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Myfreetax 18. Myfreetax   Alimony Table of Contents IntroductionSpouse or former spouse. Myfreetax Divorce or separation instrument. Myfreetax Useful Items - You may want to see: General RulesMortgage payments. Myfreetax Taxes and insurance. Myfreetax Other payments to a third party. Myfreetax Instruments Executed After 1984Payments to a third party. Myfreetax Exception. Myfreetax Substitute payments. Myfreetax Specifically designated as child support. Myfreetax Contingency relating to your child. Myfreetax Clearly associated with a contingency. Myfreetax How To Deduct Alimony Paid How To Report Alimony Received Recapture Rule Introduction This chapter discusses the rules that apply if you pay or receive alimony. Myfreetax It covers the following topics. Myfreetax What payments are alimony. Myfreetax What payments are not alimony, such as child support. Myfreetax How to deduct alimony you paid. Myfreetax How to report alimony you received as income. Myfreetax Whether you must recapture the tax benefits of alimony. Myfreetax Recapture means adding back in your income all or part of a deduction you took in a prior year. Myfreetax Alimony is a payment to or for a spouse or former spouse under a divorce or separation instrument. Myfreetax It does not include voluntary payments that are not made under a divorce or separation instrument. Myfreetax Alimony is deductible by the payer and must be included in the spouse's or former spouse's income. Myfreetax Although this chapter is generally written for the payer of the alimony, the recipient can use the information to determine whether an amount received is alimony. Myfreetax To be alimony, a payment must meet certain requirements. Myfreetax Different requirements generally apply to payments under instruments executed after 1984 and to payments under instruments executed before 1985. Myfreetax This chapter discusses the rules for payments under instruments executed after 1984. Myfreetax If you need the rules for payments under pre-1985 instruments, get and keep a copy of the 2004 version of Publication 504. Myfreetax That was the last year the information on pre-1985 instruments was included in Publication 504. Myfreetax Use Table 18-1 in this chapter as a guide to determine whether certain payments are considered alimony. Myfreetax Definitions. Myfreetax   The following definitions apply throughout this chapter. Myfreetax Spouse or former spouse. Myfreetax   Unless otherwise stated, the term “spouse” includes former spouse. Myfreetax Divorce or separation instrument. Myfreetax   The term “divorce or separation instrument” means: A decree of divorce or separate maintenance or a written instrument incident to that decree, A written separation agreement, or A decree or any type of court order requiring a spouse to make payments for the support or maintenance of the other spouse. Myfreetax This includes a temporary decree, an interlocutory (not final) decree, and a decree of alimony pendente lite (while awaiting action on the final decree or agreement). Myfreetax Useful Items - You may want to see: Publication 504 Divorced or Separated Individuals General Rules The following rules apply to alimony regardless of when the divorce or separation instrument was executed. Myfreetax Payments not alimony. Myfreetax   Not all payments under a divorce or separation instrument are alimony. Myfreetax Alimony does not include: Child support, Noncash property settlements, Payments that are your spouse's part of community income, as explained under Community Property in Publication 504, Payments to keep up the payer's property, or Use of the payer's property. Myfreetax Payments to a third party. Myfreetax   Cash payments, checks, or money orders to a third party on behalf of your spouse under the terms of your divorce or separation instrument can be alimony, if they otherwise qualify. Myfreetax These include payments for your spouse's medical expenses, housing costs (rent, utilities, etc. Myfreetax ), taxes, tuition, etc. Myfreetax The payments are treated as received by your spouse and then paid to the third party. Myfreetax Life insurance premiums. Myfreetax   Alimony includes premiums you must pay under your divorce or separation instrument for insurance on your life to the extent your spouse owns the policy. Myfreetax Payments for jointly-owned home. Myfreetax   If your divorce or separation instrument states that you must pay expenses for a home owned by you and your spouse, some of your payments may be alimony. Myfreetax Mortgage payments. Myfreetax   If you must pay all the mortgage payments (principal and interest) on a jointly-owned home, and they otherwise qualify as alimony, you can deduct one-half of the total payments as alimony. Myfreetax If you itemize deductions and the home is a qualified home, you can claim one-half of the interest in figuring your deductible interest. Myfreetax Your spouse must report one-half of the payments as alimony received. Myfreetax If your spouse itemizes deductions and the home is a qualified home, he or she can claim one-half of the interest on the mortgage in figuring deductible interest. Myfreetax Taxes and insurance. Myfreetax   If you must pay all the real estate taxes or insurance on a home held as tenants in common, you can deduct one-half of these payments as alimony. Myfreetax Your spouse must report one-half of these payments as alimony received. Myfreetax If you and your spouse itemize deductions, you can each claim one-half of the real estate taxes and none of the home insurance. Myfreetax    If your home is held as tenants by the entirety or joint tenants, none of your payments for taxes or insurance are alimony. Myfreetax But if you itemize deductions, you can claim all of the real estate taxes and none of the home insurance. Myfreetax Other payments to a third party. Myfreetax   If you made other third-party payments, see Publication 504 to see whether any part of the payments qualifies as alimony. Myfreetax Instruments Executed After 1984 The following rules for alimony apply to payments under divorce or separation instruments executed after 1984. Myfreetax Exception for instruments executed before 1985. Myfreetax   There are two situations where the rules for instruments executed after 1984 apply to instruments executed before 1985. Myfreetax A divorce or separation instrument executed before 1985 and then modified after 1984 to specify that the after-1984 rules will apply. Myfreetax A temporary divorce or separation instrument executed before 1985 and incorporated into, or adopted by, a final decree executed after 1984 that: Changes the amount or period of payment, or Adds or deletes any contingency or condition. Myfreetax   For the rules for alimony payments under pre-1985 instruments not meeting these exceptions, get the 2004 version of Publication 504 at www. Myfreetax irs. Myfreetax gov/pub504. Myfreetax Example 1. Myfreetax In November 1984, you and your former spouse executed a written separation agreement. Myfreetax In February 1985, a decree of divorce was substituted for the written separation agreement. Myfreetax The decree of divorce did not change the terms for the alimony you pay your former spouse. Myfreetax The decree of divorce is treated as executed before 1985. Myfreetax Alimony payments under this decree are not subject to the rules for payments under instruments executed after 1984. Myfreetax Example 2. Myfreetax Assume the same facts as in Example 1 except that the decree of divorce changed the amount of the alimony. Myfreetax In this example, the decree of divorce is not treated as executed before 1985. Myfreetax The alimony payments are subject to the rules for payments under instruments executed after 1984. Myfreetax Alimony requirements. Myfreetax   A payment to or for a spouse under a divorce or separation instrument is alimony if the spouses do not file a joint return with each other and all the following requirements are met. Myfreetax The payment is in cash. Myfreetax The instrument does not designate the payment as not alimony. Myfreetax Spouses legally separated under a decree of divorce or separate maintenance are not members of the same household. Myfreetax There is no liability to make any payment (in cash or property) after the death of the recipient spouse. Myfreetax The payment is not treated as child support. Myfreetax Each of these requirements is discussed below. Myfreetax Cash payment requirement. Myfreetax   Only cash payments, including checks and money orders, qualify as alimony. Myfreetax The following do not qualify as alimony. Myfreetax Transfers of services or property (including a debt instrument of a third party or an annuity contract). Myfreetax Execution of a debt instrument by the payer. Myfreetax The use of the payer's property. Myfreetax Payments to a third party. Myfreetax   Cash payments to a third party under the terms of your divorce or separation instrument can qualify as cash payments to your spouse. Myfreetax See Payments to a third party under General Rules, earlier. Myfreetax   Also, cash payments made to a third party at the written request of your spouse may qualify as alimony if all the following requirements are met. Myfreetax The payments are in lieu of payments of alimony directly to your spouse. Myfreetax The written request states that both spouses intend the payments to be treated as alimony. Myfreetax You receive the written request from your spouse before you file your return for the year you made the payments. Myfreetax Payments designated as not alimony. Myfreetax   You and your spouse can designate that otherwise qualifying payments are not alimony. Myfreetax You do this by including a provision in your divorce or separation instrument that states the payments are not deductible as alimony by you and are excludable from your spouse's income. Myfreetax For this purpose, any instrument (written statement) signed by both of you that makes this designation and that refers to a previous written separation agreement is treated as a written separation agreement (and therefore a divorce or separation instrument). Myfreetax If you are subject to temporary support orders, the designation must be made in the original or a later temporary support order. Myfreetax   Your spouse can exclude the payments from income only if he or she attaches a copy of the instrument designating them as not alimony to his or her return. Myfreetax The copy must be attached each year the designation applies. Myfreetax Spouses cannot be members of the same household. Myfreetax    Payments to your spouse while you are members of the same household are not alimony if you are legally separated under a decree of divorce or separate maintenance. Myfreetax A home you formerly shared is considered one household, even if you physically separate yourselves in the home. Myfreetax   You are not treated as members of the same household if one of you is preparing to leave the household and does leave no later than 1 month after the date of the payment. Myfreetax Exception. Myfreetax   If you are not legally separated under a decree of divorce or separate maintenance, a payment under a written separation agreement, support decree, or other court order may qualify as alimony even if you are members of the same household when the payment is made. Myfreetax Table 18-1. Myfreetax Alimony Requirements (Instruments Executed After 1984) Payments ARE alimony if all of the following are true: Payments are NOT alimony if any of the following are true: Payments are required by a divorce or separation instrument. Myfreetax Payments are not required by a divorce or separation instrument. Myfreetax Payer and recipient spouse do not file a joint return with each other. Myfreetax Payer and recipient spouse file a joint return with each other. Myfreetax Payment is in cash (including checks or money orders). Myfreetax Payment is: Not in cash, A noncash property settlement, Spouse's part of community income, or To keep up the payer's property. Myfreetax Payment is not designated in the instrument as not alimony. Myfreetax Payment is designated in the instrument as not alimony. Myfreetax Spouses legally separated under a decree of divorce or separate maintenance are not members of the same household. Myfreetax Spouses legally separated under a decree of divorce or separate maintenance are members of the same household. Myfreetax Payments are not required after death of the recipient spouse. Myfreetax Payments are required after death of the recipient spouse. Myfreetax Payment is not treated as child support. Myfreetax Payment is treated as child support. Myfreetax These payments are deductible by the payer and includible in income by the recipient. Myfreetax These payments are neither deductible by the payer nor includible in income by the recipient. Myfreetax Liability for payments after death of recipient spouse. Myfreetax   If any part of payments you make must continue to be made for any period after your spouse's death, that part of your payments is not alimony, whether made before or after the death. Myfreetax If all of the payments would continue, then none of the payments made before or after the death are alimony. Myfreetax   The divorce or separation instrument does not have to expressly state that the payments cease upon the death of your spouse if, for example, the liability for continued payments would end under state law. Myfreetax Example. Myfreetax You must pay your former spouse $10,000 in cash each year for 10 years. Myfreetax Your divorce decree states that the payments will end upon your former spouse's death. Myfreetax You must also pay your former spouse or your former spouse's estate $20,000 in cash each year for 10 years. Myfreetax The death of your spouse would not terminate these payments under state law. Myfreetax The $10,000 annual payments may qualify as alimony. Myfreetax The $20,000 annual payments that do not end upon your former spouse's death are not alimony. Myfreetax Substitute payments. Myfreetax   If you must make any payments in cash or property after your spouse's death as a substitute for continuing otherwise qualifying payments before the death, the otherwise qualifying payments are not alimony. Myfreetax To the extent that your payments begin, accelerate, or increase because of the death of your spouse, otherwise qualifying payments you made may be treated as payments that were not alimony. Myfreetax Whether or not such payments will be treated as not alimony depends on all the facts and circumstances. Myfreetax Example 1. Myfreetax Under your divorce decree, you must pay your former spouse $30,000 annually. Myfreetax The payments will stop at the end of 6 years or upon your former spouse's death, if earlier. Myfreetax Your former spouse has custody of your minor children. Myfreetax The decree provides that if any child is still a minor at your spouse's death, you must pay $10,000 annually to a trust until the youngest child reaches the age of majority. Myfreetax The trust income and corpus (principal) are to be used for your children's benefit. Myfreetax These facts indicate that the payments to be made after your former spouse's death are a substitute for $10,000 of the $30,000 annual payments. Myfreetax Of each of the $30,000 annual payments, $10,000 is not alimony. Myfreetax Example 2. Myfreetax Under your divorce decree, you must pay your former spouse $30,000 annually. Myfreetax The payments will stop at the end of 15 years or upon your former spouse's death, if earlier. Myfreetax The decree provides that if your former spouse dies before the end of the 15-year period, you must pay the estate the difference between $450,000 ($30,000 × 15) and the total amount paid up to that time. Myfreetax For example, if your spouse dies at the end of the tenth year, you must pay the estate $150,000 ($450,000 − $300,000). Myfreetax These facts indicate that the lump-sum payment to be made after your former spouse's death is a substitute for the full amount of the $30,000 annual payments. Myfreetax None of the annual payments are alimony. Myfreetax The result would be the same if the payment required at death were to be discounted by an appropriate interest factor to account for the prepayment. Myfreetax Child support. Myfreetax   A payment that is specifically designated as child support or treated as specifically designated as child support under your divorce or separation instrument is not alimony. Myfreetax The amount of child support may vary over time. Myfreetax Child support payments are not deductible by the payer and are not taxable to the recipient. Myfreetax Specifically designated as child support. Myfreetax   A payment will be treated as specifically designated as child support to the extent that the payment is reduced either: On the happening of a contingency relating to your child, or At a time that can be clearly associated with the contingency. Myfreetax A payment may be treated as specifically designated as child support even if other separate payments are specifically designated as child support. Myfreetax Contingency relating to your child. Myfreetax   A contingency relates to your child if it depends on any event relating to that child. Myfreetax It does not matter whether the event is certain or likely to occur. Myfreetax Events relating to your child include the child's: Becoming employed, Dying, Leaving the household, Leaving school, Marrying, or Reaching a specified age or income level. Myfreetax Clearly associated with a contingency. Myfreetax   Payments that would otherwise qualify as alimony are presumed to be reduced at a time clearly associated with the happening of a contingency relating to your child only in the following situations. Myfreetax The payments are to be reduced not more than 6 months before or after the date the child will reach 18, 21, or local age of majority. Myfreetax The payments are to be reduced on two or more occasions that occur not more than 1 year before or after a different one of your children reaches a certain age from 18 to 24. Myfreetax This certain age must be the same for each child, but need not be a whole number of years. Myfreetax In all other situations, reductions in payments are not treated as clearly associated with the happening of a contingency relating to your child. Myfreetax   Either you or the IRS can overcome the presumption in the two situations above. Myfreetax This is done by showing that the time at which the payments are to be reduced was determined independently of any contingencies relating to your children. Myfreetax For example, if you can show that the period of alimony payments is customary in the local jurisdiction, such as a period equal to one-half of the duration of the marriage, you can overcome the presumption and may be able to treat the amount as alimony. Myfreetax How To Deduct Alimony Paid You can deduct alimony you paid, whether or not you itemize deductions on your return. Myfreetax You must file Form 1040. Myfreetax You cannot use Form 1040A or Form 1040EZ. Myfreetax Enter the amount of alimony you paid on Form 1040, line 31a. Myfreetax In the space provided on line 31b, enter your spouse's social security number (SSN) or individual taxpayer identification number (ITIN). Myfreetax If you paid alimony to more than one person, enter the SSN or ITIN of one of the recipients. Myfreetax Show the SSN or ITIN and amount paid to each other recipient on an attached statement. Myfreetax Enter your total payments on line 31a. Myfreetax You must provide your spouse's SSN or ITIN. Myfreetax If you do not, you may have to pay a $50 penalty and your deduction may be disallowed. Myfreetax For more information on SSNs and ITINs, see Social Security Number (SSN) in chapter 1. Myfreetax How To Report Alimony Received Report alimony you received as income on Form 1040, line 11. Myfreetax You cannot use Form 1040A or Form 1040EZ. Myfreetax You must give the person who paid the alimony your SSN or ITIN. Myfreetax If you do not, you may have to pay a $50 penalty. Myfreetax Recapture Rule If your alimony payments decrease or end during the first 3 calendar years, you may be subject to the recapture rule. Myfreetax If you are subject to this rule, you have to include in income in the third year part of the alimony payments you previously deducted. Myfreetax Your spouse can deduct in the third year part of the alimony payments he or she previously included in income. Myfreetax The 3-year period starts with the first calendar year you make a payment qualifying as alimony under a decree of divorce or separate maintenance or a written separation agreement. Myfreetax Do not include any time in which payments were being made under temporary support orders. Myfreetax The second and third years are the next 2 calendar years, whether or not payments are made during those years. Myfreetax The reasons for a reduction or end of alimony payments that can require a recapture include: A change in your divorce or separation instrument, A failure to make timely payments, A reduction in your ability to provide support, or A reduction in your spouse's support needs. Myfreetax When to apply the recapture rule. Myfreetax   You are subject to the recapture rule in the third year if the alimony you pay in the third year decreases by more than $15,000 from the second year or the alimony you pay in the second and third years decreases significantly from the alimony you pay in the first year. Myfreetax   When you figure a decrease in alimony, do not include the following amounts. Myfreetax Payments made under a temporary support order. Myfreetax Payments required over a period of at least 3 calendar years that vary because they are a fixed part of your income from a business or property, or from compensation for employment or self-employment. Myfreetax Payments that decrease because of the death of either spouse or the remarriage of the spouse receiving the payments before the end of the third year. Myfreetax Figuring the recapture. Myfreetax   You can use Worksheet 1 in Publication 504 to figure recaptured alimony. Myfreetax Including the recapture in income. Myfreetax   If you must include a recapture amount in income, show it on Form 1040, line 11 (“Alimony received”). Myfreetax Cross out “received” and enter “recapture. Myfreetax ” On the dotted line next to the amount, enter your spouse's last name and SSN or ITIN. Myfreetax Deducting the recapture. Myfreetax   If you can deduct a recapture amount, show it on Form 1040, line 31a (“Alimony paid”). Myfreetax Cross out “paid” and enter “recapture. Myfreetax ” In the space provided, enter your spouse's SSN or ITIN. Myfreetax Prev  Up  Next   Home   More Online Publications
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Sample Consumer Complaint Letter

This sample complaint letter will help you provide all of the necessary information to file a complaint.


How to Use the Sample Complaint Letter

Use the sample consumer complaint letter below to draft a complaint letter or e-mail. You can also copy and paste your complaint into a company's "Contact Us" form.

Download the complaint letter in Word format.

Sample Complaint Letter and E-mail

[Your Address]
[Your City, State, ZIP]
(Your e-mail address, if sending via e-mail)

Date

[Name of Contact Person] (if available)
[Title] (if available)
[Company Name]
[Consumer Complaint Division] (if you have no specific contact)
[Street Address]
[City, State, ZIP Code]

Dear [Contact Person]:

Re: (account number, if applicable)

On [date], I [bought, leased, rented, or had repaired] a [name of the product, with serial or model number, or service performed] at [location, date, and other important details of the transaction].

Unfortunately, your product [or service] has not performed well [or the service was inadequate] because [state the problem]. I am disappointed because [explain the problem: for example, the product does not work properly; the service was not performed correctly; I was billed the wrong amount; something was not disclosed clearly or was misrepresented; etc.].

To resolve the problem, I would appreciate your [state the specific action you want: money refunded, charge card credit, repair, exchange, etc.]. Enclosed are copies (do not send originals) of my records [include receipts, guarantees, warranties, canceled checks, contracts, model and serial numbers, and any other documents].

I look forward to your reply and a resolution to my problem and will wait until [set a time limit] before seeking help from a consumer protection agency or the Better Business Bureau. Please contact me at the above address or by phone at [home and/or office numbers with area code].

Sincerely,

Your name

Enclosure(s)

Keys to an Effective Complaint Letter

  • Describe your purchase.
  • Include the name of the product and serial number.
  • Include the date and place of purchase.
  • State your problem.
  • Give the history of your purchase.
  • Ask for specific action.
  • Allow time for action.
  • State how you can be reached.
  • Enclose copies of your documents and receipts (but never send originals).
  • Keep copies of all your letters, faxes, e-mails, and related documents.

Tips for Filing a Complaint

When filing a complaint, remember these tips:

  • Remain calm. The person who can help probably didn't cause the problem.
  • Don't use an angry, threatening, or sarcastic tone.
  • State exactly what you want done about the problem.
  • Document each step, and keep copies.
  • Start with the seller first. You can resolve many problems by calling a company's toll-free number. Even on the phone, you should know the details of the complaint. You can use the sample letter below to jot down a few notes before you call. If necessary, ask to speak to a manager.
  • If that doesn't work, send a letter or e-mail to the manufacturer's national headquarters or consumer affairs office. Some experts suggest that a letter is the most effective method for contacting a company, so if e-mails and phone calls don't work, try mailing a letter.

Learn more about the steps to file a consumer complaint.

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The Myfreetax

Myfreetax Internal Revenue Bulletin:  2011-12  March 21, 2011  Rev. Myfreetax Proc. Myfreetax 2011-21 Table of Contents SECTION 1. Myfreetax PURPOSE SECTION 2. Myfreetax BACKGROUND SECTION 3. Myfreetax SCOPE SECTION 4. Myfreetax APPLICATION SECTION 5. Myfreetax EFFECTIVE DATE SECTION 6. Myfreetax EFFECT ON OTHER DOCUMENTS SECTION 7. Myfreetax DRAFTING INFORMATION SECTION 1. Myfreetax PURPOSE This revenue procedure provides: (1) limitations on depreciation deductions for owners of passenger automobiles first placed in service by the taxpayer during calendar year 2011, including separate tables of limitations on depreciation deductions for trucks and vans; (2) the amounts that must be included in income by lessees of passenger automobiles first leased by the taxpayer during calendar year 2011, including a separate table of inclusion amounts for lessees of trucks and vans; and (3) revised tables of depreciation limitations and lessee inclusion amounts for passenger automobiles that were first placed in service or first leased by the taxpayer, respectively, during 2010 and to which the 50 percent additional first year depreciation deduction under § 168(k)(1)(A) of the Internal Revenue Code or the 100 percent additional first year depreciation deduction under § 168(k)(5) applies. Myfreetax The tables detailing these depreciation limitations and lessee inclusion amounts reflect the automobile price inflation adjustments required by § 280F(d)(7). Myfreetax SECTION 2. Myfreetax BACKGROUND . Myfreetax 01 For owners of passenger automobiles, § 280F(a) imposes dollar limitations on the depreciation deduction for the year the taxpayer places the passenger automobile in service and for each succeeding year. Myfreetax For passenger automobiles placed in service after 1988, § 280F(d)(7) requires the Internal Revenue Service to increase the amounts allowable as depreciation deductions by a price inflation adjustment amount. Myfreetax The method of calculating this price inflation amount for trucks and vans placed in service in or after calendar year 2003 uses a different CPI “automobile component” (the “new trucks” component) than that used in the price inflation amount calculation for other passenger automobiles (the “new cars” component), resulting in somewhat higher depreciation deductions for trucks and vans. Myfreetax This change reflects the higher rate of price inflation for trucks and vans since 1988. Myfreetax . Myfreetax 02 Section 2022(a) of the Small Business Jobs Act of 2010, Pub. Myfreetax L. Myfreetax No. Myfreetax 111-240, 124 Stat. Myfreetax 2504 (September 27, 2010), extended the 50 percent additional first year depreciation deduction under § 168(k) to qualified property (as defined in § 168(k)(2)) acquired by the taxpayer after December 31, 2007, and before January 1, 2011, if no written binding contract for the acquisition of the property existed before January 1, 2008, and if the taxpayer places the property in service generally before January 1, 2011. Myfreetax Section 401(a) of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, Pub. Myfreetax L. Myfreetax No. Myfreetax 111-312, 124 Stat. Myfreetax 3296 (Dec. Myfreetax 17, 2010) (the “Act”) further extended the 50 percent additional first year depreciation deduction under § 168(k) to qualified property acquired by the taxpayer after December 31, 2007, and before January 1, 2013, if no written binding contract for the acquisition of the property existed before January 1, 2008, and if the taxpayer places the property in service generally before January 1, 2013. Myfreetax Section 401(b) of the Act further amended § 168(k) by adding § 168(k)(5). Myfreetax It allows a 100 percent additional first year depreciation deduction for qualified property acquired by a taxpayer after September 8, 2010, and before January 1, 2012, if the taxpayer places the property in service generally before January 1, 2012. Myfreetax Section 168(k)(2)(F)(i) increases the first year depreciation allowed under § 280F(a)(1)(A)(i) by $8,000 for passenger automobiles to which the additional first year depreciation deduction under § 168(k) (hereinafter, referred to as “§ 168(k) additional first year depreciation deduction”) applies. Myfreetax . Myfreetax 03 Section 168(k)(2)(D)(i) provides that the § 168(k) additional first year depreciation deduction does not apply to any property required to be depreciated under the alternative depreciation system of § 168(g), including property described in § 280F(b)(1). Myfreetax Section 168(k)(2)(D)(iii) permits a taxpayer to elect out of the § 168(k) additional first year depreciation deduction for any class of property. Myfreetax Section 168(k)(4), as amended by the Act, permits a corporation to elect to increase the alternative minimum tax (“AMT”) credit limitation under § 53(c), instead of claiming the § 168(k) additional first year depreciation deduction for all eligible qualified property placed in service after December 31, 2010, that is round 2 extension property (as defined in § 168(k)(4)(I)(iv). Myfreetax Accordingly, this revenue procedure provides tables for passenger automobiles for which the § 168(k) additional first year depreciation deduction applies. Myfreetax This revenue procedure also provides tables for passenger automobiles for which the § 168(k) additional first year depreciation deduction does not apply, either because taxpayer (1) purchased the passenger automobile used; (2) did not use the passenger automobile during 2011 more than 50 percent for business purposes; (3) elected out of the § 168(k) additional first year depreciation deduction pursuant to § 168(k)(2)(D)(iii); or (4) elected to increase the § 53 AMT credit limitation in lieu of claiming § 168(k) additional first year depreciation. Myfreetax . Myfreetax 04 Section 280F(c) requires a reduction in the deduction allowed to the lessee of a leased passenger automobile. Myfreetax The reduction must be substantially equivalent to the limitations on the depreciation deductions imposed on owners of passenger automobiles. Myfreetax Under § 1. Myfreetax 280F-7(a) of the Income Tax Regulations, this reduction requires a lessee to include in gross income an amount determined by applying a formula to the amount obtained from a table. Myfreetax One table applies to lessees of trucks and vans and another table applies to all other passenger automobiles. Myfreetax Each table shows inclusion amounts for a range of fair market values for each taxable year after the passenger automobile is first leased. Myfreetax SECTION 3. Myfreetax SCOPE . Myfreetax 01 The limitations on depreciation deductions in section 4. Myfreetax 01(2) of this revenue procedure apply to passenger automobiles (other than leased passenger automobiles) that are placed in service by the taxpayer in calendar year 2011, and continue to apply for each taxable year that the passenger automobile remains in service. Myfreetax . Myfreetax 02 The tables in section 4. Myfreetax 02 of this revenue procedure apply to leased passenger automobiles for which the lease term begins during calendar year 2011. Myfreetax Lessees of these passenger automobiles must use these tables to determine the inclusion amount for each taxable year during which the passenger automobile is leased. Myfreetax See Rev. Myfreetax Proc. Myfreetax 2006-18, 2006-1 C. Myfreetax B. Myfreetax 645, for passenger automobiles first leased during calendar year 2006; Rev. Myfreetax Proc. Myfreetax 2007-30, 2007-1 C. Myfreetax B. Myfreetax 1104, for passenger automobiles first leased during calendar year 2007; Rev. Myfreetax Proc. Myfreetax 2008-22, 2008-1 C. Myfreetax B. Myfreetax 658, for passenger automobiles first leased during calendar year 2008; Rev. Myfreetax Proc. Myfreetax 2009-24, 2009-1 C. Myfreetax B. Myfreetax 885, for passenger automobiles first leased during calendar year 2009; and Rev. Myfreetax Proc. Myfreetax 2010-18, 2010-1 C. Myfreetax B. Myfreetax 427, as amplified and modified by section 4. Myfreetax 03 of this revenue procedure, for passenger automobiles first leased during calendar year 2010. Myfreetax SECTION 4. Myfreetax APPLICATION . Myfreetax 01 Limitations on Depreciation Deductions for Certain Automobiles. Myfreetax (1) Amount of the inflation adjustment. Myfreetax (a) Passenger automobiles (other than trucks or vans). Myfreetax Under § 280F(d)(7)(B)(i), the automobile price inflation adjustment for any calendar year is the percentage (if any) by which the CPI automobile component for October of the preceding calendar year exceeds the CPI automobile component for October 1987. Myfreetax Section 280F(d)(7)(B)(ii) defines the term “CPI automobile component” as the automobile component of the Consumer Price Index for all Urban Consumers published by the Department of Labor. Myfreetax The new car component of the CPI was 115. Myfreetax 2 for October 1987 and 137. Myfreetax 880 for October 2010. Myfreetax The October 2010 index exceeded the October 1987 index by 22. Myfreetax 680. Myfreetax Therefore, the automobile price inflation adjustment for 2011 for passenger automobiles (other than trucks and vans) is 19. Myfreetax 69 percent (22. Myfreetax 680/115. Myfreetax 2 x 100%). Myfreetax The dollar limitations in § 280F(a) are multiplied by a factor of 0. Myfreetax 1969, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations applicable to passenger automobiles (other than trucks and vans) for calendar year 2011. Myfreetax This adjustment applies to all passenger automobiles (other than trucks and vans) that are first placed in service in calendar year 2011. Myfreetax (b) Trucks and vans. Myfreetax To determine the dollar limitations for trucks and vans first placed in service during calendar year 2011, the Service uses the new truck component of the CPI instead of the new car component. Myfreetax The new truck component of the CPI was 112. Myfreetax 4 for October 1987 and 142. Myfreetax 556 for October 2010. Myfreetax The October 2010 index exceeded the October 1987 index by 30. Myfreetax 156. Myfreetax Therefore, the automobile price inflation adjustment for 2011 for trucks and vans is 26. Myfreetax 83 percent (30. Myfreetax 156/112. Myfreetax 4 x 100%). Myfreetax The dollar limitations in § 280F(a) are multiplied by a factor of 0. Myfreetax 2683, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations for trucks and vans. Myfreetax This adjustment applies to all trucks and vans that are first placed in service in calendar year 2011. Myfreetax (2) Amount of the limitation. Myfreetax Tables 1 through 4 contain the dollar amount of the depreciation limitation for each taxable year for passenger automobiles a taxpayer places in service in calendar year 2011. Myfreetax Use Table 1 for a passenger automobile (other than a truck or van), and Table 2 for a truck or van, placed in service in calendar year 2011 for which the § 168(k) additional first year depreciation deduction applies. Myfreetax Use Table 3 for a passenger automobile (other than a truck or van), and Table 4 for a truck or van, placed in service in calendar year 2011 for which the § 168(k) additional first year depreciation deduction does not apply. Myfreetax The Service intends to issue additional guidance addressing the interaction between the 100 percent additional first year depreciation deduction and § 280F(a) for the taxable years subsequent to the first taxable year. Myfreetax REV. Myfreetax PROC. Myfreetax 2011-21 TABLE 1 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2011 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,060 2nd Tax Year $4,900 3rd Tax Year $2,950 Each Succeeding Year $1,775 REV. Myfreetax PROC. Myfreetax 2011-21 TABLE 2 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2011 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,260 2nd Tax Year $5,200 3rd Tax Year $3,150 Each Succeeding Year $1,875 REV. Myfreetax PROC. Myfreetax 2011-21 TABLE 3 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2011 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $3,060 2nd Tax Year $4,900 3rd Tax Year $2,950 Each Succeeding Year $1,775 REV. Myfreetax PROC. Myfreetax 2011-21 TABLE 4 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2011 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $3,260 2nd Tax Year $5,200 3rd Tax Year $3,150 Each Succeeding Year $1,875 . Myfreetax 02 Inclusions in Income of Lessees of Passenger Automobiles. Myfreetax A taxpayer must follow the procedures in § 1. Myfreetax 280F-7(a) for determining the inclusion amounts for passenger automobiles first leased in calendar year 2011. Myfreetax In applying these procedures, lessees of passenger automobiles other than trucks and vans should use Table 5 of this revenue procedure, while lessees of trucks and vans should use Table 6 of this revenue procedure. Myfreetax REV. Myfreetax PROC. Myfreetax 2011-21 TABLE 5 DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2011 Fair Market Value of Passenger Automobile Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & later $18,500 $19,000 3 8 11 13 16 19,000 19,500 4 9 13 15 18 19,500 20,000 4 10 15 17 20 20,000 20,500 5 11 16 19 23 20,500 21,000 5 12 18 21 25 21,000 21,500 6 13 19 24 26 21,500 22,000 6 14 21 26 29 22,000 23,000 7 16 23 29 32 23,000 24,000 8 18 27 32 37 24,000 25,000 9 20 30 36 42 25,000 26,000 10 23 33 40 46 26,000 27,000 11 25 36 44 51 27,000 28,000 12 27 40 48 55 28,000 29,000 13 29 43 52 60 29,000 30,000 14 31 47 55 65 30,000 31,000 15 34 49 60 69 31,000 32,000 16 36 53 63 73 32,000 33,000 17 38 56 68 77 33,000 34,000 18 40 60 71 82 34,000 35,000 19 42 63 75 87 35,000 36,000 20 45 66 79 91 36,000 37,000 21 47 69 83 96 37,000 38,000 22 49 73 87 100 38,000 39,000 23 51 76 91 105 39,000 40,000 24 53 80 94 110 40,000 41,000 25 56 82 99 114 41,000 42,000 26 58 86 102 119 42,000 43,000 27 60 89 107 123 43,000 44,000 28 62 93 110 128 44,000 45,000 29 64 96 114 133 45,000 46,000 30 67 98 119 137 46,000 47,000 31 69 102 122 141 47,000 48,000 32 71 105 127 145 48,000 49,000 33 73 109 130 150 49,000 50,000 34 76 111 134 155 50,000 51,000 35 78 115 138 159 51,000 52,000 36 80 118 142 164 52,000 53,000 37 82 122 146 168 53,000 54,000 38 84 125 150 173 54,000 55,000 39 87 128 153 178 55,000 56,000 40 89 131 158 182 56,000 57,000 41 91 135 161 187 57,000 58,000 42 93 138 166 191 58,000 59,000 43 95 142 169 196 59,000 60,000 44 98 144 174 200 60,000 62,000 46 101 149 179 207 62,000 64,000 48 105 156 187 216 64,000 66,000 50 109 163 195 225 66,000 68,000 52 114 169 203 234 68,000 70,000 54 118 176 211 243 70,000 72,000 56 123 182 218 253 72,000 74,000 58 127 189 226 262 74,000 76,000 60 132 195 234 270 76,000 78,000 62 136 202 242 279 78,000 80,000 64 140 209 250 288 80,000 85,000 67 148 220 264 304 85,000 90,000 72 159 237 283 327 90,000 95,000 77 170 253 303 350 95,000 100,000 82 181 269 323 372 100,000 110,000 90 198 293 352 406 110,000 120,000 100 220 326 391 452 120,000 130,000 110 242 359 430 497 130,000 140,000 120 264 392 469 543 140,000 150,000 130 286 424 509 588 150,000 160,000 140 308 457 548 633 160,000 170,000 150 330 490 587 679 170,000 180,000 160 352 523 626 724 180,000 190,000 170 374 555 666 769 190,000 200,000 180 396 588 705 815 200,000 210,000 190 418 621 744 860 210,000 220,000 200 440 654 784 904 220,000 230,000 210 462 687 823 950 230,000 240,000 220 484 719 863 995 240,000 And up 230 506 752 902 1,040 REV. Myfreetax PROC. Myfreetax 2011-21 TABLE 6 DOLLAR AMOUNTS FOR TRUCKS AND VANS WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2011 Fair Market Value of Truck or Van Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & later $19,000 $19,500 3 7 9 12 13 19,500 20,000 3 8 11 14 15 20,000 20,500 4 9 13 15 18 20,500 21,000 4 10 15 17 20 21,000 21,500 5 11 16 20 22 21,500 22,000 5 12 18 22 24 22,000 23,000 6 14 20 24 29 23,000 24,000 7 16 24 28 32 24,000 25,000 8 18 27 32 37 25,000 26,000 9 20 31 36 41 26,000 27,000 10 23 33 40 46 27,000 28,000 11 25 37 43 51 28,000 29,000 12 27 40 48 55 29,000 30,000 13 29 43 52 60 30,000 31,000 14 31 47 56 64 31,000 32,000 15 34 49 60 69 32,000 33,000 16 36 53 63 74 33,000 34,000 17 38 56 68 78 34,000 35,000 18 40 60 71 83 35,000 36,000 19 43 62 76 87 36,000 37,000 20 45 66 79 92 37,000 38,000 21 47 69 83 97 38,000 39,000 22 49 73 87 101 39,000 40,000 23 51 76 91 105 40,000 41,000 24 54 79 95 109 41,000 42,000 25 56 82 99 114 42,000 43,000 26 58 86 103 118 43,000 44,000 27 60 89 107 123 44,000 45,000 28 62 93 110 128 45,000 46,000 29 65 95 115 132 46,000 47,000 30 67 99 118 137 47,000 48,000 31 69 102 123 141 48,000 49,000 32 71 106 126 146 49,000 50,000 33 73 109 130 151 50,000 51,000 34 76 112 134 155 51,000 52,000 35 78 115 138 160 52,000 53,000 36 80 118 143 164 53,000 54,000 37 82 122 146 169 54,000 55,000 38 84 125 150 173 55,000 56,000 39 87 128 154 177 56,000 57,000 40 89 131 158 182 57,000 58,000 41 91 135 162 186 58,000 59,000 42 93 138 166 191 59,000 60,000 43 95 142 169 196 60,000 62,000 45 99 146 175 203 62,000 64,000 47 103 153 183 212 64,000 66,000 49 107 160 191 221 66,000 68,000 51 112 166 199 229 68,000 70,000 53 116 173 206 239 70,000 72,000 55 121 179 214 248 72,000 74,000 57 125 186 222 257 74,000 76,000 59 129 192 231 266 76,000 78,000 61 134 198 239 275 78,000 80,000 63 138 205 246 285 80,000 85,000 66 146 217 260 300 85,000 90,000 71 157 233 280 322 90,000 95,000 76 168 250 299 345 95,000 100,000 81 179 266 319 368 100,000 110,000 89 196 290 348 402 110,000 120,000 99 218 323 387 447 120,000 130,000 109 240 355 427 493 130,000 140,000 119 262 388 466 538 140,000 150,000 129 284 421 505 583 150,000 160,000 139 306 454 544 629 160,000 170,000 149 328 487 583 674 170,000 180,000 159 350 519 623 719 180,000 190,000 169 372 552 662 765 190,000 200,000 179 394 585 701 810 200,000 210,000 189 416 618 740 856 210,000 220,000 199 438 651 779 901 220,000 230,000 209 460 683 819 946 230,000 240,000 219 482 716 858 992 240,000 And up 229 504 749 897 1,037 . Myfreetax 03 Revised Amounts for Passenger Automobiles Placed in Service During 2010. Myfreetax (1) Calculation of the Revised Amount. Myfreetax The revised depreciation limits provided in this section 4. Myfreetax 03 were calculated by increasing the existing limitations on the first year allowance in Rev. Myfreetax Proc. Myfreetax 2010-18 by $8,000 as provided in § 168(k)(2)(F)(i). Myfreetax (2) Amount of the Revised Limitation. Myfreetax For passenger automobiles (that are not trucks or vans) placed in service by the taxpayer in calendar year 2010 for which the § 168(k) additional first year depreciation deduction applies, Table 7 of this revenue procedure contains the revised dollar amount of the depreciation limitations for each taxable year. Myfreetax For trucks or vans placed in service by the taxpayer in calendar year 2010 for which the § 168(k) additional first year depreciation deduction applies, Table 8 of this revenue procedure contains the revised dollar amount of the depreciation limitations for each taxable year. Myfreetax If the § 168(k) additional first year depreciation deduction does not apply to a passenger automobile placed in service by the taxpayer in calendar year 2010, the depreciation limitations for each taxable year in Tables 1 and 2 of Rev. Myfreetax Proc. Myfreetax 2010-18 apply. Myfreetax REV. Myfreetax PROC. Myfreetax 2011-21 TABLE 7 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2010 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,060 2nd Tax Year $4,900 3rd Tax Year $2,950 Each Succeeding Year $1,775 REV. Myfreetax PROC. Myfreetax 2011-21 TABLE 8 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2010 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,160 2nd Tax Year $5,100 3rd Tax Year $3,050 Each Succeeding Year $1,875 (3) Modification to lease inclusion amounts for 2010. Myfreetax The lease inclusion amounts in Tables 3 and 4 of Rev. Myfreetax Proc. Myfreetax 2010-18 are modified by striking the first four lines of the inclusion amounts in each table. Myfreetax Consequently, Table 3 of Rev. Myfreetax Proc. Myfreetax 2010-18 applies to passenger automobiles (other than trucks and vans) that are first leased by the taxpayer in calendar year 2010 with a fair market value over $18,500, and Table 4 of Rev. Myfreetax Proc. Myfreetax 2010-18 applies to trucks and vans that are first leased by the taxpayer in calendar year 2010 with a fair market value over $19,000. Myfreetax SECTION 5. Myfreetax EFFECTIVE DATE This revenue procedure, with the exception of section 4. Myfreetax 03, applies to passenger automobiles that a taxpayer first places in service or first leases during calendar year 2011. Myfreetax Section 4. Myfreetax 03 of this revenue procedure applies to passenger automobiles that a taxpayer first places in service or first leases during calendar year 2010. Myfreetax SECTION 6. Myfreetax EFFECT ON OTHER DOCUMENTS Rev. Myfreetax Proc. Myfreetax 2010-18 is amplified and modified. Myfreetax SECTION 7. Myfreetax DRAFTING INFORMATION The principal author of this revenue procedure is Bernard P. Myfreetax Harvey of the Office of Associate Chief Counsel (Income Tax & Accounting). Myfreetax For further information regarding this revenue procedure, contact Mr. Myfreetax Harvey at (202) 622-4930 (not a toll-free call). Myfreetax Prev  Up  Next   Home   More Internal Revenue Bulletins