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State Income Taxes More:label_state_20income_20taxes More:taxes

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State Income Taxes More:label_state_20income_20taxes More:taxes

State income taxes more:label_state_20income_20taxes more:taxes 4. State income taxes more:label_state_20income_20taxes more:taxes   Unrelated Business Taxable Income Table of Contents IncomeExclusions Dues of Agricultural Organizations and Business Leagues DeductionsDirectly Connected Exploitation of Exempt Activity—Advertising Sales Modifications Partnership Income or Loss S Corporation Income or Loss Special Rules for Foreign Organizations Special Rules for Social Clubs, VEBAs, SUBs, and GLSOsIncome that is set aside. State income taxes more:label_state_20income_20taxes more:taxes Special Rules for Veterans' Organizations Income From Controlled OrganizationsAddition to tax for valuation misstatements. State income taxes more:label_state_20income_20taxes more:taxes Net unrelated income. State income taxes more:label_state_20income_20taxes more:taxes Net unrelated loss. State income taxes more:label_state_20income_20taxes more:taxes Control. State income taxes more:label_state_20income_20taxes more:taxes Income from property financed with qualified 501(c)(3) bonds. State income taxes more:label_state_20income_20taxes more:taxes Disposition of property received from taxable subsidiary and used in unrelated business. State income taxes more:label_state_20income_20taxes more:taxes Income From Debt-Financed Property Debt-Financed PropertyAcquisition Indebtedness Computation of Debt-Financed Income Deductions for Debt-Financed Property Allocation Rules How to Get Tax Help The term “unrelated business taxable income” generally means the gross income derived from any unrelated trade or business regularly conducted by the exempt organization, less the deductions directly connected with carrying on the trade or business. State income taxes more:label_state_20income_20taxes more:taxes If an organization regularly carries on two or more unrelated business activities, its unrelated business taxable income is the total of gross income from all such activities less the total allowable deductions attributable to all the activities. State income taxes more:label_state_20income_20taxes more:taxes In computing unrelated business taxable income, gross income and deductions are subject to the modifications and special rules explained in this chapter. State income taxes more:label_state_20income_20taxes more:taxes Whether a particular item of income or expense falls within any of these modifications or special rules must be determined by all the facts and circumstances in each specific case. State income taxes more:label_state_20income_20taxes more:taxes For example, if the organization received a payment termed rent that is in fact a return of profits by a person operating the property for the benefit of the organization, or that is a share of the profits retained by the organization as a partner or joint venturer, the payment is not within the income exclusion for rents, discussed later under Exclusions. State income taxes more:label_state_20income_20taxes more:taxes Income Generally, unrelated business income is taxable, but there are exclusions and special rules that must be considered when figuring the income. State income taxes more:label_state_20income_20taxes more:taxes Exclusions The following types of income (and deductions directly connected with the income) are generally excluded when figuring unrelated business taxable income. State income taxes more:label_state_20income_20taxes more:taxes Dividends, interest, annuities and other investment income. State income taxes more:label_state_20income_20taxes more:taxes   All dividends, interest, annuities, payments with respect to securities loans, income from notional principal contracts, and other income from an exempt organization's ordinary and routine investments that the IRS determines are substantially similar to these types of income are excluded in computing unrelated business taxable income. State income taxes more:label_state_20income_20taxes more:taxes Exception for insurance activity income of a controlled foreign corporation. State income taxes more:label_state_20income_20taxes more:taxes   This exclusion does not apply to income from certain insurance activities of an exempt organization's controlled foreign corporation. State income taxes more:label_state_20income_20taxes more:taxes The income is not excludable dividend income, but instead is unrelated business taxable income to the extent it would be so treated if the exempt organization had earned it directly. State income taxes more:label_state_20income_20taxes more:taxes Certain exceptions to this rule apply. State income taxes more:label_state_20income_20taxes more:taxes For more information, see section 512(b)(17). State income taxes more:label_state_20income_20taxes more:taxes Other exceptions. State income taxes more:label_state_20income_20taxes more:taxes   This exclusion does not apply to unrelated debt-financed income (discussed under Income From Debt-Financed Property, later), to interest or annuities received from a controlled corporation (discussed under Income From Controlled Organizations, later). State income taxes more:label_state_20income_20taxes more:taxes Income from lending securities. State income taxes more:label_state_20income_20taxes more:taxes   Payments received with respect to a security loan are excluded in computing unrelated business taxable income only if the loan is made under an agreement that:    Provides for the return to the exempt organization of securities identical to the securities loaned, Requires payments to the organization of amounts equivalent to all interest, dividends, and other distributions that the owner of the securities is entitled to receive during the period of the loan, Does not reduce the organization's risk of loss or opportunity for gain on the securities, Contains reasonable procedures to implement the obligation of the borrower to furnish collateral to the organization with a fair market value each business day during the period of the loan in an amount not less than the fair market value of the securities at the close of the preceding business day, and Permits the organization to terminate the loan upon notice of not more than 5 business days. State income taxes more:label_state_20income_20taxes more:taxes   Payments with respect to securities loans include: Amounts in respect of dividends, interest, and other distributions, Fees based on the period of time the loan is in effect and the fair market value of the security during that period, Income from collateral security for the loan, and Income from the investment of collateral security. State income taxes more:label_state_20income_20taxes more:taxes The payments are considered to be from the securities loaned and not from collateral security or the investment of collateral security from the loans. State income taxes more:label_state_20income_20taxes more:taxes Any deductions that are directly connected with collateral security for the loan, or with the investment of collateral security, are considered deductions that are directly connected with the securities loaned. State income taxes more:label_state_20income_20taxes more:taxes Royalties. State income taxes more:label_state_20income_20taxes more:taxes   Royalties, including overriding royalties, are excluded in computing unrelated business taxable income. State income taxes more:label_state_20income_20taxes more:taxes   To be considered a royalty, a payment must relate to the use of a valuable right. State income taxes more:label_state_20income_20taxes more:taxes Payments for trademarks, trade names, or copyrights are ordinarily considered royalties. State income taxes more:label_state_20income_20taxes more:taxes Similarly, payments for the use of a professional athlete's name, photograph, likeness, or facsimile signature are ordinarily considered royalties. State income taxes more:label_state_20income_20taxes more:taxes However, royalties do not include payments for personal services. State income taxes more:label_state_20income_20taxes more:taxes Therefore, payments for personal appearances and interviews are not excluded as royalties and must be included in figuring unrelated business taxable income. State income taxes more:label_state_20income_20taxes more:taxes   Unrelated business taxable income does not include royalty income received from licensees by an exempt organization that is the legal and beneficial owner of patents assigned to it by inventors for specified percentages of future royalties. State income taxes more:label_state_20income_20taxes more:taxes   Mineral royalties are excluded whether measured by production or by gross or taxable income from the mineral property. State income taxes more:label_state_20income_20taxes more:taxes However, the exclusion does not apply to royalties that stem from an arrangement whereby the organization owns a working interest in a mineral property and is liable for its share of the development and operating costs under the terms of its agreement with the operator of the property. State income taxes more:label_state_20income_20taxes more:taxes To the extent they are not treated as loans under section 636 (relating to income tax treatment of mineral production payments), payments for mineral production are treated in the same manner as royalty payments for the purpose of computing unrelated business taxable income. State income taxes more:label_state_20income_20taxes more:taxes To the extent they are treated as loans, any payments for production that are the equivalent of interest are treated as interest and are excluded. State income taxes more:label_state_20income_20taxes more:taxes Exceptions. State income taxes more:label_state_20income_20taxes more:taxes   This exclusion does not apply to debt-financed income (discussed under Income From Debt-Financed Property, later) or to royalties received from a controlled corporation (discussed under Income From Controlled Organizations, later). State income taxes more:label_state_20income_20taxes more:taxes Rents. State income taxes more:label_state_20income_20taxes more:taxes   Rents from real property, including elevators and escalators, are excluded in computing unrelated business taxable income. State income taxes more:label_state_20income_20taxes more:taxes Rents from personal property are not excluded. State income taxes more:label_state_20income_20taxes more:taxes However, special rules apply to “mixed leases” of both real and personal property. State income taxes more:label_state_20income_20taxes more:taxes Mixed leases. State income taxes more:label_state_20income_20taxes more:taxes   In a mixed lease, all of the rents are excluded if the rents attributable to the personal property are not more than 10% of the total rents under the lease, as determined when the personal property is first placed in service by the lessee. State income taxes more:label_state_20income_20taxes more:taxes If the rents attributable to personal property are more than 10% but not more than 50% of the total rents, only the rents attributable to the real property are excluded. State income taxes more:label_state_20income_20taxes more:taxes If the rents attributable to the personal property are more than 50% of the total rents, none of the rents are excludable. State income taxes more:label_state_20income_20taxes more:taxes   Property is placed in service when the lessee first may use it under the terms of a lease. State income taxes more:label_state_20income_20taxes more:taxes For example, property subject to a lease entered into on November 1, for a term starting on January 1 of the next year, is considered placed in service on January 1, regardless of when the lessee first actually uses it. State income taxes more:label_state_20income_20taxes more:taxes   If separate leases are entered into for real and personal property and the properties have an integrated use (for example, one or more leases for real property and another lease or leases for personal property to be used on the real property), all the leases will be considered as one lease. State income taxes more:label_state_20income_20taxes more:taxes   The rent attributable to the personal property must be recomputed, and the treatment of the rents must be redetermined, if: The rent attributable to all the leased personal property increases by 100% or more because additional or substitute personal property is placed in service, or The lease is modified to change the rent charged (whether or not the amount of rented personal property changes). State income taxes more:label_state_20income_20taxes more:taxes Any change in the treatment of rents resulting from the recomputation is effective only for the period beginning with the event that caused the recomputation. State income taxes more:label_state_20income_20taxes more:taxes Exception for rents based on net profit. State income taxes more:label_state_20income_20taxes more:taxes   The exclusion for rents does not apply if the amount of the rent depends on the income or profits derived by any person from the leased property, other than an amount based on a fixed percentage of the gross receipts or sales. State income taxes more:label_state_20income_20taxes more:taxes Exception for income from personal services. State income taxes more:label_state_20income_20taxes more:taxes   Payment for occupying space when personal services are also rendered to the occupant does not constitute rent from real property. State income taxes more:label_state_20income_20taxes more:taxes Therefore, the exclusion does not apply to transactions such as renting hotel rooms, rooms in boarding houses or tourist homes, and space in parking lots or warehouses. State income taxes more:label_state_20income_20taxes more:taxes Other exceptions. State income taxes more:label_state_20income_20taxes more:taxes   This exclusion does not apply to unrelated debt-financed income (discussed under Income From Debt-Financed Property, later), or to interest, annuities, royalties and rents received from a controlled corporation (discussed under Income From Controlled Organizations, later), investment income (dividends, interest, rents, etc. State income taxes more:label_state_20income_20taxes more:taxes ) received by organizations described in sections 501(c)(7), 501(c)(9), 501(c)(17), and 501(c)(20). State income taxes more:label_state_20income_20taxes more:taxes See Special Rules for Social Clubs, VEBAs, SUBs, and GLSOs, discussed later for more information. State income taxes more:label_state_20income_20taxes more:taxes Income from research. State income taxes more:label_state_20income_20taxes more:taxes   A tax-exempt organization may exclude income from research grants or contracts from unrelated business taxable income. State income taxes more:label_state_20income_20taxes more:taxes However, the extent of the exclusion depends on the nature of the organization and the type of research. State income taxes more:label_state_20income_20taxes more:taxes   Income from research for the United States, any of its agencies or instrumentalities, or a state or any of its political subdivisions is excluded when computing unrelated business taxable income. State income taxes more:label_state_20income_20taxes more:taxes   For a college, university, or hospital, all income from research, whether fundamental or applied, is excluded in computing unrelated business taxable income. State income taxes more:label_state_20income_20taxes more:taxes   When an organization is operated primarily to conduct fundamental research (as distinguished from applied research) and the results are freely available to the general public, all income from research performed for any person is excluded in computing unrelated business taxable income. State income taxes more:label_state_20income_20taxes more:taxes   The term research, for this purpose, does not include activities of a type normally conducted as an incident to commercial or industrial operations, such as testing or inspecting materials or products, or designing or constructing equipment, buildings, etc. State income taxes more:label_state_20income_20taxes more:taxes In addition, the term fundamental research does not include research conducted for the primary purpose of commercial or industrial application. State income taxes more:label_state_20income_20taxes more:taxes Gains and losses from disposition of property. State income taxes more:label_state_20income_20taxes more:taxes   Also excluded from unrelated business taxable income are gains or losses from the sale, exchange, or other disposition of property other than: Stock in trade or other property of a kind that would properly be includable in inventory if on hand at the close of the tax year, Property held primarily for sale to customers in the ordinary course of a trade or business, or Cutting of timber that an organization has elected to consider as a sale or exchange of the timber. State income taxes more:label_state_20income_20taxes more:taxes   It should be noted that the last exception relates only to cut timber. State income taxes more:label_state_20income_20taxes more:taxes The sale, exchange, or other disposition of standing timber is excluded from the computation of unrelated business income, unless it constitutes property held for sale to customers in the ordinary course of business. State income taxes more:label_state_20income_20taxes more:taxes Lapse or termination of options. State income taxes more:label_state_20income_20taxes more:taxes   Any gain from the lapse or termination of options to buy or sell securities is excluded from unrelated business taxable income. State income taxes more:label_state_20income_20taxes more:taxes The exclusion applies only if the option is written in connection with the exempt organization's investment activities. State income taxes more:label_state_20income_20taxes more:taxes Therefore, this exclusion is not available if the organization is engaged in the trade or business of writing options or the options are held by the organization as inventory or for sale to customers in the ordinary course of a trade or business. State income taxes more:label_state_20income_20taxes more:taxes Exception. State income taxes more:label_state_20income_20taxes more:taxes   This exclusion does not apply to unrelated debt-financed income, discussed later under Income From Debt-Financed Property. State income taxes more:label_state_20income_20taxes more:taxes Gain or loss on disposition of certain brownfield property. State income taxes more:label_state_20income_20taxes more:taxes   Gain or loss from the qualifying sale, exchange, or other disposition of a qualifying brownfield property (as defined in section 512(b)(19)(C)), which was acquired by the organization after December 31, 2005 and before January 1, 2011, is excluded from unrelated business taxable income and is excepted from the debt-financed rules for such property. State income taxes more:label_state_20income_20taxes more:taxes See sections 512(b)(19) and 514(b)(1)(E). State income taxes more:label_state_20income_20taxes more:taxes Income from services provided under federal license. State income taxes more:label_state_20income_20taxes more:taxes   There is a further exclusion from unrelated business taxable income of income from a trade or business conducted by a religious order or by an educational organization maintained by the order. State income taxes more:label_state_20income_20taxes more:taxes   This exclusion applies only if the following requirements are met. State income taxes more:label_state_20income_20taxes more:taxes The trade or business must have been operated by the order or by the institution before May 27, 1959. State income taxes more:label_state_20income_20taxes more:taxes The trade or business must provide services under a license issued by a federal regulatory agency. State income taxes more:label_state_20income_20taxes more:taxes More than 90% of the net income from the business for the tax year must be devoted to religious, charitable, or educational purposes that constitute the basis for the religious order's exemption. State income taxes more:label_state_20income_20taxes more:taxes The rates or other charges for these services must be fully competitive with the rates or other charges of similar taxable businesses. State income taxes more:label_state_20income_20taxes more:taxes Rates or other charges for these services will be considered as fully competitive if they are neither materially higher nor materially lower than the rates charged by similar businesses operating in the same general area. State income taxes more:label_state_20income_20taxes more:taxes Exception. State income taxes more:label_state_20income_20taxes more:taxes    This exclusion does not apply to unrelated debt-financed income (discussed under Income From Debt-Financed Property, later). State income taxes more:label_state_20income_20taxes more:taxes Member income of mutual or cooperative electric companies. State income taxes more:label_state_20income_20taxes more:taxes   Income of a mutual or cooperative electric company described in section 501(c)(12) which is treated as member income under subparagraph (H) of that section is excluded from unrelated business taxable income. State income taxes more:label_state_20income_20taxes more:taxes Dues of Agricultural Organizations and Business Leagues Dues received from associate members by organizations exempt under section 501(c)(5) or section 501(c)(6) may be treated as gross income from an unrelated trade or business if the associate member category exists for the principal purpose of producing unrelated business income. State income taxes more:label_state_20income_20taxes more:taxes For example, if an organization creates an associate member category solely to allow associate members to purchase insurance through the organization, the associate member dues may be unrelated business income. State income taxes more:label_state_20income_20taxes more:taxes Exception. State income taxes more:label_state_20income_20taxes more:taxes   Associate member dues received by an agricultural or horticultural organization are not treated as gross income from an unrelated trade or business, regardless of their purpose, if they are not more than the annual limit. State income taxes more:label_state_20income_20taxes more:taxes The limit on dues paid by an associate member is $148 for 2011. State income taxes more:label_state_20income_20taxes more:taxes   If the required annual dues are more than the limit, the entire amount is treated as income from an unrelated business unless the associate member category was formed or availed of for the principal purpose of furthering the organization's exempt purposes. State income taxes more:label_state_20income_20taxes more:taxes Deductions To qualify as allowable deductions in computing unrelated business taxable income, the expenses, depreciation, and similar items generally must be allowable income tax deductions that are directly connected with carrying on an unrelated trade or business. State income taxes more:label_state_20income_20taxes more:taxes They cannot be directly connected with excluded income. State income taxes more:label_state_20income_20taxes more:taxes For an exception to the “directly connected” requirement, see Charitable contributions deduction, under Modifications, later. State income taxes more:label_state_20income_20taxes more:taxes Directly Connected To be directly connected with the conduct of an unrelated business, deductions must have a proximate and primary relationship to carrying on that business. State income taxes more:label_state_20income_20taxes more:taxes For an exception, see Expenses attributable to exploitation of exempt activities, later. State income taxes more:label_state_20income_20taxes more:taxes Expenses attributable solely to unrelated business. State income taxes more:label_state_20income_20taxes more:taxes   Expenses, depreciation, and similar items attributable solely to the conduct of an unrelated business are proximately and primarily related to that business and qualify for deduction to the extent that they are otherwise allowable income tax deductions. State income taxes more:label_state_20income_20taxes more:taxes   For example, salaries of personnel employed full-time to conduct the unrelated business and depreciation of a building used entirely in the conduct of that business are deductible to the extent otherwise allowable. State income taxes more:label_state_20income_20taxes more:taxes Expenses attributable to dual use of facilities or personnel. State income taxes more:label_state_20income_20taxes more:taxes   When facilities or personnel are used both to conduct exempt functions and to conduct an unrelated trade or business, expenses, depreciation, and similar items attributable to the facilities or personnel must be allocated between the two uses on a reasonable basis. State income taxes more:label_state_20income_20taxes more:taxes The part of an item allocated to the unrelated trade or business is proximately and primarily related to that business and is allowable as a deduction in computing unrelated business taxable income if the expense is otherwise an allowable income tax deduction. State income taxes more:label_state_20income_20taxes more:taxes Example 1. State income taxes more:label_state_20income_20taxes more:taxes A school recognized as a tax-exempt organization contracts with an individual to conduct a summer tennis camp. State income taxes more:label_state_20income_20taxes more:taxes The school provides the tennis courts, housing, and dining facilities. State income taxes more:label_state_20income_20taxes more:taxes The contracted individual hires the instructors, recruits campers, and provides supervision. State income taxes more:label_state_20income_20taxes more:taxes The income the school receives from this activity is from a dual use of the facilities and personnel. State income taxes more:label_state_20income_20taxes more:taxes The school, in computing its unrelated business taxable income, may deduct an allocable part of the expenses attributable to the facilities and personnel. State income taxes more:label_state_20income_20taxes more:taxes Example 2. State income taxes more:label_state_20income_20taxes more:taxes An exempt organization with gross income from an unrelated trade or business pays its president $90,000 a year. State income taxes more:label_state_20income_20taxes more:taxes The president devotes approximately 10% of his time to the unrelated business. State income taxes more:label_state_20income_20taxes more:taxes To figure the organization's unrelated business taxable income, a deduction of $9,000 ($90,000 × 10%) is allowed for the salary paid to its president. State income taxes more:label_state_20income_20taxes more:taxes Expenses attributable to exploitation of exempt activities. State income taxes more:label_state_20income_20taxes more:taxes   Generally, expenses, depreciation, and similar items attributable to the conduct of an exempt activity are not deductible in computing unrelated business taxable income from an unrelated trade or business that exploits the exempt activity. State income taxes more:label_state_20income_20taxes more:taxes (See Exploitation of exempt functions under Not substantially related in chapter 3. State income taxes more:label_state_20income_20taxes more:taxes ) This is because they do not have a proximate and primary relationship to the unrelated trade or business, and therefore, they do not qualify as directly connected with that business. State income taxes more:label_state_20income_20taxes more:taxes Exception. State income taxes more:label_state_20income_20taxes more:taxes   Expenses, depreciation, and similar items may be treated as directly connected with the conduct of the unrelated business if all the following statements are true. State income taxes more:label_state_20income_20taxes more:taxes The unrelated business exploits the exempt activity. State income taxes more:label_state_20income_20taxes more:taxes The unrelated business is a type normally conducted for profit by taxable organizations. State income taxes more:label_state_20income_20taxes more:taxes The exempt activity is a type normally conducted by taxable organizations in carrying on that type of business. State income taxes more:label_state_20income_20taxes more:taxes The amount treated as directly connected is the smaller of: The excess of these expenses, depreciation, and similar items over the income from, or attributable to, the exempt activity; or The gross unrelated business income reduced by all other expenses, depreciation, and other items that are actually directly connected. State income taxes more:label_state_20income_20taxes more:taxes   The application of these rules to an advertising activity that exploits an exempt publishing activity is explained next. State income taxes more:label_state_20income_20taxes more:taxes Exploitation of Exempt Activity—Advertising Sales The sale of advertising in a periodical of an exempt organization that contains editorial material related to the accomplishment of the organization's exempt purpose is an unrelated business that exploits an exempt activity, the circulation and readership of the periodical. State income taxes more:label_state_20income_20taxes more:taxes Therefore, in addition to direct advertising costs, exempt activity costs (expenses, depreciation, and similar expenses attributable to the production and distribution of the editorial or readership content) can be treated as directly connected with the conduct of the advertising activity. State income taxes more:label_state_20income_20taxes more:taxes (See Expenses attributable to exploitation of exempt activities under Directly Connected, earlier. State income taxes more:label_state_20income_20taxes more:taxes ) Figuring unrelated business taxable income (UBTI). State income taxes more:label_state_20income_20taxes more:taxes   The UBTI of an advertising activity is the amount shown in the following chart. State income taxes more:label_state_20income_20taxes more:taxes IF gross advertising income is . State income taxes more:label_state_20income_20taxes more:taxes . State income taxes more:label_state_20income_20taxes more:taxes . State income taxes more:label_state_20income_20taxes more:taxes THEN UBTI is . State income taxes more:label_state_20income_20taxes more:taxes . State income taxes more:label_state_20income_20taxes more:taxes . State income taxes more:label_state_20income_20taxes more:taxes More than direct advertising costs The excess advertising income, reduced (but not below zero) by the excess, if any, of readership costs over circulation income. State income taxes more:label_state_20income_20taxes more:taxes Equal to or less than direct advertising costs Zero. State income taxes more:label_state_20income_20taxes more:taxes   • Circulation income and readership costs are not taken into account. State income taxes more:label_state_20income_20taxes more:taxes   • Any excess advertising costs reduce (but not below zero) UBTI from any other unrelated business activity. State income taxes more:label_state_20income_20taxes more:taxes   The terms used in the chart are explained in the following discussions. State income taxes more:label_state_20income_20taxes more:taxes Periodical Income Gross advertising income. State income taxes more:label_state_20income_20taxes more:taxes   This is all the income from the unrelated advertising activities of an exempt organization periodical. State income taxes more:label_state_20income_20taxes more:taxes Circulation income. State income taxes more:label_state_20income_20taxes more:taxes   This is all the income from the production, distribution, or circulation of an exempt organization's periodical (other than gross advertising income). State income taxes more:label_state_20income_20taxes more:taxes It includes all amounts from the sale or distribution of the readership content of the periodical, such as income from subscriptions. State income taxes more:label_state_20income_20taxes more:taxes It also includes allocable membership receipts if the right to receive the periodical is associated with a membership or similar status in the organization. State income taxes more:label_state_20income_20taxes more:taxes Allocable membership receipts. State income taxes more:label_state_20income_20taxes more:taxes   This is the part of membership receipts (dues, fees, or other charges associated with membership) equal to the amount that would have been charged and paid for the periodical if: The periodical was published by a taxable organization, The periodical was published for profit, and The member was an unrelated party dealing with the taxable organization at arm's length. State income taxes more:label_state_20income_20taxes more:taxes   The amount used to allocate membership receipts is the amount shown in the following chart. State income taxes more:label_state_20income_20taxes more:taxes   For this purpose, the total periodical costs are the sum of the direct advertising costs and the readership costs, explained under Periodical Costs, later. State income taxes more:label_state_20income_20taxes more:taxes The cost of other exempt activities means the total expenses incurred by the organization in connection with its other exempt activities, not offset by any income earned by the organization from those activities. State income taxes more:label_state_20income_20taxes more:taxes IF . State income taxes more:label_state_20income_20taxes more:taxes . State income taxes more:label_state_20income_20taxes more:taxes . State income taxes more:label_state_20income_20taxes more:taxes THEN the amount used to allocate membership receipts is . State income taxes more:label_state_20income_20taxes more:taxes . State income taxes more:label_state_20income_20taxes more:taxes . State income taxes more:label_state_20income_20taxes more:taxes 20% or more of the total circulation consists of sales to nonmembers The subscription price charged nonmembers. State income taxes more:label_state_20income_20taxes more:taxes The above condition does not apply, and 20% or more of the members pay reduced dues because they do not receive the periodical The reduction in dues for a member not receiving the periodical. State income taxes more:label_state_20income_20taxes more:taxes Neither of the above conditions applies The membership receipts multiplied by this fraction:   Total periodical costs Total periodical costs Plus Cost of other exempt activities Example 1. State income taxes more:label_state_20income_20taxes more:taxes U is an exempt scientific organization with 10,000 members who pay annual dues of $15. State income taxes more:label_state_20income_20taxes more:taxes One of U's activities is publishing a monthly periodical distributed to all of its members. State income taxes more:label_state_20income_20taxes more:taxes U also distributes 5,000 additional copies of its periodical to nonmembers, who subscribe for $10 a year. State income taxes more:label_state_20income_20taxes more:taxes Since the nonmember circulation of U's periodical represents one-third (more than 20%) of its total circulation, the subscription price charged to nonmembers is used to determine the part of U's membership receipts allocable to the periodical. State income taxes more:label_state_20income_20taxes more:taxes Thus, U's allocable membership receipts are $100,000 ($10 times 10,000 members), and U's total circulation income for the periodical is $150,000 ($100,000 from members plus $50,000 from sales to nonmembers). State income taxes more:label_state_20income_20taxes more:taxes Example 2. State income taxes more:label_state_20income_20taxes more:taxes Assume the same facts except that U sells only 500 copies of its periodical to nonmembers, at a price of $10 a year. State income taxes more:label_state_20income_20taxes more:taxes Assume also that U's members may elect not to receive the periodical, in which case their dues are reduced from $15 a year to $6 a year, and that only 3,000 members elect to receive the periodical and pay the full dues of $15 a year. State income taxes more:label_state_20income_20taxes more:taxes U's stated subscription price of $9 to members consistently results in an excess of total income (including gross advertising income) attributable to the periodical over total costs of the periodical. State income taxes more:label_state_20income_20taxes more:taxes Since the 500 copies of the periodical distributed to nonmembers represent only 14% of the 3,500 copies distributed, the $10 subscription price charged to nonmembers is not used to determine the part of membership receipts allocable to the periodical. State income taxes more:label_state_20income_20taxes more:taxes Instead, since 70% of the members elect not to receive the periodical and pay $9 less per year in dues, the $9 price is used to determine the subscription price charged to members. State income taxes more:label_state_20income_20taxes more:taxes Thus, the allocable membership receipts will be $9 a member, or $27,000 ($9 times 3,000 copies). State income taxes more:label_state_20income_20taxes more:taxes U's total circulation income is $32,000 ($27,000 plus the $5,000 from nonmember subscriptions). State income taxes more:label_state_20income_20taxes more:taxes Periodical Costs Direct advertising costs. State income taxes more:label_state_20income_20taxes more:taxes   These are expenses, depreciation, and similar items of deduction directly connected with selling and publishing advertising in the periodical. State income taxes more:label_state_20income_20taxes more:taxes   Examples of allowable deductions under this classification include agency commissions and other direct selling costs, such as transportation and travel expenses, office salaries, promotion and research expenses, and office overhead directly connected with the sale of advertising lineage in the periodical. State income taxes more:label_state_20income_20taxes more:taxes Also included are other deductions commonly classified as advertising costs under standard account classifications, such as artwork and copy preparation, telephone, telegraph, postage, and similar costs directly connected with advertising. State income taxes more:label_state_20income_20taxes more:taxes   In addition, direct advertising costs include the part of mechanical and distribution costs attributable to advertising lineage. State income taxes more:label_state_20income_20taxes more:taxes For this purpose, the general account classifications of items includable in mechanical and distribution costs ordinarily employed in business-paper and consumer-publication accounting provide a guide for the computation. State income taxes more:label_state_20income_20taxes more:taxes Accordingly, the mechanical and distribution costs include the part of the costs and other expenses of composition, press work, binding, mailing (including paper and wrappers used for mailing), and bulk postage attributable to the advertising lineage of the publication. State income taxes more:label_state_20income_20taxes more:taxes   In the absence of specific and detailed records, the part of mechanical and distribution costs attributable to the periodical's advertising lineage can be based on the ratio of advertising lineage to total lineage in the periodical, if this allocation is reasonable. State income taxes more:label_state_20income_20taxes more:taxes Readership costs. State income taxes more:label_state_20income_20taxes more:taxes   These are all expenses, depreciation, and similar items that are directly connected with the production and distribution of the readership content of the periodical. State income taxes more:label_state_20income_20taxes more:taxes Costs partly attributable to other activities. State income taxes more:label_state_20income_20taxes more:taxes   Deductions properly attributable to exempt activities other than publishing the periodical may not be allocated to the periodical. State income taxes more:label_state_20income_20taxes more:taxes When expenses are attributable both to the periodical and to the organization's other activities, an allocation must be made on a reasonable basis. State income taxes more:label_state_20income_20taxes more:taxes The method of allocation will vary with the nature of the item, but once adopted, should be used consistently. State income taxes more:label_state_20income_20taxes more:taxes Allocations based on dollar receipts from various exempt activities generally are not reasonable since receipts usually do not accurately reflect the costs associated with specific activities that an exempt organization conducts. State income taxes more:label_state_20income_20taxes more:taxes Consolidated Periodicals If an exempt organization publishes more than one periodical to produce income, it may treat all of them (but not less than all) as one in determining unrelated business taxable income from selling advertising. State income taxes more:label_state_20income_20taxes more:taxes It treats the gross income from all the periodicals, and the deductions directly connected with them, on a consolidated basis. State income taxes more:label_state_20income_20taxes more:taxes Consolidated treatment, once adopted, must be followed consistently and is binding. State income taxes more:label_state_20income_20taxes more:taxes This treatment can be changed only with the consent of the Internal Revenue Service. State income taxes more:label_state_20income_20taxes more:taxes An exempt organization's periodical is published to produce income if: The periodical generates gross advertising income to the organization equal to at least 25% of its readership costs, and Publishing the periodical is an activity engaged in for profit. State income taxes more:label_state_20income_20taxes more:taxes Whether the publication of a periodical is an activity engaged in for profit can be determined only by all the facts and circumstances in each case. State income taxes more:label_state_20income_20taxes more:taxes The facts and circumstances must show that the organization carries on the activity for economic profit, although there may not be a profit in a particular year. State income taxes more:label_state_20income_20taxes more:taxes For example, if an organization begins publishing a new periodical whose total costs exceed total income in the start-up years because of lack of advertising sales, that does not mean that the organization did not have as its objective an economic profit. State income taxes more:label_state_20income_20taxes more:taxes The organization may establish that it had this objective by showing it can reasonably expect advertising sales to increase, so that total income will exceed costs within a reasonable time. State income taxes more:label_state_20income_20taxes more:taxes Example. State income taxes more:label_state_20income_20taxes more:taxes Y, an exempt trade association, publishes three periodicals that it distributes to its members: a weekly newsletter, a monthly magazine, and a quarterly journal. State income taxes more:label_state_20income_20taxes more:taxes Both the monthly magazine and the quarterly journal contain advertising that accounts for gross advertising income equal to more than 25% of their respective readership costs. State income taxes more:label_state_20income_20taxes more:taxes Similarly, the total income attributable to each periodical has exceeded the total deductions attributable to each periodical for substantially all the years they have been published. State income taxes more:label_state_20income_20taxes more:taxes The newsletter carries no advertising and its annual subscription price is not intended to cover the cost of publication. State income taxes more:label_state_20income_20taxes more:taxes The newsletter is a service that Y distributes to all of its members in an effort to keep them informed of changes occurring in the business world. State income taxes more:label_state_20income_20taxes more:taxes It is not engaged in for profit. State income taxes more:label_state_20income_20taxes more:taxes Under these circumstances, Y may consolidate the income and deductions from the monthly and quarterly journals in computing its unrelated business taxable income. State income taxes more:label_state_20income_20taxes more:taxes It may not consolidate the income and deductions from the newsletter with the income and deductions of its other periodicals, since the newsletter is not published for the production of income. State income taxes more:label_state_20income_20taxes more:taxes Modifications Net operating loss deduction. State income taxes more:label_state_20income_20taxes more:taxes   The net operating loss (NOL) deduction (as provided in section 172) is allowed in computing unrelated business taxable income. State income taxes more:label_state_20income_20taxes more:taxes However, the NOL for any tax year, the carrybacks and carryovers of NOLs, and the NOL deduction are determined without taking into account any amount of income or deduction that has been specifically excluded in computing unrelated business taxable income. State income taxes more:label_state_20income_20taxes more:taxes For example, a loss from an unrelated trade or business is not diminished because dividend income was received. State income taxes more:label_state_20income_20taxes more:taxes   If this were not done, organizations would, in effect, be taxed on their exempt income, since unrelated business losses then would be offset by dividends, interest, and other excluded income. State income taxes more:label_state_20income_20taxes more:taxes This would reduce the loss that could be applied against unrelated business income of prior or future tax years. State income taxes more:label_state_20income_20taxes more:taxes Therefore, to preserve the immunity of exempt income, all NOL computations are limited to those items of income and deductions that affect the unrelated business taxable income. State income taxes more:label_state_20income_20taxes more:taxes   In line with this concept, an NOL carryback or carryover is allowed only from a tax year for which the organization is subject to tax on unrelated business income. State income taxes more:label_state_20income_20taxes more:taxes   For example, if an organization just became subject to the tax last year, its NOL for that year is not a carryback to a prior year when it had no unrelated business taxable income, nor is its NOL carryover to succeeding years reduced by the related income of those prior years. State income taxes more:label_state_20income_20taxes more:taxes   However, in determining the span of years for which an NOL may be carried back or forward, the tax years for which the organization is not subject to the tax on unrelated business income are counted. State income taxes more:label_state_20income_20taxes more:taxes For example, if an organization was subject to the tax for 2009 and had an NOL for that year, the last tax year to which any part of that loss may be carried over is 2029, regardless of whether the organization was subject to the unrelated business income tax in any of the intervening years. State income taxes more:label_state_20income_20taxes more:taxes   For more details on the NOL deduction, including property eligible for an extended carryback period, see sections 172 and 1400N, Publication 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts, and Publication 4492-B, Information for Affected Taxpayers in the Midwestern Disaster Areas. State income taxes more:label_state_20income_20taxes more:taxes Charitable contributions deduction. State income taxes more:label_state_20income_20taxes more:taxes   An exempt organization is allowed to deduct its charitable contributions in computing its unrelated business taxable income whether or not the contributions are directly connected with the unrelated business. State income taxes more:label_state_20income_20taxes more:taxes   To be deductible, the contribution must be paid to another qualified organization. State income taxes more:label_state_20income_20taxes more:taxes For example, an exempt university that operates an unrelated business may deduct a contribution made to another university for educational work, but may not claim a deduction for contributions of amounts spent for carrying out its own educational program. State income taxes more:label_state_20income_20taxes more:taxes   For purposes of the deduction, a distribution by a trust made under the trust instrument to a beneficiary, which itself is a qualified organization, is treated the same as a contribution. State income taxes more:label_state_20income_20taxes more:taxes Deduction limits. State income taxes more:label_state_20income_20taxes more:taxes   An exempt organization that is subject to the unrelated business income tax at corporate rates is allowed a deduction for charitable contributions up to 10% of its unrelated business taxable income computed without regard to the deduction for contributions. State income taxes more:label_state_20income_20taxes more:taxes See the Instructions for Form 990-T for more information. State income taxes more:label_state_20income_20taxes more:taxes    An exempt trust that is subject to the unrelated business income tax at trust rates generally is allowed a deduction for charitable contributions in the same amounts as allowed for individuals. State income taxes more:label_state_20income_20taxes more:taxes However, the limit on the deduction is determined in relation to the trust's unrelated business taxable income computed without regard to the deduction, rather than in relation to adjusted gross income. State income taxes more:label_state_20income_20taxes more:taxes   Contributions in excess of the limits just described may be carried over to the next 5 tax years. State income taxes more:label_state_20income_20taxes more:taxes A contribution carryover is not allowed, however, to the extent that it increases an NOL carryover. State income taxes more:label_state_20income_20taxes more:taxes Suspension of deduction limits for farmers and ranchers. State income taxes more:label_state_20income_20taxes more:taxes   The limitations discussed above are temporarily suspended for certain qualified conservation contributions of property used in agriculture or livestock production. State income taxes more:label_state_20income_20taxes more:taxes See the Instructions for Form 990-T for details. State income taxes more:label_state_20income_20taxes more:taxes Specific deduction. State income taxes more:label_state_20income_20taxes more:taxes   In computing unrelated business taxable income, a specific deduction of $1,000 is allowed. State income taxes more:label_state_20income_20taxes more:taxes However, the specific deduction is not allowed in computing an NOL or the NOL deduction. State income taxes more:label_state_20income_20taxes more:taxes   Generally, the deduction is limited to $1,000 regardless of the number of unrelated businesses in which the organization is engaged. State income taxes more:label_state_20income_20taxes more:taxes Exception. State income taxes more:label_state_20income_20taxes more:taxes   An exception is provided in the case of a diocese, province of a religious order, or a convention or association of churches that may claim a specific deduction for each parish, individual church, district, or other local unit. State income taxes more:label_state_20income_20taxes more:taxes In these cases, the specific deduction for each local unit is limited to the lower of: $1,000, or Gross income derived from an unrelated trade or business regularly conducted by the local unit. State income taxes more:label_state_20income_20taxes more:taxes   This exception applies only to parishes, districts, or other local units that are not separate legal entities, but are components of a larger entity (diocese, province, convention, or association) filing Form 990-T. State income taxes more:label_state_20income_20taxes more:taxes The parent organization must file a return reporting the unrelated business gross income and related deductions of all units that are not separate legal entities. State income taxes more:label_state_20income_20taxes more:taxes The local units cannot file separate returns. State income taxes more:label_state_20income_20taxes more:taxes However, each local unit that is separately incorporated must file its own return and cannot include, or be included with, any other entity. State income taxes more:label_state_20income_20taxes more:taxes See Title-holding corporations in chapter 1 for a discussion of the only situation in which more than one legal entity may be included on the same Form 990-T. State income taxes more:label_state_20income_20taxes more:taxes Example. State income taxes more:label_state_20income_20taxes more:taxes X is an association of churches and is divided into local units A, B, C, and D. State income taxes more:label_state_20income_20taxes more:taxes Last year, A, B, C, and D derived gross income of, respectively, $1,200, $800, $1,500, and $700 from unrelated businesses that they regularly conduct. State income taxes more:label_state_20income_20taxes more:taxes X may claim a specific deduction of $1,000 with respect to A, $800 with respect to B, $1,000 with respect to C, and $700 with respect to D. State income taxes more:label_state_20income_20taxes more:taxes Partnership Income or Loss An organization may have unrelated business income or loss as a member of a partnership, rather than through direct business dealings with the public. State income taxes more:label_state_20income_20taxes more:taxes If so, it must treat its share of the partnership income or loss as if it had conducted the business activity in its own capacity as a corporation or trust. State income taxes more:label_state_20income_20taxes more:taxes No distinction is made between limited and general partners. State income taxes more:label_state_20income_20taxes more:taxes The organization is required to notify the partnership of its tax-exempt status. State income taxes more:label_state_20income_20taxes more:taxes Thus, if an organization is a member of a partnership regularly engaged in a trade or business that is an unrelated trade or business with respect to the organization, the organization must include in its unrelated business taxable income its share of the partnership's gross income from the unrelated trade or business (whether or not distributed), and the deductions attributable to it. State income taxes more:label_state_20income_20taxes more:taxes The partnership income and deductions to be included in the organization's unrelated business taxable income are figured the same way as any income and deductions from an unrelated trade or business conducted directly by the organization. State income taxes more:label_state_20income_20taxes more:taxes The partnership is required to provide the organization this information on Schedule K-1. State income taxes more:label_state_20income_20taxes more:taxes Example. State income taxes more:label_state_20income_20taxes more:taxes An exempt educational organization is a partner in a partnership that operates a factory. State income taxes more:label_state_20income_20taxes more:taxes The partnership also holds stock in a corporation. State income taxes more:label_state_20income_20taxes more:taxes The exempt organization must include its share of the gross income from operating the factory in its unrelated business taxable income but may exclude its share of any dividends the partnership received from the corporation. State income taxes more:label_state_20income_20taxes more:taxes Different tax years. State income taxes more:label_state_20income_20taxes more:taxes   If the exempt organization and the partnership of which it is a member have different tax years, the partnership items that enter into the computation of the organization's unrelated business taxable income must be based on the income and deductions of the partnership for the partnership's tax year that ends within or with the organization's tax year. State income taxes more:label_state_20income_20taxes more:taxes S Corporation Income or Loss An organization that owns S corporation stock must take into account its share of the S corporation's income, deductions, or losses in figuring unrelated business taxable income, regardless of the actual source or nature of the income, deductions, and losses. State income taxes more:label_state_20income_20taxes more:taxes For example, the organization's share of the S corporation's interest and dividend income will be taxable, even though interest and dividends are normally excluded from unrelated business taxable income. State income taxes more:label_state_20income_20taxes more:taxes The organization must also take into account its gain or loss on the sale or other disposition of the S corporation stock in figuring unrelated business taxable income. State income taxes more:label_state_20income_20taxes more:taxes Special Rules for Foreign Organizations The unrelated business taxable income of a foreign organization exempt from tax under section 501(a) consists of the organization's: Unrelated business taxable income derived from sources within the United States but not effectively connected with the conduct of a trade or business within the United States, and Unrelated business taxable income effectively connected with the conduct of a trade or business within the United States, whether or not this income is derived from sources within the United States. State income taxes more:label_state_20income_20taxes more:taxes To determine whether income realized by a foreign organization is derived from sources within the United States or is effectively connected with the conduct of a trade or business within the United States, see sections 861 through 865 and the related regulations. State income taxes more:label_state_20income_20taxes more:taxes Special Rules for Social Clubs, VEBAs, SUBs, and GLSOs The following discussion applies to: Social clubs described in section 501(c)(7), Voluntary employees' beneficiary associations (VEBAs) described in section 501(c)(9), Supplemental unemployment compensation benefit trusts (SUBs) described in section 501(c)(17), and Group legal services organizations (GLSOs) described in section 501(c)(20). State income taxes more:label_state_20income_20taxes more:taxes These organizations must figure unrelated business taxable income under special rules. State income taxes more:label_state_20income_20taxes more:taxes Unlike other exempt organizations, they cannot exclude their investment income (dividends, interest, rents, etc. State income taxes more:label_state_20income_20taxes more:taxes ). State income taxes more:label_state_20income_20taxes more:taxes (See Exclusions under Income, earlier. State income taxes more:label_state_20income_20taxes more:taxes ) Therefore, they are generally subject to unrelated business income tax on this income. State income taxes more:label_state_20income_20taxes more:taxes The unrelated business taxable income of these organizations includes all gross income, less deductions directly connected with the production of that income, except that gross income for this purpose does not include exempt function income. State income taxes more:label_state_20income_20taxes more:taxes The dividends received by a corporation are not allowed in computing unrelated business taxable income because it is not an expense incurred in the production of income. State income taxes more:label_state_20income_20taxes more:taxes Losses from nonexempt activities. State income taxes more:label_state_20income_20taxes more:taxes   Losses from nonexempt activities of these organizations cannot be used to offset investment income unless the activities were undertaken with the intent to make a profit. State income taxes more:label_state_20income_20taxes more:taxes Example. State income taxes more:label_state_20income_20taxes more:taxes A private golf and country club that is a qualified tax-exempt social club has nonexempt function income from interest and from the sale of food and beverages to nonmembers. State income taxes more:label_state_20income_20taxes more:taxes The club sells food and beverages as a service to members and their guests rather than for the purpose of making a profit. State income taxes more:label_state_20income_20taxes more:taxes Therefore, any loss resulting from sales to nonmembers cannot be used to offset the club's interest income. State income taxes more:label_state_20income_20taxes more:taxes Modifications. State income taxes more:label_state_20income_20taxes more:taxes   The unrelated business taxable income is modified by any NOL or charitable contributions deduction and by the specific deduction (described earlier under Deductions). State income taxes more:label_state_20income_20taxes more:taxes Exempt function income. State income taxes more:label_state_20income_20taxes more:taxes   This is gross income from dues, fees, charges or similar items paid by members for goods, facilities, or services to the members or their dependents or guests, to further the organization's exempt purposes. State income taxes more:label_state_20income_20taxes more:taxes Exempt function income also includes income set aside for qualified purposes. State income taxes more:label_state_20income_20taxes more:taxes Income that is set aside. State income taxes more:label_state_20income_20taxes more:taxes   This is income set aside to be used for religious, charitable, scientific, literary, or educational purposes or for the prevention of cruelty to children or animals. State income taxes more:label_state_20income_20taxes more:taxes In addition, for a VEBA, SUB, or GLSO, it is income set aside to provide for the payment of life, sick, accident, or other benefits. State income taxes more:label_state_20income_20taxes more:taxes   However, any amounts set aside by a VEBA or SUB that exceed the organization's qualified asset account limit (determined under section 419A) are unrelated business income. State income taxes more:label_state_20income_20taxes more:taxes Special rules apply to the treatment of existing reserves for post-retirement medical or life insurance benefits. State income taxes more:label_state_20income_20taxes more:taxes These rules are explained in section 512(a)(3)(E)(ii). State income taxes more:label_state_20income_20taxes more:taxes   Income derived from an unrelated trade or business may not be set aside and therefore cannot be exempt function income. State income taxes more:label_state_20income_20taxes more:taxes In addition, any income set aside and later spent for other purposes must be included in unrelated business taxable income. State income taxes more:label_state_20income_20taxes more:taxes   Set-aside income is generally excluded from gross income only if it is set aside in the tax year in which it is otherwise includible in gross income. State income taxes more:label_state_20income_20taxes more:taxes However, income set aside on or before the date for filing Form 990-T, including extensions of time, may, at the election of the organization, be treated as having been set aside in the tax year for which the return was filed. State income taxes more:label_state_20income_20taxes more:taxes The income set aside must have been includible in gross income for that earlier year. State income taxes more:label_state_20income_20taxes more:taxes Nonrecognition of gain. State income taxes more:label_state_20income_20taxes more:taxes   If the organization sells property used directly in performing an exempt function and purchases other property used directly in performing an exempt function, any gain on the sale is recognized only to the extent that the sales price of the old property exceeds the cost of the new property. State income taxes more:label_state_20income_20taxes more:taxes The purchase of the new property must be made within 1 year before the date of sale of the old property or within 3 years after the date of sale. State income taxes more:label_state_20income_20taxes more:taxes   This rule also applies to gain from an involuntary conversion of the property resulting from its destruction in whole or in part, theft, seizure, requisition, or condemnation. State income taxes more:label_state_20income_20taxes more:taxes Special Rules for Veterans' Organizations Unrelated business taxable income of a veterans' organization that is exempt under section 501(c)(19) does not include the net income from insurance business that is properly set aside. State income taxes more:label_state_20income_20taxes more:taxes The organization may set aside income from payments received for life, sick, accident, or health insurance for the organization's members or their dependents for the payment of insurance benefits or reasonable costs of insurance administration, or for use exclusively for religious, charitable, scientific, literary, or educational purposes, or the prevention of cruelty to children or animals. State income taxes more:label_state_20income_20taxes more:taxes For details, see section 512(a)(4) and the regulations under that section. State income taxes more:label_state_20income_20taxes more:taxes Income From Controlled Organizations The exclusions for interest, annuities, royalties, and rents, explained earlier in this chapter under Income, may not apply to a payment of these items received by a controlling organization from its controlled organization. State income taxes more:label_state_20income_20taxes more:taxes The payment is included in the controlling organization's unrelated business taxable income to the extent it reduced the net unrelated income (or increased the net unrelated loss) of the controlled organization. State income taxes more:label_state_20income_20taxes more:taxes All deductions of the controlling organization directly connected with the amount included in its unrelated business taxable income are allowed. State income taxes more:label_state_20income_20taxes more:taxes Excess qualifying specified payments. State income taxes more:label_state_20income_20taxes more:taxes   Excess qualifying specified payments received or accrued from a controlled entity are included in a controlling exempt organization's unrelated business taxable income only on the amount that exceeds that which would have been paid or accrued if the payments had been determined under section 482. State income taxes more:label_state_20income_20taxes more:taxes Qualifying specified payments means any payments of interest, annuities, royalties, or rents received or accrued from the controlled organization pursuant to a binding written contract in effect on August 17, 2006, or to a contract which is a renewal, under substantially similar terms of a binding written contract in effect on August 17, 2006, and the payments are received or accrued before January 1, 2012. State income taxes more:label_state_20income_20taxes more:taxes   If a controlled participant is not required to file a U. State income taxes more:label_state_20income_20taxes more:taxes S. State income taxes more:label_state_20income_20taxes more:taxes income tax return, the participant must ensure that the copy or copies of the Regulations section 1. State income taxes more:label_state_20income_20taxes more:taxes 482-7 Cost Sharing Arrangement Statement and any updates are attached to Schedule M of any Form 5471, Information Return of U. State income taxes more:label_state_20income_20taxes more:taxes S. State income taxes more:label_state_20income_20taxes more:taxes Persons With Respect To Certain Foreign Corporations, any Form 5472, Information Return of a 25% Foreign-Owned U. State income taxes more:label_state_20income_20taxes more:taxes S. State income taxes more:label_state_20income_20taxes more:taxes Corporation or a Foreign Corporation Engaged in a U. State income taxes more:label_state_20income_20taxes more:taxes S. State income taxes more:label_state_20income_20taxes more:taxes Trade or Business, or any Form 8865, Return of U. State income taxes more:label_state_20income_20taxes more:taxes S. State income taxes more:label_state_20income_20taxes more:taxes Persons With Respect to Certain Foreign Partnerships, filed for that participant. State income taxes more:label_state_20income_20taxes more:taxes Addition to tax for valuation misstatements. State income taxes more:label_state_20income_20taxes more:taxes   Under section 512(b)(13)(E)(ii), the tax imposed on a controlling organization will be increased by 20 percent of the excess qualifying specified payments that are determined with or without any amendments or supplements, whichever is larger. State income taxes more:label_state_20income_20taxes more:taxes See section 512(b)(13)(E)(ii) for more information. State income taxes more:label_state_20income_20taxes more:taxes Net unrelated income. State income taxes more:label_state_20income_20taxes more:taxes   This is: For an exempt organization, its unrelated business taxable income, or For a nonexempt organization, the part of its taxable income that would be unrelated business taxable income if it were exempt and had the same exempt purposes as the controlling organization. State income taxes more:label_state_20income_20taxes more:taxes Net unrelated loss. State income taxes more:label_state_20income_20taxes more:taxes   This is: For an exempt organization, its NOL, or For a nonexempt organization, the part of its NOL that would be its NOL if it were exempt and had the same exempt purposes as the controlling organization. State income taxes more:label_state_20income_20taxes more:taxes Control. State income taxes more:label_state_20income_20taxes more:taxes   An organization is controlled if: For a corporation, the controlling organization owns (by vote or value) more than 50% of the stock, For a partnership, the controlling organization owns more than 50% of the profits or capital interests, or For any other organization, the controlling organization owns more than 50% of the beneficial interest. State income taxes more:label_state_20income_20taxes more:taxes For this purpose, constructive ownership of stock (determined under section 318) or other interests is taken into account. State income taxes more:label_state_20income_20taxes more:taxes   As a result, an exempt parent organization is treated as controlling any subsidiary in which it holds more than 50% of the voting power or value, whether directly (as in the case of a first-tier subsidiary) or indirectly (as in the case of a second-tier subsidiary). State income taxes more:label_state_20income_20taxes more:taxes Income from property financed with qualified 501(c)(3) bonds. State income taxes more:label_state_20income_20taxes more:taxes If any part of a 501(c)(3) organization's property financed with qualified 501(c)(3) bonds is used in a trade or business of any person other than a section 501(c)(3) organization or a governmental unit, and such use is not consistent with the requirements for qualified 501(c)(3) bonds under section 145, the section 501(c)(3) organization is considered to have received unrelated business income in the amount of the greater of the actual rental income or the fair rental value of the property for the period it is used. State income taxes more:label_state_20income_20taxes more:taxes No deduction is allowed for interest on the private activity bond. State income taxes more:label_state_20income_20taxes more:taxes See sections 150(b)(3) and (c) for more information. State income taxes more:label_state_20income_20taxes more:taxes Disposition of property received from taxable subsidiary and used in unrelated business. State income taxes more:label_state_20income_20taxes more:taxes A taxable 80%-owned subsidiary corporation of one or more tax-exempt entities is generally subject to tax on a distribution in liquidation of its assets to its exempt parent (or parents). State income taxes more:label_state_20income_20taxes more:taxes The assets are treated as if sold at fair market value. State income taxes more:label_state_20income_20taxes more:taxes Tax-exempt entities include organizations described in sections 501(a), 529, and 115, charitable remainder trusts, U. State income taxes more:label_state_20income_20taxes more:taxes S. State income taxes more:label_state_20income_20taxes more:taxes and foreign governments, Indian tribal governments, international organizations, and similar non-taxable organizations. State income taxes more:label_state_20income_20taxes more:taxes A taxable corporation that transfers substantially all of its assets to a tax-exempt entity in a transaction that otherwise qualifies for nonrecognition treatment must recognize gain on the transaction as if it sold the assets at fair market value. State income taxes more:label_state_20income_20taxes more:taxes However, such a transfer is not taxable if it qualifies as a like-kind exchange under section 1031 or an involuntary conversion under section 1033. State income taxes more:label_state_20income_20taxes more:taxes In such a case the built-in appreciation is preserved in the replacement property received in the transaction. State income taxes more:label_state_20income_20taxes more:taxes A corporation that changes status from taxable to tax-exempt is treated generally as if it transferred all of its assets to a tax-exempt entity immediately before the change in status (thus subjecting it to the tax on a deemed sale for fair market value). State income taxes more:label_state_20income_20taxes more:taxes This rule does not apply where the taxable corporation becomes exempt within 3 years of formation, or had previously been exempt and within several years (generally a period of 3 years) regains exemption, unless the principal purpose of the transactions is to avoid the tax on the change in status. State income taxes more:label_state_20income_20taxes more:taxes In the transactions described above, the taxable event is deferred for property that the tax-exempt entity immediately uses in an unrelated business. State income taxes more:label_state_20income_20taxes more:taxes If the parent later disposes of the property, then any gain (not in excess of the amount not recognized) is included in the parent's unrelated business taxable income. State income taxes more:label_state_20income_20taxes more:taxes If there is partial use of the assets in unrelated business, then there is partial recognition of gain or loss. State income taxes more:label_state_20income_20taxes more:taxes Property is treated as disposed if the tax-exempt entity no longer uses it in an unrelated business. State income taxes more:label_state_20income_20taxes more:taxes Losses on the transfer of assets to a tax-exempt entity are disallowed if part of a plan with a principal purpose of recognizing losses. State income taxes more:label_state_20income_20taxes more:taxes Income From Debt-Financed Property Investment income that would otherwise be excluded from an exempt organization's unrelated business taxable income (see Exclusions under Income earlier) must be included to the extent it is derived from debt-financed property. State income taxes more:label_state_20income_20taxes more:taxes The amount of income included is proportionate to the debt on the property. State income taxes more:label_state_20income_20taxes more:taxes Debt-Financed Property In general, the term “debt-financed property” means any property held to produce income (including gain from its disposition) for which there is an acquisition indebtedness at any time during the tax year (or during the 12-month period before the date of the property's disposal, if it was disposed of during the tax year). State income taxes more:label_state_20income_20taxes more:taxes It includes rental real estate, tangible personal property, and corporate stock. State income taxes more:label_state_20income_20taxes more:taxes Acquisition Indebtedness For any debt-financed property, acquisition indebtedness is the unpaid amount of debt incurred by an organization: When acquiring or improving the property, Before acquiring or improving the property if the debt would not have been incurred except for the acquisition or improvement, and After acquiring or improving the property if: The debt would not have been incurred except for the acquisition or improvement, and Incurring the debt was reasonably foreseeable when the property was acquired or improved. State income taxes more:label_state_20income_20taxes more:taxes The facts and circumstances of each situation determine whether incurring a debt was reasonably foreseeable. State income taxes more:label_state_20income_20taxes more:taxes That an organization may not have foreseen the need to incur a debt before acquiring or improving the property does not necessarily mean that incurring the debt later was not reasonably foreseeable. State income taxes more:label_state_20income_20taxes more:taxes Example 1. State income taxes more:label_state_20income_20taxes more:taxes Y, an exempt scientific organization, mortgages its laboratory to replace working capital used in remodeling an office building that Y rents to an insurance company for nonexempt purposes. State income taxes more:label_state_20income_20taxes more:taxes The debt is acquisition indebtedness since the debt, though incurred after the improvement of the office building, would not have been incurred without the improvement, and the debt was reasonably foreseeable when, to make the improvement, Y reduced its working capital below the amount necessary to continue current operations. State income taxes more:label_state_20income_20taxes more:taxes Example 2. State income taxes more:label_state_20income_20taxes more:taxes X, an exempt organization, forms a partnership with A and B. State income taxes more:label_state_20income_20taxes more:taxes The partnership agreement provides that all three partners will share equally in the profits of the partnership, each will invest $3 million, and X will be a limited partner. State income taxes more:label_state_20income_20taxes more:taxes X invests $1 million of its own funds in the partnership and $2 million of borrowed funds. State income taxes more:label_state_20income_20taxes more:taxes The partnership buys as its sole asset an office building that it leases to the public for nonexempt purposes. State income taxes more:label_state_20income_20taxes more:taxes The office building costs the partnership $24 million, of which $15 million is borrowed from Y bank. State income taxes more:label_state_20income_20taxes more:taxes The loan is secured by a mortgage on the entire office building. State income taxes more:label_state_20income_20taxes more:taxes By agreement with Y bank, X is not personally liable for payment of the mortgage. State income taxes more:label_state_20income_20taxes more:taxes X has acquisition indebtedness of $7 million. State income taxes more:label_state_20income_20taxes more:taxes This amount is the $2 million debt X incurred in acquiring the partnership interest, plus the $5 million that is X's allocable part of the partnership's debt incurred to buy the office building (one-third of $15 million). State income taxes more:label_state_20income_20taxes more:taxes Example 3. State income taxes more:label_state_20income_20taxes more:taxes A labor union advanced funds, from existing resources and without any borrowing, to its tax-exempt subsidiary title-holding company. State income taxes more:label_state_20income_20taxes more:taxes The subsidiary used the funds to pay a debt owed to a third party that was previously incurred in acquiring two income-producing office buildings. State income taxes more:label_state_20income_20taxes more:taxes Neither the union nor the subsidiary has incurred any further debt in acquiring or improving the property. State income taxes more:label_state_20income_20taxes more:taxes The union has no outstanding debt on the property. State income taxes more:label_state_20income_20taxes more:taxes The subsidiary's debt to the union is represented by a demand note on which the subsidiary makes payments whenever it has the available cash. State income taxes more:label_state_20income_20taxes more:taxes The books of the union and the subsidiary list the outstanding debt as interorganizational indebtedness. State income taxes more:label_state_20income_20taxes more:taxes Although the subsidiary's books show a debt to the union, it is not the type subject to the debt-financed property rules. State income taxes more:label_state_20income_20taxes more:taxes In this situation, the very nature of the title-holding company and the parent-subsidiary relationship shows this debt to be merely a matter of accounting between the two organizations. State income taxes more:label_state_20income_20taxes more:taxes Accordingly, the debt is not acquisition indebtedness. State income taxes more:label_state_20income_20taxes more:taxes Change in use of property. State income taxes more:label_state_20income_20taxes more:taxes   If an organization converts property that is not debt-financed property to a use that results in its treatment as debt-financed property, the outstanding principal debt on the property is thereafter treated as acquisition indebtedness. State income taxes more:label_state_20income_20taxes more:taxes Example. State income taxes more:label_state_20income_20taxes more:taxes Four years ago a university borrowed funds to acquire an apartment building as housing for married students. State income taxes more:label_state_20income_20taxes more:taxes Last year, the university rented the apartment building to the public for nonexempt purposes. State income taxes more:label_state_20income_20taxes more:taxes The outstanding principal debt becomes acquisition indebtedness as of the time the building was first rented to the public. State income taxes more:label_state_20income_20taxes more:taxes Continued debt. State income taxes more:label_state_20income_20taxes more:taxes   If an organization sells property and, without paying off debt that would be acquisition indebtedness if the property were debt-financed property, buys property that is otherwise debt-financed property, the unpaid debt is acquisition indebtedness for the new property. State income taxes more:label_state_20income_20taxes more:taxes This is true even if the original property was not debt-financed property. State income taxes more:label_state_20income_20taxes more:taxes Example. State income taxes more:label_state_20income_20taxes more:taxes To house its administration offices, an exempt organization bought a building using $600,000 of its own funds and $400,000 of borrowed funds secured by a pledge of its securities. State income taxes more:label_state_20income_20taxes more:taxes The office building was not debt-financed property. State income taxes more:label_state_20income_20taxes more:taxes The organization later sold the building for $1 million without repaying the $400,000 loan. State income taxes more:label_state_20income_20taxes more:taxes It used the sale proceeds to buy an apartment building it rents to the general public. State income taxes more:label_state_20income_20taxes more:taxes The unpaid debt of $400,000 is acquisition indebtedness with respect to the apartment building. State income taxes more:label_state_20income_20taxes more:taxes Property acquired subject to mortgage or lien. State income taxes more:label_state_20income_20taxes more:taxes   If property (other than certain gifts, bequests, and devises) is acquired subject to a mortgage, the outstanding principal debt secured by that mortgage is treated as acquisition indebtedness even if the organization did not assume or agree to pay the debt. State income taxes more:label_state_20income_20taxes more:taxes Example. State income taxes more:label_state_20income_20taxes more:taxes An exempt organization paid $50,000 for real property valued at $150,000 and subject to a $100,000 mortgage. State income taxes more:label_state_20income_20taxes more:taxes The $100,000 of outstanding principal debt is acquisition indebtedness, as though the organization had borrowed $100,000 to buy the property. State income taxes more:label_state_20income_20taxes more:taxes Liens similar to a mortgage. State income taxes more:label_state_20income_20taxes more:taxes   In determining acquisition indebtedness, a lien similar to a mortgage is treated as a mortgage. State income taxes more:label_state_20income_20taxes more:taxes A lien is similar to a mortgage if title to property is encumbered by the lien for a creditor's benefit. State income taxes more:label_state_20income_20taxes more:taxes However, when state law provides that a lien for taxes or assessments attaches to property before the taxes or assessments become due and payable, the lien is not treated as a mortgage until after the taxes or assessments have become due and payable and the organization has had an opportunity to pay the lien in accordance with state law. State income taxes more:label_state_20income_20taxes more:taxes Liens similar to mortgages include (but are not limited to): Deeds of trust, Conditional sales contracts, Chattel mortgages, Security interests under the Uniform Commercial Code, Pledges, Agreements to hold title in escrow, and Liens for taxes or assessments (other than those discussed earlier in this paragraph). State income taxes more:label_state_20income_20taxes more:taxes Exception for property acquired by gift, bequest, or devise. State income taxes more:label_state_20income_20taxes more:taxes   If property subject to a mortgage is acquired by gift, bequest, or devise, the outstanding principal debt secured by the mortgage is not treated as acquisition indebtedness during the 10-year period following the date the organization receives the property. State income taxes more:label_state_20income_20taxes more:taxes However, this applies to a gift of property only if:    The mortgage was placed on the property more than 5 years before the date the organization received it, and The donor held the property for more than 5 years before the date the organization received it. State income taxes more:label_state_20income_20taxes more:taxes   This exception does not apply if an organization assumes and agrees to pay all or part of the debt secured by the mortgage or makes any payment for the equity in the property owned by the donor or decedent (other than a payment under an annuity obligation excluded from the definition of acquisition indebtedness, discussed under Debt That Is Not Acquisition Indebtedness, later). State income taxes more:label_state_20income_20taxes more:taxes   Whether an organization has assumed and agreed to pay all or part of a debt in order to acquire the property is determined by the facts and circumstances of each situation. State income taxes more:label_state_20income_20taxes more:taxes Modifying existing debt. State income taxes more:label_state_20income_20taxes more:taxes   Extending, renewing, or refinancing an existing debt is considered a continuation of that debt to the extent its outstanding principal does not increase. State income taxes more:label_state_20income_20taxes more:taxes When the principal of the modified debt is more than the outstanding principal of the old debt, the excess is treated as a separate debt. State income taxes more:label_state_20income_20taxes more:taxes Extension or renewal. State income taxes more:label_state_20income_20taxes more:taxes   In general, any modification or substitution of the terms of a debt by an organization is considered an extension or renewal of the original debt, rather than the start of a new one, to the extent that the outstanding principal of the debt does not increase. State income taxes more:label_state_20income_20taxes more:taxes   The following are examples of acts resulting in the extension or renewal of a debt: Substituting liens to secure the debt, Substituting obligees whether or not with the organization's consent, Renewing, extending, or accelerating the payment terms of the debt, and Adding, deleting, or substituting sureties or other primary or secondary obligors. State income taxes more:label_state_20income_20taxes more:taxes Debt increase. State income taxes more:label_state_20income_20taxes more:taxes   If the outstanding principal of a modified debt is more than that of the unmodified debt, and only part of the refinanced debt is acquisition indebtedness, the payments on the refinanced debt must be allocated between the old debt and the excess. State income taxes more:label_state_20income_20taxes more:taxes Example. State income taxes more:label_state_20income_20taxes more:taxes An organization has an outstanding principal debt of $500,000 that is treated as acquisition indebtedness. State income taxes more:label_state_20income_20taxes more:taxes The organization borrows another $100,000, which is not acquisition indebtedness, from the same lender, resulting in a $600,000 note for the total obligation. State income taxes more:label_state_20income_20taxes more:taxes A payment of $60,000 on the total obligation would reduce the acquisition indebtedness by $50,000 ($60,000 x $500,000/$600,000) and the excess debt by $10,000. State income taxes more:label_state_20income_20taxes more:taxes Debt That Is Not Acquisition Indebtedness Certain debt and obligations are not acquisition indebtedness. State income taxes more:label_state_20income_20taxes more:taxes These include the following. State income taxes more:label_state_20income_20taxes more:taxes Debts incurred in performing an exempt purpose. State income taxes more:label_state_20income_20taxes more:taxes Annuity obligations. State income taxes more:label_state_20income_20taxes more:taxes Securities loans. State income taxes more:label_state_20income_20taxes more:taxes Real property debts of qualified organizations. State income taxes more:label_state_20income_20taxes more:taxes Certain Federal financing. State income taxes more:label_state_20income_20taxes more:taxes Debt incurred in performing exempt purpose. State income taxes more:label_state_20income_20taxes more:taxes   A debt incurred in performing an exempt purpose is not acquisition indebtedness. State income taxes more:label_state_20income_20taxes more:taxes For example, acquisition indebtedness does not include the debt an exempt credit union incurs in accepting deposits from its members or the debt an exempt organization incurs in accepting payments from its members to provide them with insurance, retirement, or other benefits. State income taxes more:label_state_20income_20taxes more:taxes Annuity obligation. State income taxes more:label_state_20income_20taxes more:taxes   The organization's obligation to pay an annuity is not acquisition indebtedness if the annuity meets all the following requirements. State income taxes more:label_state_20income_20taxes more:taxes It must be the sole consideration (other than a mortgage on property acquired by gift, bequest, or devise that meets the exception discussed under Property acquired subject to mortgage or lien, earlier in this chapter) issued in exchange for the property received. State income taxes more:label_state_20income_20taxes more:taxes Its present value, at the time of exchange, must be less than 90% of the value of the prior owner's equity in the property received. State income taxes more:label_state_20income_20taxes more:taxes It must be payable over the lives of either one or two individuals living when issued. State income taxes more:label_state_20income_20taxes more:taxes It must be payable under a contract that: Does not guarantee a minimum nor specify a maximum number of payments, and Does not provide for any adjustment of the amount of the annuity payments based on the income received from the transferred property or any other property. State income taxes more:label_state_20income_20taxes more:taxes Example. State income taxes more:label_state_20income_20taxes more:taxes X, an exempt organization, receives property valued at $100,000 from donor A, a male age 60. State income taxes more:label_state_20income_20taxes more:taxes In return X promises to pay A $6,000 a year for the rest of A's life, with neither a minimum nor maximum number of payments specified. State income taxes more:label_state_20income_20taxes more:taxes The amounts paid under the annuity are not dependent on the income derived from the property transferred to X. State income taxes more:label_state_20income_20taxes more:taxes The present value of this annuity is $81,156, determined from IRS valuation tables. State income taxes more:label_state_20income_20taxes more:taxes Since the value of the annuity is less than 90 percent of A's $100,000 equity in the property transferred and the annuity meets all the other requirements just discussed, the obligation to make annuity payments is not acquisition indebtedness. State income taxes more:label_state_20income_20taxes more:taxes Securities loans. State income taxes more:label_state_20income_20taxes more:taxes   Acquisition indebtedness does not include an obligation of the exempt organization to return collateral security provided by the borrower of the exempt organization's securities under a securities loan agreement (discussed under Exclusions earlier in this chapter). State income taxes more:label_state_20income_20taxes more:taxes This transaction is not treated as the borrowing by the exempt organization of the collateral furnished by the borrower (usually a broker) of the securities. State income taxes more:label_state_20income_20taxes more:taxes   However, if the exempt organization incurred debt to buy the loaned securities, any income from the securities (including income from
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Form 1040, U.S. Individual Income Tax Return
Annual income tax return filed by citizens or residents of the United States
Related: Instructions for Form 1040   Tax Tables

Additional forms and schedules for filing Form 1040

Form 1040-A, U.S. Individual Income Tax Return
Shorter version of Form 1040 allows you to report limited types of income and to claim certain adjustments. You cannot itemize deductions if you file Form 1040-A
Related: Instructions for Form 1040-A

Form 1040-ES, Estimated Tax for Individuals
Figure and pay your estimated tax on income that is not subject to withholding (for example, earnings from self-employment, interest, dividends, rents, alimony, etc.)
Related: Instructions for Form 1040-ES

Form 1040-EZ, Income Tax Return for Single and Joint Filers With No Dependents
Simplest individual income tax return form to fill out. If you file Form 1040EZ, you cannot itemize deductions or claim any adjustments to income or tax credits (other than the earned income credit).
Related: Inst 1040-EZ

Need help choosing the right 1040 for your situation? Use the Interactive Tax Assistant (ITA) or read Which Form - 1040, 1040A, or 1040EZ?

Form 2848, Power of Attorney and Declaration of Representative
Use Form 2848 to authorize an individual to represent you before the IRS.
Related: Instructions for Form 2848

Form 8821, Tax Information Authorization
Authorizes any individual, corporation, firm, organization, or partnership you designate to inspect and/or receive your confidential information for the type of tax and the years or periods listed on the form.

Form 8949, Sales and Other Dispositions of Capital Assets
Reconcile amounts that were reported to you and the IRS on Form 1099-B or 1099-S (or substitute statement) with the amounts you report on your return.
Related: Instructions for Form 8949

Form 9465, Installment Agreement Request
Request monthly payments through an installment agreement if you're not financially able to pay your tax debt immediately. 
Related: Instructions for Form 9465  Online Payment Agreement Application

Form 990, Return of Organization Exempt From Income Tax
Used by tax-exempt organizations, nonexempt charitable trusts, and section 527 political organizations to provide the IRS with the information required by section 6033.
Related: Instructions for Form 990  Schedules for Form 990

Form SS-4, Application for Employer Identification Number (EIN)
Apply for an Employer Identification Number. An EIN is a nine-digit number assigned to employers, sole proprietors, corporations, partnerships, estates, trusts, certain individuals, and other entities for tax filing and reporting purposes.
Related: Instructions for Form SS-4  Apply for an EIN online

Form W-2, Wage and Tax Statement (Info copy only)
Employers must complete, file with the Social Security Administration, and furnish to their employees Form W-2 showing the wages paid and taxes withheld for the year for each employee.
Related: Instructions for Form W-2 and W-3  Order Employer Returns Online

Form W-4, Employee's Withholding Allowance Certificate
Complete Form W-4 so that your employer can withhold the correct federal income tax from your pay. Consider completing a new Form W-4 each year and when your personal or financial situation changes.
Related: Withholding Calculator

Form W-9, Request for Taxpayer Identification Number (TIN) and Certification
Provide your correct TIN to the person who is required to file an information return with the IRS to report, for example, income paid to you, real estate transactions, mortgage interest you paid, acquisition or abandonment of secured property, cancellation of debt, or contributions you made to an IRA.
Related: Instructions for the Requestor of Form W-9

Publication 15 (Circular E), Employer's Tax Guide
Explains your tax responsibilities as an employer. It also includes tax tables that you need to figure the taxes to withhold from each employee.
Related: Read Pub 15 Online

Publication 17, Your Federal Income Tax
Explains the general rules for filing a federal income tax return. It supplements the information contained in your tax form instruction booklet. It explains the tax law to make sure you pay only the tax you owe and no more.
Related: Read Pub 17 Online

Publication 502, Medical and Dental Expenses
Explains the itemized deduction for medical and dental expenses that you claim on Schedule A (Form 1040).
Related: Read Pub 502 Online

Publication 590, Individual Retirement Arrangements (IRAs)
Explains individual retirement arrangements (IRAs). An IRA is a personal savings plan that gives you tax advantages for setting aside money for retirement.
Related: Read Pub 590 Online

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