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How To Fill Out 1040x

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How To Fill Out 1040x

How to fill out 1040x Publication 541 - Additional Material Prev  Up  Next   Home   More Online Publications
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Consumer Protection Offices

City, county, regional, and state consumer offices offer a variety of important services. They might mediate complaints, conduct investigations, prosecute offenders of consumer laws, license and regulate professional service providers, provide educational materials and advocate for consumer rights. To save time, call before sending a written complaint. Ask if the office handles the type of complaint you have and if complaint forms are provided.

State Consumer Protection Offices

Departmento de Asuntos Del Consumidor

Website: Departmento de Asuntos Del Consumidor

Address: Departmento de Asuntos Del Consumidor
Apartado 41059
Minillas Station
Santurce, PR 00940

Phone Number: 787-722-7555

Toll-free: 1-866-520-3226 (PR)

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Banking Authorities

The officials listed in this section regulate and supervise state-chartered banks. Many of them handle or refer problems and complaints about other types of financial institutions as well. Some also answer general questions about banking and consumer credit. If you are dealing with a federally chartered bank, check Federal Agencies.

Oficina del Comisionado de Instituciones Financieras

Website: Oficina del Comisionado de Instituciones Financieras

Address: Oficina del Comisionado de Instituciones Financieras
PO Box 11855
San Juan, PR 00910-3855

Phone Number: 787-723-3131

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Insurance Regulators

Each state has its own laws and regulations for each type of insurance. The officials listed in this section enforce these laws. Many of these offices can also provide you with information to help you make informed insurance buying decisions.

Office of the Commissioner of Insurance

Website: Office of the Commissioner of Insurance

Address: Office of the Commissioner of Insurance
B5 Calle Tabonuco, Suite 216 PMB 356
Guaynabo, PR 00968-3029

Phone Number: 787-304-8686

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Securities Administrators

Each state has its own laws and regulations for securities brokers and securities - including stocks, mutual funds, commodities, real estate, etc. The officials and agencies listed in this section enforce these laws and regulations. Many of these offices can also provide information to help you make informed investment decisions.

Office of the Commissioner of Financial Institutions

Website: Office of the Commissioner of Financial Institutions

Address: Office of the Commissioner of Financial Institutions
Securities Division
PO Box 11855
San Juan, PR 00910-3855

Phone Number: 787-723-3131

TTY: 1-800-981-7711 (Consumers)

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Utility Commissions

State Utility Commissions regulate services and rates for gas, electricity and telephones within your state. In some states, the utility commissions regulate other services such as water, transportation, and the moving of household goods. Many utility commissions handle consumer complaints. Sometimes, if a number of complaints are received about the same utility matter, they will conduct investigations.

Public Service Commission

Website: Public Service Commission

Address: Public Service Commission
PO Box 190870
San Juan, PR 00918

Phone Number: 787-756-1919

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The How To Fill Out 1040x

How to fill out 1040x Other Methods of Depreciation Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: How To Figure the DeductionBasis Useful Life Salvage Value Methods To UseStraight Line Method Declining Balance Method Income Forecast Method How To Change Methods DispositionsSale or exchange. How to fill out 1040x Property not disposed of or abandoned. How to fill out 1040x Special rule for normal retirements from item accounts. How to fill out 1040x Abandoned property. How to fill out 1040x Single item accounts. How to fill out 1040x Multiple property account. How to fill out 1040x Topics - This chapter discusses: How to figure the deduction Methods to use How to change methods Dispositions Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets 551 Basis of Assets 583 Starting a Business and Keeping Records 946 How To Depreciate Property Form (and Instructions) 3115 Application for Change in Accounting Method 4562 Depreciation and Amortization Schedule C (Form 1040) Profit or Loss From Business If your property is being depreciated under ACRS, you must continue to use rules for depreciation that applied when you placed the property in service. How to fill out 1040x If your property qualified for MACRS, you must depreciate it under MACRS. How to fill out 1040x See Publication 946. How to fill out 1040x However, you cannot use MACRS for certain property because of special rules that exclude it from MACRS. How to fill out 1040x Also, you can elect to exclude certain property from being depreciated under MACRS. How to fill out 1040x Property that you cannot depreciate using MACRS includes: Intangible property, Property you can elect to exclude from MACRS that you properly depreciate under a method that is not based on a term of years, Certain public utility property, Any motion picture film or video tape, Any sound recording, and Certain real and personal property placed in service before 1987. How to fill out 1040x Intangible property. How to fill out 1040x   You cannot depreciate intangible property under ACRS or MACRS. How to fill out 1040x You depreciate intangible property using any other reasonable method, usually, the straight line method. How to fill out 1040x Note. How to fill out 1040x The cost of certain intangible property that you acquire after August 10, 1993, must be amortized over a 15-year period. How to fill out 1040x For more information, see chapter 12 of Publication 535. How to fill out 1040x Public utility property. How to fill out 1040x   The law excludes from MACRS any public utility property for which the taxpayer does not use a normalization method of accounting. How to fill out 1040x This type of property is subject to depreciation under a special rule. How to fill out 1040x Videocassettes. How to fill out 1040x   If you are in the videocassette rental business, you can depreciate those videocassettes purchased for rental. How to fill out 1040x You can depreciate the cost less salvage value of those videocassettes that have a useful life over one year using either: The straight line method, or The income forecast method. How to fill out 1040x The straight line method, salvage value, and useful life are discussed later under Methods To Use. How to fill out 1040x You can deduct in the year of purchase as a business expense the cost of any cassette that has a useful life of one year or less. How to fill out 1040x How To Figure the Deduction Two other reasonable methods can be used to figure your deduction for property not covered under ACRS or MACRS. How to fill out 1040x These methods are straight line and declining balance. How to fill out 1040x To figure depreciation using these methods, you must generally determine three things about the property you intend to depreciate. How to fill out 1040x They are: The basis, The useful life, and The estimated salvage value at the end of its useful life. How to fill out 1040x The amount of the deduction in any year also depends on which method of depreciation you choose. How to fill out 1040x Basis To deduct the proper amount of depreciation each year, first determine your basis in the property you intend to depreciate. How to fill out 1040x The basis used for figuring depreciation is the same as the basis that would be used for figuring the gain on a sale. How to fill out 1040x Your original basis is usually the purchase price. How to fill out 1040x However, if you acquire property in some other way, such as inheriting it, getting it as a gift, or building it yourself, you have to figure your original basis in a different way. How to fill out 1040x Adjusted basis. How to fill out 1040x   Events will often change the basis of property. How to fill out 1040x When this occurs, the changed basis is called the adjusted basis. How to fill out 1040x Some events, such as improvements you make, increase basis. How to fill out 1040x Events such as deducting casualty losses and depreciation decrease basis. How to fill out 1040x If basis is adjusted, the depreciation deduction may also have to be changed, depending on the reason for the adjustment and the method of depreciation you are using. How to fill out 1040x   Publication 551 explains how to figure basis for property acquired in different ways. How to fill out 1040x It also discusses what items increase and decrease basis, how to figure adjusted basis, and how to allocate cost if you buy several pieces of property at one time. How to fill out 1040x Useful Life The useful life of a piece of property is an estimate of how long you can expect to use it in your trade or business, or to produce income. How to fill out 1040x It is the length of time over which you will make yearly depreciation deductions of your basis in the property. How to fill out 1040x It is how long it will continue to be useful to you, not how long the property will last. How to fill out 1040x Many things affect the useful life of property, such as: Frequency of use, Age when acquired, Your repair policy, and Environmental conditions. How to fill out 1040x The useful life can also be affected by technological improvements, progress in the arts, reasonably foreseeable economic changes, shifting of business centers, prohibitory laws, and other causes. How to fill out 1040x Consider all these factors before you arrive at a useful life for your property. How to fill out 1040x The useful life of the same type of property varies from user to user. How to fill out 1040x When you determine the useful life of your property, keep in mind your own experience with similar property. How to fill out 1040x You can use the general experience of the industry you are in until you are able to determine a useful life of your property from your own experience. How to fill out 1040x Change in useful life. How to fill out 1040x   You base your estimate of useful life on certain facts. How to fill out 1040x If these facts change significantly, you can adjust your estimate of the remaining useful life. How to fill out 1040x However, you redetermine the estimated useful life only when the change is substantial and there is a clear reason for making the change. How to fill out 1040x Salvage Value It is important for you to accurately determine the correct salvage value of the property you want to depreciate. How to fill out 1040x You generally cannot depreciate property below a reasonable salvage value. How to fill out 1040x Determining salvage value. How to fill out 1040x   Salvage value is the estimated value of property at the end of its useful life. How to fill out 1040x It is what you expect to get for the property if you sell it after you can no longer use it productively. How to fill out 1040x You must estimate the salvage value of a piece of property when you first acquire it. How to fill out 1040x   Salvage value is affected both by how you use the property and how long you use it. How to fill out 1040x If it is your policy to dispose of property that is still in good operating condition, the salvage value can be relatively large. How to fill out 1040x However, if your policy is to use property until it is no longer usable, its salvage value can be its junk value. How to fill out 1040x Changing salvage value. How to fill out 1040x   Once you determine the salvage value for property, you should not change it merely because prices have changed. How to fill out 1040x However, if you redetermine the useful life of property, as discussed earlier under Change in useful life, you can also redetermine the salvage value. How to fill out 1040x When you redetermine the salvage value, take into account the facts that exist at the time. How to fill out 1040x Net salvage. How to fill out 1040x   Net salvage is the salvage value of property minus what it costs to remove it when you dispose of it. How to fill out 1040x You can choose either salvage value or net salvage when you figure depreciation. How to fill out 1040x You must consistently use the one you choose and the treatment of the costs of removal must be consistent with the practice adopted. How to fill out 1040x However, if the cost to remove the property is more than the estimated salvage value, then net salvage is zero. How to fill out 1040x Your salvage value can never be less than zero. How to fill out 1040x Ten percent rule. How to fill out 1040x   If you acquire personal property that has a useful life of 3 years or more, you can use an amount for salvage value that is less than your actual estimate. How to fill out 1040x You can subtract from your estimate of salvage value an amount equal to 10% of your basis in the property. How to fill out 1040x If salvage value is less than 10% of basis, you can ignore salvage value when you figure depreciation. How to fill out 1040x Methods To Use Two methods of depreciation are the straight line and declining balance methods. How to fill out 1040x If ACRS or MACRS does not apply, you can use one of these methods. How to fill out 1040x The straight line and declining balance methods discussed in this section are not figured in the same way as straight line or declining balance methods under MACRS. How to fill out 1040x Straight Line Method Before 1981, you could use any reasonable method for every kind of depreciable property. How to fill out 1040x One of these methods was the straight line method. How to fill out 1040x This method was also used for intangible property. How to fill out 1040x It lets you deduct the same amount of depreciation each year. How to fill out 1040x To figure your deduction, determine the adjusted basis of your property, its salvage value, and its estimated useful life. How to fill out 1040x Subtract the salvage value, if any, from the adjusted basis. How to fill out 1040x The balance is the total amount of depreciation you can take over the useful life of the property. How to fill out 1040x Divide the balance by the number of years remaining in the useful life. How to fill out 1040x This gives you the amount of your yearly depreciation deduction. How to fill out 1040x Unless there is a big change in adjusted basis, or useful life, this amount will stay the same throughout the time you depreciate the property. How to fill out 1040x If, in the first year, you use the property for less than a full year, you must prorate your depreciation deduction for the number of months in use. How to fill out 1040x Example. How to fill out 1040x In April 1994, Frank bought a franchise for $5,600. How to fill out 1040x It expires in 10 years. How to fill out 1040x This property is intangible property that cannot be depreciated under MACRS. How to fill out 1040x Frank depreciates the franchise under the straight line method, using a 10-year useful life and no salvage value. How to fill out 1040x He takes the $5,600 basis and divides that amount by 10 years ($5,600 ÷ 10 = $560, a full year's use). How to fill out 1040x He must prorate the $560 for his 9 months of use in 1994. How to fill out 1040x This gives him a deduction of $420 ($560 ÷ 9/12). How to fill out 1040x In 1995, Frank can deduct $560 for the full year. How to fill out 1040x Declining Balance Method The declining balance method allows you to recover a larger amount of the cost of the property in the early years of your use of the property. How to fill out 1040x The rate cannot be more than twice the straight line rate. How to fill out 1040x Rate of depreciation. How to fill out 1040x   Under this method, you must determine your declining balance rate of depreciation. How to fill out 1040x The initial step is to: Divide the number 1 by the useful life of your property to get a straight line rate. How to fill out 1040x (For example, if property has a useful life of 5 years, its normal straight line rate of depreciation is ⅕, or 20%. How to fill out 1040x ) Multiply this straight line rate by a number that is more than 1 but not more than 2 to determine the declining balance rate. How to fill out 1040x Unless there is a change in the useful life during the time you depreciate the property, the rate of depreciation generally will not change. How to fill out 1040x Depreciation deductions. How to fill out 1040x   After you determine the rate of depreciation, multiply the adjusted basis of the property by it. How to fill out 1040x This gives you the amount of your deduction. How to fill out 1040x For example, if your adjusted basis at the beginning of the first year is $10,000, and your declining balance rate is 20%, your depreciation deduction for the first year is $2,000 ($10,000 ÷ 20%). How to fill out 1040x To figure your depreciation deduction in the second year, you must first adjust the basis for the amount of depreciation you deducted in the first year. How to fill out 1040x Subtract the previous year's depreciation from your basis ($10,000 - $2,000 = $8,000). How to fill out 1040x Multiply this amount by the rate of depreciation ($8,000 ÷ 20% = $1,600). How to fill out 1040x Your depreciation deduction for the second year is $1,600. How to fill out 1040x   As you can see from this example, your adjusted basis in the property gets smaller each year. How to fill out 1040x Also, under this method, deductions are larger in the earlier years and smaller in the later years. How to fill out 1040x You can make a change to the straight line method without consent. How to fill out 1040x Salvage value. How to fill out 1040x   Do not subtract salvage value when you figure your yearly depreciation deductions under the declining balance method. How to fill out 1040x However, you cannot depreciate the property below its reasonable salvage value. How to fill out 1040x Determine salvage value using the rules discussed earlier, including the special 10% rule. How to fill out 1040x Example. How to fill out 1040x If your adjusted basis has been decreased to $1,000 and the rate of depreciation is 20%, your depreciation deduction should be $200. How to fill out 1040x But if your estimate of salvage value was $900, you can only deduct $100. How to fill out 1040x This is because $100 is the amount that would lower your adjusted basis to equal salvage value. How to fill out 1040x Income Forecast Method The income forecast method requires income projections for each videocassette or group of videocassettes. How to fill out 1040x You can group the videocassettes by title for making this projection. How to fill out 1040x You determine the depreciation by applying a fraction to the cost less salvage value of the cassette. How to fill out 1040x The numerator is the income from the videocassette for the tax year and the denominator is the total projected income for the cassette. How to fill out 1040x For more information on the income forecast method, see Revenue Ruling 60-358 in Cumulative Bulletin 1960, Volume 2, on page 68. How to fill out 1040x How To Change Methods In some cases, you may change your method of depreciation for property depreciated under a reasonable method. How to fill out 1040x If you change your method of depreciation, it is generally a change in your method of accounting. How to fill out 1040x You must get IRS consent before making the change. How to fill out 1040x However, you do not need permission for certain changes in your method of depreciation. How to fill out 1040x The rules discussed in this section do not apply to property depreciated under ACRS or MACRS. How to fill out 1040x For information on ACRS elections,see Revocation of election, in chapter 1 under Alternate ACRS Method. How to fill out 1040x Change to the straight line method. How to fill out 1040x   You can change from the declining balance method to the straight line method at any time during the useful life of your property without IRS consent. How to fill out 1040x However, if you have a written agreement with the IRS that prohibits a change, you must first get IRS permission. How to fill out 1040x When the change is made, figure depreciation based on your adjusted basis in the property at that time. How to fill out 1040x Your adjusted basis takes into account all previous depreciation deductions. How to fill out 1040x Use the estimated remaining useful life of your property at the time of change and its estimated salvage value. How to fill out 1040x   You can change from the declining balance method to straight line only on the original tax return for the year you first use the straight line method. How to fill out 1040x You cannot make the change on an amended return filed after the due date of the original return (including extensions). How to fill out 1040x   When you make the change, attach a statement to your tax return showing: When you acquired the property, Its original cost or other original basis, The total amount claimed for depreciation and other allowances since you acquired it, Its salvage value and remaining useful life, and A description of the property and its use. How to fill out 1040x   After you change to straight line, you cannot change back to the declining balance method or to any other method for a period of 10 years without written permission from the IRS. How to fill out 1040x Changes that require permission. How to fill out 1040x   For most other changes in method of depreciation, you must get permission from the IRS. How to fill out 1040x To request a change in method of depreciation, file Form 3115. How to fill out 1040x File the application within the first 180 days of the tax year the change is to become effective. How to fill out 1040x In most cases, there is a user fee that must accompany Form 3115. How to fill out 1040x See the instructions for Form 3115 to determine if a fee is required. How to fill out 1040x Changes granted automatically. How to fill out 1040x   The IRS automatically approves certain changes of a method of depreciation. How to fill out 1040x But, you must file Form 3115 for these automatic changes. How to fill out 1040x   However, IRS can deny permission if Form 3115 is not filed on time. How to fill out 1040x For more information on automatic changes, see Revenue Procedure 74-11, 1974-1 C. How to fill out 1040x B. How to fill out 1040x 420. How to fill out 1040x Changes for which approval is not automatic. How to fill out 1040x   The automatic change procedures do not apply to: Property or an account where you made a change in depreciation within the last 10 tax years (unless the change was made under the Class Life System), Class Life Asset Depreciation Range System, and Public utility property. How to fill out 1040x   You must request and receive permission for these changes. How to fill out 1040x To make the request, file Form 3115 during the first 180 days of the tax year for which you want the change to be effective. How to fill out 1040x Change from an improper method. How to fill out 1040x   If the IRS disallows the method you are using, you do not need permission to change to a proper method. How to fill out 1040x You can adopt the straight line method, or any other method that would have been permitted if you had used it from the beginning. How to fill out 1040x If you file your tax return using an improper method, but later file an amended return, you can use a proper method on the amended return without getting IRS permission. How to fill out 1040x However, you must file the amended return before the filing date for the next tax year. How to fill out 1040x Dispositions Retirement is the permanent withdrawal of depreciable property from use in your trade or business or for the production of income. How to fill out 1040x You can do this by selling, exchanging, or abandoning the item of property. How to fill out 1040x You can also withdraw it from use without disposing of it. How to fill out 1040x For example, you could place it in a supplies or scrap account. How to fill out 1040x Retirements can be either normal or abnormal depending on all facts and circumstances. How to fill out 1040x The rules discussed next do not apply to MACRS and ACRS property. How to fill out 1040x Normal retirement. How to fill out 1040x   A normal retirement is a permanent withdrawal of depreciable property from use if the following apply: The retirement is made within the useful life you estimated originally, and The property has reached a condition at which you customarily retire or would retire similar property from use. How to fill out 1040x A retirement is generally considered normal unless you can show that you retired the property because of a reason you did not consider when you originally estimated the useful life of the property. How to fill out 1040x Abnormal retirement. How to fill out 1040x   A retirement can be abnormal if you withdraw the property early or under other circumstances. How to fill out 1040x For example, if the property is damaged by a fire or suddenly becomes obsolete and is now useless. How to fill out 1040x Gain or loss on retirement. How to fill out 1040x   There are special rules for figuring the gain or loss on retirement of property. How to fill out 1040x The gain or loss will depend on several factors. How to fill out 1040x These include the type of withdrawal, if the withdrawal was from a single property or multiple property account, and if the retirement was normal or abnormal. How to fill out 1040x A single property account contains only one item of property. How to fill out 1040x A multiple property account is one in which several items have been combined with a single rate of depreciation assigned to the entire account. How to fill out 1040x Sale or exchange. How to fill out 1040x   If property is retired by sale or exchange, you figure gain or loss by the usual rules that apply to sales or other dispositions of property. How to fill out 1040x See Publication 544. How to fill out 1040x Property not disposed of or abandoned. How to fill out 1040x   If property is retired permanently, but not disposed of or physically abandoned, you do not recognize gain. How to fill out 1040x You are allowed a loss in such a case, but only if the retirement is: An abnormal retirement, A normal retirement from a single property account in which you determined the life of each item of property separately, or A normal retirement from a multiple property account in which the depreciation rate is based on the maximum expected life of the longest lived item of property and the loss occurs before the expiration of the full useful life. How to fill out 1040x However, you are not allowed a loss if the depreciation rate is based on the average useful life of the items of property in the account. How to fill out 1040x   To figure your loss, subtract the estimated salvage or fair market value of the property at the date of retirement, whichever is more, from its adjusted basis. How to fill out 1040x Special rule for normal retirements from item accounts. How to fill out 1040x   You can generally deduct losses upon retirement of a few depreciable items of property with similar useful lives, if: You account for each one in a separate account, and You use the average useful life to figure depreciation. How to fill out 1040x However, you cannot deduct losses if you use the average useful life to figure depreciation and they have a wide range of useful lives. How to fill out 1040x   If you have a large number of depreciable property items and use average useful lives to figure depreciation, you cannot deduct the losses upon normal retirements from these accounts. How to fill out 1040x Abandoned property. How to fill out 1040x   If you physically abandon property, you can deduct as a loss the adjusted basis of the property at the time of its abandonment. How to fill out 1040x However, your intent must be to discard the property so that you will not use it again or retrieve it for sale, exchange, or other disposition. How to fill out 1040x Basis of property retired. How to fill out 1040x   The basis for figuring gain or loss on the retirement of property is its adjusted basis at the time of retirement, as determined in the following discussions. How to fill out 1040x Single item accounts. How to fill out 1040x   If an item of property is accounted for in a single item account, the adjusted basis is the basis you would use to figure gain or loss for a sale or exchange of the property. How to fill out 1040x This is generally the cost or other basis of the item of property less depreciation. How to fill out 1040x See Publication 551. How to fill out 1040x Multiple property account. How to fill out 1040x   For a normal retirement from a multiple property account, if you figured depreciation using the average expected useful life, the adjusted basis is the salvage value estimated for the item of property when it was originally acquired. How to fill out 1040x If you figured depreciation using the maximum expected useful life of the longest lived item of property in the account, you must use the depreciation method used for the multiple property account and a rate based on the maximum expected useful life of the item of property retired. How to fill out 1040x   You make the adjustment for depreciation for an abnormal retirement from a multiple property account at the rate that would be proper if the item of property was depreciated in a single property account. How to fill out 1040x The method of depreciation used for the multiple property account is used. How to fill out 1040x You base the rate on either the average expected useful life or the maximum expected useful life of the retired item of property, depending on the method used to determine the depreciation rate for the multiple property account. How to fill out 1040x Prev  Up  Next   Home   More Online Publications