales to a state or local government for its exclusive use. How to file taxes from 2011 Sales to Indian tribal governments, but only if the transaction involves the exercise of an essential tribal government function. How to file taxes from 2011 Sales to a nonprofit educational organization for its exclusive use. How to file taxes from 2011 Sales to a qualified blood collector organization (as defined under Communications Tax in chapter 4) for its exclusive use in the collection, storage, or transportation of blood. How to file taxes from 2011 Sales for use by the purchaser for further manufacture of other taxable articles (see below). How to file taxes from 2011 Sales for export or for resale by the purchaser to a second purchaser for export. How to file taxes from 2011 Sales to the United Nations for official use. How to file taxes from 2011 Registration requirement. How to file taxes from 2011   In general, the seller and buyer must be registered for a sale to be tax free. How to file taxes from 2011 See the Form 637 instructions for more information. How to file taxes from 2011 Certain registration exceptions apply in the case of sales to state and local governments, sales to foreign purchasers for export, and sales for resale or long term leasing. How to file taxes from 2011 Further manufacture. How to file taxes from 2011   If you buy articles tax free and resell or use them other than in the manufacture of another article, you are liable for the tax on their resale or use just as if you had manufactured and made the first retail sale of them. How to file taxes from 2011 Credits or refunds. How to file taxes from 2011   A credit or refund (without interest) of the retail tax on the taxable articles described earlier may be allowable if the tax has been paid with respect to an article and, before any other use, such article is used by any person as a component part of another taxable article manufactured or produced. How to file taxes from 2011 The person using the article as a component part is eligible for the credit or refund. How to file taxes from 2011   A credit or refund is allowable if, before any other use, an article is, by any person: Exported, Used or sold for use as supplies for vessels, Sold to a state or local government for its exclusive use, Sold to a nonprofit educational organization for its exclusive use, or Sold to a qualified blood collector organization (as defined under Communications Tax in chapter 4) for its exclusive use in the collection, storage, or transportation of blood. How to file taxes from 2011 A credit or refund is also allowable if there is a price readjustment by reason of the return or repossession of an article or by reason of a bona fide discount, rebate, or allowance. How to file taxes from 2011   See also Conditions to allowance in chapter 5. How to file taxes from 2011 Tire credit. How to file taxes from 2011   A credit is allowed against the retail tax on the taxable articles described earlier if taxable tires are sold on or in connection with the sale of the article. How to file taxes from 2011 The credit is equal to the manufacturers excise tax imposed on the taxable tires (discussed earlier). How to file taxes from 2011 This is the section 4051(d) taxable tire credit and is claimed on Schedule C (Form 720) for the same quarter for which the tax on the heavy vehicle is reported. How to file taxes from 2011 Prev  Up  Next   Home   More Online Publications