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Irs Tax Forms 2007

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Irs Tax Forms 2007

Irs tax forms 2007 6. Irs tax forms 2007   How To Figure Cost of Goods Sold Table of Contents Introduction Figuring Cost of Goods Sold on Schedule C, Lines 35 Through 42Line 35 Inventory at Beginning of Year Line 36 Purchases Less Cost of Items Withdrawn for Personal Use Line 37 Cost of Labor Line 38 Materials and Supplies Line 39 Other Costs Line 40 Add Lines 35 through 39 Line 41 Inventory at End of Year Line 42 Cost of Goods Sold Introduction If you make or buy goods to sell, you can deduct the cost of goods sold from your gross receipts on Schedule C. Irs tax forms 2007 However, to determine these costs, you must value your inventory at the beginning and end of each tax year. Irs tax forms 2007 This chapter applies to you if you are a manufacturer, wholesaler, or retailer or if you are engaged in any business that makes, buys, or sells goods to produce income. Irs tax forms 2007 This chapter does not apply to a personal service business, such as the business of a doctor, lawyer, carpenter, or painter. Irs tax forms 2007 However, if you work in a personal service business and also sell or charge for the materials and supplies normally used in your business, this chapter applies to you. Irs tax forms 2007 If you must account for an inventory in your business, you must generally use an accrual method of accounting for your purchases and sales. Irs tax forms 2007 For more information, see chapter 2. Irs tax forms 2007 Figuring Cost of Goods Sold on Schedule C, Lines 35 Through 42 Figure your cost of goods sold by filling out lines 35 through 42 of Schedule C. Irs tax forms 2007 These lines are reproduced below and are explained in the discussion that follows. Irs tax forms 2007 35 Inventory at beginning of year. Irs tax forms 2007 If different from last year's closing inventory, attach explanation   36 Purchases less cost of items withdrawn for personal use   37 Cost of labor. Irs tax forms 2007 Do not include any amounts paid to yourself   38 Materials and supplies   39 Other costs   40 Add lines 35 through 39   41 Inventory at end of year   42 Cost of goods sold. Irs tax forms 2007 Subtract line 41 from line 40. Irs tax forms 2007  Enter the result here and on line 4   Line 35 Inventory at Beginning of Year If you are a merchant, beginning inventory is the cost of merchandise on hand at the beginning of the year that you will sell to customers. Irs tax forms 2007 If you are a manufacturer or producer, it includes the total cost of raw materials, work in process, finished goods, and materials and supplies used in manufacturing the goods (see Inventories in chapter 2). Irs tax forms 2007 Opening inventory usually will be identical to the closing inventory of the year before. Irs tax forms 2007 You must explain any difference in a schedule attached to your return. Irs tax forms 2007 Donation of inventory. Irs tax forms 2007   If you contribute inventory (property that you sell in the course of your business), the amount you can claim as a contribution deduction is the smaller of its fair market value on the day you contributed it or its basis. Irs tax forms 2007 The basis of donated inventory is any cost incurred for the inventory in an earlier year that you would otherwise include in your opening inventory for the year of the contribution. Irs tax forms 2007 You must remove the amount of your contribution deduction from your opening inventory. Irs tax forms 2007 It is not part of the cost of goods sold. Irs tax forms 2007   If the cost of donated inventory is not included in your opening inventory, the inventory's basis is zero and you cannot claim a charitable contribution deduction. Irs tax forms 2007 Treat the inventory's cost as you would ordinarily treat it under your method of accounting. Irs tax forms 2007 For example, include the purchase price of inventory bought and donated in the same year in the cost of goods sold for that year. Irs tax forms 2007   A special rule may apply to certain donations of food inventory. Irs tax forms 2007 See Publication 526, Charitable Contributions. Irs tax forms 2007 Example 1. Irs tax forms 2007 You are a calendar year taxpayer who uses an accrual method of accounting. Irs tax forms 2007 In 2013, you contributed property from inventory to a church. Irs tax forms 2007 It had a fair market value of $600. Irs tax forms 2007 The closing inventory at the end of 2012 properly included $400 of costs due to the acquisition of the property, and in 2012, you properly deducted $50 of administrative and other expenses attributable to the property as business expenses. Irs tax forms 2007 The charitable contribution allowed for 2013 is $400 ($600 − $200). Irs tax forms 2007 The $200 is the amount that would be ordinary income if you had sold the contributed inventory at fair market value on the date of the gift. Irs tax forms 2007 The cost of goods sold you use in determining gross income for 2013 must not include the $400. Irs tax forms 2007 You remove that amount from opening inventory for 2013. Irs tax forms 2007 Example 2. Irs tax forms 2007 If, in Example 1, you acquired the contributed property in 2013 at a cost of $400, you would include the $400 cost of the property in figuring the cost of goods sold for 2013 and deduct the $50 of administrative and other expenses attributable to the property for that year. Irs tax forms 2007 You would not be allowed any charitable contribution deduction for the contributed property. Irs tax forms 2007 Line 36 Purchases Less Cost of Items Withdrawn for Personal Use If you are a merchant, use the cost of all merchandise you bought for sale. Irs tax forms 2007 If you are a manufacturer or producer, this includes the cost of all raw materials or parts purchased for manufacture into a finished product. Irs tax forms 2007 Trade discounts. Irs tax forms 2007   The differences between the stated prices of articles and the actual prices you pay for them are called trade discounts. Irs tax forms 2007 You must use the prices you pay (not the stated prices) in figuring your cost of purchases. Irs tax forms 2007 Do not show the discount amount separately as an item in gross income. Irs tax forms 2007   An automobile dealer must record the cost of a car in inventory reduced by any manufacturer's rebate that represents a trade discount. Irs tax forms 2007 Cash discounts. Irs tax forms 2007   Cash discounts are amounts your suppliers let you deduct from your purchase invoices for prompt payments. Irs tax forms 2007 There are two methods of accounting for cash discounts. Irs tax forms 2007 You can either credit them to a separate discount account or deduct them from total purchases for the year. Irs tax forms 2007 Whichever method you use, you must be consistent. Irs tax forms 2007 If you want to change your method of figuring inventory cost, you must file Form 3115, Application for Change in Accounting Method. Irs tax forms 2007 For more information, see Change in Accounting Method in chapter 2. Irs tax forms 2007   If you credit cash discounts to a separate account, you must include this credit balance in your business income at the end of the tax year. Irs tax forms 2007 If you use this method, do not reduce your cost of goods sold by the cash discounts. Irs tax forms 2007 Purchase returns and allowances. Irs tax forms 2007   You must deduct all returns and allowances from your total purchases during the year. Irs tax forms 2007 Merchandise withdrawn from sale. Irs tax forms 2007   If you withdraw merchandise for your personal or family use, you must exclude this cost from the total amount of merchandise you bought for sale. Irs tax forms 2007 Do this by crediting the purchases or sales account with the cost of merchandise you withdraw for personal use. Irs tax forms 2007 You must also charge the amount to your drawing account. Irs tax forms 2007   A drawing account is a separate account you should keep to record the business income you withdraw to pay for personal and family expenses. Irs tax forms 2007 As stated above, you also use it to record withdrawals of merchandise for personal or family use. Irs tax forms 2007 This account is also known as a “withdrawals account” or “personal account. Irs tax forms 2007 ” Line 37 Cost of Labor Labor costs are usually an element of cost of goods sold only in a manufacturing or mining business. Irs tax forms 2007 Small merchandisers (wholesalers, retailers, etc. Irs tax forms 2007 ) usually do not have labor costs that can properly be charged to cost of goods sold. Irs tax forms 2007 In a manufacturing business, labor costs properly allocable to the cost of goods sold include both the direct and indirect labor used in fabricating the raw material into a finished, saleable product. Irs tax forms 2007 Direct labor. Irs tax forms 2007   Direct labor costs are the wages you pay to those employees who spend all their time working directly on the product being manufactured. Irs tax forms 2007 They also include a part of the wages you pay to employees who work directly on the product part time if you can determine that part of their wages. Irs tax forms 2007 Indirect labor. Irs tax forms 2007   Indirect labor costs are the wages you pay to employees who perform a general factory function that does not have any immediate or direct connection with making the saleable product, but that is a necessary part of the manufacturing process. Irs tax forms 2007 Other labor. Irs tax forms 2007   Other labor costs not properly chargeable to the cost of goods sold can be deducted as selling or administrative expenses. Irs tax forms 2007 Generally, the only kinds of labor costs properly chargeable to your cost of goods sold are the direct or indirect labor costs and certain other costs treated as overhead expenses properly charged to the manufacturing process, as discussed later under Line 39 Other Costs. Irs tax forms 2007 Line 38 Materials and Supplies Materials and supplies, such as hardware and chemicals, used in manufacturing goods are charged to cost of goods sold. Irs tax forms 2007 Those that are not used in the manufacturing process are treated as deferred charges. Irs tax forms 2007 You deduct them as a business expense when you use them. Irs tax forms 2007 Business expenses are discussed in chapter 8. Irs tax forms 2007 Line 39 Other Costs Examples of other costs incurred in a manufacturing or mining process that you charge to your cost of goods sold are as follows. Irs tax forms 2007 Containers. Irs tax forms 2007   Containers and packages that are an integral part of the product manufactured are a part of your cost of goods sold. Irs tax forms 2007 If they are not an integral part of the manufactured product, their costs are shipping or selling expenses. Irs tax forms 2007 Freight-in. Irs tax forms 2007   Freight-in, express-in, and cartage-in on raw materials, supplies you use in production, and merchandise you purchase for sale are all part of cost of goods sold. Irs tax forms 2007 Overhead expenses. Irs tax forms 2007   Overhead expenses include expenses such as rent, heat, light, power, insurance, depreciation, taxes, maintenance, labor, and supervision. Irs tax forms 2007 The overhead expenses you have as direct and necessary expenses of the manufacturing operation are included in your cost of goods sold. Irs tax forms 2007 Line 40 Add Lines 35 through 39 The total of lines 35 through 39 equals the cost of the goods available for sale during the year. Irs tax forms 2007 Line 41 Inventory at End of Year Subtract the value of your closing inventory (including, as appropriate, the allocable parts of the cost of raw materials and supplies, direct labor, and overhead expenses) from line 40. Irs tax forms 2007 Inventory at the end of the year is also known as closing or ending inventory. Irs tax forms 2007 Your ending inventory will usually become the beginning inventory of your next tax year. Irs tax forms 2007 Line 42 Cost of Goods Sold When you subtract your closing inventory (inventory at the end of the year) from the cost of goods available for sale, the remainder is your cost of goods sold during the tax year. Irs tax forms 2007 Prev  Up  Next   Home   More Online Publications
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Tax Information for Political Organizations

FEC Filing Required for Some 527 Organizations
Overview of FEC "electioneering communications" filings required for some section 527 exempt organizations.

Filing Requirements
Political parties; campaign committees for candidates for federal, state or local office; and political action committees are all political organizations subject to tax under IRC section 527 and may have filing requirements with the Service.

Political Organization Filing and Disclosure
File and search for notices and reports filed with the Service under IRC section 527.

Exemption Requirements - Political Organizations
A brief description of the requirements for exemption under IRC section 527.

Taxable Income - Political Organizations
A brief explanation of how political organizations are taxed under IRC section 527.

Solicitation Notice
A brief description of the solicitation notice requirements under IRC section 6113.

Employment Taxes for Exempt Organizations
Links to information about employment taxes for tax-exempt organizations.

Political organizations: Resource materials
Resources available on irs.gov concerning tax-exempt political organizations (section 527).

Page Last Reviewed or Updated: 12-Mar-2014

The Irs Tax Forms 2007

Irs tax forms 2007 Tax Changes for Businesses Table of Contents 2001 ChangesNew 5-Year Carryback Rule for Net Operating Losses (NOLs) Electronic Form 1099 Tax Incentives for New York Liberty Zone Other 2001 Changes 2002 ChangesNonaccrual-Experience Method Issuance of Qualified Zone Academy Bonds Depletion Work Opportunity Credit Expanded in New York Liberty Zone Credit For Pension Plan Startup Costs Welfare-to-Work Credit Extended Work Opportunity Credit Extended Electric and Clean-Fuel Vehicles Renewable Electricity Production Credit Later ChangesSpecial Depreciation Allowance Extension of Placed in Service Date Special Liberty Zone Depreciation Allowance for New and Used Property Depreciation of Property Used on Indian Reservations Indian Employment Credit Extended 2001 Changes New 5-Year Carryback Rule for Net Operating Losses (NOLs) If you have an NOL from a tax year ending during 2001 or 2002, you must generally carry back the entire amount of the NOL to the 5 tax years before the NOL year (the carryback period). Irs tax forms 2007 However, you can still choose to use the previous carryback period. Irs tax forms 2007 You also can choose not to carry back an NOL and only carry it forward. Irs tax forms 2007 Individuals, estates, and trusts can file Form 1045, Application for Tentative Refund. Irs tax forms 2007 Corporations can file Form 1139, Corporation Application for Tentative Refund. Irs tax forms 2007 The instructions for these forms will be revised to reflect the new law. Irs tax forms 2007 Electronic Form 1099 For tax years ending after March 9, 2002, most Forms 1099 can be furnished electronically if the recipient consents, according to IRS regulations, to receive it that way. Irs tax forms 2007 Tax Incentives for New York Liberty Zone New tax benefits are provided for the parts of New York City damaged in the terrorist attacks on September 11, 2001. Irs tax forms 2007 These benefits apply to the newly created New York Liberty Zone, which is the area located on or south of Canal Street, East Broadway (east of its intersection with Canal Street), or Grand Street (east of its intersection with East Broadway), in the Borough of Manhattan. Irs tax forms 2007 Tax benefits for the New York Liberty Zone include the following. Irs tax forms 2007 A special depreciation allowance equal to 30% of the adjusted basis of qualified Liberty Zone property. Irs tax forms 2007 It is allowed for the year the property is placed in service. Irs tax forms 2007 No alternative minimum tax depreciation adjustment for qualified Liberty Zone property. Irs tax forms 2007 Classification of Liberty Zone leasehold improvement property as 5-year property. Irs tax forms 2007 Authorization of the issuance of tax-exempt New York Liberty bonds to finance the acquisition, construction, reconstruction, and renovation of nonresidential real property, residential rental property, and public utility property in the Liberty Zone. Irs tax forms 2007 An increased section 179 deduction for certain Liberty Zone property. Irs tax forms 2007 Extension of the replacement period from 2 years to 5 years for certain property involuntarily converted as a result of the terrorist attacks on September 11, 2001, but only if substantially all of the use of the replacement property is in New York City. Irs tax forms 2007 For more information about involuntary conversions, see Postponement of Gain in Publication 547, Casualties, Disasters, and Thefts. Irs tax forms 2007 In addition, for 2002 and 2003, the work opportunity credit is expanded by creating a new targeted group, consisting generally of employees who work in the Liberty Zone or, in certain cases, in New York City outside the Liberty Zone. Irs tax forms 2007 For more information, see Work Opportunity Credit Expanded in New York Liberty Zone under 2002 Changes, later. Irs tax forms 2007 For more information about the 30% special depreciation allowance, Liberty Zone leasehold improvement property, or increased section 179 deduction, see New York Liberty Zone Benefits, in chapter 5. Irs tax forms 2007 In addition, the tax benefits for the Liberty Zone will be covered in a new edition of Publication 954, Tax Incentives for Empowerment Zones and Other Distressed Communities, available later in 2002. Irs tax forms 2007 Other 2001 Changes Other changes are discussed in the following chapters. Irs tax forms 2007 Chapter 4 Car Expenses Chapter 5 Depreciation 2002 Changes Nonaccrual-Experience Method Under current law, if you perform services and use an accrual method of accounting, you do not accrue income which, based on experience, you expect to be uncollectible. Irs tax forms 2007 Beginning in 2002, this rule only applies if you perform services in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, and consulting, or your average annual gross receipts for the 3 prior tax years does not exceed $5,000,000. Irs tax forms 2007 As under current law, the nonaccrual-experience method will not apply to amounts on which you charge interest or a late payment penalty. Irs tax forms 2007 For more information, see Nonaccrual-Experience Method in chapter 11 of Publication 535, Business Expenses. Irs tax forms 2007 Issuance of Qualified Zone Academy Bonds State and local governments issue qualified zone academy bonds to raise funds for the use of qualified zone academies. Irs tax forms 2007 The amount of bonds that may be issued was limited to $400 million each year for 1998, 1999, 2000, and 2001. Irs tax forms 2007 This provision has been extended to provide for an additional $400 million of bonds to be issued each year for 2002 and 2003. Irs tax forms 2007 For more information about qualified zone academy bonds, see Publication 954, Tax Incentives for Empowerment Zones and Other Distressed Communities. Irs tax forms 2007 Depletion The suspension of the taxable income limit on percentage depletion from the marginal production of oil and natural gas that was scheduled to expire for tax years beginning after 2001 has been extended to tax years beginning before 2004. Irs tax forms 2007 For more information on marginal production, see section 613A(c) of the Internal Revenue Code. Irs tax forms 2007 Work Opportunity Credit Expanded in New York Liberty Zone The work opportunity credit is expanded to include a new targeted group consisting generally of employees who perform substantially all their services: In the New York Liberty Zone (defined earlier under Tax Incentives for New York Liberty Zone, under 2001 Changes), or Elsewhere in New York City for a business that relocated from the Liberty Zone due to the destruction or damage of its place of business by the September 11, 2001, terrorist attack. Irs tax forms 2007 The credit is available to employers for wages paid to new employees and existing employees for work performed during 2002 or 2003. Irs tax forms 2007 Certain limits apply. Irs tax forms 2007 For more information about the work opportunity credit, see Publication 954, Tax Incentives for Empowerment Zones and Other Distressed Communities. Irs tax forms 2007 Credit For Pension Plan Startup Costs The credit for pension plan startup costs is now allowed for plans that become effective after December 31, 2001. Irs tax forms 2007 Previously, the credit was only allowed for plans established after December 31, 2001. Irs tax forms 2007 For more information on the credit, see Important Changes for 2002 in Publication 560, Retirement Plans for Small Business. Irs tax forms 2007 Welfare-to-Work Credit Extended The welfare-to-work credit that was scheduled to expire for wages paid to individuals who began working for you after 2001 has been extended to include wages paid to qualified individuals who begin work for you in 2002 or 2003. Irs tax forms 2007 For more information on the welfare-to-work credit, see Publication 954, Tax Incentives for Empowerment Zones and Other Distressed Communities. Irs tax forms 2007 Work Opportunity Credit Extended The work opportunity credit that was scheduled to expire for wages paid to individuals who began working for you after 2001 has been extended to include wages paid to qualified individuals who begin work for you in 2002 or 2003. Irs tax forms 2007 For more information about the work opportunity credit, see Publication 954, Tax Incentives for Empowerment Zones and Other Distressed Communities. Irs tax forms 2007 Electric and Clean-Fuel Vehicles The maximum clean-fuel vehicle deduction and qualified electric vehicle credit were scheduled to be 25% lower for 2002 and both were scheduled to be phased out completely by 2005. Irs tax forms 2007 The full deduction and credit are now allowed for qualified property placed in service in 2002 and 2003. Irs tax forms 2007 The phaseout of the deduction and the credit will begin in 2004, and no deduction or credit will be allowed for property placed in service after 2006. Irs tax forms 2007 For more information about electric and clean-fuel vehicles, see chapter 12 in Publication 535, Business Expenses. Irs tax forms 2007 Renewable Electricity Production Credit The renewable electricity production credit is extended to include electricity produced by facilities placed in service after 2001 and before 2004. Irs tax forms 2007 Later Changes Special Depreciation Allowance You can claim the special depreciation allowance (an additional 30% depreciation deduction) for new property that you acquire before September 11, 2004, and place in service for your business generally before January 1, 2005, if you meet the other requirements for qualified property covered in chapter 5. Irs tax forms 2007 Accordingly, you will generally no longer be able to claim the special depreciation allowance for the qualified property if you acquire it after September 10, 2004, or place it in service for your business after December 31, 2004. Irs tax forms 2007 However, you will be able to claim the special Liberty Zone depreciation allowance (an additional 30% depreciation deduction) for most qualified property if you place it in service in the Liberty Zone after December 31, 2004, and generally before January 1, 2007, provided you meet the other requirements for qualified Liberty Zone property covered in chapter 5. Irs tax forms 2007 Extension of Placed in Service Date To qualify for the special depreciation allowance, your property must meet certain tests, including the placed in service date test, as well as the other requirements covered in chapter 5 of this publication. Irs tax forms 2007 To meet the placed in service date test, your property must generally be placed in service for use in your trade or business or for the production of income after September 10, 2001, and before January 1, 2005. Irs tax forms 2007 However, certain property placed in service before January 1, 2006, may meet this test. Irs tax forms 2007 Transportation property and property with a recovery period of 10 years or longer meet the test if one of the following applies. Irs tax forms 2007 The property has an estimated production period of more than 2 years. Irs tax forms 2007 The property has an estimated production period of more than 1 year and it costs more than $1 million. Irs tax forms 2007 Transportation property is any tangible personal property used in the trade or business of transporting persons or property. Irs tax forms 2007 For property that qualifies for the special depreciation allowance solely because of the one-year extension of the placed in service date, only the part of the basis attributable to manufacture, construction, or production before September 11, 2004, is eligible for the special depreciation allowance. Irs tax forms 2007 Special Liberty Zone Depreciation Allowance for New and Used Property You can claim the special Liberty Zone depreciation allowance (an additional 30% depreciation deduction) for used property that you acquire after September 10, 2001, if the property meets the requirements listed under Qualified Liberty Zone Property in chapter 5 of this publication. Irs tax forms 2007 You will be able to claim the allowance for both new and used property that you acquire after September 10, 2004, provided the property meets the other requirements for qualified Liberty Zone property. Irs tax forms 2007 Depreciation of Property Used on Indian Reservations The special depreciation rules that apply to qualified property used on an Indian reservation were scheduled to expire for property placed in service after 2003. Irs tax forms 2007 These special rules have been extended to include property placed in service in 2004. Irs tax forms 2007 For more information about these rules, see Publication 946, How To Depreciate Property. Irs tax forms 2007 Indian Employment Credit Extended The Indian employment credit that was scheduled to expire for tax years beginning after 2003 has been extended to include a tax year beginning in 2004. Irs tax forms 2007 For more information about this credit, see Publication 954, Tax Incentives for Empowerment Zones and Other Distressed Communities. Irs tax forms 2007 Prev  Up  Next   Home   More Online Publications