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Income Tax Extension Deadline

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Income Tax Extension Deadline

Income tax extension deadline Publication 1544 - Main Content Table of Contents Why Report These Payments? Who Must File Form 8300?What Payments Must Be Reported? What Is Cash? Taxpayer Identification Number (TIN) What Is a Related Transaction? What About Suspicious Transactions? When, Where, and What To File Examples Penalties How To Get Tax HelpLow Income Taxpayer Clinics (LITCs). Income tax extension deadline Why Report These Payments? Drug dealers and smugglers often use large cash payments to “launder” money from illegal activities. Income tax extension deadline Laundering means converting “dirty” or illegally-gained money to “clean” money. Income tax extension deadline The government can often trace this laundered money through the payments you report. Income tax extension deadline Laws passed by Congress require you to report these payments. Income tax extension deadline Your compliance with these laws provides valuable information that can stop those who evade taxes and those who profit from the drug trade and other criminal activities. Income tax extension deadline The USA PATRIOT Act of 2001 increased the scope of these laws to help trace funds used for terrorism. Income tax extension deadline Who Must File Form 8300? Generally, any person in a trade or business who receives more than $10,000 in cash in a single transaction or in related transactions must file Form 8300. Income tax extension deadline For example, you may have to file Form 8300 if you are a dealer in jewelry, furniture, boats, aircraft, or automobiles; a pawnbroker; an attorney; a real estate broker; an insurance company; or a travel agency. Income tax extension deadline Special rules for clerks of federal or state courts are discussed later under Bail received by court clerks. Income tax extension deadline However, you do not have to file Form 8300 if the transaction is not related to your trade or business. Income tax extension deadline For example, if you own a jewelry store and sell your personal automobile for more than $10,000 in cash, you would not submit a Form 8300 for that transaction. Income tax extension deadline Transaction defined. Income tax extension deadline    A “transaction” occurs when: Goods, services, or property are sold; Property is rented; Cash is exchanged for other cash; A contribution is made to a trust or escrow account; A loan is made or repaid; or Cash is converted to a negotiable instrument, such as a check or a bond. Income tax extension deadline Person defined. Income tax extension deadline   A “person” includes an individual, a company, a corporation, a partnership, an association, a trust, or an estate. Income tax extension deadline   Exempt organizations, including employee plans, are also “persons. Income tax extension deadline ” However, exempt organizations do not have to file Form 8300 for a more-than-$10,000 charitable cash contribution they receive since it is not received in the course of a trade or business. Income tax extension deadline Foreign transactions. Income tax extension deadline   You do not have to file Form 8300 if the entire transaction (including the receipt of cash) takes place outside of: The 50 states, The District of Columbia, Puerto Rico, or A possession or territory of the United States. Income tax extension deadline However, you must file Form 8300 if any part of the transaction (including the receipt of cash) occurs in Puerto Rico or a possession or territory of the United States and you are subject to the Internal Revenue Code. Income tax extension deadline Bail received by court clerks. Income tax extension deadline   Any clerk of a federal or state court who receives more than $10,000 in cash as bail for an individual charged with any of the following criminal offenses must file Form 8300: Any federal offense involving a controlled substance, Racketeering, Money laundering, and Any state offense substantially similar to (1), (2), or (3) above. Income tax extension deadline For more information about the rules that apply to court clerks, see Section 1. Income tax extension deadline 6050I-2 of the Income Tax Regulations. Income tax extension deadline What Payments Must Be Reported? You must file Form 8300 to report cash paid to you if it is: Over $10,000, Received as: One lump sum of over $10,000, Installment payments that cause the total cash received within 1 year of the initial payment to total more than $10,000, or Other previously unreportable payments that cause the total cash received within a 12-month period to total more than $10,000, Received in the course of your trade or business, Received from the same buyer (or agent), and Received in a single transaction or in related transactions (defined later). Income tax extension deadline What Is Cash? Cash is: The coins and currency of the United States (and any other country), and A cashier's check, bank draft, traveler's check, or money order you receive, if it has a face amount of $10,000 or less and you receive it in: A designated reporting transaction (defined later), or Any transaction in which you know the payer is trying to avoid the reporting of the transaction on Form 8300. Income tax extension deadline Cash may include a cashier's check even if it is called a “treasurer's check” or “bank check. Income tax extension deadline ” Cash does not include a check drawn on an individual's personal account. Income tax extension deadline A cashier's check, bank draft, traveler's check, or money order with a face amount of more than $10,000 is not treated as cash. Income tax extension deadline These items are not defined as cash and you do not have to file Form 8300 when you receive them because, if they were bought with currency, the bank or other financial institution that issued them must file a report on FinCEN Form 104. Income tax extension deadline Example 1. Income tax extension deadline You are a coin dealer. Income tax extension deadline Bob Green buys gold coins from you for $13,200. Income tax extension deadline He pays for them with $6,200 in U. Income tax extension deadline S. Income tax extension deadline currency and a cashier's check having a face amount of $7,000. Income tax extension deadline The cashier's check is treated as cash. Income tax extension deadline You have received more than $10,000 cash and must file Form 8300 for this transaction. Income tax extension deadline Example 2. Income tax extension deadline You are a retail jeweler. Income tax extension deadline Mary North buys an item of jewelry from you for $12,000. Income tax extension deadline She pays for it with a personal check payable to you in the amount of $9,600 and traveler's checks totaling $2,400. Income tax extension deadline Because the personal check is not treated as cash, you have not received more than $10,000 cash in the transaction. Income tax extension deadline You do not have to file Form 8300. Income tax extension deadline Example 3. Income tax extension deadline You are a boat dealer. Income tax extension deadline Emily Jones buys a boat from you for $16,500. Income tax extension deadline She pays for it with a cashier's check payable to you in the amount of $16,500. Income tax extension deadline The cashier's check is not treated as cash because its face amount is more than $10,000. Income tax extension deadline You do not have to file Form 8300 for this transaction. Income tax extension deadline Designated Reporting Transaction A designated reporting transaction is the retail sale of any of the following: A consumer durable, such as an automobile or boat. Income tax extension deadline A consumer durable is property, other than land or buildings, that: Is suitable for personal use, Can reasonably be expected to last at least 1 year under ordinary use, Has a sales price of more than $10,000, and Can be seen or touched (tangible property). Income tax extension deadline For example, a $20,000 car is a consumer durable, but a $20,000 dump truck or factory machine is not. Income tax extension deadline The car is a consumer durable even if you sell it to a buyer who will use it in a business. Income tax extension deadline A collectible (for example, a work of art, rug, antique, metal, gem, stamp, or coin). Income tax extension deadline Travel or entertainment, if the total sales price of all items sold for the same trip or entertainment event in one transaction (or related transactions) is more than $10,000. Income tax extension deadline To figure the total sales price of all items sold for a trip or entertainment event, you include the sales price of items such as airfare, hotel rooms, and admission tickets. Income tax extension deadline Example. Income tax extension deadline You are a travel agent. Income tax extension deadline Ed Johnson asks you to charter a passenger airplane to take a group to a sports event in another city. Income tax extension deadline He also asks you to book hotel rooms and admission tickets for the group. Income tax extension deadline In payment, he gives you two money orders, each for $6,000. Income tax extension deadline You have received more than $10,000 cash in this designated reporting transaction. Income tax extension deadline You must file Form 8300. Income tax extension deadline Retail sale. Income tax extension deadline   The term “retail sale” means any sale made in the course of a trade or business that consists mainly of making sales to ultimate consumers. Income tax extension deadline   Thus, if your business consists mainly of making sales to ultimate consumers, all sales you make in the course of that business are retail sales. Income tax extension deadline This includes any sales of items that will be resold. Income tax extension deadline Broker or intermediary. Income tax extension deadline   A designated reporting transaction includes the retail sale of items (1), (2), or (3) of the preceding list, even if the funds are received by a broker or other intermediary, rather than directly by the seller. Income tax extension deadline Exceptions to Definition of Cash A cashier's check, bank draft, traveler's check, or money order you received in a designated reporting transaction is not treated as cash if one of the following exceptions applies. Income tax extension deadline Exception for certain bank loans. Income tax extension deadline   A cashier's check, bank draft, traveler's check, or money order is not treated as cash if it is the proceeds from a bank loan. Income tax extension deadline As proof that it is from a bank loan, you may rely on a copy of the loan document, a written statement or lien instruction from the bank, or similar proof. Income tax extension deadline Example. Income tax extension deadline You are a car dealer. Income tax extension deadline Mandy White buys a new car from you for $11,500. Income tax extension deadline She pays you with $2,000 of U. Income tax extension deadline S. Income tax extension deadline currency and a cashier's check for $9,500 payable to you and her. Income tax extension deadline You can tell that the cashier's check is the proceeds of a bank loan because it includes instructions to you to have a lien put on the car as security for the loan. Income tax extension deadline For this reason, the cashier's check is not treated as cash. Income tax extension deadline You do not have to file Form 8300 for the transaction. Income tax extension deadline Exception for certain installment sales. Income tax extension deadline   A cashier's check, bank draft, traveler's check, or money order is not treated as cash if it is received in payment on a promissory note or an installment sales contract (including a lease that is considered a sale for federal tax purposes). Income tax extension deadline However, this exception applies only if: You use similar notes or contracts in other sales to ultimate consumers in the ordinary course of your trade or business, and The total payments for the sale that you receive on or before the 60th day after the sale are 50% or less of the purchase price. Income tax extension deadline Exception for certain down payment plans. Income tax extension deadline   A cashier's check, bank draft, traveler's check, or money order is not treated as cash if you received it in payment for a consumer durable or collectible, and all three of the following statements are true. Income tax extension deadline You receive it under a payment plan requiring: One or more down payments, and Payment of the rest of the purchase price by the date of sale. Income tax extension deadline You receive it more than 60 days before the date of sale. Income tax extension deadline You use payment plans with the same or substantially similar terms when selling to ultimate consumers in the ordinary course of your trade or business. Income tax extension deadline Exception for travel and entertainment. Income tax extension deadline   A cashier's check, bank draft, traveler's check, or money order received for travel or entertainment is not treated as cash if all three of the following statements are true. Income tax extension deadline You receive it under a payment plan requiring: One or more down payments, and Payment of the rest of the purchase price by the earliest date that any travel or entertainment item (such as airfare) is furnished for the trip or entertainment event. Income tax extension deadline You receive it more than 60 days before the date on which the final payment is due. Income tax extension deadline You use payment plans with the same or substantially similar terms when selling to ultimate consumers in the ordinary course of your trade or business. Income tax extension deadline Taxpayer Identification Number (TIN) You must furnish the correct TIN of the person or persons from whom you receive the cash. Income tax extension deadline If the transaction is conducted on the behalf of another person or persons, you must furnish the TIN of that person or persons. Income tax extension deadline If you do not know a person's TIN, you have to ask for it. Income tax extension deadline You may be subject to penalties for an incorrect or missing TIN. Income tax extension deadline There are three types of TINs. Income tax extension deadline The TIN for an individual, including a sole proprietor, is the individual's social security number (SSN). Income tax extension deadline The TIN for a nonresident alien individual who needs a TIN but is not eligible to get an SSN is an IRS individual taxpayer identification number (ITIN). Income tax extension deadline An ITIN has nine digits, similar to an SSN. Income tax extension deadline The TIN for other persons, including corporations, partnerships, and estates, is the employer identification number (EIN). Income tax extension deadline Exception. Income tax extension deadline   You are not required to provide the TIN of a person who is a nonresident alien individual or a foreign organization if that person or foreign organization: Does not have income effectively connected with the conduct of a U. Income tax extension deadline S. Income tax extension deadline trade or business; Does not have an office or place of business, or a fiscal or paying agent in the United States; Does not file a federal tax return; Does not furnish a withholding certificate described in §1. Income tax extension deadline 1441-1(e)(2) or (3) or 1. Income tax extension deadline 1441-5(c)(2)(iv) or (3)(iii) to the extent required under 1. Income tax extension deadline 1441-1(e)(4)(vii); Does not have to furnish a TIN on any return, statement, or other document as required by the income tax regulations under section 897 or 1445; or In the case of a nonresident alien individual, the individual has not chosen to file a joint federal income tax return with a spouse who is a U. Income tax extension deadline S. Income tax extension deadline citizen or resident. Income tax extension deadline What Is a Related Transaction? Any transactions between a buyer (or an agent of the buyer) and a seller that occur within a 24-hour period are related transactions. Income tax extension deadline If you receive over $10,000 in cash during two or more transactions with one buyer in a 24-hour period, you must treat the transactions as one transaction and report the payments on Form 8300. Income tax extension deadline For example, if you sell two products for $6,000 each to the same customer in 1 day and the customer pays you in cash, these are related transactions. Income tax extension deadline Because they total $12,000 (more than $10,000), you must file Form 8300. Income tax extension deadline More than 24 hours between transactions. Income tax extension deadline   Transactions are related even if they are more than 24 hours apart if you know, or have reason to know, that each is one of a series of connected transactions. Income tax extension deadline   For example, you are a travel agent. Income tax extension deadline A client pays you $8,000 in cash for a trip. Income tax extension deadline Two days later, the same client pays you $3,000 more in cash to include another person on the trip. Income tax extension deadline These are related transactions, and you must file Form 8300 to report them. Income tax extension deadline What About Suspicious Transactions? If you receive $10,000 or less in cash, you may voluntarily file Form 8300 if the transaction appears to be suspicious. Income tax extension deadline A transaction is suspicious if it appears that a person is trying to cause you not to file Form 8300 or is trying to cause you to file a false or incomplete Form 8300, or if there is a sign of possible illegal activity. Income tax extension deadline If you are suspicious, you are encouraged to call the local IRS Criminal Investigation Division as soon as possible. Income tax extension deadline Or, you can call the FinCEN Financial Institution Hotline toll free at 1-866-556-3974. Income tax extension deadline When, Where, and What To File The amount you receive and when you receive it determine when you must file. Income tax extension deadline Generally, you must file Form 8300 within 15 days after receiving a payment. Income tax extension deadline If the Form 8300 due date (the 15th or last day you can timely file the form) falls on a Saturday, Sunday, or legal holiday, it is delayed until the next day that is not a Saturday, Sunday, or legal holiday. Income tax extension deadline More than one payment. Income tax extension deadline   In some transactions, the buyer may arrange to pay you in cash installment payments. Income tax extension deadline If the first payment is more than $10,000, you must file Form 8300 within 15 days. Income tax extension deadline If the first payment is not more than $10,000, you must add the first payment and any later payments made within 1 year of the first payment. Income tax extension deadline When the total cash payments are more than $10,000, you must file Form 8300 within 15 days. Income tax extension deadline   After you file Form 8300, you must start a new count of cash payments received from that buyer. Income tax extension deadline If you receive more than $10,000 in additional cash payments from that buyer within a 12-month period, you must file another Form 8300. Income tax extension deadline You must file the form within 15 days of the payment that causes the additional payments to total more than $10,000. Income tax extension deadline   If you are already required to file Form 8300 and you receive additional payments within the 15 days before you must file, you can report all the payments on one form. Income tax extension deadline Example. Income tax extension deadline On January 10, you receive a cash payment of $11,000. Income tax extension deadline You receive additional cash payments on the same transaction of $4,000 on February 15, $5,000 on March 20, and $6,000 on May 12. Income tax extension deadline By January 25, you must file a Form 8300 for the $11,000 payment. Income tax extension deadline By May 27, you must file an additional Form 8300 for the additional payments that total $15,000. Income tax extension deadline Amending a Report?   If you are amending a report, check box 1a at the top of Form 8300. Income tax extension deadline Complete the form in its entirety (Parts I-IV) and include the amended information. Income tax extension deadline Do not attach a copy of the original report. Income tax extension deadline Where to file. Income tax extension deadline   Mail the form to the address given in the Form 8300 instructions. Income tax extension deadline Required statement to buyer. Income tax extension deadline   You must give a written or electronic statement to each person named on any Form 8300 you must file. Income tax extension deadline You can give the statement electronically only if the recipient agrees to receive it in that format. Income tax extension deadline The statement must show the name and address of your business, the name and phone number of a contact person, and the total amount of reportable cash you received from the person during the year. Income tax extension deadline It must state that you are also reporting this information to the IRS. Income tax extension deadline   You must send this statement to the buyer by January 31 of the year after the year in which you received the cash that caused you to file the form. Income tax extension deadline    You must keep a copy of every Form 8300 you file for 5 years. Income tax extension deadline Examples Example 1. Income tax extension deadline Pat Brown is the sales manager for Small Town Cars. Income tax extension deadline On January 6, 2009, Jane Smith buys a new car from Pat and pays $18,000 in cash. Income tax extension deadline Pat asks for identification from Jane to get the necessary information to complete Form 8300. Income tax extension deadline A filled-in form is shown in this publication. Income tax extension deadline Pat must mail the form to the address shown in the form's instructions by January 21, 2009. Income tax extension deadline He must also send a statement to Jane by January 31, 2010. Income tax extension deadline Example 2. Income tax extension deadline Using the same facts given in Example 1, suppose Jane had arranged to make cash payments of $6,000 each on January 6, February 6, and March 6. Income tax extension deadline Pat would have to file a Form 8300 by February 26 (17 days after receiving total cash payments within 1 year over $10,000 because February 21, 2009, is a Saturday). Income tax extension deadline Pat would not have to report the remaining $6,000 cash payment because it is not more than $10,000. Income tax extension deadline However, he could report it if he felt it was a suspicious transaction. Income tax extension deadline Penalties There are civil penalties for failure to: File a correct Form 8300 by the date it is due, and Provide the required statement to those named in the Form 8300. Income tax extension deadline If you intentionally disregard the requirement to file a correct Form 8300 by the date it is due, the penalty is the greater of: $25,000, or The amount of cash you received and were required to report (up to $100,000). Income tax extension deadline There are criminal penalties for: Willful failure to file Form 8300, Willfully filing a false or fraudulent Form 8300, Stopping or trying to stop Form 8300 from being filed, and Setting up, helping to set up, or trying to set up a transaction in a way that would make it seem unnecessary to file Form 8300. Income tax extension deadline If you willfully fail to file Form 8300, you can be fined up to $250,000 for individuals ($500,000 for corporations) or sentenced to up to 5 years in prison, or both. Income tax extension deadline These dollar amounts are based on Section 3571 of Title 18 of the U. Income tax extension deadline S. Income tax extension deadline Code. Income tax extension deadline The penalties for failure to file may also apply to any person (including a payer) who attempts to interfere with or prevent the seller (or business) from filing a correct Form 8300. Income tax extension deadline This includes any attempt to structure the transaction in a way that would make it seem unnecessary to file Form 8300. Income tax extension deadline Structuring means breaking up a large cash transaction into small cash transactions. Income tax extension deadline How To Get Tax Help You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get information from the IRS in several ways. Income tax extension deadline By selecting the method that is best for you, you will have quick and easy access to tax help. Income tax extension deadline Free help with your return. Income tax extension deadline   Free help in preparing your return is available nationwide from IRS-certified volunteers. Income tax extension deadline The Volunteer Income Tax Assistance (VITA) program is designed to help low-moderate income taxpayers and the Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. Income tax extension deadline Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Income tax extension deadline To find the nearest VITA or TCE site, visit IRS. Income tax extension deadline gov or call 1-800-906-9887 or 1-800-829-1040. Income tax extension deadline   As part of the TCE program, AARP offers the Tax-Aide counseling program. Income tax extension deadline To find the nearest AARP Tax-Aide site, call 1-888-227-7669 or visit AARP's website at www. Income tax extension deadline aarp. Income tax extension deadline org/money/taxaide. Income tax extension deadline   For more information on these programs, go to IRS. Income tax extension deadline gov and enter keyword “VITA” in the upper right-hand corner. Income tax extension deadline Internet. Income tax extension deadline You can access the IRS website at IRS. Income tax extension deadline gov 24 hours a day, 7 days a week to: Check the status of your 2011 refund. Income tax extension deadline Go to IRS. Income tax extension deadline gov and click on Where's My Refund. Income tax extension deadline Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. Income tax extension deadline If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). Income tax extension deadline Have your 2011 tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Income tax extension deadline E-file your return. Income tax extension deadline Find out about commercial tax preparation and e-file services available free to eligible taxpayers. Income tax extension deadline Download forms, including talking tax forms, instructions, and publications. Income tax extension deadline Order IRS products online. Income tax extension deadline Research your tax questions online. Income tax extension deadline Search publications online by topic or keyword. Income tax extension deadline Use the online Internal Revenue Code, regulations, or other official guidance. Income tax extension deadline View Internal Revenue Bulletins (IRBs) published in the last few years. Income tax extension deadline Figure your withholding allowances using the withholding calculator online at  www. Income tax extension deadline irs. Income tax extension deadline gov/individuals. Income tax extension deadline Determine if Form 6251 must be filed by using our Alternative Minimum Tax (AMT) Assistant available online at  www. Income tax extension deadline irs. Income tax extension deadline gov/individuals. Income tax extension deadline Sign up to receive local and national tax news by email. Income tax extension deadline Get information on starting and operating a small business. Income tax extension deadline Phone. Income tax extension deadline Many services are available by phone. Income tax extension deadline   Ordering forms, instructions, and publications. Income tax extension deadline Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, and publications, and prior-year forms and instructions. Income tax extension deadline You should receive your order within 10 days. Income tax extension deadline Asking tax questions. Income tax extension deadline Call the IRS with your tax questions at 1-800-829-1040. Income tax extension deadline Solving problems. Income tax extension deadline You can get face-to-face help solving tax problems every business day in IRS Taxpayer Assistance Centers. Income tax extension deadline An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. Income tax extension deadline Call your local Taxpayer Assistance Center for an appointment. Income tax extension deadline To find the number, go to www. Income tax extension deadline irs. Income tax extension deadline gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. Income tax extension deadline TTY/TDD equipment. Income tax extension deadline If you have access to TTY/TDD equipment, call 1-800-829-4059 to ask tax questions or to order forms and publications. Income tax extension deadline TeleTax topics. Income tax extension deadline Call 1-800-829-4477 to listen to pre-recorded messages covering various tax topics. Income tax extension deadline Refund information. Income tax extension deadline You can check the status of your refund on the new IRS phone app. Income tax extension deadline Download the free IRS2Go app by visiting the iTunes app store or the Android Marketplace. Income tax extension deadline IRS2Go is a new way to provide you with information and tools. Income tax extension deadline To check the status of your refund by phone, call 1-800-829-4477 (automated refund information 24 hours a day, 7 days a week). Income tax extension deadline Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. Income tax extension deadline If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). Income tax extension deadline Have your 2011 tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Income tax extension deadline If you check the status of your refund and are not given the date it will be issued, please wait until the next week before checking back. Income tax extension deadline Other refund information. Income tax extension deadline To check the status of a prior-year refund or amended return refund, call 1-800-829-1040. Income tax extension deadline Evaluating the quality of our telephone services. Income tax extension deadline To ensure IRS representatives give accurate, courteous, and professional answers, we use several methods to evaluate the quality of our telephone services. Income tax extension deadline One method is for a second IRS representative to listen in on or record random telephone calls. Income tax extension deadline Another is to ask some callers to complete a short survey at the end of the call. Income tax extension deadline Walk-in. Income tax extension deadline Many products and services are available on a walk-in basis. Income tax extension deadline   Products. Income tax extension deadline You can walk in to many post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Income tax extension deadline Some IRS offices, libraries, grocery stores, copy centers, city and county government offices, credit unions, and office supply stores have a collection of products available to print from a CD or photocopy from reproducible proofs. Income tax extension deadline Also, some IRS offices and libraries have the Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes. Income tax extension deadline Services. Income tax extension deadline You can walk in to your local Taxpayer Assistance Center every business day for personal, face-to-face tax help. Income tax extension deadline An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. Income tax extension deadline If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local Taxpayer Assistance Center where you can spread out your records and talk with an IRS representative face-to-face. Income tax extension deadline No appointment is necessary—just walk in. Income tax extension deadline If you prefer, you can call your local Center and leave a message requesting an appointment to resolve a tax account issue. Income tax extension deadline A representative will call you back within 2 business days to schedule an in-person appointment at your convenience. Income tax extension deadline If you have an ongoing, complex tax account problem or a special need, such as a disability, an appointment can be requested. Income tax extension deadline All other issues will be handled without an appointment. Income tax extension deadline To find the number of your local office, go to www. Income tax extension deadline irs. Income tax extension deadline gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. Income tax extension deadline Mail. Income tax extension deadline You can send your order for forms, instructions, and publications to the address below. Income tax extension deadline You should receive a response within 10 days after your request is received. Income tax extension deadline  Internal Revenue Service 1201 N. Income tax extension deadline Mitsubishi Motorway Bloomington, IL 61705-6613 Taxpayer Advocate Service. Income tax extension deadline   The Taxpayer Advocate Service (TAS) is your voice at the IRS. Income tax extension deadline Our job is to ensure that every taxpayer is treated fairly, and that you know and understand your rights. Income tax extension deadline We offer free help to guide you through the often-confusing process of resolving tax problems that you haven’t been able to solve on your own. Income tax extension deadline Remember, the worst thing you can do is nothing at all. Income tax extension deadline   TAS can help if you can’t resolve your problem with the IRS and: Your problem is causing financial difficulties for you, your family, or your business. Income tax extension deadline You face (or your business is facing) an immediate threat of adverse action. Income tax extension deadline You have tried repeatedly to contact the IRS but no one has responded, or the IRS has not responded to you by the date promised. Income tax extension deadline   If you qualify for our help, we’ll do everything we can to get your problem resolved. Income tax extension deadline You will be assigned to one advocate who will be with you at every turn. Income tax extension deadline We have offices in every state, the District of Columbia, and Puerto Rico. Income tax extension deadline Although TAS is independent within the IRS, our advocates know how to work with the IRS to get your problems resolved. Income tax extension deadline And our services are always free. Income tax extension deadline   As a taxpayer, you have rights that the IRS must abide by in its dealings with you. Income tax extension deadline Our tax toolkit at www. Income tax extension deadline TaxpayerAdvocate. Income tax extension deadline irs. Income tax extension deadline gov can help you understand these rights. Income tax extension deadline   If you think TAS might be able to help you, call your local advocate, whose number is in your phone book and on our website at www. Income tax extension deadline irs. Income tax extension deadline gov/advocate. Income tax extension deadline You can also call our toll-free number at 1-877-777-4778. Income tax extension deadline   TAS also handles large-scale or systemic problems that affect many taxpayers. Income tax extension deadline If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. Income tax extension deadline irs. Income tax extension deadline gov/advocate. Income tax extension deadline Low Income Taxpayer Clinics (LITCs). Income tax extension deadline   Low Income Taxpayer Clinics (LITCs) are independent from the IRS. Income tax extension deadline Some clinics serve individuals whose income is below a certain level and who need to resolve a tax problem. Income tax extension deadline These clinics provide professional representation before the IRS or in court on audits, appeals, tax collection disputes, and other issues for free or for a small fee. Income tax extension deadline Some clinics can provide information about taxpayer rights and responsibilities in many different languages for individuals who speak English as a second language. Income tax extension deadline For more information and to find a clinic near you, see the LITC page on www. Income tax extension deadline irs. Income tax extension deadline gov/advocate or IRS Publication 4134, Low Income Taxpayer Clinic List. Income tax extension deadline This publication is also available by calling 1-800-829-3676 or at your local IRS office. Income tax extension deadline Free tax services. Income tax extension deadline   Publication 910, IRS Guide to Free Tax Services, is your guide to IRS services and resources. Income tax extension deadline Learn about free tax information from the IRS, including publications, services, and education and assistance programs. Income tax extension deadline The publication also has an index of over 100 TeleTax topics (recorded tax information) you can listen to on the telephone. Income tax extension deadline The majority of the information and services listed in this publication are available to you free of charge. Income tax extension deadline If there is a fee associated with a resource or service, it is listed in the publication. Income tax extension deadline   Accessible versions of IRS published products are available on request in a variety of alternative formats for people with disabilities. Income tax extension deadline DVD for tax products. Income tax extension deadline You can order Publication 1796, IRS Tax Products DVD, and obtain: Current-year forms, instructions, and publications. Income tax extension deadline Prior-year forms, instructions, and publications. Income tax extension deadline Tax Map: an electronic research tool and finding aid. Income tax extension deadline Tax law frequently asked questions. Income tax extension deadline Tax Topics from the IRS telephone response system. Income tax extension deadline Internal Revenue Code—Title 26 of the U. Income tax extension deadline S. Income tax extension deadline Code. Income tax extension deadline Links to other Internet based Tax Research Materials. Income tax extension deadline Fill-in, print, and save features for most tax forms. Income tax extension deadline Internal Revenue Bulletins. Income tax extension deadline Toll-free and email technical support. Income tax extension deadline Two releases during the year. Income tax extension deadline  – The first release will ship the beginning of January. Income tax extension deadline  – The final release will ship the beginning of March. 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Income tax extension deadline 9. Income tax extension deadline   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. Income tax extension deadline Depletion unit. Income tax extension deadline Introduction Depletion is the using up of natural resources by mining, drilling, quarrying stone, or cutting timber. Income tax extension deadline The depletion deduction allows an owner or operator to account for the reduction of a product's reserves. Income tax extension deadline There are two ways of figuring depletion: cost depletion and percentage depletion. Income tax extension deadline For mineral property, you generally must use the method that gives you the larger deduction. Income tax extension deadline For standing timber, you must use cost depletion. Income tax extension deadline 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. Income tax extension deadline More than one person can have an economic interest in the same mineral deposit or timber. Income tax extension deadline In the case of leased property, the depletion deduction is divided between the lessor and the lessee. Income tax extension deadline You have an economic interest if both the following apply. Income tax extension deadline You have acquired by investment any interest in mineral deposits or standing timber. Income tax extension deadline 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. Income tax extension deadline 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. Income tax extension deadline A production payment carved out of, or retained on the sale of, mineral property is not an economic interest. Income tax extension deadline Individuals, corporations, estates, and trusts who claim depletion deductions may be liable for alternative minimum tax. Income tax extension deadline Basis adjustment for depletion. Income tax extension deadline   You must reduce the basis of your property by the depletion allowed or allowable, whichever is greater. Income tax extension deadline Mineral Property Mineral property includes oil and gas wells, mines, and other natural deposits (including geothermal deposits). Income tax extension deadline For this purpose, the term “property” means each separate interest you own in each mineral deposit in each separate tract or parcel of land. Income tax extension deadline You can treat two or more separate interests as one property or as separate properties. Income tax extension deadline See section 614 of the Internal Revenue Code and the related regulations for rules on how to treat separate mineral interests. Income tax extension deadline There are two ways of figuring depletion on mineral property. Income tax extension deadline Cost depletion. Income tax extension deadline Percentage depletion. Income tax extension deadline Generally, you must use the method that gives you the larger deduction. Income tax extension deadline However, unless you are an independent producer or royalty owner, you generally cannot use percentage depletion for oil and gas wells. Income tax extension deadline See Oil and Gas Wells , later. Income tax extension deadline Cost Depletion To figure cost depletion you must first determine the following. Income tax extension deadline The property's basis for depletion. Income tax extension deadline The total recoverable units of mineral in the property's natural deposit. Income tax extension deadline The number of units of mineral sold during the tax year. Income tax extension deadline Basis for depletion. Income tax extension deadline   To figure the property's basis for depletion, subtract all the following from the property's adjusted basis. Income tax extension deadline Amounts recoverable through: Depreciation deductions, Deferred expenses (including deferred exploration and development costs), and Deductions other than depletion. Income tax extension deadline The residual value of land and improvements at the end of operations. Income tax extension deadline The cost or value of land acquired for purposes other than mineral production. Income tax extension deadline Adjusted basis. Income tax extension deadline   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. Income tax extension deadline Your adjusted basis can never be less than zero. Income tax extension deadline See Publication 551, Basis of Assets, for more information on adjusted basis. Income tax extension deadline Total recoverable units. Income tax extension deadline   The total recoverable units is the sum of the following. Income tax extension deadline The number of units of mineral remaining at the end of the year (including units recovered but not sold). Income tax extension deadline The number of units of mineral sold during the tax year (determined under your method of accounting, as explained next). Income tax extension deadline   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. Income tax extension deadline You must include ores and minerals that are developed, in sight, blocked out, or assured. Income tax extension deadline You must also include probable or prospective ores or minerals that are believed to exist based on good evidence. Income tax extension deadline But see Elective safe harbor for owners of oil and gas property , later. Income tax extension deadline Number of units sold. Income tax extension deadline   You determine the number of units sold during the tax year based on your method of accounting. Income tax extension deadline Use the following table to make this determination. Income tax extension deadline    IF you  use . Income tax extension deadline . Income tax extension deadline . Income tax extension deadline THEN the units sold during the year are . Income tax extension deadline . Income tax extension deadline . Income tax extension deadline The cash method of accounting The units sold for which you receive payment during the tax year (regardless of the year of sale). Income tax extension deadline An accrual method of accounting The units sold based on your inventories and method of accounting for inventory. Income tax extension deadline   The number of units sold during the tax year does not include any for which depletion deductions were allowed or allowable in earlier years. Income tax extension deadline Figuring the cost depletion deduction. Income tax extension deadline   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. Income tax extension deadline Step Action Result 1 Divide your property's basis for depletion by total recoverable units. Income tax extension deadline Rate per unit. Income tax extension deadline 2 Multiply the rate per unit by units sold during the tax year. Income tax extension deadline Cost depletion deduction. Income tax extension deadline You must keep accounts for the depletion of each property and adjust these accounts each year for units sold and depletion claimed. Income tax extension deadline Elective safe harbor for owners of oil and gas property. Income tax extension deadline   Instead of using the method described earlier to determine the total recoverable units, you can use an elective safe harbor. Income tax extension deadline If you choose the elective safe harbor, the total recoverable units equal 105% of a property's proven reserves (both developed and undeveloped). Income tax extension deadline For details, see Revenue Procedure 2004-19 on page 563 of Internal Revenue Bulletin 2004-10, available at www. Income tax extension deadline irs. Income tax extension deadline gov/pub/irs-irbs/irb04-10. Income tax extension deadline pdf. Income tax extension deadline   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. Income tax extension deadline The statement must indicate that you are electing the safe harbor provided by Revenue Procedure 2004-19. Income tax extension deadline The election, if made, is effective for the tax year in which it is made and all later years. Income tax extension deadline It cannot be revoked for the tax year in which it is elected, but may be revoked in a later year. Income tax extension deadline Once revoked, it cannot be re-elected for the next 5 years. Income tax extension deadline 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. Income tax extension deadline 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 . Income tax extension deadline Rates and other rules for percentage depletion of other specific minerals are found later in Mines and Geothermal Deposits . Income tax extension deadline Gross income. Income tax extension deadline   When figuring percentage depletion, subtract from your gross income from the property the following amounts. Income tax extension deadline Any rents or royalties you paid or incurred for the property. Income tax extension deadline 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. Income tax extension deadline A bonus payment includes amounts you paid as a lessee to satisfy a production payment retained by the lessor. Income tax extension deadline   Use the following fraction to figure the part of the bonus you must subtract. Income tax extension deadline No. Income tax extension deadline 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. Income tax extension deadline For other property, more information about the definition of gross income from the property is under Mines and Geothermal Deposits , later. Income tax extension deadline Taxable income limit. Income tax extension deadline   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. Income tax extension deadline   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. Income tax extension deadline These deductible items include, but are not limited to, the following. Income tax extension deadline Operating expenses. Income tax extension deadline Certain selling expenses. Income tax extension deadline Administrative and financial overhead. Income tax extension deadline Depreciation. Income tax extension deadline Intangible drilling and development costs. Income tax extension deadline Exploration and development expenditures. Income tax extension deadline Deductible taxes (see chapter 5), but not taxes that you capitalize or take as a credit. Income tax extension deadline Losses sustained. Income tax extension deadline   The following rules apply when figuring your taxable income from the property for purposes of the taxable income limit. Income tax extension deadline Do not deduct any net operating loss deduction from the gross income from the property. Income tax extension deadline Corporations do not deduct charitable contributions from the gross income from the property. Income tax extension deadline 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. Income tax extension deadline See section 1. Income tax extension deadline 613-5(b)(1) of the regulations for information on how to figure the ordinary gain allocable to the property. Income tax extension deadline Oil and Gas Wells You cannot claim percentage depletion for an oil or gas well unless at least one of the following applies. Income tax extension deadline You are either an independent producer or a royalty owner. Income tax extension deadline The well produces natural gas that is either sold under a fixed contract or produced from geopressured brine. Income tax extension deadline If you are an independent producer or royalty owner, see Independent Producers and Royalty Owners , next. Income tax extension deadline 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. Income tax extension deadline 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. Income tax extension deadline However, certain refiners, as explained next, and certain retailers and transferees of proven oil and gas properties, as explained next, cannot claim percentage depletion. Income tax extension deadline For information on figuring the deduction, see Figuring percentage depletion , later. Income tax extension deadline Refiners who cannot claim percentage depletion. Income tax extension deadline   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. Income tax extension deadline 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. Income tax extension deadline Related person. Income tax extension deadline   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. Income tax extension deadline For example, a corporation, partnership, estate, or trust and anyone who holds a significant ownership interest in it are related persons. Income tax extension deadline A partnership and a trust are related persons if one person holds a significant ownership interest in each of them. Income tax extension deadline 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. Income tax extension deadline The value of the outstanding stock of a corporation. Income tax extension deadline The interest in the profits or capital of a partnership. Income tax extension deadline The beneficial interests in an estate or trust. Income tax extension deadline 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. Income tax extension deadline Retailers who cannot claim percentage depletion. Income tax extension deadline   You cannot claim percentage depletion if both the following apply. Income tax extension deadline You sell oil or natural gas or their by-products directly or through a related person in any of the following situations. Income tax extension deadline Through a retail outlet operated by you or a related person. Income tax extension deadline 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. Income tax extension deadline 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. Income tax extension deadline 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. Income tax extension deadline   For the purpose of determining if this rule applies, do not count the following. Income tax extension deadline Bulk sales (sales in very large quantities) of oil or natural gas to commercial or industrial users. Income tax extension deadline Bulk sales of aviation fuels to the Department of Defense. Income tax extension deadline 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. Income tax extension deadline Related person. Income tax extension deadline   To determine if you and another person are related persons, see Related person under Refiners who cannot claim percentage depletion, earlier. Income tax extension deadline Sales through a related person. Income tax extension deadline   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. Income tax extension deadline   You are not considered to be selling through a related person who is a retailer if all the following apply. Income tax extension deadline You do not have a significant ownership interest in the retailer. Income tax extension deadline You sell your production to persons who are not related to either you or the retailer. Income tax extension deadline The retailer does not buy oil or natural gas from your customers or persons related to your customers. Income tax extension deadline 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. Income tax extension deadline 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. Income tax extension deadline Transferees who cannot claim percentage depletion. Income tax extension deadline   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. Income tax extension deadline For a definition of the term “transfer,” see section 1. Income tax extension deadline 613A-7(n) of the regulations. Income tax extension deadline For a definition of the term “interest in proven oil or gas property,” see section 1. Income tax extension deadline 613A-7(p) of the regulations. Income tax extension deadline Figuring percentage depletion. Income tax extension deadline   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. Income tax extension deadline 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%. Income tax extension deadline 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. Income tax extension deadline   In addition, there is a limit on the percentage depletion deduction. Income tax extension deadline See Taxable income limit , later. Income tax extension deadline Average daily production. Income tax extension deadline   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. Income tax extension deadline Partial interest. Income tax extension deadline   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. Income tax extension deadline   You have a partial interest in the production from a property if you have a net profits interest in the property. Income tax extension deadline 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. Income tax extension deadline To figure this percentage, you divide the income you receive for your net profits interest by the gross revenue from the property. Income tax extension deadline Then multiply the total production from the property by your percentage participation to figure your share of the production. Income tax extension deadline Example. Income tax extension deadline Javier Robles owns oil property in which Pablo Olmos owns a 20% net profits interest. Income tax extension deadline During the year, the property produced 10,000 barrels of oil, which Javier sold for $200,000. Income tax extension deadline Javier had expenses of $90,000 attributable to the property. Income tax extension deadline The property generated a net profit of $110,000 ($200,000 − $90,000). Income tax extension deadline Pablo received income of $22,000 ($110,000 × . Income tax extension deadline 20) for his net profits interest. Income tax extension deadline 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). Income tax extension deadline Pablo determined his share of the oil production to be 1,100 barrels (10,000 barrels × 11%). Income tax extension deadline Depletable oil or natural gas quantity. Income tax extension deadline   Generally, your depletable oil quantity is 1,000 barrels. Income tax extension deadline 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. Income tax extension deadline 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. Income tax extension deadline Example. Income tax extension deadline You have both oil and natural gas production. Income tax extension deadline To figure your depletable natural gas quantity, you choose to apply 360 barrels of your 1000-barrel depletable oil quantity. Income tax extension deadline Your depletable natural gas quantity is 2. Income tax extension deadline 16 million cubic feet of gas (360 × 6000). Income tax extension deadline You must reduce your depletable oil quantity to 640 barrels (1000 − 360). Income tax extension deadline 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. Income tax extension deadline Also, see Notice 2012-50, available at www. Income tax extension deadline irs. Income tax extension deadline gov/irb/2012–31_IRB/index. Income tax extension deadline html. Income tax extension deadline Business entities and family members. Income tax extension deadline   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. Income tax extension deadline 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). Income tax extension deadline You and your spouse and minor children. Income tax extension deadline 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. Income tax extension deadline Controlled group of corporations. Income tax extension deadline   Members of the same controlled group of corporations are treated as one taxpayer when figuring the depletable oil or natural gas quantity. Income tax extension deadline They share the depletable quantity. Income tax extension deadline 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%. Income tax extension deadline ” Gross income from the property. Income tax extension deadline   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. Income tax extension deadline 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. Income tax extension deadline   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. Income tax extension deadline   Gross income from the property does not include lease bonuses, advance royalties, or other amounts payable without regard to production from the property. Income tax extension deadline Average daily production exceeds depletable quantities. Income tax extension deadline   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. Income tax extension deadline Figure your average daily production of oil or natural gas for the year. Income tax extension deadline Figure your depletable oil or natural gas quantity for the year. Income tax extension deadline Figure depletion for all oil or natural gas produced from the property using a percentage depletion rate of 15%. Income tax extension deadline 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). Income tax extension deadline This is your depletion allowance for that property for the year. Income tax extension deadline Taxable income limit. Income tax extension deadline   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. Income tax extension deadline 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. Income tax extension deadline For a definition of taxable income from the property, see Taxable income limit , earlier, under Mineral Property. Income tax extension deadline 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. Income tax extension deadline You can carry over to the following year any amount you cannot deduct because of the 65%-of-taxable-income limit. Income tax extension deadline Add it to your depletion allowance (before applying any limits) for the following year. Income tax extension deadline Partnerships and S Corporations Generally, each partner or S corporation shareholder, and not the partnership or S corporation, figures the depletion allowance separately. Income tax extension deadline (However, see Electing large partnerships must figure depletion allowance , later. Income tax extension deadline ) Each partner or shareholder must decide whether to use cost or percentage depletion. Income tax extension deadline 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. Income tax extension deadline Partner's or shareholder's adjusted basis. Income tax extension deadline   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. Income tax extension deadline The partnership or S corporation makes the allocation as of the date it acquires the oil or gas property. Income tax extension deadline   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. Income tax extension deadline However, in some cases, it is figured according to the partner's interest in partnership income. Income tax extension deadline   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. Income tax extension deadline Recordkeeping. Income tax extension deadline 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. Income tax extension deadline The partner or shareholder must reduce his or her adjusted basis by the depletion allowed or allowable on the property each year. Income tax extension deadline 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. Income tax extension deadline Reporting the deduction. Income tax extension deadline   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). Income tax extension deadline Deduct oil and gas depletion for your partnership or S corporation interest on Schedule E (Form 1040). Income tax extension deadline The depletion deducted on Schedule E is included in figuring income or loss from rental real estate or royalty properties. Income tax extension deadline The instructions for Schedule E explain where to report this income or loss and whether you need to file either of the following forms. Income tax extension deadline Form 6198, At-Risk Limitations. Income tax extension deadline Form 8582, Passive Activity Loss Limitations. Income tax extension deadline Electing large partnerships must figure depletion allowance. Income tax extension deadline   An electing large partnership, rather than each partner, generally must figure the depletion allowance. Income tax extension deadline 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. Income tax extension deadline Also, the adjusted basis of a partner's interest in the partnership is not affected by the depletion allowance. Income tax extension deadline   An electing large partnership is one that meets both the following requirements. Income tax extension deadline The partnership had 100 or more partners in the preceding year. Income tax extension deadline The partnership chooses to be an electing large partnership. Income tax extension deadline Disqualified persons. Income tax extension deadline   An electing large partnership does not figure the depletion allowance of its partners that are disqualified persons. Income tax extension deadline Disqualified persons must figure it themselves, as explained earlier. Income tax extension deadline   All the following are disqualified persons. Income tax extension deadline Refiners who cannot claim percentage depletion (discussed under Independent Producers and Royalty Owners , earlier). Income tax extension deadline Retailers who cannot claim percentage depletion (discussed under Independent Producers and Royalty Owners , earlier). Income tax extension deadline 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. Income tax extension deadline Average daily production is discussed earlier. Income tax extension deadline 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. Income tax extension deadline Natural gas sold under a fixed contract. Income tax extension deadline   Natural gas sold under a fixed contract qualifies for a percentage depletion rate of 22%. Income tax extension deadline 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. Income tax extension deadline The contract must have been in effect from February 1, 1975, until the date of sale of the gas. Income tax extension deadline 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. Income tax extension deadline Natural gas from geopressured brine. Income tax extension deadline   Qualified natural gas from geopressured brine is eligible for a percentage depletion rate of 10%. Income tax extension deadline This is natural gas that is both the following. Income tax extension deadline Produced from a well you began to drill after September 1978 and before 1984. Income tax extension deadline Determined in accordance with section 503 of the Natural Gas Policy Act of 1978 to be produced from geopressured brine. Income tax extension deadline Mines and Geothermal Deposits Certain mines, wells, and other natural deposits, including geothermal deposits, qualify for percentage depletion. Income tax extension deadline Mines and other natural deposits. Income tax extension deadline   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. Income tax extension deadline   The following is a list of the percentage depletion rates for the more common minerals. Income tax extension deadline 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. Income tax extension deadline Corporate deduction for iron ore and coal. Income tax extension deadline   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). Income tax extension deadline Gross income from the property. Income tax extension deadline   For property other than a geothermal deposit or an oil or gas well, gross income from the property means the gross income from mining. Income tax extension deadline Mining includes all the following. Income tax extension deadline Extracting ores or minerals from the ground. Income tax extension deadline Applying certain treatment processes described later. Income tax extension deadline 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. Income tax extension deadline Excise tax. Income tax extension deadline   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. Income tax extension deadline Extraction. Income tax extension deadline   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. Income tax extension deadline 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. Income tax extension deadline Treatment processes. Income tax extension deadline   The processes included as mining depend on the ore or mineral mined. Income tax extension deadline To qualify as mining, the treatment processes must be applied by the mine owner or operator. Income tax extension deadline For a listing of treatment processes considered as mining, see section 613(c)(4) of the Internal Revenue Code and the related regulations. Income tax extension deadline Transportation of more than 50 miles. Income tax extension deadline   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. Income tax extension deadline    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. Income tax extension deadline 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. Income tax extension deadline For more information about requesting an advance ruling, see Revenue Procedure 2013-1, available at www. Income tax extension deadline irs. Income tax extension deadline gov/irb/2013-01_IRB/ar11. Income tax extension deadline html. Income tax extension deadline Disposal of coal or iron ore. Income tax extension deadline   You cannot take a depletion deduction for coal (including lignite) or iron ore mined in the United States if both the following apply. Income tax extension deadline You disposed of it after holding it for more than 1 year. Income tax extension deadline You disposed of it under a contract under which you retain an economic interest in the coal or iron ore. Income tax extension deadline Treat any gain on the disposition as a capital gain. Income tax extension deadline Disposal to related person. Income tax extension deadline   This rule does not apply if you dispose of the coal or iron ore to one of the following persons. Income tax extension deadline A related person (as listed in chapter 2 of Publication 544). Income tax extension deadline A person owned or controlled by the same interests that own or control you. Income tax extension deadline Geothermal deposits. Income tax extension deadline   Geothermal deposits located in the United States or its possessions qualify for a percentage depletion rate of 15%. Income tax extension deadline A geothermal deposit is a geothermal reservoir of natural heat stored in rocks or in a watery liquid or vapor. Income tax extension deadline For percentage depletion purposes, a geothermal deposit is not considered a gas well. Income tax extension deadline   Figure gross income from the property for a geothermal steam well in the same way as for oil and gas wells. Income tax extension deadline See Gross income from the property , earlier, under Oil and Gas Wells. Income tax extension deadline Percentage depletion on a geothermal deposit cannot be more than 50% of your taxable income from the property. Income tax extension deadline Lessor's Gross Income In the case of leased property, the depletion deduction is divided between the lessor and the lessee. Income tax extension deadline A lessor's gross income from the property that qualifies for percentage depletion usually is the total of the royalties received from the lease. Income tax extension deadline Bonuses and advanced royalties. Income tax extension deadline   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. Income tax extension deadline 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. Income tax extension deadline Figuring cost depletion. Income tax extension deadline   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. Income tax extension deadline 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. Income tax extension deadline Figuring percentage depletion. Income tax extension deadline   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 . Income tax extension deadline 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. Income tax extension deadline 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. Income tax extension deadline Ending the lease. Income tax extension deadline   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. Income tax extension deadline Do this for the year the lease ends or is abandoned. Income tax extension deadline Also increase your adjusted basis in the property to restore the depletion deduction you previously subtracted. Income tax extension deadline   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. Income tax extension deadline Include this amount in income for the year the lease ends. Income tax extension deadline Increase your adjusted basis in the property by the amount you include in income. Income tax extension deadline Delay rentals. Income tax extension deadline   These are payments for deferring development of the property. Income tax extension deadline Since delay rentals are ordinary rent, they are ordinary income that is not subject to depletion. Income tax extension deadline These rentals can be avoided by either abandoning the lease, beginning development operations, or obtaining production. Income tax extension deadline Timber You can figure timber depletion only by the cost method. Income tax extension deadline Percentage depletion does not apply to timber. Income tax extension deadline Base your depletion on your cost or other basis in the timber. Income tax extension deadline Your cost does not include the cost of land or any amounts recoverable through depreciation. Income tax extension deadline Depletion takes place when you cut standing timber. Income tax extension deadline You can figure your depletion deduction when the quantity of cut timber is first accurately measured in the process of exploitation. Income tax extension deadline Figuring cost depletion. Income tax extension deadline   To figure your cost depletion allowance, you multiply the number of timber units cut by your depletion unit. Income tax extension deadline Timber units. Income tax extension deadline   When you acquire timber property, you must make an estimate of the quantity of marketable timber that exists on the property. Income tax extension deadline You measure the timber using board feet, log scale, cords, or other units. Income tax extension deadline If you later determine that you have more or less units of timber, you must adjust the original estimate. Income tax extension deadline   The term “timber property” means your economic interest in standing timber in each tract or block representing a separate timber account. Income tax extension deadline Depletion unit. Income tax extension deadline   You figure your depletion unit each year by taking the following steps. Income tax extension deadline Determine your cost or adjusted basis of the timber on hand at the beginning of the year. Income tax extension deadline Adjusted basis is defined under Cost Depletion in the discussion on Mineral Property. Income tax extension deadline Add to the amount determined in (1) the cost of any timber units acquired during the year and any additions to capital. Income tax extension deadline 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. Income tax extension deadline Divide the result of (2) by the result of (3). Income tax extension deadline This is your depletion unit. Income tax extension deadline Example. Income tax extension deadline You bought a timber tract for $160,000 and the land was worth as much as the timber. Income tax extension deadline Your basis for the timber is $80,000. Income tax extension deadline 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). Income tax extension deadline If you cut 500 MBF of timber, your depletion allowance would be $40,000 (500 MBF × $80). Income tax extension deadline When to claim depletion. Income tax extension deadline   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). Income tax extension deadline 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. Income tax extension deadline The inventory is your basis for determining gain or loss in the tax year you sell the timber products. Income tax extension deadline Example. Income tax extension deadline The facts are the same as in the previous example except that you sold only half of the timber products in the cutting year. Income tax extension deadline You would deduct $20,000 of the $40,000 depletion that year. Income tax extension deadline You would add the remaining $20,000 depletion to your closing inventory of timber products. Income tax extension deadline Electing to treat the cutting of timber as a sale or exchange. Income tax extension deadline   You can elect, under certain circumstances, to treat the cutting of timber held for more than 1 year as a sale or exchange. Income tax extension deadline You must make the election on your income tax return for the tax year to which it applies. Income tax extension deadline 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. Income tax extension deadline You generally report the gain as long-term capital gain. Income tax extension deadline 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. Income tax extension deadline For more information, see Timber in chapter 2 of Publication 544, Sales and Other Dispositions of Assets. Income tax extension deadline   You may revoke an election to treat the cutting of timber as a sale or exchange without IRS's consent. Income tax extension deadline The prior election (and revocation) is disregarded for purposes of making a subsequent election. Income tax extension deadline See Form T (Timber), Forest Activities Schedule, for more information. Income tax extension deadline Form T. Income tax extension deadline   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. Income tax extension deadline Prev  Up  Next   Home   More Online Publications