Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

Irs 2012 Tax Forms 1040

Amend Tax Return Already FiledNeed 2009 Tax ReturnFile 2008 Taxes OnlineTax Act 2012 Returning User2007 Tax FormsH&r Block Federal FreeAmended 1040Amending Your Tax ReturnComplete Tax Free File2009 1040Filing State Taxes For FreeHow To Amend Your Tax ReturnEfile 1040nr Ez 540nr ShortFile Amended Tax Return 2010 OnlineState Tax PrepFile 2009 Taxes Online Free State And Federal2011 Turbo Tax Software1040x Form DownloadTurbotaxTurbotax Free For Military 2012Amendment FormIrs Forms 1040 EzEz 1040 Form1040ez 2010Hand R Block OnlineFiling 2010 Taxes Late Online FreeFree E-file 1040ezFreetaxreturnsState Tax Forms OnlineTax Act 2011 Free1040H&r Block LoginAmended Tax ReturnCan I Efile 2012 Taxes2012 Irs Form 1040File State ReturnHow To File State TaxesFiling 2010 Taxes Late OnlineTurbotax 2011 DownloadFiling Taxes As Unemployed

Irs 2012 Tax Forms 1040

Irs 2012 tax forms 1040 3. Irs 2012 tax forms 1040   Limit on Annual Additions Table of Contents Ministers and church employees. Irs 2012 tax forms 1040 Includible Compensation for Your Most Recent Year of ServiceMost Recent Year of Service Includible Compensation The first component of MAC is the limit on annual additions. Irs 2012 tax forms 1040 This is a limit on the total contributions (elective deferrals, nonelective contributions, and after-tax contributions) that can be made to your 403(b) account. Irs 2012 tax forms 1040 The limit on annual additions generally is the lesser of: $51,000 for 2013 and $52,000 for 2014, or 100% of your includible compensation for your most recent year of service. Irs 2012 tax forms 1040 More than one 403(b) account. Irs 2012 tax forms 1040 If you contributed to more than one 403(b) account, you must combine the contributions made to all 403(b) accounts on your behalf by your employer. Irs 2012 tax forms 1040 Ministers and church employees. Irs 2012 tax forms 1040   If you are a minister or a church employee, you may be able to increase your limit on annual additions or use different rules when figuring your limit on annual additions. Irs 2012 tax forms 1040 For more information, see chapter 5. Irs 2012 tax forms 1040 Participation in a qualified plan. Irs 2012 tax forms 1040 If you participated in a 403(b) plan and a qualified plan, you must combine contributions made to your 403(b) account with contributions to a qualified plan and simplified employee pensions of all corporations, partnerships, and sole proprietorships in which you have more than 50% control. Irs 2012 tax forms 1040 You can use Part I of Worksheet 1 in chapter 9 to figure your limit on annual additions. Irs 2012 tax forms 1040 Includible Compensation for Your Most Recent Year of Service Definition. Irs 2012 tax forms 1040   Generally, includible compensation for your most recent year of service is the amount of taxable wages and benefits you received from the employer that maintained a 403(b) account for your benefit during your most recent year of service. Irs 2012 tax forms 1040 When figuring your includible compensation for your most recent year of service, keep in mind that your most recent year of service may not be the same as your employer's most recent annual work period. Irs 2012 tax forms 1040 This can happen if your tax year is not the same as your employer's annual work period. Irs 2012 tax forms 1040 When figuring includible compensation for your most recent year of service, do not mix compensation or service of one employer with compensation or service of another employer. Irs 2012 tax forms 1040 Most Recent Year of Service Your most recent year of service is your last full year of service, ending on the last day of your tax year that you worked for the employer that maintained a 403(b) account on your behalf. Irs 2012 tax forms 1040 Tax year different from employer's annual work period. Irs 2012 tax forms 1040   If your tax year is not the same as your employer's annual work period, your most recent year of service is made up of parts of at least two of your employer's annual work periods. Irs 2012 tax forms 1040 Example. Irs 2012 tax forms 1040 A professor who reports her income on a calendar-year basis is employed on a full-time basis by a university that operates on an academic year (October through May). Irs 2012 tax forms 1040 To figure her includible compensation for 2013, the professor's most recent year of service is her service from January through May 2013 and from October through December 2013. Irs 2012 tax forms 1040 Figuring Your Most Recent Year of Service To figure your most recent year of service, begin by determining what is a full year of service for your position. Irs 2012 tax forms 1040 A full year of service is equal to full-time employment for your employer's annual work period. Irs 2012 tax forms 1040 After identifying a full year of service, begin counting the service you have provided for your employer starting with the service provided in the current year. Irs 2012 tax forms 1040 Part-time or employed only part of the year. Irs 2012 tax forms 1040   If you are a part-time or a full-time employee who is employed for only part of the year, your most recent year of service is your service this year and your service for as many previous years as is necessary to total 1 full year of service. Irs 2012 tax forms 1040 To determine your most recent year of service, add the following periods of service: Your service during the year for which you are figuring the limit on annual additions, and Your service during your preceding tax years until the total service equals 1 year of service or you have figured all of your service with the employer. Irs 2012 tax forms 1040 Example. Irs 2012 tax forms 1040 You were employed on a full-time basis from July through December 2011 (1/2 year of service), July through December 2012 (1/2 year of service), and October through December 2013 (1/4 year of service). Irs 2012 tax forms 1040 Your most recent year of service for computing your limit on annual additions for 2013 is the total of your service during 2013 (1/4 year of service), your service during 2012 (1/2 year of service), and your service during the months October through December 2011 (1/4 year of service). Irs 2012 tax forms 1040 Not yet employed for 1 year. Irs 2012 tax forms 1040   If, at the close of the year, you have not yet worked for your employer for 1 year (including time you worked for the same employer in all earlier years), use the period of time you have worked for the employer as your most recent year of service. Irs 2012 tax forms 1040 Includible Compensation After identifying your most recent year of service, the next step is to identify the includible compensation associated with that full year of service. Irs 2012 tax forms 1040 Includible compensation is not the same as income included on your tax return. Irs 2012 tax forms 1040 Compensation is a combination of income and benefits received in exchange for services provided to your employer. Irs 2012 tax forms 1040 Generally, includible compensation is the amount of income and benefits: Received from the employer who maintains your 403(b) account, and Must be included in your income. Irs 2012 tax forms 1040 Includible compensation includes the following amounts. Irs 2012 tax forms 1040 Elective deferrals (employer's contributions made on your behalf under a salary reduction agreement). Irs 2012 tax forms 1040 Amounts contributed or deferred by your employer under a section 125 cafeteria plan. Irs 2012 tax forms 1040 Amounts contributed or deferred, at the election of the employee, under an eligible section 457 nonqualified deferred compensation plan (state or local government or tax-exempt organization plan). Irs 2012 tax forms 1040  Note. Irs 2012 tax forms 1040 For information about treating elective deferrals under section 457 plans as Roth contributions, see Publication 575. Irs 2012 tax forms 1040 Wages, salaries, and fees for personal services earned with the employer maintaining your 403(b) account. Irs 2012 tax forms 1040 Income otherwise excluded under the foreign earned income exclusion. Irs 2012 tax forms 1040 Pre-tax contributions (employer's contributions made on your behalf according to your election) to a qualified transportation fringe benefit plan. Irs 2012 tax forms 1040 Includible compensation does not include the following items. Irs 2012 tax forms 1040 Your employer's contributions to your 403(b) account. Irs 2012 tax forms 1040 Compensation earned while your employer was not an eligible employer. Irs 2012 tax forms 1040 Your employer's contributions to a qualified plan that: Are on your behalf, and Are excludable from income. Irs 2012 tax forms 1040 The cost of incidental life insurance. Irs 2012 tax forms 1040 See Cost of Incidental Life Insurance, later. Irs 2012 tax forms 1040 If you are a church employee or a foreign missionary, figure includible compensation using the rules explained in chapter 5. Irs 2012 tax forms 1040 Contributions after retirement. Irs 2012 tax forms 1040   Nonelective contributions may be made for an employee for up to 5 years after retirement. Irs 2012 tax forms 1040 These contributions would be based on includible compensation for the last year of service before retirement. Irs 2012 tax forms 1040 Cost of Incidental Life Insurance Includible compensation does not include the cost of incidental life insurance. Irs 2012 tax forms 1040 If all of your 403(b) accounts invest only in mutual funds, then you have no incidental life insurance. Irs 2012 tax forms 1040 If you have an annuity contract, a portion of the cost of that contract may be for incidental life insurance. Irs 2012 tax forms 1040 If so, the cost of the insurance is taxable to you in the year contributed and is considered part of your basis when distributed. Irs 2012 tax forms 1040 Your employer will include the cost of your insurance as taxable wages in box 1 of Form W-2. Irs 2012 tax forms 1040 Not all annuity contracts include life insurance. Irs 2012 tax forms 1040 Contact your plan administrator to determine if your contract includes incidental life insurance. Irs 2012 tax forms 1040 If it does, you will need to figure the cost of life insurance each year the policy is in effect. Irs 2012 tax forms 1040 Figuring the cost of incidental life insurance. Irs 2012 tax forms 1040 If you have determined that part of the cost of your annuity contract is for an incidental life insurance premium, you will need to determine the amount of the premium and subtract it from your includible compensation. Irs 2012 tax forms 1040 To determine the amount of the life insurance premiums, you will need to know the following information. Irs 2012 tax forms 1040 The value of your life insurance contract, which is the amount payable upon your death. Irs 2012 tax forms 1040 The cash value of your life insurance contract at the end of the tax year. Irs 2012 tax forms 1040 Your age on your birthday nearest the beginning of the policy year. Irs 2012 tax forms 1040 Your current life insurance protection under an ordinary retirement income life insurance policy, which is the amount payable upon your death minus the cash value of the contract at the end of the year. Irs 2012 tax forms 1040 You can use Worksheet A, in chapter 9, to determine the cost of your incidental life insurance. Irs 2012 tax forms 1040 Example. Irs 2012 tax forms 1040 Your new contract provides that your beneficiary will receive $10,000 if you should die before retirement. Irs 2012 tax forms 1040 Your cash value in the contract at the end of the first year is zero. Irs 2012 tax forms 1040 Your current life insurance protection for the first year is $10,000 ($10,000 − 0). Irs 2012 tax forms 1040 The cash value in the contract at the end of year two is $1,000, and the current life insurance protection for the second year is $9,000 ($10,000 – $1,000). Irs 2012 tax forms 1040 The 1-year cost of the protection can be calculated by using Figure 3-1, Table of One-Year Term Premiums for $1,000 Life Insurance Protection . Irs 2012 tax forms 1040 The premium rate is determined based on your age on your birthday nearest the beginning of the policy year. Irs 2012 tax forms 1040 Figure 3-1. Irs 2012 tax forms 1040 Table of One-Year Term Premiums for $1,000 Life Insurance Protection Age Cost   Age Cost   Age Cost 0 $0. Irs 2012 tax forms 1040 70   35 $0. Irs 2012 tax forms 1040 99   70 $20. Irs 2012 tax forms 1040 62 1 0. Irs 2012 tax forms 1040 41   36 1. Irs 2012 tax forms 1040 01   71 22. Irs 2012 tax forms 1040 72 2 0. Irs 2012 tax forms 1040 27   37 1. Irs 2012 tax forms 1040 04   72 25. Irs 2012 tax forms 1040 07 3 0. Irs 2012 tax forms 1040 19   38 1. Irs 2012 tax forms 1040 06   73 27. Irs 2012 tax forms 1040 57 4 0. Irs 2012 tax forms 1040 13   39 1. Irs 2012 tax forms 1040 07   74 30. Irs 2012 tax forms 1040 18 5 0. Irs 2012 tax forms 1040 13   40 1. Irs 2012 tax forms 1040 10   75 33. Irs 2012 tax forms 1040 05 6 0. Irs 2012 tax forms 1040 14   41 1. Irs 2012 tax forms 1040 13   76 36. Irs 2012 tax forms 1040 33 7 0. Irs 2012 tax forms 1040 15   42 1. Irs 2012 tax forms 1040 20   77 40. Irs 2012 tax forms 1040 17 8 0. Irs 2012 tax forms 1040 16   43 1. Irs 2012 tax forms 1040 29   78 44. Irs 2012 tax forms 1040 33 9 0. Irs 2012 tax forms 1040 16   44 1. Irs 2012 tax forms 1040 40   79 49. Irs 2012 tax forms 1040 23 10 0. Irs 2012 tax forms 1040 16   45 1. Irs 2012 tax forms 1040 53   80 54. Irs 2012 tax forms 1040 56 11 0. Irs 2012 tax forms 1040 19   46 1. Irs 2012 tax forms 1040 67   81 60. Irs 2012 tax forms 1040 51 12 0. Irs 2012 tax forms 1040 24   47 1. Irs 2012 tax forms 1040 83   82 66. Irs 2012 tax forms 1040 74 13 0. Irs 2012 tax forms 1040 28   48 1. Irs 2012 tax forms 1040 98   83 73. Irs 2012 tax forms 1040 07 14 0. Irs 2012 tax forms 1040 33   49 2. Irs 2012 tax forms 1040 13   84 80. Irs 2012 tax forms 1040 35 15 0. Irs 2012 tax forms 1040 38   50 2. Irs 2012 tax forms 1040 30   85 88. Irs 2012 tax forms 1040 76 16 0. Irs 2012 tax forms 1040 52   51 2. Irs 2012 tax forms 1040 52   86 99. Irs 2012 tax forms 1040 16 17 0. Irs 2012 tax forms 1040 57   52 2. Irs 2012 tax forms 1040 81   87 110. Irs 2012 tax forms 1040 40 18 0. Irs 2012 tax forms 1040 59   53 3. Irs 2012 tax forms 1040 20   88 121. Irs 2012 tax forms 1040 85 19 0. Irs 2012 tax forms 1040 61   54 3. Irs 2012 tax forms 1040 65   89 133. Irs 2012 tax forms 1040 40 20 0. Irs 2012 tax forms 1040 62   55 4. Irs 2012 tax forms 1040 15   90 144. Irs 2012 tax forms 1040 30 21 0. Irs 2012 tax forms 1040 62   56 4. Irs 2012 tax forms 1040 68   91 155. Irs 2012 tax forms 1040 80 22 0. Irs 2012 tax forms 1040 64   57 5. Irs 2012 tax forms 1040 20   92 168. Irs 2012 tax forms 1040 75 23 0. Irs 2012 tax forms 1040 66   58 5. Irs 2012 tax forms 1040 66   93 186. Irs 2012 tax forms 1040 44 24 0. Irs 2012 tax forms 1040 68   59 6. Irs 2012 tax forms 1040 06   94 206. Irs 2012 tax forms 1040 70 25 0. Irs 2012 tax forms 1040 71   60 6. Irs 2012 tax forms 1040 51   95 228. Irs 2012 tax forms 1040 35 26 0. Irs 2012 tax forms 1040 73   61 7. Irs 2012 tax forms 1040 11   96 250. Irs 2012 tax forms 1040 01 27 0. Irs 2012 tax forms 1040 76   62 7. Irs 2012 tax forms 1040 96   97 265. Irs 2012 tax forms 1040 09 28 0. Irs 2012 tax forms 1040 80   63 9. Irs 2012 tax forms 1040 08   98 270. Irs 2012 tax forms 1040 11 29 0. Irs 2012 tax forms 1040 83   64 10. Irs 2012 tax forms 1040 41   99 281. Irs 2012 tax forms 1040 05 30 0. Irs 2012 tax forms 1040 87   65 11. Irs 2012 tax forms 1040 90       31 0. Irs 2012 tax forms 1040 90   66 13. Irs 2012 tax forms 1040 51       32 0. Irs 2012 tax forms 1040 93   67 15. Irs 2012 tax forms 1040 20       33 0. Irs 2012 tax forms 1040 96   68 16. Irs 2012 tax forms 1040 92       34 0. Irs 2012 tax forms 1040 98   69 18. Irs 2012 tax forms 1040 70                       If the current published premium rates per $1,000 of insurance protection charged by an insurer for individual 1-year term life insurance premiums available to all standard risks are lower than those in the preceding table, you can use the lower rates for figuring the cost of insurance in connection with individual policies issued by the same insurer. Irs 2012 tax forms 1040 Example 1. Irs 2012 tax forms 1040 Lynne Green, age 44, and her employer enter into a 403(b) plan that will provide her with a $500 a month annuity upon retirement at age 65. Irs 2012 tax forms 1040 The agreement also provides that if she should die before retirement, her beneficiary will receive the greater of $20,000 or the cash surrender value in the life insurance contract. Irs 2012 tax forms 1040 Using the facts presented we can determine the cost of Lynne's life insurance protection as shown in Table 3-1. Irs 2012 tax forms 1040 Lynne's employer has included $28 for the cost of the life insurance protection in her current year's income. Irs 2012 tax forms 1040 When figuring her includible compensation for this year, Lynne will subtract $28. Irs 2012 tax forms 1040 Table 3-1. Irs 2012 tax forms 1040 Worksheet A. Irs 2012 tax forms 1040 Cost of Incidental Life Insurance Note. Irs 2012 tax forms 1040 Use this worksheet to figure the cost of incidental life insurance included in your annuity contract. Irs 2012 tax forms 1040 This amount will be used to figure includible compensation for your most recent year of service. Irs 2012 tax forms 1040 1. Irs 2012 tax forms 1040 Enter the value of the contract (amount payable upon your death) 1. Irs 2012 tax forms 1040 $20,000. Irs 2012 tax forms 1040 00 2. Irs 2012 tax forms 1040 Enter the cash value in the contract at the end of the year 2. Irs 2012 tax forms 1040 0. Irs 2012 tax forms 1040 00 3. Irs 2012 tax forms 1040 Subtract line 2 from line 1. Irs 2012 tax forms 1040 This is the value of your current life insurance protection 3. Irs 2012 tax forms 1040 $20,000. Irs 2012 tax forms 1040 00 4. Irs 2012 tax forms 1040 Enter your age on your birthday nearest the beginning of the policy year 4. Irs 2012 tax forms 1040 44 5. Irs 2012 tax forms 1040 Enter the 1-year term premium for $1,000 of life insurance based on your age. Irs 2012 tax forms 1040 (From Figure 3-1) 5. Irs 2012 tax forms 1040 $1. Irs 2012 tax forms 1040 40 6. Irs 2012 tax forms 1040 Divide line 3 by $1,000 6. Irs 2012 tax forms 1040 20 7. Irs 2012 tax forms 1040 Multiply line 6 by line 5. Irs 2012 tax forms 1040 This is the cost of your incidental life insurance 7. Irs 2012 tax forms 1040 $28. Irs 2012 tax forms 1040 00 Example 2. Irs 2012 tax forms 1040 Lynne's cash value in the contract at the end of the second year is $1,000. Irs 2012 tax forms 1040 In year two, the cost of Lynne's life insurance is calculated as shown in Table 3-2. Irs 2012 tax forms 1040 In year two, Lynne's employer will include $29. Irs 2012 tax forms 1040 07 in her current year's income. Irs 2012 tax forms 1040 Lynne will subtract this amount when figuring her includible compensation. Irs 2012 tax forms 1040 Table 3-2. Irs 2012 tax forms 1040 Worksheet A. Irs 2012 tax forms 1040 Cost of Incidental Life Insurance Note. Irs 2012 tax forms 1040 Use this worksheet to figure the cost of incidental life insurance included in your annuity contract. Irs 2012 tax forms 1040 This amount will be used to figure includible compensation for your most recent year of service. Irs 2012 tax forms 1040 1. Irs 2012 tax forms 1040 Enter the value of the contract (amount payable upon your death) 1. Irs 2012 tax forms 1040 $20,000. Irs 2012 tax forms 1040 00 2. Irs 2012 tax forms 1040 Enter the cash value in the contract at the end of the year 2. Irs 2012 tax forms 1040 $1,000. Irs 2012 tax forms 1040 00 3. Irs 2012 tax forms 1040 Subtract line 2 from line 1. Irs 2012 tax forms 1040 This is the value of your current life insurance protection 3. Irs 2012 tax forms 1040 $19,000. Irs 2012 tax forms 1040 00 4. Irs 2012 tax forms 1040 Enter your age on your birthday nearest the beginning of the policy year 4. Irs 2012 tax forms 1040 45 5. Irs 2012 tax forms 1040 Enter the 1-year term premium for $1,000 of life insurance based on your age. Irs 2012 tax forms 1040 (From Figure 3-1) 5. Irs 2012 tax forms 1040 $1. Irs 2012 tax forms 1040 53 6. Irs 2012 tax forms 1040 Divide line 3 by $1,000 6. Irs 2012 tax forms 1040 19 7. Irs 2012 tax forms 1040 Multiply line 6 by line 5. Irs 2012 tax forms 1040 This is the cost of your incidental life insurance 7. Irs 2012 tax forms 1040 $29. Irs 2012 tax forms 1040 07 Figuring Includible Compensation for Your Most Recent Year of Service You can use Worksheet B in chapter 9 to determine your includible compensation for your most recent year of service. Irs 2012 tax forms 1040 Example. Irs 2012 tax forms 1040 Floyd has been periodically working full-time for a local hospital since September 2011. Irs 2012 tax forms 1040 He needs to figure his limit on annual additions for 2014. Irs 2012 tax forms 1040 The hospital's normal annual work period for employees in Floyd's general type of work runs from January to December. Irs 2012 tax forms 1040 During the periods that Floyd was employed with the hospital, the hospital has always been eligible to provide a 403(b) plan to employees. Irs 2012 tax forms 1040 Additionally, the hospital has never provided the employees with a 457 deferred compensation plan, a transportation fringe benefit plan, or a cafeteria plan. Irs 2012 tax forms 1040 Floyd has never worked abroad and there is no life insurance provided under the plan. Irs 2012 tax forms 1040 Table 3-3 shows the service Floyd provided to his employer, his compensation for the periods worked, his elective deferrals, and his taxable wages. Irs 2012 tax forms 1040 Table 3-3. Irs 2012 tax forms 1040 Floyd's Compensation Note. Irs 2012 tax forms 1040 This table shows information Floyd will use to figure includible compensation for his most recent year of service. Irs 2012 tax forms 1040   Year Years of Service Taxable Wages Elective Deferrals 2014 6/12 of  a year $42,000 $2,000 2013 4/12 of  a year $16,000 $1,650 2012 4/12 of  a year $16,000 $1,650 Before Floyd can figure his limit on annual additions, he must figure includible compensation for his most recent year of service. Irs 2012 tax forms 1040 Because Floyd is not planning to work the entire 2014 year, his most recent year of service will include the time he is planning to work in 2014 plus time he worked in the preceding 3 years until the time he worked for the hospital totals 1 year. Irs 2012 tax forms 1040 If the total time he worked is less than 1 year, Floyd will treat it as if it were 1 year. Irs 2012 tax forms 1040 He figures his most recent year of service shown in the following list. Irs 2012 tax forms 1040 Time he will work in 2014 is 6/12 of a year. Irs 2012 tax forms 1040 Time worked in 2013 is 4/12 of a year. Irs 2012 tax forms 1040 All of this time will be used to determine Floyd's most recent year of service. Irs 2012 tax forms 1040 Time worked in 2012 is 4/12 of a year. Irs 2012 tax forms 1040 Floyd only needs 2 months of the 4 months he worked in 2012 to have enough time to total 1 full year. Irs 2012 tax forms 1040 Because he needs only one-half of the actual time he worked, Floyd will use only one-half of his income earned during that period to calculate wages that will be used in figuring his includible compensation. Irs 2012 tax forms 1040 Using the information provided in Table 3-3, wages for Floyd's most recent year of service are $66,000 ($42,000 + $16,000 + $8,000). Irs 2012 tax forms 1040 His includible compensation for his most recent year of service is figured as shown in Table 3-4. Irs 2012 tax forms 1040 After figuring his includible compensation, Floyd determines his limit on annual additions for 2014 to be $52,000, the lesser of his includible compensation, $70,475 (Table 3-4), and the maximum amount of $52,000. Irs 2012 tax forms 1040 Table 3-4. Irs 2012 tax forms 1040 Worksheet B. Irs 2012 tax forms 1040 Includible Compensation for Your Most Recent Year of Service1 Note. Irs 2012 tax forms 1040 Use this worksheet to figure includible compensation for your most recent year of service. Irs 2012 tax forms 1040 1. Irs 2012 tax forms 1040 Enter your includible wages from the employer maintaining your 403(b) account for your most recent year of service 1. Irs 2012 tax forms 1040 $66,000 2. Irs 2012 tax forms 1040 Enter elective deferrals excluded from your gross income for your most recent year of service2 2. Irs 2012 tax forms 1040 4,4753 3. Irs 2012 tax forms 1040 Enter amounts contributed or deferred by your employer under a cafeteria plan for your most recent year of service 3. Irs 2012 tax forms 1040 -0- 4. Irs 2012 tax forms 1040 Enter amounts contributed or deferred by your employer according to your election to your 457 account (a nonqualified plan of a state or local government, or of a tax-exempt organization) for your most recent year of service 4. Irs 2012 tax forms 1040 -0- 5. Irs 2012 tax forms 1040 Enter pre-tax contributions (employer's contributions made on your behalf according to your election) to a qualified transportation fringe benefit plan for your most recent year of service 5. Irs 2012 tax forms 1040 -0- 6. Irs 2012 tax forms 1040 Enter your foreign earned income exclusion for your most recent year of service 6. Irs 2012 tax forms 1040 -0- 7. Irs 2012 tax forms 1040 Add lines 1, 2, 3, 4, 5, and 6 7. Irs 2012 tax forms 1040 70,475 8. Irs 2012 tax forms 1040 Enter the cost of incidental life insurance that is part of your annuity contract for your most recent year of service 8. Irs 2012 tax forms 1040 -0- 9. Irs 2012 tax forms 1040 Enter compensation that was both: Earned during your most recent year of service, and Earned while your employer was not qualified to maintain a 403(b) plan 9. Irs 2012 tax forms 1040 -0- 10. Irs 2012 tax forms 1040 Add lines 8 and 9 10. Irs 2012 tax forms 1040 -0- 11. Irs 2012 tax forms 1040 Subtract line 10 from line 7. Irs 2012 tax forms 1040 This is your includible compensation for your most recent year of service 11. Irs 2012 tax forms 1040 70,475 1Use estimated amounts if figuring includible compensation before the end of the year. Irs 2012 tax forms 1040 2Elective deferrals made to a designated Roth account are not excluded from your gross income and should not be included on this line. Irs 2012 tax forms 1040  3$4,475 ($2,000 + $1,650 + $825). Irs 2012 tax forms 1040 Prev  Up  Next   Home   More Online Publications
Español

Indian Affairs

Indian Affairs provides services to approximately 1.9 million American Indians and Alaska Natives.

Contact the Agency or Department

Website: Indian Affairs

Contact In-Person: Regional Offices

Address: MS-4141-MIB
1849 C Street, NW

Washington, DC 20240

Phone Number: (202) 208-3710

The Irs 2012 Tax Forms 1040

Irs 2012 tax forms 1040 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. Irs 2012 tax forms 1040 Property not disposed of or abandoned. Irs 2012 tax forms 1040 Special rule for normal retirements from item accounts. Irs 2012 tax forms 1040 Abandoned property. Irs 2012 tax forms 1040 Single item accounts. Irs 2012 tax forms 1040 Multiple property account. Irs 2012 tax forms 1040 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. Irs 2012 tax forms 1040 If your property qualified for MACRS, you must depreciate it under MACRS. Irs 2012 tax forms 1040 See Publication 946. Irs 2012 tax forms 1040 However, you cannot use MACRS for certain property because of special rules that exclude it from MACRS. Irs 2012 tax forms 1040 Also, you can elect to exclude certain property from being depreciated under MACRS. Irs 2012 tax forms 1040 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. Irs 2012 tax forms 1040 Intangible property. Irs 2012 tax forms 1040   You cannot depreciate intangible property under ACRS or MACRS. Irs 2012 tax forms 1040 You depreciate intangible property using any other reasonable method, usually, the straight line method. Irs 2012 tax forms 1040 Note. Irs 2012 tax forms 1040 The cost of certain intangible property that you acquire after August 10, 1993, must be amortized over a 15-year period. Irs 2012 tax forms 1040 For more information, see chapter 12 of Publication 535. Irs 2012 tax forms 1040 Public utility property. Irs 2012 tax forms 1040   The law excludes from MACRS any public utility property for which the taxpayer does not use a normalization method of accounting. Irs 2012 tax forms 1040 This type of property is subject to depreciation under a special rule. Irs 2012 tax forms 1040 Videocassettes. Irs 2012 tax forms 1040   If you are in the videocassette rental business, you can depreciate those videocassettes purchased for rental. Irs 2012 tax forms 1040 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. Irs 2012 tax forms 1040 The straight line method, salvage value, and useful life are discussed later under Methods To Use. Irs 2012 tax forms 1040 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. Irs 2012 tax forms 1040 How To Figure the Deduction Two other reasonable methods can be used to figure your deduction for property not covered under ACRS or MACRS. Irs 2012 tax forms 1040 These methods are straight line and declining balance. Irs 2012 tax forms 1040 To figure depreciation using these methods, you must generally determine three things about the property you intend to depreciate. Irs 2012 tax forms 1040 They are: The basis, The useful life, and The estimated salvage value at the end of its useful life. Irs 2012 tax forms 1040 The amount of the deduction in any year also depends on which method of depreciation you choose. Irs 2012 tax forms 1040 Basis To deduct the proper amount of depreciation each year, first determine your basis in the property you intend to depreciate. Irs 2012 tax forms 1040 The basis used for figuring depreciation is the same as the basis that would be used for figuring the gain on a sale. Irs 2012 tax forms 1040 Your original basis is usually the purchase price. Irs 2012 tax forms 1040 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. Irs 2012 tax forms 1040 Adjusted basis. Irs 2012 tax forms 1040   Events will often change the basis of property. Irs 2012 tax forms 1040 When this occurs, the changed basis is called the adjusted basis. Irs 2012 tax forms 1040 Some events, such as improvements you make, increase basis. Irs 2012 tax forms 1040 Events such as deducting casualty losses and depreciation decrease basis. Irs 2012 tax forms 1040 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. Irs 2012 tax forms 1040   Publication 551 explains how to figure basis for property acquired in different ways. Irs 2012 tax forms 1040 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. Irs 2012 tax forms 1040 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. Irs 2012 tax forms 1040 It is the length of time over which you will make yearly depreciation deductions of your basis in the property. Irs 2012 tax forms 1040 It is how long it will continue to be useful to you, not how long the property will last. Irs 2012 tax forms 1040 Many things affect the useful life of property, such as: Frequency of use, Age when acquired, Your repair policy, and Environmental conditions. Irs 2012 tax forms 1040 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. Irs 2012 tax forms 1040 Consider all these factors before you arrive at a useful life for your property. Irs 2012 tax forms 1040 The useful life of the same type of property varies from user to user. Irs 2012 tax forms 1040 When you determine the useful life of your property, keep in mind your own experience with similar property. Irs 2012 tax forms 1040 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. Irs 2012 tax forms 1040 Change in useful life. Irs 2012 tax forms 1040   You base your estimate of useful life on certain facts. Irs 2012 tax forms 1040 If these facts change significantly, you can adjust your estimate of the remaining useful life. Irs 2012 tax forms 1040 However, you redetermine the estimated useful life only when the change is substantial and there is a clear reason for making the change. Irs 2012 tax forms 1040 Salvage Value It is important for you to accurately determine the correct salvage value of the property you want to depreciate. Irs 2012 tax forms 1040 You generally cannot depreciate property below a reasonable salvage value. Irs 2012 tax forms 1040 Determining salvage value. Irs 2012 tax forms 1040   Salvage value is the estimated value of property at the end of its useful life. Irs 2012 tax forms 1040 It is what you expect to get for the property if you sell it after you can no longer use it productively. Irs 2012 tax forms 1040 You must estimate the salvage value of a piece of property when you first acquire it. Irs 2012 tax forms 1040   Salvage value is affected both by how you use the property and how long you use it. Irs 2012 tax forms 1040 If it is your policy to dispose of property that is still in good operating condition, the salvage value can be relatively large. Irs 2012 tax forms 1040 However, if your policy is to use property until it is no longer usable, its salvage value can be its junk value. Irs 2012 tax forms 1040 Changing salvage value. Irs 2012 tax forms 1040   Once you determine the salvage value for property, you should not change it merely because prices have changed. Irs 2012 tax forms 1040 However, if you redetermine the useful life of property, as discussed earlier under Change in useful life, you can also redetermine the salvage value. Irs 2012 tax forms 1040 When you redetermine the salvage value, take into account the facts that exist at the time. Irs 2012 tax forms 1040 Net salvage. Irs 2012 tax forms 1040   Net salvage is the salvage value of property minus what it costs to remove it when you dispose of it. Irs 2012 tax forms 1040 You can choose either salvage value or net salvage when you figure depreciation. Irs 2012 tax forms 1040 You must consistently use the one you choose and the treatment of the costs of removal must be consistent with the practice adopted. Irs 2012 tax forms 1040 However, if the cost to remove the property is more than the estimated salvage value, then net salvage is zero. Irs 2012 tax forms 1040 Your salvage value can never be less than zero. Irs 2012 tax forms 1040 Ten percent rule. Irs 2012 tax forms 1040   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. Irs 2012 tax forms 1040 You can subtract from your estimate of salvage value an amount equal to 10% of your basis in the property. Irs 2012 tax forms 1040 If salvage value is less than 10% of basis, you can ignore salvage value when you figure depreciation. Irs 2012 tax forms 1040 Methods To Use Two methods of depreciation are the straight line and declining balance methods. Irs 2012 tax forms 1040 If ACRS or MACRS does not apply, you can use one of these methods. Irs 2012 tax forms 1040 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. Irs 2012 tax forms 1040 Straight Line Method Before 1981, you could use any reasonable method for every kind of depreciable property. Irs 2012 tax forms 1040 One of these methods was the straight line method. Irs 2012 tax forms 1040 This method was also used for intangible property. Irs 2012 tax forms 1040 It lets you deduct the same amount of depreciation each year. Irs 2012 tax forms 1040 To figure your deduction, determine the adjusted basis of your property, its salvage value, and its estimated useful life. Irs 2012 tax forms 1040 Subtract the salvage value, if any, from the adjusted basis. Irs 2012 tax forms 1040 The balance is the total amount of depreciation you can take over the useful life of the property. Irs 2012 tax forms 1040 Divide the balance by the number of years remaining in the useful life. Irs 2012 tax forms 1040 This gives you the amount of your yearly depreciation deduction. Irs 2012 tax forms 1040 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. Irs 2012 tax forms 1040 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. Irs 2012 tax forms 1040 Example. Irs 2012 tax forms 1040 In April 1994, Frank bought a franchise for $5,600. Irs 2012 tax forms 1040 It expires in 10 years. Irs 2012 tax forms 1040 This property is intangible property that cannot be depreciated under MACRS. Irs 2012 tax forms 1040 Frank depreciates the franchise under the straight line method, using a 10-year useful life and no salvage value. Irs 2012 tax forms 1040 He takes the $5,600 basis and divides that amount by 10 years ($5,600 ÷ 10 = $560, a full year's use). Irs 2012 tax forms 1040 He must prorate the $560 for his 9 months of use in 1994. Irs 2012 tax forms 1040 This gives him a deduction of $420 ($560 ÷ 9/12). Irs 2012 tax forms 1040 In 1995, Frank can deduct $560 for the full year. Irs 2012 tax forms 1040 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. Irs 2012 tax forms 1040 The rate cannot be more than twice the straight line rate. Irs 2012 tax forms 1040 Rate of depreciation. Irs 2012 tax forms 1040   Under this method, you must determine your declining balance rate of depreciation. Irs 2012 tax forms 1040 The initial step is to: Divide the number 1 by the useful life of your property to get a straight line rate. Irs 2012 tax forms 1040 (For example, if property has a useful life of 5 years, its normal straight line rate of depreciation is ⅕, or 20%. Irs 2012 tax forms 1040 ) Multiply this straight line rate by a number that is more than 1 but not more than 2 to determine the declining balance rate. Irs 2012 tax forms 1040 Unless there is a change in the useful life during the time you depreciate the property, the rate of depreciation generally will not change. Irs 2012 tax forms 1040 Depreciation deductions. Irs 2012 tax forms 1040   After you determine the rate of depreciation, multiply the adjusted basis of the property by it. Irs 2012 tax forms 1040 This gives you the amount of your deduction. Irs 2012 tax forms 1040 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%). Irs 2012 tax forms 1040 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. Irs 2012 tax forms 1040 Subtract the previous year's depreciation from your basis ($10,000 - $2,000 = $8,000). Irs 2012 tax forms 1040 Multiply this amount by the rate of depreciation ($8,000 ÷ 20% = $1,600). Irs 2012 tax forms 1040 Your depreciation deduction for the second year is $1,600. Irs 2012 tax forms 1040   As you can see from this example, your adjusted basis in the property gets smaller each year. Irs 2012 tax forms 1040 Also, under this method, deductions are larger in the earlier years and smaller in the later years. Irs 2012 tax forms 1040 You can make a change to the straight line method without consent. Irs 2012 tax forms 1040 Salvage value. Irs 2012 tax forms 1040   Do not subtract salvage value when you figure your yearly depreciation deductions under the declining balance method. Irs 2012 tax forms 1040 However, you cannot depreciate the property below its reasonable salvage value. Irs 2012 tax forms 1040 Determine salvage value using the rules discussed earlier, including the special 10% rule. Irs 2012 tax forms 1040 Example. Irs 2012 tax forms 1040 If your adjusted basis has been decreased to $1,000 and the rate of depreciation is 20%, your depreciation deduction should be $200. Irs 2012 tax forms 1040 But if your estimate of salvage value was $900, you can only deduct $100. Irs 2012 tax forms 1040 This is because $100 is the amount that would lower your adjusted basis to equal salvage value. Irs 2012 tax forms 1040 Income Forecast Method The income forecast method requires income projections for each videocassette or group of videocassettes. Irs 2012 tax forms 1040 You can group the videocassettes by title for making this projection. Irs 2012 tax forms 1040 You determine the depreciation by applying a fraction to the cost less salvage value of the cassette. Irs 2012 tax forms 1040 The numerator is the income from the videocassette for the tax year and the denominator is the total projected income for the cassette. Irs 2012 tax forms 1040 For more information on the income forecast method, see Revenue Ruling 60-358 in Cumulative Bulletin 1960, Volume 2, on page 68. Irs 2012 tax forms 1040 How To Change Methods In some cases, you may change your method of depreciation for property depreciated under a reasonable method. Irs 2012 tax forms 1040 If you change your method of depreciation, it is generally a change in your method of accounting. Irs 2012 tax forms 1040 You must get IRS consent before making the change. Irs 2012 tax forms 1040 However, you do not need permission for certain changes in your method of depreciation. Irs 2012 tax forms 1040 The rules discussed in this section do not apply to property depreciated under ACRS or MACRS. Irs 2012 tax forms 1040 For information on ACRS elections,see Revocation of election, in chapter 1 under Alternate ACRS Method. Irs 2012 tax forms 1040 Change to the straight line method. Irs 2012 tax forms 1040   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. Irs 2012 tax forms 1040 However, if you have a written agreement with the IRS that prohibits a change, you must first get IRS permission. Irs 2012 tax forms 1040 When the change is made, figure depreciation based on your adjusted basis in the property at that time. Irs 2012 tax forms 1040 Your adjusted basis takes into account all previous depreciation deductions. Irs 2012 tax forms 1040 Use the estimated remaining useful life of your property at the time of change and its estimated salvage value. Irs 2012 tax forms 1040   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. Irs 2012 tax forms 1040 You cannot make the change on an amended return filed after the due date of the original return (including extensions). Irs 2012 tax forms 1040   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. Irs 2012 tax forms 1040   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. Irs 2012 tax forms 1040 Changes that require permission. Irs 2012 tax forms 1040   For most other changes in method of depreciation, you must get permission from the IRS. Irs 2012 tax forms 1040 To request a change in method of depreciation, file Form 3115. Irs 2012 tax forms 1040 File the application within the first 180 days of the tax year the change is to become effective. Irs 2012 tax forms 1040 In most cases, there is a user fee that must accompany Form 3115. Irs 2012 tax forms 1040 See the instructions for Form 3115 to determine if a fee is required. Irs 2012 tax forms 1040 Changes granted automatically. Irs 2012 tax forms 1040   The IRS automatically approves certain changes of a method of depreciation. Irs 2012 tax forms 1040 But, you must file Form 3115 for these automatic changes. Irs 2012 tax forms 1040   However, IRS can deny permission if Form 3115 is not filed on time. Irs 2012 tax forms 1040 For more information on automatic changes, see Revenue Procedure 74-11, 1974-1 C. Irs 2012 tax forms 1040 B. Irs 2012 tax forms 1040 420. Irs 2012 tax forms 1040 Changes for which approval is not automatic. Irs 2012 tax forms 1040   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. Irs 2012 tax forms 1040   You must request and receive permission for these changes. Irs 2012 tax forms 1040 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. Irs 2012 tax forms 1040 Change from an improper method. Irs 2012 tax forms 1040   If the IRS disallows the method you are using, you do not need permission to change to a proper method. Irs 2012 tax forms 1040 You can adopt the straight line method, or any other method that would have been permitted if you had used it from the beginning. Irs 2012 tax forms 1040 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. Irs 2012 tax forms 1040 However, you must file the amended return before the filing date for the next tax year. Irs 2012 tax forms 1040 Dispositions Retirement is the permanent withdrawal of depreciable property from use in your trade or business or for the production of income. Irs 2012 tax forms 1040 You can do this by selling, exchanging, or abandoning the item of property. Irs 2012 tax forms 1040 You can also withdraw it from use without disposing of it. Irs 2012 tax forms 1040 For example, you could place it in a supplies or scrap account. Irs 2012 tax forms 1040 Retirements can be either normal or abnormal depending on all facts and circumstances. Irs 2012 tax forms 1040 The rules discussed next do not apply to MACRS and ACRS property. Irs 2012 tax forms 1040 Normal retirement. Irs 2012 tax forms 1040   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. Irs 2012 tax forms 1040 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. Irs 2012 tax forms 1040 Abnormal retirement. Irs 2012 tax forms 1040   A retirement can be abnormal if you withdraw the property early or under other circumstances. Irs 2012 tax forms 1040 For example, if the property is damaged by a fire or suddenly becomes obsolete and is now useless. Irs 2012 tax forms 1040 Gain or loss on retirement. Irs 2012 tax forms 1040   There are special rules for figuring the gain or loss on retirement of property. Irs 2012 tax forms 1040 The gain or loss will depend on several factors. Irs 2012 tax forms 1040 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. Irs 2012 tax forms 1040 A single property account contains only one item of property. Irs 2012 tax forms 1040 A multiple property account is one in which several items have been combined with a single rate of depreciation assigned to the entire account. Irs 2012 tax forms 1040 Sale or exchange. Irs 2012 tax forms 1040   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. Irs 2012 tax forms 1040 See Publication 544. Irs 2012 tax forms 1040 Property not disposed of or abandoned. Irs 2012 tax forms 1040   If property is retired permanently, but not disposed of or physically abandoned, you do not recognize gain. Irs 2012 tax forms 1040 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. Irs 2012 tax forms 1040 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. Irs 2012 tax forms 1040   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. Irs 2012 tax forms 1040 Special rule for normal retirements from item accounts. Irs 2012 tax forms 1040   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. Irs 2012 tax forms 1040 However, you cannot deduct losses if you use the average useful life to figure depreciation and they have a wide range of useful lives. Irs 2012 tax forms 1040   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. Irs 2012 tax forms 1040 Abandoned property. Irs 2012 tax forms 1040   If you physically abandon property, you can deduct as a loss the adjusted basis of the property at the time of its abandonment. Irs 2012 tax forms 1040 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. Irs 2012 tax forms 1040 Basis of property retired. Irs 2012 tax forms 1040   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. Irs 2012 tax forms 1040 Single item accounts. Irs 2012 tax forms 1040   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. Irs 2012 tax forms 1040 This is generally the cost or other basis of the item of property less depreciation. Irs 2012 tax forms 1040 See Publication 551. Irs 2012 tax forms 1040 Multiple property account. Irs 2012 tax forms 1040   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. Irs 2012 tax forms 1040 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. Irs 2012 tax forms 1040   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. Irs 2012 tax forms 1040 The method of depreciation used for the multiple property account is used. Irs 2012 tax forms 1040 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. Irs 2012 tax forms 1040 Prev  Up  Next   Home   More Online Publications