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State Tax Filing Software

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State Tax Filing Software

State tax filing software 3. State tax filing software   Investment Expenses Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Limits on DeductionsPassive activity. State tax filing software Other income (nonpassive income). State tax filing software Expenses. State tax filing software Additional information. State tax filing software Interest ExpensesInvestment Interest Limit on Deduction Bond Premium AmortizationSpecial rules to determine amounts payable on a bond. State tax filing software Basis. State tax filing software How To Figure Amortization Choosing To Amortize How To Report Amortization Expenses of Producing IncomeFees to buy or sell. State tax filing software Including mutual fund or REMIC expenses in income. State tax filing software Nondeductible ExpensesUsed as collateral. State tax filing software Short-sale expenses. State tax filing software Expenses for both tax-exempt and taxable income. State tax filing software State income taxes. State tax filing software Nondeductible amount. State tax filing software Basis adjustment. State tax filing software How To Report Investment Expenses When To Report Investment Expenses Topics - This chapter discusses: Limits on Deductions , Interest Expenses , Bond Premium Amortization , Expenses of Producing Income , Nondeductible Expenses , How To Report Investment Expenses , and When To Report Investment Expenses . State tax filing software Useful Items - You may want to see: Publication 535 Business Expenses 925 Passive Activity and At-Risk Rules 929 Tax Rules for Children and Dependents Form (and Instructions) Schedule A (Form 1040) Itemized Deductions 4952 Investment Interest Expense Deduction See chapter 5, How To Get Tax Help , for information about getting these publications and forms. State tax filing software Limits on Deductions Your deductions for investment expenses may be limited by: The at-risk rules, The passive activity loss limits, The limit on investment interest, or The 2% limit on certain miscellaneous itemized deductions. State tax filing software The at-risk rules and passive activity rules are explained briefly in this section. State tax filing software The limit on investment interest is explained later in this chapter under Interest Expenses . State tax filing software The 2% limit is explained later in this chapter under Expenses of Producing Income . State tax filing software At-risk rules. State tax filing software   Special at-risk rules apply to most income-producing activities. State tax filing software These rules limit the amount of loss you can deduct to the amount you risk losing in the activity. State tax filing software Generally, this is the cash and the adjusted basis of property you contribute to the activity. State tax filing software It also includes money you borrow for use in the activity if you are personally liable for repayment or if you use property not used in the activity as security for the loan. State tax filing software For more information, see Publication 925. State tax filing software Passive activity losses and credits. State tax filing software   The amount of losses and tax credits you can claim from passive activities is limited. State tax filing software Generally, you are allowed to deduct passive activity losses only up to the amount of your passive activity income. State tax filing software Also, you can use credits from passive activities only against tax on the income from passive activities. State tax filing software There are exceptions for certain activities, such as rental real estate activities. State tax filing software Passive activity. State tax filing software   A passive activity generally is any activity involving the conduct of any trade or business in which you do not materially participate and any rental activity. State tax filing software However, if you are involved in renting real estate, the activity is not a passive activity if both of the following are true. State tax filing software More than one-half of the personal services you perform during the year in all trades or businesses are performed in real property trades or businesses in which you materially participate. State tax filing software You perform more than 750 hours of services during the year in real property trades or businesses in which you materially participate. State tax filing software  The term “trade or business” generally means any activity that involves the conduct of a trade or business, is conducted in anticipation of starting a trade or business, or involves certain research or experimental expenditures. State tax filing software However, it does not include rental activities or certain activities treated as incidental to holding property for investment. State tax filing software   You are considered to materially participate in an activity if you are involved on a regular, continuous, and substantial basis in the operations of the activity. State tax filing software Other income (nonpassive income). State tax filing software    Generally, you can use losses from passive activities only to offset income from passive activities. State tax filing software You cannot use passive activity losses to offset your other income, such as your wages or your portfolio income. State tax filing software Portfolio income includes gross income from interest, dividends, annuities, or royalties that is not derived in the ordinary course of a trade or business. State tax filing software It also includes gains or losses (not derived in the ordinary course of a trade or business) from the sale or trade of property (other than an interest in a passive activity) producing portfolio income or held for investment. State tax filing software This includes capital gain distributions from mutual funds (and other regulated investment companies) and real estate investment trusts. State tax filing software   You cannot use passive activity losses to offset Alaska Permanent Fund dividends. State tax filing software Expenses. State tax filing software   Do not include in the computation of your passive activity income or loss: Expenses (other than interest) that are clearly and directly allocable to your portfolio income, or Interest expense properly allocable to portfolio income. State tax filing software However, this interest and other expenses may be subject to other limits. State tax filing software These limits are explained in the rest of this chapter. State tax filing software Additional information. State tax filing software   For more information about determining and reporting income and losses from passive activities, see Publication 925. State tax filing software Interest Expenses This section discusses interest expenses you may be able to deduct as an investor. State tax filing software For information on business interest, see chapter 4 of Publication 535. State tax filing software You cannot deduct personal interest expenses other than qualified home mortgage interest, as explained in Publication 936, Home Mortgage Interest Deduction, and interest on certain student loans, as explained in Publication 970. State tax filing software Investment Interest If you borrow money to buy property you hold for investment, the interest you pay is investment interest. State tax filing software You can deduct investment interest subject to the limit discussed later. State tax filing software However, you cannot deduct interest you incurred to produce tax-exempt income. State tax filing software See Tax-exempt income under Nondeductible Expenses, later. State tax filing software You also cannot deduct interest expenses on straddles discussed under Interest expense and carrying charges on straddles , later. State tax filing software Investment interest does not include any qualified home mortgage interest or any interest taken into account in computing income or loss from a passive activity. State tax filing software Investment property. State tax filing software   Property held for investment includes property that produces interest, dividends, annuities, or royalties not derived in the ordinary course of a trade or business. State tax filing software It also includes property that produces gain or loss (not derived in the ordinary course of a trade or business) from the sale or trade of property producing these types of income or held for investment (other than an interest in a passive activity). State tax filing software Investment property also includes an interest in a trade or business activity in which you did not materially participate (other than a passive activity). State tax filing software Partners, shareholders, and beneficiaries. State tax filing software   To determine your investment interest, combine your share of investment interest from a partnership, S corporation, estate, or trust with your other investment interest. State tax filing software Allocation of Interest Expense If you borrow money for business or personal purposes as well as for investment, you must allocate the debt among those purposes. State tax filing software Only the interest expense on the part of the debt used for investment purposes is treated as investment interest. State tax filing software The allocation is not affected by the use of property that secures the debt. State tax filing software Example 1. State tax filing software You borrow $10,000 and use $8,000 to buy stock. State tax filing software You use the other $2,000 to buy items for your home. State tax filing software Since 80% of the debt is used for, and allocated to, investment purposes, 80% of the interest on that debt is investment interest. State tax filing software The other 20% is nondeductible personal interest. State tax filing software Debt proceeds received in cash. State tax filing software   If you receive debt proceeds in cash, the proceeds are generally not treated as investment property. State tax filing software Debt proceeds deposited in account. State tax filing software   If you deposit debt proceeds in an account, that deposit is treated as investment property, regardless of whether the account bears interest. State tax filing software But, if you withdraw the funds and use them for another purpose, you must reallocate the debt to determine the amount considered to be for investment purposes. State tax filing software Example 2. State tax filing software Assume in Example 1 that you borrowed the money on March 1 and immediately bought the stock for $8,000. State tax filing software You did not buy the household items until June 1. State tax filing software You had deposited the $2,000 in the bank. State tax filing software You had no other transactions on the bank account until June. State tax filing software You did not sell the stock, and you made no principal payments on the debt. State tax filing software You paid interest from another account. State tax filing software The $8,000 is treated as being used for an investment purpose. State tax filing software The $2,000 is treated as being used for an investment purpose for the 3-month period. State tax filing software Your total interest expense for 3 months on this debt is investment interest. State tax filing software In June, when you spend the $2,000 for household items, you must begin to allocate 80% of the debt and the interest expense to investment purposes and 20% to personal purposes. State tax filing software Amounts paid within 30 days. State tax filing software   If you receive loan proceeds in cash or if the loan proceeds are deposited in an account, you can treat any payment (up to the amount of the proceeds) made from any account you own, or from cash, as made from those proceeds. State tax filing software This applies to any payment made within 30 days before or after the proceeds are received in cash or deposited in your account. State tax filing software   If you received the loan proceeds in cash, you can treat the payment as made on the date you received the cash instead of the date you actually made the payment. State tax filing software Payments on debt may require new allocation. State tax filing software   As you repay a debt used for more than one purpose, you must reallocate the balance. State tax filing software You must first reduce the amount allocated to personal purposes by the repayment. State tax filing software You then reallocate the rest of the debt to find what part is for investment purposes. State tax filing software Example 3. State tax filing software If, in Example 2 , you repay $500 on November 1, the entire repayment is applied against the amount allocated to personal purposes. State tax filing software The debt balance is now allocated as $8,000 for investment purposes and $1,500 for personal purposes. State tax filing software Until the next reallocation is necessary, 84% ($8,000 ÷ $9,500) of the debt and the interest expense is allocated to investment. State tax filing software Pass-through entities. State tax filing software   If you use borrowed funds to buy an interest in a partnership or S corporation, then the interest on those funds must be allocated based on the assets of the entity. State tax filing software If you contribute to the capital of the entity, you can make the allocation using any reasonable method. State tax filing software Additional allocation rules. State tax filing software   For more information about allocating interest expense, see chapter 4 of Publication 535. State tax filing software When To Deduct Investment Interest If you use the cash method of accounting, you must pay the interest before you can deduct it. State tax filing software If you use an accrual method of accounting, you can deduct interest over the period it accrues, regardless of when you pay it. State tax filing software For an exception, see Unpaid expenses owed to related party under When To Report Investment Expenses, later in this chapter. State tax filing software Example. State tax filing software You borrowed $1,000 on August 26, 2013, payable in 90 days at 12% interest. State tax filing software On November 26, 2013, you paid this with a new note for $1,030, due on February 26, 2014. State tax filing software If you use the cash method of accounting, you cannot deduct any part of the $30 interest on your return for 2013 because you did not actually pay it. State tax filing software If you use an accrual method, you may be able to deduct a portion of the interest on the loans through December 31, 2013, on your return for 2013. State tax filing software Interest paid in advance. State tax filing software   Generally, if you pay interest in advance for a period that goes beyond the end of the tax year, you must spread the interest over the tax years to which it belongs under the OID rules discussed in chapter 1. State tax filing software You can deduct in each year only the interest for that year. State tax filing software Interest on margin accounts. State tax filing software   If you are a cash method taxpayer, you can deduct interest on margin accounts to buy taxable securities as investment interest in the year you paid it. State tax filing software You are considered to have paid interest on these accounts only when you actually pay the broker or when payment becomes available to the broker through your account. State tax filing software Payment may become available to the broker through your account when the broker collects dividends or interest for your account, or sells securities held for you or received from you. State tax filing software   You cannot deduct any interest on money borrowed for personal reasons. State tax filing software Limit on interest deduction for market discount bonds. State tax filing software   The amount you can deduct for interest expense you paid or accrued during the year to buy or carry a market discount bond may be limited. State tax filing software This limit does not apply if you accrue the market discount and include it in your income currently. State tax filing software   Under this limit, the interest is deductible only to the extent it is more than: The total interest and OID includible in gross income for the bond for the year, plus The market discount for the number of days you held the bond during the year. State tax filing software Figure the amount in (2) above using the rules for figuring accrued market discount in chapter 1 under Market Discount Bonds . State tax filing software Interest not deducted due to limit. State tax filing software   In the year you dispose of the bond, you can deduct any interest expense you were not allowed to deduct in earlier years because of the limit. State tax filing software Choosing to deduct disallowed interest expense before the year of disposition. State tax filing software   You can choose to deduct disallowed interest expense in any year before the year you dispose of the bond, up to your net interest income from the bond during the year. State tax filing software The rest of the disallowed interest expense remains deductible in the year you dispose of the bond. State tax filing software Net interest income. State tax filing software   This is the interest income (including OID) from the bond that you include in income for the year, minus the interest expense paid or accrued during the year to purchase or carry the bond. State tax filing software Limit on interest deduction for short-term obligations. State tax filing software   If the current income inclusion rules discussed in chapter 1 under Discount on Short-Term Obligations do not apply to you, the amount you can deduct for interest expense you paid or accrued during the year to buy or carry a short-term obligation is limited. State tax filing software   The interest is deductible only to the extent it is more than: The amount of acquisition discount or OID on the obligation for the tax year, plus The amount of any interest payable on the obligation for the year that is not included in income because of your accounting method (other than interest taken into account in determining the amount of acquisition discount or OID). State tax filing software The method of determining acquisition discount and OID for short-term obligations is discussed in chapter 1 under Discount on Short-Term Obligations . State tax filing software Interest not deducted due to limit. State tax filing software   In the year you dispose of the obligation, or, if you choose, in another year in which you have net interest income from the obligation, you can deduct any interest expense you were not allowed to deduct for an earlier year because of the limit. State tax filing software Follow the same rules provided in the earlier discussion under Limit on interest deduction for market discount bonds , earlier. State tax filing software Limit on Deduction Generally, your deduction for investment interest expense is limited to your net investment income. State tax filing software You can carry over the amount of investment interest you could not deduct because of this limit to the next tax year. State tax filing software The interest carried over is treated as investment interest paid or accrued in that next year. State tax filing software You can carry over disallowed investment interest to the next tax year even if it is more than your taxable income in the year the interest was paid or accrued. State tax filing software Net Investment Income Determine the amount of your net investment income by subtracting your investment expenses (other than interest expense) from your investment income. State tax filing software Investment income. State tax filing software   This generally includes your gross income from property held for investment (such as interest, dividends, annuities, and royalties). State tax filing software Investment income does not include Alaska Permanent Fund dividends. State tax filing software It also does not include qualified dividends or net capital gain unless you choose to include them. State tax filing software Choosing to include qualified dividends. State tax filing software   Investment income generally does not include qualified dividends, discussed in chapter 1. State tax filing software However, you can choose to include all or part of your qualified dividends in investment income. State tax filing software   You make this choice by completing Form 4952, line 4g, according to its instructions. State tax filing software   If you choose to include any of your qualified dividends in investment income, you must reduce your qualified dividends that are eligible for the lower capital gains tax rates by the same amount. State tax filing software Choosing to include net capital gain. State tax filing software    Investment income generally does not include net capital gain from disposing of investment property (including capital gain distributions from mutual funds). State tax filing software However, you can choose to include all or part of your net capital gain in investment income. State tax filing software   You make this choice by completing Form 4952, line 4g, according to its instructions. State tax filing software   If you choose to include any of your net capital gain in investment income, you must reduce your net capital gain that is eligible for the lower capital gains tax rates by the same amount. State tax filing software   For more information about the capital gains rates, see Capital Gain Tax Rates in chapter 4. State tax filing software    Before making either choice, consider the overall effect on your tax liability. State tax filing software Compare your tax if you make one or both of these choices with your tax if you do not. State tax filing software Investment income of child reported on parent's return. State tax filing software   Investment income includes the part of your child's interest and dividend income you choose to report on your return. State tax filing software If the child does not have qualified dividends, Alaska Permanent Fund dividends, or capital gain distributions, this is the amount on line 6 of Form 8814. State tax filing software Include it on line 4a of Form 4952. State tax filing software Example. State tax filing software Your 8-year-old son has interest income of $2,200, which you choose to report on your own return. State tax filing software You enter $2,200 on Form 8814, lines 1a and 4, and $200 on lines 6 and 12 and complete Part II. State tax filing software Also enter $200 on Form 1040, line 21. State tax filing software Your investment income includes this $200. State tax filing software Child's qualified dividends. State tax filing software   If part of the amount you report is your child's qualified dividends, that part (which is reported on Form 1040, line 9b) generally does not count as investment income. State tax filing software However, you can choose to include all or part of it in investment income, as explained under Choosing to include qualified dividends , earlier. State tax filing software   Your investment income also includes the amount on Form 8814, line 12 (or, if applicable, the reduced amount figured next under Child's Alaska Permanent Fund dividends). State tax filing software Child's Alaska Permanent Fund dividends. State tax filing software   If part of the amount you report is your child's Alaska Permanent Fund dividends, that part does not count as investment income. State tax filing software To figure the amount of your child's income that you can consider your investment income, start with the amount on Form 8814, line 6. State tax filing software Multiply that amount by a percentage that is equal to the Alaska Permanent Fund dividends divided by the total amount on Form 8814, line 4. State tax filing software Subtract the result from the amount on Form 8814, line 12. State tax filing software Example. State tax filing software Your 10-year-old child has taxable interest income of $4,000 and Alaska Permanent Fund dividends of $2,000. State tax filing software You choose to report this on your return. State tax filing software You enter $4,000 on Form 8814, line 1a, $2,000 on line 2a, and $6,000 on line 4. State tax filing software You then enter $4,000 on Form 8814, lines 6 and 12, and Form 1040, line 21. State tax filing software You figure the amount of your child's income that you can consider your investment income as follows: $4,000 − ($4,000 × ($2,000 ÷ $6,000)) = $2,667 You include the result, $2,667, on Form 4952, line 4a. State tax filing software Child's capital gain distributions. State tax filing software   If part of the amount you report is your child's capital gain distributions, that part (which is reported on Schedule D (Form 1040), line 13, or Form 1040, line 13) generally does not count as investment income. State tax filing software However, you can choose to include all or part of it in investment income, as explained in Choosing to include net capital gain , earlier. State tax filing software   Your investment income also includes the amount on Form 8814, line 12 (or, if applicable, the reduced amount figured under Child's Alaska Permanent Fund dividends , earlier). State tax filing software Investment expenses. State tax filing software   Investment expenses are your allowed deductions (other than interest expense) directly connected with the production of investment income. State tax filing software Investment expenses that are included as a miscellaneous itemized deduction on Schedule A (Form 1040) are allowable deductions after applying the 2% limit that applies to miscellaneous itemized deductions. State tax filing software Use the smaller of: The investment expenses included on Schedule A (Form 1040), line 23, or The amount on Schedule A (Form 1040), line 27. State tax filing software See Expenses of Producing Income , later, for a discussion of the 2% limit. State tax filing software Losses from passive activities. State tax filing software   Income or expenses that you used in computing income or loss from a passive activity are not included in determining your investment income or investment expenses (including investment interest expense). State tax filing software See Publication 925 for information about passive activities. State tax filing software Example. State tax filing software Ted is a partner in a partnership that operates a business. State tax filing software However, he does not materially participate in the partnership's business. State tax filing software Ted's interest in the partnership is considered a passive activity. State tax filing software Ted's investment income from interest and dividends (other than qualified dividends) is $10,000. State tax filing software His investment expenses (other than interest) are $3,200 after taking into account the 2% limit on miscellaneous itemized deductions. State tax filing software His investment interest expense is $8,000. State tax filing software Ted also has income from the partnership of $2,000. State tax filing software Ted figures his net investment income and the limit on his investment interest expense deduction in the following way: Total investment income $10,000 Minus: Investment expenses (other than interest) 3,200 Net investment income $6,800 Deductible investment interest expense for the year $6,800 The $2,000 of income from the passive activity is not used in determining Ted's net investment income. State tax filing software His investment interest deduction for the year is limited to $6,800, the amount of his net investment income. State tax filing software Form 4952 Use Form 4952 to figure your deduction for investment interest. State tax filing software See Form 4952 for more information. State tax filing software Exception to use of Form 4952. State tax filing software   You do not have to complete Form 4952 or attach it to your return if you meet all of the following tests. State tax filing software Your investment interest expense is not more than your investment income from interest and ordinary dividends minus any qualified dividends. State tax filing software You do not have any other deductible investment expenses. State tax filing software You have no carryover of investment interest expense from 2012. State tax filing software   If you meet all of these tests, you can deduct all of your investment interest. State tax filing software    Bond Premium Amortization If you pay a premium to buy a bond, the premium is part of your basis in the bond. State tax filing software If the bond yields taxable interest, you can choose to amortize the premium. State tax filing software This generally means that each year, over the life of the bond, you use a part of the premium to reduce the amount of interest includible in your income. State tax filing software If you make this choice, you must reduce your basis in the bond by the amortization for the year. State tax filing software If the bond yields tax-exempt interest, you must amortize the premium. State tax filing software This amortized amount is not deductible in determining taxable income. State tax filing software However, each year you must reduce your basis in the bond (and tax-exempt interest otherwise reportable on Form 1040, line 8b) by the amortization for the year. State tax filing software Bond premium. State tax filing software   Bond premium is the amount by which your basis in the bond right after you get it is more than the total of all amounts payable on the bond after you get it (other than payments of qualified stated interest). State tax filing software For example, a bond with a maturity value of $1,000 generally would have a $50 premium if you buy it for $1,050. State tax filing software Special rules to determine amounts payable on a bond. State tax filing software   For special rules that apply to determine the amounts payable on a variable rate bond, an inflation-indexed debt instrument, a bond that provides for certain alternative payment schedules (for example, a bond callable prior to the stated maturity date of the bond), or a bond that provides for remote or incidental contingencies, see Regulations section 1. State tax filing software 171-3. State tax filing software Basis. State tax filing software   In general, your basis for figuring bond premium amortization is the same as your basis for figuring any loss on the sale of the bond. State tax filing software However, you may need to use a different basis for: Convertible bonds, Bonds you got in a trade, and Bonds whose basis has to be determined using the basis of the person who transferred the bond to you. State tax filing software See Regulations section 1. State tax filing software 171-1(e). State tax filing software Dealers. State tax filing software   A dealer in taxable bonds (or anyone who holds them mainly for sale to customers in the ordinary course of a trade or business or who would properly include bonds in inventory at the close of the tax year) cannot claim a deduction for amortizable bond premium. State tax filing software   See section 75 of the Internal Revenue Code for the treatment of bond premium by a dealer in tax-exempt bonds. State tax filing software How To Figure Amortization For bonds issued after September 27, 1985, you must amortize bond premium using a constant yield method on the basis of the bond's yield to maturity, determined by using the bond's basis and compounding at the close of each accrual period. State tax filing software Constant yield method. State tax filing software   Figure the bond premium amortization for each accrual period as follows. State tax filing software Step 1: Determine your yield. State tax filing software   Your yield is the discount rate that, when used in figuring the present value of all remaining payments to be made on the bond (including payments of qualified stated interest), produces an amount equal to your basis in the bond. State tax filing software Figure the yield as of the date you got the bond. State tax filing software It must be constant over the term of the bond and must be figured to at least two decimal places when expressed as a percentage. State tax filing software   If you do not know the yield, consult your broker or tax advisor. State tax filing software Databases available to them are likely to show the yield at the date of purchase. State tax filing software Step 2: Determine the accrual periods. State tax filing software   You can choose the accrual periods to use. State tax filing software They may be of any length and may vary in length over the term of the bond, but each accrual period can be no longer than 1 year and each scheduled payment of principal or interest must occur either on the first or the final day of an accrual period. State tax filing software The computation is simplest if accrual periods are the same as the intervals between interest payment dates. State tax filing software Step 3: Determine the bond premium for the accrual period. State tax filing software   To do this, multiply your adjusted acquisition price at the beginning of the accrual period by your yield. State tax filing software Then subtract the result from the qualified stated interest for the period. State tax filing software   Your adjusted acquisition price at the beginning of the first accrual period is the same as your basis. State tax filing software After that, it is your basis decreased by the amount of bond premium amortized for earlier periods and the amount of any payment previously made on the bond other than a payment of qualified stated interest. State tax filing software Example. State tax filing software On February 1, 2012, you bought a taxable bond for $110,000. State tax filing software The bond has a stated principal amount of $100,000, payable at maturity on February 1, 2019, making your premium $10,000 ($110,000 − $100,000). State tax filing software The bond pays qualified stated interest of $10,000 on February 1 of each year. State tax filing software Your yield is 8. State tax filing software 07439% compounded annually. State tax filing software You choose to use annual accrual periods ending on February 1 of each year. State tax filing software To find your bond premium amortization for the accrual period ending on February 1, 2013, you multiply the adjusted acquisition price at the beginning of the period ($110,000) by your yield. State tax filing software When you subtract the result ($8,881. State tax filing software 83) from the qualified stated interest for the period ($10,000), you find that your bond premium amortization for the period is $1,118. State tax filing software 17. State tax filing software Special rules to figure amortization. State tax filing software   For special rules to figure the bond premium amortization on a variable rate bond, an inflation-indexed debt instrument, a bond that provides for certain alternative payment schedules (for example, a bond callable prior to the stated maturity date of the bond), or a bond that provides for remote or incidental contingencies, see Regulations section 1. State tax filing software 171-3. State tax filing software Bonds Issued Before September 28, 1985 For these bonds, you can amortize bond premium using any reasonable method. State tax filing software Reasonable methods include: The straight-line method, and The Revenue Ruling 82-10 method. State tax filing software Straight-line method. State tax filing software   Under this method, the amount of your bond premium amortization is the same each month. State tax filing software Divide the number of months you held the bond during the year by the number of months from the beginning of the tax year (or, if later, the date of acquisition) to the date of maturity or earlier call date. State tax filing software Then multiply the result by the bond premium (reduced by any bond premium amortization claimed in earlier years). State tax filing software This gives you your bond premium amortization for the year. State tax filing software Revenue Ruling 82-10 method. State tax filing software   Under this method, the amount of your bond premium amortization increases each month over the life of the bond. State tax filing software This method is explained in Revenue Ruling 82-10, 1982-1 C. State tax filing software B. State tax filing software 46. State tax filing software Choosing To Amortize You choose to amortize the premium on taxable bonds by reporting the amortization for the year on your income tax return for the first tax year you want the choice to apply. State tax filing software You should attach a statement to your return that you are making this choice under section 171. State tax filing software See How To Report Amortization, next. State tax filing software This choice is binding for the year you make it and for later tax years. State tax filing software It applies to all taxable bonds you own in the year you make the choice and also to those you acquire in later years. State tax filing software You can change your decision to amortize bond premium only with the written approval of the IRS. State tax filing software To request approval, use Form 3115. State tax filing software For more information on requesting approval, see section 5 of the Appendix to Revenue Procedure 2011-14 in Internal Revenue Bulletin 2011-4. State tax filing software You can find Revenue Procedure 2011-14 at www. State tax filing software irs. State tax filing software gov/irb/2011-04_IRB/ar08. State tax filing software html. State tax filing software How To Report Amortization Subtract the bond premium amortization from your interest income from these bonds. State tax filing software Report the bond's interest on Schedule B (Form 1040A or 1040), line 1. State tax filing software Under your last entry on line 1, put a subtotal of all interest listed on line 1. State tax filing software Below this subtotal, print “ABP Adjustment,” and the total interest you received. State tax filing software Subtract this amount from the subtotal, and enter the result on line 2. State tax filing software Bond premium amortization more than interest. State tax filing software   If the amount of your bond premium amortization for an accrual period is more than the qualified stated interest for the period, you can deduct the difference as a miscellaneous itemized deduction on Schedule A (Form 1040), line 28. State tax filing software    But your deduction is limited to the amount by which your total interest inclusions on the bond in prior accrual periods is more than your total bond premium deductions on the bond in prior periods. State tax filing software Any amount you cannot deduct because of this limit can be carried forward to the next accrual period. State tax filing software Pre-1998 election to amortize bond premium. State tax filing software   Generally, if you first elected to amortize bond premium before 1998, the above treatment of the premium does not apply to bonds you acquired before 1988. State tax filing software Bonds acquired before October 23, 1986. State tax filing software   The amortization of the premium on these bonds is a miscellaneous itemized deduction not subject to the 2%-of-adjusted-gross-income limit. State tax filing software Bonds acquired after October 22, 1986, but before 1988. State tax filing software    The amortization of the premium on these bonds is investment interest expense subject to the investment interest limit, unless you choose to treat it as an offset to interest income on the bond. State tax filing software Expenses of Producing Income You deduct investment expenses (other than interest expenses) as miscellaneous itemized deductions on Schedule A (Form 1040). State tax filing software To be deductible, these expenses must be ordinary and necessary expenses paid or incurred: To produce or collect income, or To manage property held for producing income. State tax filing software The expenses must be directly related to the income or income-producing property, and the income must be taxable to you. State tax filing software The deduction for most income-producing expenses is subject to a 2% limit that also applies to certain other miscellaneous itemized deductions. State tax filing software The amount deductible is limited to the total of these miscellaneous deductions that is more than 2% of your adjusted gross income. State tax filing software For information on how to report expenses of producing income, see How To Report Investment Expenses , later. State tax filing software Attorney or accounting fees. State tax filing software   You can deduct attorney or accounting fees that are necessary to produce or collect taxable income. State tax filing software However, in some cases, attorney or accounting fees are part of the basis of property. State tax filing software See Basis of Investment Property in chapter 4. State tax filing software Automatic investment service and dividend reinvestment plans. State tax filing software   A bank may offer its checking account customers an automatic investment service so that, for a charge, each customer can choose to invest a part of the checking account each month in common stock. State tax filing software Or a bank that is a dividend disbursing agent for a number of publicly-owned corporations may set up an automatic dividend reinvestment service. State tax filing software Through that service, cash dividends are reinvested in more shares of stock after the bank deducts a service charge. State tax filing software   A corporation in which you own stock also may have a dividend reinvestment plan. State tax filing software This plan lets you choose to use your dividends to buy more shares of stock in the corporation instead of receiving the dividends in cash. State tax filing software   You can deduct the monthly service charge you pay to a bank to participate in an automatic investment service. State tax filing software If you participate in a dividend reinvestment plan, you can deduct any service charge subtracted from your cash dividends before the dividends are used to buy more shares of stock. State tax filing software Deduct the charges in the year you pay them. State tax filing software Clerical help and office rent. State tax filing software   You can deduct office expenses, such as rent and clerical help, you incurred in connection with your investments and collecting the taxable income on your investments. State tax filing software Cost of replacing missing securities. State tax filing software   To replace your taxable securities that are mislaid, lost, stolen, or destroyed, you may have to post an indemnity bond. State tax filing software You can deduct the premium you pay to buy the indemnity bond and the related incidental expenses. State tax filing software   You may, however, get a refund of part of the bond premium if the missing securities are recovered within a specified time. State tax filing software Under certain types of insurance policies, you can recover some of the expenses. State tax filing software   If you receive the refund in the tax year you pay the amounts, you can deduct only the difference between the expenses paid and the amount refunded. State tax filing software If the refund is made in a later tax year, you must include the refund in income in the year you received it, but only to the extent that the expenses decreased your tax in the year you deducted them. State tax filing software Fees to collect income. State tax filing software   You can deduct fees you pay to a broker, bank, trustee, or similar agent to collect investment income, such as your taxable bond or mortgage interest, or your dividends on shares of stock. State tax filing software Fees to buy or sell. State tax filing software   You cannot deduct a fee you pay to a broker to acquire investment property, such as stocks or bonds. State tax filing software You must add the fee to the cost of the property. State tax filing software See Basis of Investment Property in chapter 4. State tax filing software    You cannot deduct any broker's fees, commissions, or option premiums you pay (or that were netted out) in connection with the sale of investment property. State tax filing software They can be used only to figure gain or loss from the sale. State tax filing software See Reporting Capital Gains and Losses , in chapter 4, for more information about the treatment of these sale expenses. State tax filing software Investment counsel and advice. State tax filing software   You can deduct fees you pay for counsel and advice about investments that produce taxable income. State tax filing software This includes amounts you pay for investment advisory services. State tax filing software Safe deposit box rent. State tax filing software   You can deduct rent you pay for a safe deposit box if you use the box to store taxable income-producing stocks, bonds, or other investment-related papers and documents. State tax filing software If you also use the box to store tax-exempt securities or personal items, you can deduct only part of the rent. State tax filing software See Tax-exempt income under Nondeductible Expenses, later, to figure what part you can deduct. State tax filing software State and local transfer taxes. State tax filing software   You cannot deduct the state and local transfer taxes you pay when you buy or sell securities. State tax filing software If you pay these transfer taxes when you buy securities, you must treat them as part of the cost of the property. State tax filing software If you pay these transfer taxes when you sell securities, you must treat them as a reduction in the amount realized. State tax filing software Trustee's commissions for revocable trust. State tax filing software   If you set up a revocable trust and have its income distributed to you, you can deduct the commission you pay the trustee for managing the trust to the extent it is to produce or collect taxable income or to manage property. State tax filing software However, you cannot deduct any part of the commission used for producing or collecting tax-exempt income or for managing property that produces tax-exempt income. State tax filing software   If you are a cash-basis taxpayer and pay the commissions for several years in advance, you must deduct a part of the commission each year. State tax filing software You cannot deduct the entire amount in the year you pay it. State tax filing software Investment expenses from pass-through entities. State tax filing software   If you hold an interest in a partnership, S corporation, real estate mortgage investment conduit (REMIC), or a nonpublicly offered mutual fund, you can deduct your share of that entity's investment expenses. State tax filing software A partnership or S corporation will show your share of these expenses on your Schedule K-1 (Form 1065) or Schedule K-1 (Form 1120S). State tax filing software A nonpublicly offered mutual fund will indicate your share of these expenses in box 5 of Form 1099-DIV (or substitute statement). State tax filing software Publicly-offered mutual funds are discussed later. State tax filing software   If you hold an interest in a REMIC, any expenses relating to your residual interest investment will be shown on Schedule Q (Form 1066), line 3b. State tax filing software Any expenses relating to your regular interest investment will appear in box 5 of Form 1099-INT (or substitute statement) or box 9 of Form 1099-OID (or substitute statement). State tax filing software   Report your share of these investment expenses on Schedule A (Form 1040), subject to the 2% limit, in the same manner as your other investment expenses. State tax filing software Including mutual fund or REMIC expenses in income. State tax filing software   Your share of the investment expenses of a REMIC or a nonpublicly offered mutual fund, as described above, are considered to be indirect deductions through that pass-through entity. State tax filing software You must include in your gross income an amount equal to the expenses allocated to you, whether or not you are able to claim a deduction for those expenses. State tax filing software If you are a shareholder in a nonpublicly offered mutual fund, you must include on your return the full amount of ordinary dividends or other distributions of stock, as shown in box 1a of Form 1099-DIV (or substitute statement). State tax filing software If you are a residual interest holder in a REMIC, you must report as ordinary income on Schedule E (Form 1040) the total amounts shown on Schedule Q (Form 1066), lines 1b and 3b. State tax filing software If you are a REMIC regular interest holder, you must include the amount of any expense allocation you received on Form 1040, line 8a. State tax filing software Publicly-offered mutual funds. State tax filing software   Most mutual funds are publicly offered. State tax filing software These mutual funds, generally, are traded on an established securities exchange. State tax filing software These funds do not pass investment expenses through to you. State tax filing software Instead, the dividend income they report to you in box 1a of Form 1099-DIV (or substitute statement) is already reduced by your share of investment expenses. State tax filing software As a result, you cannot deduct the expenses on your return. State tax filing software   Include the amount from box 1a of Form 1099-DIV (or substitute statement) in your income. State tax filing software    A publicly offered mutual fund is one that: Is continuously offered pursuant to a public offering, Is regularly traded on an established securities market, and Is held by or for no fewer than 500 persons at any time during the year. State tax filing software Contact your mutual fund if you are not sure whether it is publicly offered. State tax filing software Nondeductible Expenses Some expenses that you incur as an investor are not deductible. State tax filing software Stockholders' meetings. State tax filing software   You cannot deduct transportation and other expenses you pay to attend stockholders' meetings of companies in which you have no interest other than owning stock. State tax filing software This is true even if your purpose in attending is to get information that would be useful in making further investments. State tax filing software Investment-related seminar. State tax filing software   You cannot deduct expenses for attending a convention, seminar, or similar meeting for investment purposes. State tax filing software Single-premium life insurance, endowment, and annuity contracts. State tax filing software   You cannot deduct interest on money you borrow to buy or carry a single-premium life insurance, endowment, or annuity contract. State tax filing software Used as collateral. State tax filing software   If you use a single premium annuity contract as collateral to obtain or continue a mortgage loan, you cannot deduct any interest on the loan that is collateralized by the annuity contract. State tax filing software Figure the amount of interest expense disallowed by multiplying the current interest rate on the mortgage loan by the lesser of the amount of the annuity contract used as collateral or the amount of the loan. State tax filing software Borrowing on insurance. State tax filing software   Generally, you cannot deduct interest on money you borrow to buy or carry a life insurance, endowment, or annuity contract if you plan to systematically borrow part or all of the increases in the cash value of the contract. State tax filing software This rule applies to the interest on the total amount borrowed to buy or carry the contract, not just the interest on the borrowed increases in the cash value. State tax filing software Tax-exempt income. State tax filing software   You cannot deduct expenses you incur to produce tax-exempt income. State tax filing software Nor can you deduct interest on money you borrow to buy tax-exempt securities or shares in a mutual fund or other regulated investment company that distributes only exempt-interest dividends. State tax filing software Short-sale expenses. State tax filing software   The rule disallowing a deduction for interest expenses on tax-exempt securities applies to amounts you pay in connection with personal property used in a short sale or amounts paid by others for the use of any collateral in connection with the short sale. State tax filing software However, it does not apply to the expenses you incur if you deposit cash as collateral for the property used in the short sale and the cash does not earn a material return during the period of the sale. State tax filing software Short sales are discussed in Short Sales in chapter 4. State tax filing software Expenses for both tax-exempt and taxable income. State tax filing software   You may have expenses that are for both tax-exempt and taxable income. State tax filing software If you cannot specifically identify what part of the expenses is for each type of income, you can divide the expenses, using reasonable proportions based on facts and circumstances. State tax filing software You must attach a statement to your return showing how you divided the expenses and stating that each deduction claimed is not based on tax-exempt income. State tax filing software   One accepted method for dividing expenses is to do it in the same proportion that each type of income is to the total income. State tax filing software If the expenses relate in part to capital gains and losses, include the gains, but not the losses, in figuring this proportion. State tax filing software To find the part of the expenses that is for the tax-exempt income, divide your tax-exempt income by the total income and multiply your expenses by the result. State tax filing software Example. State tax filing software You received $6,000 interest; $4,800 was tax-exempt and $1,200 was taxable. State tax filing software In earning this income, you had $500 of expenses. State tax filing software You cannot specifically identify the amount of each expense item that is for each income item, so you must divide your expenses. State tax filing software 80% ($4,800 tax-exempt interest divided by $6,000 total interest) of your expenses is for the tax-exempt income. State tax filing software You cannot deduct $400 (80% of $500) of the expenses. State tax filing software You can deduct $100 (the rest of the expenses) because they are for the taxable interest. State tax filing software State income taxes. State tax filing software   If you itemize your deductions, you can deduct, as taxes, state income taxes on interest income that is exempt from federal income tax. State tax filing software But you cannot deduct, as either taxes or investment expenses, state income taxes on other exempt income. State tax filing software Interest expense and carrying charges on straddles. State tax filing software   You cannot deduct interest and carrying charges allocable to personal property that is part of a straddle. State tax filing software The nondeductible interest and carrying charges are added to the basis of the straddle property. State tax filing software However, this treatment does not apply if: All the offsetting positions making up the straddle either consist of one or more qualified covered call options and the optioned stock, or consist of section 1256 contracts (and the straddle is not part of a larger straddle); or The straddle is a hedging transaction. State tax filing software  For information about straddles, including definitions of the terms used in this discussion, see Straddles in chapter 4. State tax filing software   Interest includes any amount you pay or incur in connection with personal property used in a short sale. State tax filing software However, you must first apply the rules discussed in Payments in lieu of dividends under Short Sales in chapter 4. State tax filing software   To determine the interest on market discount bonds and short-term obligations that are part of a straddle, you must first apply the rules discussed under Limit on interest deduction for market discount bonds and Limit on interest deduction for short-term obligations (both under Interest Expenses, earlier). State tax filing software Nondeductible amount. State tax filing software   Figure the nondeductible interest and carrying charges on straddle property as follows. State tax filing software Add: Interest on indebtedness incurred or continued to buy or carry the personal property, and All other amounts (including charges to insure, store, or transport the personal property) paid or incurred to carry the personal property. State tax filing software Subtract from the amount in (1): Interest (including OID) includible in gross income for the year on the personal property, Any income from the personal property treated as ordinary income on the disposition of short-term government obligations or as ordinary income under the market discount and short-term bond provisions — see Discount on Debt Instruments in chapter 1, The dividends includible in gross income for the year from the personal property, and Any payment on a loan of the personal property for use in a short sale that is includible in gross income. State tax filing software Basis adjustment. State tax filing software   Add the nondeductible amount to the basis of your straddle property. State tax filing software How To Report Investment Expenses To deduct your investment expenses, you must itemize deductions on Schedule A (Form 1040). State tax filing software Enter your deductible investment interest expense on Schedule A (Form1040), line 14. State tax filing software Include any deductible short sale expenses. State tax filing software (See Short Sales in chapter 4 for information on these expenses. State tax filing software ) Also attach a completed Form 4952 if you used that form to figure your investment interest expense. State tax filing software Enter the total amount of your other investment expenses (other than interest expenses) on Schedule A (Form 1040), line 23. State tax filing software List the type and amount of each expense on the dotted lines next to line 23. State tax filing software (If necessary, you can show the required information on an attached statement. State tax filing software ) For information on how to report amortizable bond premium, see Bond Premium Amortization , earlier in this chapter. State tax filing software When To Report Investment Expenses If you use the cash method to report income and expenses, you generally deduct your expenses, except for certain prepaid interest, in the year you pay them. State tax filing software If you use an accrual method, you generally deduct your expenses when you incur a liability for them, rather than when you pay them. State tax filing software Also see When To Deduct Investment Interest , earlier in this chapter. State tax filing software Unpaid expenses owed to related party. State tax filing software   If you use an accrual method, you cannot deduct interest and other expenses owed to a related cash-basis person until payment is made and the amount is includible in the gross income of that person. State tax filing software The relationship, for purposes of this rule, is determined as of the end of the tax year for which the interest or expense would otherwise be deductible. State tax filing software If a deduction is denied under this rule, this rule will continue to apply even if your relationship with the person ceases to exist before the amount is includible in the gross income of that person. State tax filing software   This rule generally applies to those relationships listed in chapter 4 under Related Party Transactions . State tax filing software It also applies to accruals by partnerships to partners, partners to partnerships, shareholders to S corporations, and S corporations to shareholders. State tax filing software   The postponement of deductions for unpaid expenses and interest under the related party rule does not apply to OID, regardless of when payment is made. State tax filing software This rule also does not apply to loans with below-market interest rates or to certain payments for the use of property and services when the lender or recipient has to include payments periodically in income, even if a payment has not been made. State tax filing software Prev  Up  Next   Home   More Online Publications
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Tax Relief for Victims of Severe Storms, Tornadoes, Straight-line Winds and Flooding in Tennessee

AL/TN-2012-14TN, March 19, 2012

NASHVILLE — Victims of the severe storms, tornadoes, straight-line winds, and flooding that began on Feb. 29, 2012 in parts of Tennessee may qualify for tax relief from the Internal Revenue Service.

The President has declared Bradley, Claiborne, Cumberland, DeKalb, Hamilton, Jackson, McMinn, Monroe, Overton and Polk counties a federal disaster area. Individuals who reside or have a business in these counties may qualify for tax relief.

The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after Feb. 29, and on or before May 31, have been postponed to May 31, 2012. This includes the April 17 deadline for filing 2011 individual income tax returns, making income tax payments and making 2011 contributions to an individual retirement account (IRA).  

In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after Feb. 29, and on or before March 15, as long as the deposits are made by March 15, 2012.

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 866-562-5227 to request this tax relief.

Covered Disaster Area

The counties listed above constitute a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and are entitled to the relief detailed below.

Affected Taxpayers

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

Grant of Relief

Under section 7508A, the IRS gives affected taxpayers until May 31 to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after Feb. 29 and on or before May 31.

The IRS also gives affected taxpayers until May 31 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after Feb. 29 and on or before May 31.

This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after Feb. 29 and on or before March 15 provided the taxpayer makes these deposits by March 15.

Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.

Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation “Tennessee/Severe Storms, Tornadoes, Straight-line Winds, and Flooding” at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Taxpayers may download forms and publications from the official IRS website, irs.gov, or order them by calling 800-TAX-FORM (800-829-3676). The IRS toll-free number for general tax questions is 800-829-1040.

Related Information

Page Last Reviewed or Updated: 03-Feb-2014

The State Tax Filing Software

State tax filing software 2. State tax filing software   Fuel Tax Credits and Refunds Table of Contents Gasoline and Aviation Gasoline Undyed Diesel Fuel and Undyed Kerosene (Other Than Kerosene Used in Aviation)Sales by Registered Ultimate Vendors Diesel-Water Fuel Emulsion Kerosene for Use in AviationSales by Registered Ultimate Vendors Other Fuels (Including Alternative Fuels) Refunds of Second TaxOptional reporting. State tax filing software Providing information. State tax filing software Definitions of Nontaxable UsesCustom application of fertilizer and pesticide. State tax filing software Fuel used between airfield and farm. State tax filing software Fuel not used for farming. State tax filing software Vehicles not considered highway vehicles. State tax filing software Biodiesel or Renewable Diesel Mixture Credit, Alternative Fuel Credit, and Alternative Fuel Mixture CreditHow to Claim the Credit Filing Claims Claiming A Refund Claiming a Credit on Form 4136 Including the Credit or Refund in Income Federal excise taxes are imposed on certain fuels as discussed in chapter 1. State tax filing software This chapter lists the nontaxable uses of each fuel and defines the nontaxable uses. State tax filing software Information on the refund of second tax is included. State tax filing software This chapter also explains credits and refunds for the biodiesel or renewable diesel mixture credits, and the alternative fuel mixture and alternative fuel credits. State tax filing software Information on how to make a claim for credit or refund is included in this chapter and in the instructions for: Form 720, Form 4136, and Form 8849. State tax filing software Exported taxable fuel. State tax filing software   The claim rates for exported taxable fuel are listed on Schedule C (Form 720), Schedule 1 (Form 8849), and Form 4136. State tax filing software Taxpayers making a claim for exported taxable fuel must include with their records proof of exportation. State tax filing software Proof of exportation includes: A copy of the export bill of lading issued by the delivering carrier, A certificate by the agent or representative of the export carrier showing actual exportation of the fuel, A certificate of lading signed by a customs officer of the foreign country to which the fuel is exported, or A statement of the foreign consignee showing receipt of the fuel. State tax filing software Gasoline and Aviation Gasoline Ultimate Purchasers. State tax filing software   The following are the uses of gasoline (defined earlier) for which a credit or refund may be allowable to an ultimate purchaser. State tax filing software On a farm for farming purposes (credit only). State tax filing software Off-highway business use. State tax filing software Export. State tax filing software In a boat engaged in commercial fishing. State tax filing software In certain intercity and local buses. State tax filing software In a school bus. State tax filing software Exclusive use by a qualified blood collector organization. State tax filing software In a highway vehicle owned by the United States that is not used on a highway. State tax filing software Exclusive use by a nonprofit educational organization (see Sales by registered ultimate vendors and Credit Card Purchases, later). State tax filing software Exclusive use by a state, political subdivision of a state, or the District of Columbia (see Sales by registered ultimate vendors and Credit Card Purchases, later). State tax filing software In an aircraft or vehicle owned by an aircraft museum. State tax filing software   The following are the uses of aviation gasoline for which a credit or refund may be allowable to an ultimate purchaser. State tax filing software On a farm for farming purposes (credit only). State tax filing software Export. State tax filing software In foreign trade. State tax filing software Certain helicopter and fixed-wing air ambulance uses. State tax filing software In commercial aviation (other than foreign trade). State tax filing software Exclusive use by a qualified blood collector organization. State tax filing software Exclusive use by a nonprofit education organization (see Sales by registered ultimate vendors and Credit card purchases, later). State tax filing software Exclusive use by a state, political subdivision of a state, or the District of Columbia (see Sales by registered ultimate vendors and Credit and purchases, later). State tax filing software In an aircraft owned by an aircraft museum. State tax filing software In military aircraft. State tax filing software Claims by persons who paid the tax to the government. State tax filing software   Except for sales to nonprofit educational organizations and states and local governments, a credit or refund is allowable to the person that paid the tax to the government if the gasoline was sold to the ultimate purchaser (including an exporter) by either that person or by a retailer and the fuel was exported; used or sold for use as supplies for vessels or aircraft, including military aircraft, commercial fishing, and foreign trade; sold to a qualified blood collector organization; or used or sold for use in the production of Other Fuels. State tax filing software See Filing Claims, later. State tax filing software Sales by registered ultimate vendors. State tax filing software   This is an ultimate vendor that sells gasoline or aviation gasoline to any of the following and that is purchased without the use of a credit card. State tax filing software A state or local government for its exclusive use (including essential government use by an Indian tribal government). State tax filing software A nonprofit educational organization for its exclusive use. State tax filing software   The registered ultimate vendor may make the claim if the ultimate purchaser did not use a credit card and waives its right to the credit or refund by providing the registered ultimate vendor with a certificate. State tax filing software A sample certificate is included as Model Certificate M in the Appendix. State tax filing software The registered ultimate vendor must have the certificate at the time the credit or refund is claimed. State tax filing software   The ultimate vendor must be registered by the IRS. State tax filing software See Registration Requirements, earlier. State tax filing software Credit card purchases. State tax filing software   If gasoline and aviation gasoline are purchased with a credit card issued to a state or local government for its exclusive use (including essential government use by an Indian tribal government), or a nonprofit educational organization for its exclusive use, the person who extended credit to the ultimate purchaser (the credit card issuer) is treated as the person that paid the tax and makes the claim if the credit card issuer: Is registered by the IRS, Has established that the amount of tax has not been collected from the person who purchased the gasoline or has obtained written consent from the ultimate purchaser to the allowance of the credit or refund, and Has repaid or agreed to repay the amount of the tax to the ultimate vendor, has obtained the written consent of the ultimate vendor to the allowance of the credit or refund, or has made arrangements that provide the ultimate vendor with reimbursement of the tax. State tax filing software   If the requirements above are not met by the credit card issuer, the credit card issuer must collect the tax from the ultimate purchaser and only the ultimate purchaser may make the claim. State tax filing software How to make the claim. State tax filing software   If the claim is made by the credit card issuer, see Schedule C  (Form 720) or Schedule 8 (Form 8849). State tax filing software Undyed Diesel Fuel and Undyed Kerosene (Other Than Kerosene Used in Aviation) For conditions to an allowance of a credit or refund on exported dyed diesel fuel and dyed kerosene, see Exported taxable fuel, earlier. State tax filing software Ultimate purchasers. State tax filing software   The following are nontaxable uses of diesel fuel and kerosene (defined earlier) for which a credit or refund may be allowable to an ultimate purchaser. State tax filing software On a farm for farming purposes. State tax filing software Off-highway business use. State tax filing software Export. State tax filing software In a qualified local bus. State tax filing software In a school bus. State tax filing software Other than as a fuel in a propulsion engine of a diesel-powered highway vehicle (such as home heating oil). State tax filing software Exclusive use by a qualified blood collector organization. State tax filing software In a highway vehicle owned by the United States that is not used on a highway. State tax filing software Exclusive use by a nonprofit educational organization (see Sales by Registered Ultimate Vendors and Credit Card Purchases, later). State tax filing software Exclusive use by a state, political subdivision of a state, or the District of Columbia (see Sales by Registered Ultimate Vendors and Credit Card Purchases, later). State tax filing software In a vehicle owned by an aircraft museum. State tax filing software As a fuel in a propulsion engine of a diesel-powered train. State tax filing software Sales by Registered Ultimate Vendors The following are the sales for which a credit or refund may be allowable to the registered ultimate vendor only. State tax filing software Undyed diesel fuel or undyed kerosene sold for the exclusive use by a state or local government (if credit card rules (defined later) do not apply), Undyed kerosene sold from a blocked pump (defined below), or Undyed diesel fuel or undyed kerosene used in certain intercity and local buses, only if the ultimate purchaser waives its right to the credit or refund by providing the registered ultimate vendor with a waiver. State tax filing software Registered ultimate vendor (state use). State tax filing software   This is a person that sells undyed diesel fuel or undyed kerosene to a state or local government for its exclusive use (including essential government use by an Indian tribal government). State tax filing software The diesel fuel or kerosene must be purchased by the state without the use of a credit card, issued to the state by the credit card issuer, in order for the ultimate vendor to make the claim. State tax filing software The ultimate vendor must be registered by the IRS. State tax filing software See Registration Requirements, earlier. State tax filing software Registered ultimate vendor (blocked pump). State tax filing software   This is an ultimate vendor that sells undyed kerosene from a blocked pump. State tax filing software   A credit or refund may be allowable to a registered ultimate vendor (blocked pump) if the vendor sold to a buyer undyed kerosene from a blocked pump for use other than as a fuel in a diesel-powered highway vehicle and the vendor had no reason to believe the kerosene would not be used in that manner. State tax filing software Blocked pump. State tax filing software   A blocked pump is a fuel pump that meets all the following requirements. State tax filing software It is used to make retail sales of undyed kerosene for use by the buyer in any nontaxable use. State tax filing software It is at a fixed location. State tax filing software It is identified with a legible and conspicuous notice stating, “UNDYED UNTAXED KEROSENE, NONTAXABLE USE ONLY. State tax filing software ” It meets either of the following conditions. State tax filing software It cannot reasonably be used to dispense fuel directly into the fuel supply tank of a diesel-powered highway vehicle or train. State tax filing software It is locked by the vendor after each sale and unlocked by the vendor only in response to a buyer's request for undyed kerosene for use other than as a fuel in a diesel-powered highway vehicle or train. State tax filing software Registered ultimate vendor (certain intercity and local buses). State tax filing software   This is an ultimate vendor that sells undyed diesel fuel or undyed kerosene to the ultimate purchaser for use in certain intercity and local buses. State tax filing software   The registered ultimate vendor may make the claim if the ultimate purchaser waives its right to the credit or refund by providing the registered ultimate vendor with a waiver. State tax filing software A sample waiver is included as Model Waiver N in the Appendix. State tax filing software The registered ultimate vendor must have the waiver at the time the credit or payment is claimed. State tax filing software Credit Card Purchases. State tax filing software   If undyed diesel fuel or kerosene is purchased with a credit card issued to a state, the person who extended credit to the state (the credit card issuer) is treated as the person that paid the tax and makes the claim if the credit card issuer: Is registered by the IRS, Has established that the amount of tax has not been collected from the person who purchased the diesel fuel or kerosene, or has obtained written consent from the ultimate purchaser to the allowance of the credit or refund, and Has repaid or agreed to repay the amount of the tax to the ultimate vendor, has obtained the written consent of the ultimate vendor to the allowance of the credit or refund, or has made arrangements that provide the ultimate vendor with reimbursement of the tax. State tax filing software   If the requirements above are not met by the credit card issuer, the credit card issuer must collect the tax from the ultimate purchaser and only the ultimate purchaser may make the claim. State tax filing software Diesel-Water Fuel Emulsion A claim for credit or refund may be made for the nontaxable use of a diesel-water fuel emulsion and for undyed diesel fuel used to produce a diesel-water fuel emulsion. State tax filing software The claim rate for nontaxable use of a diesel-water fuel emulsion taxed at $. State tax filing software 198 per gallon is $. State tax filing software 197 (if exported, the claim rate is $. State tax filing software 198). State tax filing software The following are the nontaxable uses for a diesel-water fuel emulsion for which a credit or refund may be allowable to an ultimate purchaser. State tax filing software On a farm for farming purposes. State tax filing software Off-highway business use. State tax filing software Export. State tax filing software In a qualified local bus. State tax filing software In a school bus. State tax filing software Other than as fuel in the propulsion engine of a train or diesel-powered highway vehicle (but not off-highway use). State tax filing software Exclusive use by a qualified blood collector organization. State tax filing software In a highway vehicle owned by the United States that is not used on a highway. State tax filing software Exclusive use by a nonprofit educational organization. State tax filing software Exclusive use by a state, political subdivision of a state, or the District of Columbia. State tax filing software In an aircraft or vehicle owned by an aircraft museum. State tax filing software Blender claims. State tax filing software   The claim rate for undyed diesel fuel taxed at $. State tax filing software 244 and used to produce a diesel-water fuel emulsion is $. State tax filing software 046 per gallon of diesel fuel so used. State tax filing software The blender must be registered by the IRS in order to make the claim. State tax filing software The blender must attach a statement to the claim certifying that: The diesel-water fuel emulsion contains at least 14% water, The emulsion additive is registered by a United States manufacturer with the EPA under section 211 of the Clean Air Act as in effect on March 31, 2003, Undyed diesel fuel taxed at $. State tax filing software 244 was used to produce the diesel-water fuel emulsion, and The diesel-water fuel emulsion was used or sold for use in the blender's trade or business. State tax filing software Kerosene for Use in Aviation Ultimate purchasers. State tax filing software   Ultimate purchasers of kerosene used in certain aviation uses may make a claim if the rate of tax on their use is less than the rate of tax that was charged on the kerosene. State tax filing software   The ultimate purchaser of the kerosene used in commercial aviation (other than foreign trade) and noncommercial aviation (other than nonexempt, noncommercial aviation and exclusive use by a state, political subdivision of a state, or the District of Columbia) is eligible to make a claim if the ultimate purchaser certifies that the right to make the claim has not been waived. State tax filing software Generally, the ultimate purchaser is the aircraft operator. State tax filing software   The following are the nontaxable uses of kerosene used in noncommercial aviation for which a credit or refund may be allowable to the ultimate purchaser. State tax filing software On a farm for farming purposes. State tax filing software Certain helicopter and fixed-wing aircraft uses. State tax filing software Exclusive use by a qualified blood collector organization. State tax filing software Exclusive use by a nonprofit educational organization. State tax filing software In an aircraft owned by an aircraft museum. State tax filing software In military aircraft. State tax filing software Kerosene for use partly in commercial aviation and partly in nonexempt, noncommercial aviation. State tax filing software   If the fuel is used partly for use in commercial aviation and partly for use in nonexempt, noncommercial aviation, the operator may identify, either at the time of purchase or after the kerosene has been used, the amount that will be (or has been) used in commercial aviation. State tax filing software At the same time, the operator would either make the claim or waive the right to make the claim for credit or refund of the kerosene for use in commercial and nonexempt, noncommercial aviation. State tax filing software   If the operator does not identify the amount of kerosene that will be (or has been) used in commercial aviation, the operator may provide a certificate to the ultimate vendor similar to Model Certificate Q in the Appendix. State tax filing software For kerosene purchased with the certificate, used in commercial aviation, and taxed at $. State tax filing software 244 per gallon, use of the certificate will be treated as a waiver of the right to claim a credit or refund for the $. State tax filing software 025 per gallon part of the tax. State tax filing software The ultimate vendor may make this claim. State tax filing software The operator may make a claim for the $. State tax filing software 175 tax per gallon of the kerosene, but cannot waive the right to make the claim for the $. State tax filing software 175 tax per gallon. State tax filing software Sales by Registered Ultimate Vendors Kerosene for use in commercial aviation or noncommercial aviation. State tax filing software   The registered ultimate vendor of kerosene for use in commercial aviation (other than foreign trade) or noncommercial aviation (other than nonexempt, noncommercial aviation and exclusive use by a state, political subdivision of a state, or the District of Columbia) may make this claim if the ultimate purchaser waives its right to the credit or payment by providing the registered ultimate vendor with a waiver. State tax filing software A sample waiver is included as Model Waiver L in the Appendix. State tax filing software The registered ultimate vendor must have the waiver at the time the credit or payment is claimed. State tax filing software   Noncommercial aviation means any use of an aircraft not described as commercial aviation. State tax filing software For the definition of commercial aviation, see Commercial aviation on page 11. State tax filing software Kerosene for use in nonexempt, noncommercial aviation. State tax filing software   Only the registered ultimate vendor may claim a credit or payment for sales of kerosene for use in nonexempt, noncommercial aviation. State tax filing software The ultimate vendor must be registered by the IRS (activity letter UA) and have the required certificate from the ultimate purchaser. State tax filing software A sample certificate is included as Model Certificate Q in the Appendix. State tax filing software The registered ultimate vendor must have the certificate at the time the credit or payment is claimed. State tax filing software Kerosene for use in aviation by a state or local government. State tax filing software   Only the registered ultimate vendor may claim a credit or payment for sales of kerosene for use in aviation to a state or local government for its exclusive use (including essential government use by an Indian tribal government). State tax filing software The kerosene for use in aviation must be purchased by the state without the use of a credit card in order for the ultimate vendor to make the claim. State tax filing software The ultimate vendor must be registered by the IRS (activity letter UV) and have the required certificate from the ultimate purchaser. State tax filing software A sample certificate is included as Model Certificate P in the Appendix. State tax filing software The registered ultimate vendor must have the certificate at the time the credit or payment is claimed. State tax filing software Credit card purchases. State tax filing software   If taxed kerosene for use in aviation is purchased with a credit card issued to a state, the person who extended credit to the state (the credit card issuer) is treated as the person that paid the tax and makes the claim if the credit card issuer: Is registered by the IRS, Has established that the amount of tax has not been collected from the person who purchased the kerosene, or has obtained written consent from the ultimate purchaser to the allowance of the credit or refund, and Has repaid or agreed to repay the amount of the tax to the ultimate vendor, has obtained the written consent of the ultimate vendor to the allowance of the credit or refund, or has made arrangements that provide the ultimate vendor with reimbursement of the tax. State tax filing software   If the requirements above are not met by the credit card issuer, the credit card issuer must collect the tax from the ultimate purchaser and only the ultimate purchaser may make the claim. State tax filing software Other Fuels (Including Alternative Fuels) Credit or refund for nontaxable use of taxed Other Fuels may be allowable to an ultimate purchaser. State tax filing software While tax is generally imposed on delivery, Other Fuels are taxed prior to delivery in the case of certain bulk sales described in chapter 1. State tax filing software The following are the nontaxable uses of Other Fuels for which a credit or refund may be allowable to the ultimate purchaser. State tax filing software On a farm for farming purposes. State tax filing software Off-highway business use. State tax filing software In a boat engaged in commercial fishing. State tax filing software In certain intercity and local buses. State tax filing software In a school bus. State tax filing software In a qualified local bus. State tax filing software Exclusive use by a qualified blood collector organization. State tax filing software Exclusive use by a nonprofit educational organization. State tax filing software Exclusive use by a state, political subdivision of a state, or the District of Columbia. State tax filing software In an aircraft or vehicle owned by an aircraft museum. State tax filing software Use in any boat operated by the United States for its exclusive use or any vessel of war of any foreign nation. State tax filing software See Biodiesel or Renewable Diesel Mixture Credit, Alternative Fuel Credit, and Alternative Fuel Mixture Credit, later. State tax filing software Refunds of Second Tax The tax on dyed diesel fuel for inland waterways fuel use applies at the rate listed on Form 720. State tax filing software This is in addition to all other taxes imposed on the sale or use of the fuel. State tax filing software The section 4081(e) refund (discussed below) cannot be claimed. State tax filing software If the tax is paid and reported to the government on more than one taxable event for a taxable fuel under section 4081, the person paying the “second tax” may claim a refund (without interest) of that tax if certain conditions and reporting requirements are met. State tax filing software No credit against any tax is allowed for this tax. State tax filing software For information about taxable events, see the discussions under Gasoline, Diesel Fuel and Kerosene and Kerosene for Use in Aviation in chapter 1. State tax filing software Conditions to allowance of refund. State tax filing software   A claim for refund of the tax is allowed only if all the following conditions are met. State tax filing software A tax on the fuel was paid to the government and not credited or refunded (the “first tax”). State tax filing software After the first tax was imposed, another tax was imposed on the same fuel and was paid to the government (the “second tax”). State tax filing software The person that paid the second tax filed a timely claim for refund containing the information required (see Refund claim, later). State tax filing software The person that paid the first tax has met the reporting requirements, discussed next. State tax filing software Reporting requirements. State tax filing software   Generally, the person that paid the first tax must file a “First Taxpayer's Report” with its Form 720 for the quarter to which the report relates. State tax filing software A model first taxpayer's report is shown in the Appendix as Model Certificate B. State tax filing software The report must contain all information needed to complete the model. State tax filing software   By the due date for filing the Form 720, you must also send a separate copy of the report to the following address. State tax filing software Department of the Treasury Internal Revenue Service  Cincinnati, OH 45999-0555 Write “EXCISE – FIRST TAXPAYER'S REPORT” across the top of that copy. State tax filing software Optional reporting. State tax filing software   A first taxpayer's report is not required for the tax imposed on: Removal at a terminal rack, Nonbulk entries into the United States, and Removals or sales by blenders. State tax filing software However, if the person liable for the tax expects that another tax will be imposed on that fuel, that person should (but is not required to) file a first taxpayer's report. State tax filing software Providing information. State tax filing software   The first taxpayer must give a copy of the report to the buyer of the fuel within the bulk transfer/terminal system or to the owner of the fuel immediately before the first tax was imposed, if the first taxpayer is not the owner at that time. State tax filing software If an optional report is filed, a copy should (but is not required to) be given to the buyer or owner. State tax filing software   A person that receives a copy of the first taxpayer's report and later sells the fuel within the bulk transfer/terminal system must give the copy and a “Statement of Subsequent Seller” to the buyer. State tax filing software If the later sale is outside the bulk transfer/terminal system and that person expects that another tax will be imposed, that person should (but is not required to) give the copy and the statement to the buyer. State tax filing software A model statement of subsequent seller is shown in the Appendix as Model Certificate A. State tax filing software The statement must contain all information necessary to complete the model. State tax filing software   If the first taxpayer's report relates to fuel sold to more than one buyer, copies of that report must be made when the fuel is divided. State tax filing software Each buyer must be given a copy of the report. State tax filing software Refund claim. State tax filing software   You must have filed Form 720 and paid the second tax before you file for a refund of that tax. State tax filing software You must make your claim for refund on Form 8849. State tax filing software Complete Schedule 5 (Form 8849) and attach it to your Form 8849. State tax filing software Do not include this claim with a claim under another tax provision. State tax filing software You must not have included the second tax in the price of the fuel and must not have collected it from the purchaser. State tax filing software You must submit the following information with your claim. State tax filing software A copy of the first taxpayer's report (discussed earlier). State tax filing software A copy of the statement of subsequent seller if the fuel was bought from someone other than the first taxpayer. State tax filing software Definitions of Nontaxable Uses This section provides definitions of the terms used in Table 2-1 for nontaxable uses. State tax filing software If applicable, the type of use number from Table 2-1 is indicated in each heading. State tax filing software Type of use table. State tax filing software   The first column of the table is the number you enter on Form 4136, Form 8849, or Schedule C (Form 720) for that type of use. State tax filing software For type of use 2, the mobile machinery parenthetical applies only to Form 8849 and Form 720. State tax filing software Table 2-1. State tax filing software Type of Use Table No. State tax filing software Type of Use 1 On a farm for farming purposes 2 Off-highway business use (for business use other than in a highway vehicle registered or required to be registered for highway use) (other than use in mobile machinery) 3 Export 4 In a boat engaged in commercial fishing 5 In certain intercity and local buses 6 In a qualified local bus 7 In a bus transporting students and employees of schools (school buses) 8 For diesel fuel and kerosene (other than kerosene used in aviation) used other than as a fuel in the propulsion engine of a train or diesel-powered highway vehicle (but not off-highway business use) 9 In foreign trade 10 Certain helicopter and fixed-wing aircraft uses 11 Exclusive use by a qualified blood collector organization 12 In a highway vehicle owned by the United States that is not used on a highway 13 Exclusive use by a nonprofit educational organization 14 Exclusive use by a state, political subdivision of a state, or the District of Columbia 15 In an aircraft or vehicle owned by an aircraft museum 16 In military aircraft On a farm for farming purposes (No. State tax filing software 1). State tax filing software   On a farm for farming purposes means fuel used in carrying on a trade or business of farming, on a farm in the United States, and for farming purposes. State tax filing software Farm. State tax filing software   A farm includes livestock, dairy, fish, poultry, fruit, fur-bearing animals, and truck farms; orchards; plantations; ranches; nurseries; ranges; and feed yards for fattening cattle. State tax filing software It also includes structures such as greenhouses used primarily for the raising of agricultural or horticultural commodities. State tax filing software A fish farm is an area where fish are grown or raised — not merely caught or harvested. State tax filing software Farming purposes. State tax filing software   As an owner, tenant, or operator, you use fuel on a farm for farming purposes if you use it in any of the following ways. State tax filing software To cultivate the soil or to raise or harvest any agricultural or horticultural commodity. State tax filing software To raise, shear, feed, care for, train, or manage livestock, bees, poultry, fur-bearing animals, or wildlife. State tax filing software To operate, manage, conserve, improve, or maintain your farm and its tools and equipment. State tax filing software To handle, dry, pack, grade, or store any raw agricultural or horticultural commodity. State tax filing software For this use to qualify, you must have produced more than half the commodity so treated during the tax year. State tax filing software Commodity means a single raw product. State tax filing software For example, apples and peaches are two separate commodities. State tax filing software To plant, cultivate, care for, or cut trees or to prepare (other than sawing logs into lumber, chipping, or other milling) trees for market, but only if the planting, etc. State tax filing software , is incidental to your farming operations. State tax filing software Your tree operations will be incidental only if they are minor in nature when compared to the total farming operations. State tax filing software   If any other person, such as a neighbor or custom operator, performs a service for you on your farm for any of the purposes listed in (1) or (2), you are considered to be the ultimate purchaser that used the fuel on a farm for farming purposes. State tax filing software However, see Custom application of fertilizer and pesticide, next. State tax filing software   If doubt exists whether the owner, the tenant, or the operator of the farm bought the fuel, determine who bore the cost of the fuel. State tax filing software For example, if the owner of a farm and the tenant equally share the cost of gasoline that is used on a farm for farming purposes, each can claim a credit for the tax on one-half the fuel used. State tax filing software Custom application of fertilizer and pesticide. State tax filing software   Fuel used on a farm for farming purposes includes fuel used in the application of fertilizer, pesticides, or other substances, including aerial applications. State tax filing software Generally, the applicator is treated as having used the fuel on a farm for farming purposes. State tax filing software For aviation gasoline, the aerial applicator makes the claim as the ultimate purchaser. State tax filing software For kerosene used in aviation, the ultimate purchaser may make the claim or waive their right to make the claim to the registered ultimate vendor. State tax filing software Fuel used between airfield and farm. State tax filing software   Fuel used by an aerial applicator for the direct flight between the airfield and one or more farms is treated as a farming purpose. State tax filing software Fuel not used for farming. State tax filing software   Fuel is not used on a farm for farming purposes if it is used in any of the following ways. State tax filing software Off the farm, such as on the highway or in noncommercial aviation, other than fuel used between the airfield and farm described above, even if the fuel is used in transporting livestock, feed, crops, or equipment. State tax filing software For personal use, such as mowing the lawn. State tax filing software In processing, packaging, freezing, or canning operations. State tax filing software In processing crude gum into gum spirits of turpentine or gum resin or in processing maple sap into maple syrup or maple sugar. State tax filing software Off-highway business use (No. State tax filing software 2). State tax filing software   Off-highway business use means fuel used in a trade or business or in an income-producing activity other than as a fuel in a highway vehicle registered or required to be registered for use on public highways. State tax filing software The terms “highway vehicle,” “public highway,” and “registered” are defined below. State tax filing software Do not consider any use in a boat as an off-highway business use. State tax filing software   Off-highway business use includes fuels used in any of the following ways. State tax filing software In stationary machines such as generators, compressors, power saws, and similar equipment. State tax filing software For cleaning purposes. State tax filing software In forklift trucks, bulldozers, and earthmovers. State tax filing software   Generally, this use does not include nonbusiness use of fuel, such as use by minibikes, snowmobiles, power lawn mowers, chain saws, and other yard equipment. State tax filing software Example. State tax filing software Caroline owns a landscaping business. State tax filing software She uses power lawn mowers and chain saws in her business. State tax filing software The gasoline used in the power lawn mowers and chain saws qualifies as fuel used in an off-highway business use. State tax filing software The gasoline used in her personal lawn mower at home does not qualify. State tax filing software Highway vehicle. State tax filing software   A highway vehicle is any self-propelled vehicle designed to carry a load over public highways, whether or not it is also designed to perform other functions. State tax filing software Examples of vehicles designed to carry a load over public highways are passenger automobiles, motorcycles, buses, and highway-type trucks and truck tractors. State tax filing software A vehicle is a highway vehicle even though the vehicle's design allows it to perform a highway transportation function for only one of the following. State tax filing software A particular type of load, such as passengers, furnishings, and personal effects (as in a house, office, or utility trailer). State tax filing software A special kind of cargo, goods, supplies, or materials. State tax filing software Some off-highway task unrelated to highway transportation, except as discussed next. State tax filing software Vehicles not considered highway vehicles. State tax filing software   Generally, the following kinds of vehicles are not considered highway vehicles for purposes of the credit or refund of fuel taxes. State tax filing software Specially designed mobile machinery for nontransportation functions. State tax filing software A self-propelled vehicle is not a highway vehicle if all the following apply. State tax filing software The chassis has permanently mounted to it machinery or equipment used to perform certain operations (construction, manufacturing, drilling, mining, timbering, processing, farming, or similar operations) if the operation of the machinery or equipment is unrelated to transportation on or off the public highways. State tax filing software The chassis has been specially designed to serve only as a mobile carriage and mount (and power source, if applicable) for the machinery or equipment, whether or not the machinery or equipment is in operation. State tax filing software The chassis could not, because of its special design and without substantial structural modification, be used as part of a vehicle designed to carry any other load. State tax filing software The vehicle must have traveled less than 7,500 miles on public highways during the taxable year. State tax filing software Vehicles specially designed for off-highway transportation. State tax filing software A vehicle is not treated as a highway vehicle if the vehicle is specially designed for the primary function of transporting a particular type of load other than over the public highway and because of this special design, the vehicle's capability to transport a load over a public highway is substantially limited or impaired. State tax filing software To make this determination, you can take into account the vehicle's size, whether the vehicle is subject to licensing, safety, or other requirements, and whether the vehicle can transport a load at a sustained speed of at least 25 miles per hour. State tax filing software It does not matter that the vehicle can carry heavier loads off highway than it is allowed to carry over the highway. State tax filing software Nontransportation trailers and semitrailers. State tax filing software A trailer or semi-trailer is not treated as a highway vehicle if it is specially designed to function only as an enclosed stationary shelter for carrying on a nontransportation function at an off-highway site. State tax filing software For example, a trailer that is capable only of functioning as an office for an off-highway construction operation is not a highway vehicle. State tax filing software Public highway. State tax filing software   A public highway includes any road in the United States that is not a private roadway. State tax filing software This includes federal, state, county, and city roads and streets. State tax filing software Registered. State tax filing software   A vehicle is considered registered when it is registered or required to be registered for highway use under the law of any state, the District of Columbia, or any foreign country in which it is operated or situated. State tax filing software Any highway vehicle operated under a dealer's tag, license, or permit is considered registered. State tax filing software A highway vehicle is not considered registered solely because a special permit allows the vehicle to be operated at particular times and under specified conditions. State tax filing software Dual use of propulsion motor. State tax filing software   Off-highway business use does not include any fuel used in the propulsion motor of a registered highway vehicle even though that motor also operates special equipment by means of a power take-off or power transfer. State tax filing software It does not matter if the special equipment is mounted on the vehicle. State tax filing software Example. State tax filing software The motor of a registered concrete-mixer truck operates both the engine and the mixing unit by means of a power take-off. State tax filing software The fuel used in the motor to run the mixer is not off-highway business use. State tax filing software Use in separate motor. State tax filing software   Off-highway business use includes fuel used in a separate motor to operate special equipment, such as a refrigeration unit, pump, generator, or mixing unit. State tax filing software If you draw fuel from the same tank that supplies fuel to the propulsion motor, you must figure the quantity used in the separate motor operating the special equipment. State tax filing software You may make a reasonable estimate based on your operating experience and supported by your records. State tax filing software   You can use devices that measure the miles the vehicle has traveled (such as hubometers) to figure the gallons of fuel used to propel the vehicle. State tax filing software Add to this amount the fuel consumed while idling or warming up the motor before propelling the vehicle. State tax filing software The difference between your total fuel used and the fuel used to propel the vehicle is the fuel used in the separate motor. State tax filing software Example. State tax filing software Hazel owns a refrigerated truck. State tax filing software It has a separate motor for the refrigeration unit. State tax filing software The same tank supplies both motors. State tax filing software Using the truck's hubometer, Hazel figures that 90% of the fuel was used to propel the truck. State tax filing software Therefore, 10% of the fuel is used in an off-highway business use. State tax filing software Fuel lost or destroyed. State tax filing software   You cannot treat fuel lost or destroyed through spillage, fire, or other casualty as fuel used in an off-highway business use. State tax filing software Export (No. State tax filing software 3). State tax filing software   Export means fuel transported from the United States with the intention that the fuel remain in a foreign country or possession of the United States. State tax filing software Fuel is not exported if it is in the fuel supply tank of a vehicle or aircraft. State tax filing software In a boat engaged in commercial fishing (No. State tax filing software 4). State tax filing software   In a boat engaged in commercial fishing means fuel used in taking, catching, processing, or transporting fish, shellfish, or other aquatic life for commercial purposes, such as selling or processing the catch, on a specific trip basis. State tax filing software They include boats used in both fresh and salt water fishing. State tax filing software They do not include boats used for both sport fishing and commercial fishing on the same trip. State tax filing software In certain intercity and local buses (No. State tax filing software 5). State tax filing software   In certain intercity and local buses means fuel used in a bus engaged in furnishing (for compensation) passenger land transportation available to the general public. State tax filing software The bus must be engaged in one of the following activities. State tax filing software Scheduled transportation along regular routes. State tax filing software Nonscheduled operations if the seating capacity of the bus is at least 20 adults, not including the driver. State tax filing software Vans and similar vehicles used for van-pooling or taxi service do not qualify. State tax filing software Available to the general public. State tax filing software   This means you offer service to more than a limited number of persons or organizations. State tax filing software If a bus operator normally provides charter operations through travel agencies but has buses available for chartering by the general public, this service is available to the general public. State tax filing software A bus does not qualify when its operator uses it to provide exclusive services to only one person, group, or organization. State tax filing software Also, intercity bus transportation does not include transporting students and employees of schools or intercity transportation in a qualified local bus. State tax filing software In a qualified local bus (No. State tax filing software 6). State tax filing software   In a qualified local bus means fuel used in a bus meeting all the following requirements. State tax filing software It is engaged in furnishing (for compensation) intracity passenger land transportation available to the general public. State tax filing software It operates along scheduled, regular routes. State tax filing software It has a seating capacity of at least 20 adults (excluding the driver). State tax filing software It is under contract with (or is receiving more than a nominal subsidy from) any state or local government to furnish the transportation. State tax filing software Intracity passenger land transportation. State tax filing software   This is the land transportation of passengers between points located within the same metropolitan area. State tax filing software It includes transportation along routes that cross state, city, or county boundaries if the routes remain within the metropolitan area. State tax filing software Under contract. State tax filing software   A bus is under contract with a state or local government only if the contract imposes a bona fide obligation on the bus operator to furnish the transportation. State tax filing software More than a nominal subsidy. State tax filing software   A subsidy is more than nominal if it is reasonably expected to exceed an amount equal to 3 cents multiplied by the number of gallons of fuel used in buses on subsidized routes. State tax filing software A company that operates its buses along subsidized and unsubsidized intracity routes may consider its buses qualified local buses only when the buses are used on the subsidized intracity routes. State tax filing software In a school bus (No. State tax filing software 7). State tax filing software   In a school bus means fuel used in a bus engaged in the transportation of students or employees of schools. State tax filing software A school is an educational organization with a regular faculty and curriculum and a regularly enrolled body of students who attend the place where the educational activities occur. State tax filing software For diesel fuel and kerosene (other than kerosene used in aviation) used other than as a fuel (No. State tax filing software 8). State tax filing software   Diesel fuel and kerosene (other than kerosene used in aviation) used other than as a fuel in the propulsion engine of a diesel-powered highway vehicle or diesel-powered train (not including off-highway business use) means undyed diesel fuel and undyed kerosene used: For home heating, lighting, and cooking; In boats; In stationary machines, such as generators and compressors; For cleaning purposes; or In minibikes and snowmobiles. State tax filing software In foreign trade (No. State tax filing software 9). State tax filing software   In foreign trade means fuel used in civil aircraft employed in foreign trade or trade between the United States and any of its possessions. State tax filing software The term trade includes the transportation of persons or property for hire and the making of the necessary preparations for such transportation. State tax filing software In the case of aircraft registered in a foreign country, the country must allow reciprocal benefits for aircraft registered in the United States. State tax filing software Certain helicopter and fixed-wing aircraft uses (No. State tax filing software 10). State tax filing software   Includes: Certain helicopter uses. State tax filing software   Certain helicopter uses means fuel used by a helicopter for any of the following purposes. State tax filing software Transporting individuals, equipment, or supplies in the exploration for, or the development or removal of, hard minerals, oil, or gas. State tax filing software Planting, cultivating, cutting, transporting, or caring for trees (including logging operations). State tax filing software Providing emergency medical transportation. State tax filing software   During a use described in items (1) and (2), the helicopter must not take off from, or land at, a facility eligible for assistance under the Airport and Airway Development Act of 1970, or otherwise use services provided pursuant to section 44509 or 44913(b) or subchapter I of chapter 471 of title 49, United States Code. State tax filing software For item (1), treat each flight segment as a separate flight. State tax filing software Fixed-wing aircraft uses. State tax filing software   Fixed-wing aircraft uses means fuel used by a fixed-wing aircraft for any of the following purposes. State tax filing software Planting, cultivating, cutting, transporting, or caring for trees (including logging operations). State tax filing software Providing emergency medical transportation. State tax filing software The aircraft must be equipped for and exclusively dedicated on that flight to acute care emergency medical services. State tax filing software During a use described in item (1), the aircraft must not take off from, or land at, a facility eligible for assistance under the Airport and Airway Development Act of 1970, or otherwise use services provided pursuant to section 44509 or 44913(b) or subchapter I of chapter 471 of title 49, United States Code. State tax filing software Exclusive use by a qualified blood collector organization (No. State tax filing software 11). State tax filing software   Exclusive use by a qualified blood collector organization means fuel used by the qualified blood collector organization for its exclusive use in the collection, storage, or transportation of blood. State tax filing software Qualified blood collector organization. State tax filing software   A qualified blood collector organization is one that is: Described in section 501(c)(3) and exempt from tax under section 501(a), Primarily engaged in the activity of collecting human blood, Registered by the IRS, and Registered by the Food and Drug Administration to collect blood. State tax filing software In a highway vehicle owned by the United States that is not used on a highway (No. State tax filing software 12). State tax filing software   In a highway vehicle owned by the United States that is not used on a highway means fuel used in a vehicle that was not used on public highways during the period covered by the claim. State tax filing software This use applies whether or not the vehicle is registered or required to be registered for highway use. State tax filing software Exclusive use by a nonprofit educational organization (No. State tax filing software 13). State tax filing software   Exclusive use by a nonprofit educational organization means fuel used by an organization exempt from income tax under section 501(a) that meets both of the following requirements. State tax filing software It has a regular faculty and curriculum. State tax filing software It has a regularly enrolled body of students who attend the place where the instruction normally occurs. State tax filing software   A nonprofit educational organization also includes a school operated by a church or other organization described in section 501(c)(3) if the school meets the above requirements. State tax filing software Exclusive use by a state, political subdivision of a state, or the District of Columbia (No. State tax filing software 14). State tax filing software   Exclusive use by a state, political subdivision of a state, or the District of Columbia means fuel purchased by the state or local government for its exclusive use. State tax filing software A state or local government is any state, any political subdivision thereof, or the District of Columbia. State tax filing software An Indian tribal government is treated as a state only if the fuel is used in an activity that involves the exercise of an essential tribal government function. State tax filing software Gasoline, diesel fuel, and kerosene used by the American Red Cross is considered to be the use of these fuels by a state. State tax filing software In an aircraft or vehicle owned by an aircraft museum (No. State tax filing software 15). State tax filing software   In an aircraft or vehicle owned by an aircraft museum means fuel used in an aircraft or vehicle that is owned by an organization that meets all the following requirements. State tax filing software It is exempt from income tax as an organization described in section 501(c)(3). State tax filing software It is operated as a museum under a state (or District of Columbia) charter. State tax filing software It is operated exclusively for acquiring, exhibiting, and caring for aircraft of the type used for combat or transport in  World War II. State tax filing software   The aircraft or vehicle (such as a ground servicing vehicle for aircraft) must be used exclusively for the purposes described in item (3). State tax filing software In military aircraft (No. State tax filing software 16). State tax filing software   In a military aircraft means fuel used in an aircraft owned by the United States or any foreign nation and constituting a part of its armed forces. State tax filing software In commercial aviation (other than foreign trade). State tax filing software   See Commercial aviation, earlier, for the definition. State tax filing software Use in a train. State tax filing software   Use in a train means fuel used in the propulsion engine of equipment or machinery that rides on rails. State tax filing software This includes use in a locomotive, work train, switching engine, and track maintenance machine. State tax filing software Biodiesel or Renewable Diesel Mixture Credit, Alternative Fuel Credit, and Alternative Fuel Mixture Credit For alternative fuel mixtures produced after December 31, 2011, see How to Claim the Credit below. State tax filing software The section 6426 credit for biodiesel and alternative fuel consists of the biodiesel or renewable diesel mixture credit, alternative fuel credit, and alternative fuel mixture credit. State tax filing software Biodiesel or renewable diesel mixture credit claimant. State tax filing software   Claimant produced a biodiesel mixture by mixing biodiesel with diesel fuel. State tax filing software Claimant produced a renewable diesel mixture by mixing renewable diesel with liquid fuel (other than renewable diesel). State tax filing software   The person that produced and sold or used the mixture in their trade or business is the only person eligible to make this claim. State tax filing software The credit is based on the gallons of biodiesel or renewable diesel in the mixture. State tax filing software Renewable diesel does not include any fuel derived from coprocessing biomass (as defined in section 45K(c)(3)) with a feedstock that is not biomass. State tax filing software Claim requirements. State tax filing software   See the Instructions for Form 720 for the biodiesel or renewable diesel mixture claim requirements. State tax filing software Alternative fuel credit claimant. State tax filing software   For the alternative fuel credit, the registered alternative fueler who (1) sold an alternative fuel at retail delivered it into the fuel supply tank of a motor vehicle or motorboat, (2) sold an alternative fuel, delivered it in bulk taxable use in a motor vehicle or motorboat, and received required statement from the buyer, (3) used an alternative fuel (not sold at retail or in bulk as previously described) motor vehicle or motorboat, or (4) sold an alternative fuel used as a fuel in aviation is the only person eligible to make this claim. State tax filing software Carbon capture requirement. State tax filing software   A credit for Fischer-Tropsch process liquid fuel derived from coal (including peat) can be claimed only if the fuel is derived from coal produced at a gasification facility that separates and sequesters at least 75% of the facility's total carbon dioxide emissions. State tax filing software Alternative fuel credit. State tax filing software   The registered alternative fueler is the person eligible to make the claim. State tax filing software An alternative fueler is the person liable for tax on alternative fuel under the rules for taxable events for Other Fuels (discussed in chapter 1) or would be liable but for an exemption for nontaxable uses. State tax filing software An alternative fueler includes a person who sells for use or uses an alternative fuel in aviation. State tax filing software Alternative fuel mixture credit claimant. State tax filing software   For the alternative fuel mixture credit, the registered alternative fueler that produced and sold or used the mixture as a fuel in their trade or business is the only person eligible to make this claim. State tax filing software The credit is based on the gallons of alternative fuel in the mixture. State tax filing software An alternative fuel mixture is a mixture of alternative fuel and section 4081 taxable fuel (gasoline, diesel fuel, or kerosene). State tax filing software Registration. State tax filing software   You must be registered by the IRS to be eligible to claim the section 6426 fuel credit. State tax filing software See Registration Requirements in chapter 1. State tax filing software Credits for fuel provide incentive for United States production. State tax filing software   The section 6426 fuel credit may not be claimed for alternative fuel that is produced outside the United States for use as a fuel outside the United States. State tax filing software The United States includes any possession of the United States. State tax filing software Credit for fuels derived from paper or pulp production. State tax filing software   Credit for alternative fuels and alternative fuel mixtures for any fuel derived from the production of paper or pulp are not available for fuel sold or used on or after December 31, 2009. State tax filing software How to Claim the Credit Any biodiesel or renewable diesel mixture credit must first be claimed on Schedule C to reduce your taxable fuel liability reported on Form 720. State tax filing software Any excess credit may be claimed on Schedule C (Form 720), Schedule 3 (Form 8849), Form 4136, or Form 8864, Biodiesel and Renewable Diesel Fuels Credit. State tax filing software See Notice 2005-4 and the Instructions for Form 720 for more information. State tax filing software Also see Notice 2013-26 on page 984 of I. State tax filing software R. State tax filing software B. State tax filing software 2013-18 at www. State tax filing software irs. State tax filing software gov/pub/irs-irbs/irb13-18. State tax filing software pdf; and see chapter 2, later. State tax filing software Coordination with income tax credit. State tax filing software   Only one credit may be taken for any amount of biodiesel or renewable diesel. State tax filing software If any amount is claimed (or will be claimed) for any amount of biodiesel or renewable diesel on Form 720, Form 8849, or Form 4136, then a claim cannot be made on Form 8864 for that amount of biodiesel or renewable diesel. State tax filing software   Any alternative fuel credit must first be claimed on Schedule C (Form 720) to reduce your section 4041 taxable fuel liability for alternative fuel and CNG reported on Form 720. State tax filing software Any excess credit may claimed on Schedule C (Form 720), Schedule 3 (Form 8849), or Form 4136. State tax filing software   For alternative fuel mixtures produced after December 31, 2011, the alternative fuel mixture credit can be claimed on Schedule C (Form 720), not on Form 4136 or Schedule 3 (Form 8849), and only to the extent of your section 4081 taxable fuel liability for gasoline, diesel fuel and kerosene reported on Form 720. State tax filing software   Calculate the limitation for alternative fuel mixtures separately and enter on Schedule C (Form 720), line 14, only the gallons of mixtures that do not exceed your section 4081 taxable fuel liability. State tax filing software Filing Claims This section tells you how to make a claim for a credit or refund of excise taxes on fuels. State tax filing software This section also covers recordkeeping requirements and when to include the credit or refund in your income. State tax filing software Generally, you will provide all the information needed to claim a credit or refund when you properly complete Form 8849, Form 4136, Schedule C (Form 720), Form 6478, or Form 8864. State tax filing software In some cases, you will have to attach additional information. State tax filing software You need to keep records that support your claim for a credit or refund. State tax filing software Keep at your principal place of business all records needed to enable the IRS to verify that you are the person entitled to claim a credit or refund and the amount you claimed. State tax filing software Ultimate purchaser. State tax filing software   Ultimate purchasers may make claims for the nontaxable use of fuels on Form 4136, Schedule 1 (Form 8849), and Schedule C (Form 720) if reporting excise tax liability on that return. State tax filing software If you are an ultimate purchaser, you must keep the following records. State tax filing software The number of gallons purchased and used during the period covered by your claim. State tax filing software The dates of the purchases. State tax filing software The names and addresses of suppliers and amounts purchased from each in the period covered by your claim. State tax filing software The nontaxable use for which you used the fuel. State tax filing software The number of gallons used for each nontaxable use. State tax filing software It is important that your records show separately the number of gallons used for each nontaxable use that qualifies as a claim. State tax filing software If the fuel is exported, you must have proof of exportation. State tax filing software   For more information about keeping records, see Publication 583, Starting a Business and Keeping Records, or chapter 1 of Publication 17, Your Federal Income Tax for Individuals. State tax filing software Exceptions. State tax filing software    Generally, the ultimate purchaser may not claim a credit or refund for undyed diesel fuel, undyed kerosene, or kerosene for use in aviation sold for the exclusive use of a state or local government. State tax filing software However, see Claims by credit card issuers, later, for an exception. State tax filing software The ultimate purchaser may not claim a credit or refund as follows. State tax filing software The ultimate purchaser of gasoline or aviation gasoline used by a state or local government for its exclusive use or by a nonprofit educational organization for its exclusive use may waive its right to make a claim by providing a certificate that is signed under penalties of perjury by a person authorized to bind the ultimate purchaser and is in the same format as the Model Certificate M. State tax filing software A new certificate is required each year or when any information in the current certificate expires. State tax filing software The ultimate purchaser of kerosene for use in commercial aviation or noncommercial aviation (other than nonexempt, noncommercial aviation and exclusive use by a state, political subdivision of a state, or the District of Columbia) may waive its right to make a claim by providing a waiver that is signed under penalties of perjury by a person authorized to bind the ultimate purchaser and is in the same format as the Model Waiver L. State tax filing software A new waiver is required each year or when any information in the current waiver expires. State tax filing software The ultimate purchaser of undyed diesel fuel or undyed kerosene used in certain intercity and local buses may waive its right to make a claim by providing a waiver that is signed under penalties of perjury by a person authorized to bind the ultimate purchaser and is in the same format as the Model Waiver N. State tax filing software A new waiver is required each year or when any information in the current waiver expires. State tax filing software The ultimate purchaser of kerosene for use in nonexempt, noncommercial aviation must provide a certificate that is signed under penalties of perjury by a person authorized to bind the ultimate purchaser and is in the same format as the Model Certificate Q. State tax filing software A new certificate is required each year or when any information in the current certificate expires. State tax filing software Registered ultimate vendor. State tax filing software   Registered ultimate vendors may make claims for certain sales of fuels on Form 4136, Schedule 2 (Form 8849), and Schedule C (Form 720) if reporting excise tax liability on that return. State tax filing software If you are a registered ultimate vendor, you must keep certain information pertaining to the sale of the fuel. State tax filing software   To make a claim, you must have sold the fuel at a tax-excluded price, repaid the tax to the buyer, or obtained the buyer's written consent to the allowance of the claim. State tax filing software You are required to have a valid certificate or waiver in your possession in order to make the claim. State tax filing software   In addition, you must have a registration number that has not been revoked or suspended. State tax filing software See Form 637. State tax filing software State use. State tax filing software   To make a claim as an ultimate vendor (state), you must have a UV registration number and the fuel cannot be purchased with a credit card as explained below. State tax filing software If you sell undyed diesel fuel, undyed kerosene, or kerosene for use in aviation for use by a state or local government, you must keep the following information. State tax filing software The name and taxpayer identification number of each person (government unit) that bought the fuel. State tax filing software The number of gallons sold to each person. State tax filing software An unexpired certificate from the buyer. State tax filing software See Model Certificate P in the Appendix. State tax filing software The certificate expires on the earlier of 1 year after the date of the certificate or the date a new certificate is given to the registered ultimate vendor. State tax filing software Nonprofit educational organization and state use. State tax filing software   To make a claim as an ultimate vendor (nonprofit educational organization or state), you must have a UV registration number and the fuel cannot be purchased with a credit card as explained later. State tax filing software If you sell gasoline or aviation gasoline to a nonprofit educational organization for its exclusive use or to a state or local government for its exclusive use, you must keep the following information. State tax filing software The name and taxpayer identification number of each person (nonprofit educational organization or government unit) that bought the fuel. State tax filing software The number of gallons sold to each person. State tax filing software An unexpired certificate from the buyer. State tax filing software See Model Certificate M in the Appendix. State tax filing software  The certificate expires on the earlier of 1 year after the date of the certificate or the date a new certificate is given to the registered ultimate vendor. State tax filing software Blocked pump. State tax filing software   To make a claim as an ultimate vendor (blocked pump), you must have a UP registration number. State tax filing software If you sell undyed kerosene (other than kerosene for use in aviation) from a pump that qualifies as a blocked pump because it is locked by you after each sale and is unlocked by you at the request of the buyer, you must keep the following information for each sale of more than 5 gallons. State tax filing software The date of each sale. State tax filing software The name and address of the buyer. State tax filing software The number of gallons sold to that buyer. State tax filing software Certain intercity and local bus use. State tax filing software   To make a claim as an ultimate vendor of undyed diesel fuel or undyed kerosene used in certain intercity and local buses, you must have a UB registration number. State tax filing software You must keep the following information. State tax filing software The date of each sale. State tax filing software The name and address of the buyer. State tax filing software The number of gallons sold to the buyer. State tax filing software A copy of the waiver signed by the buyer at the time the credit or payment is claimed. State tax filing software See Model Waiver N in the Appendix. State tax filing software Kerosene for use in commercial aviation or noncommercial aviation. State tax filing software   To make a claim as an ultimate vendor of kerosene for use in commercial aviation (other than foreign trade) or noncommercial aviation (other than nonexempt, noncommercial aviation and exclusive use by a state, political subdivision of a state, or the District of Columbia), you must have a UA registration number. State tax filing software See Kerosene for use in aviation, earlier, for a list of nontaxable uses. State tax filing software You must keep the following information. State tax filing software The date of each sale. State tax filing software The name and address of the buyer. State tax filing software The number of gallons sold to the buyer. State tax filing software A copy of the waiver signed by the buyer at the time the credit or payment is claimed. State tax filing software See Model Waiver L in the Appendix. State tax filing software Kerosene for use in nonexempt, noncommercial aviation. State tax filing software   To make a claim as an ultimate vendor of kerosene for use in nonexempt, noncommercial aviation, you must have a UA registration number. State tax filing software You must keep the following information. State tax filing software The date of each sale. State tax filing software The name and address of the buyer. State tax filing software The number of gallons sold to the buyer. State tax filing software A copy of the certificate signed by the buyer at the time the credit or payment is claimed. State tax filing software See Model Certificate Q in the Appendix. State tax filing software Claims by credit card issuers. State tax filing software   For sales of gasoline, aviation gasoline, diesel fuel, kerosene, or kerosene for use in aviation that are purchased by an exempt user with the use of a credit card, the registered credit card issuer is the only person who can make the claim. State tax filing software An exempt user for this purpose is: For gasoline or aviation gasoline, a state or local government (including essential government use by an Indian tribal government) or a nonprofit educational organization; or For diesel fuel, kerosene, or kerosene for use in aviation, a state or local government (including essential government use by an Indian tribal government). State tax filing software   If gasoline is purchased without the use of a credit card, then the registered ultimate vendor of the gasoline may make the claim for refund or credit. State tax filing software However, if the gasoline is purchased with a credit card issued to a state, but the credit card issuer is not registered by the IRS or does not meet the conditions described, the credit card issuer must collect the tax and the state may make the claim. State tax filing software   If diesel fuel, kerosene, or kerosene for use in aviation is purchased without the use of a credit card, the registered ultimate vendor may make the claim for refund or credit. State tax filing software A state is not allowed to make a claim for these fuels. State tax filing software However, if the diesel fuel or kerosene is purchased with a credit card issued to a state, but the credit card issuer is not registered by the IRS or does not meet the conditions described, the credit card issuer must collect the tax and the state may make the claim. State tax filing software   The claim from the credit card issuer must contain the following information as it applies to the fuel covered in the claim. State tax filing software The total number of gallons. State tax filing software Its registration number. State tax filing software A statement that it has not collected the amount of tax from the ultimate purchaser or has obtained the written consent of the ultimate purchaser to make the claim. State tax filing software A statement that it has repaid or agreed to repay the amount of tax to the ultimate vendor, has obtained the written consent of the ultimate vendor to make the claim, or has otherwise made arrangements which directly or indirectly provide the ultimate vendor with reimbursement of the tax. State tax filing software Has in its possession an unexpired certificate similar to Model Certificate R in the Appendix and has no reason to believe any of the information in the certificate is false. State tax filing software Taxpayer identification number. State tax filing software   To file a claim, you must have a taxpayer identification number. State tax filing software Your taxpayer identification number can be an: Employer identification number (EIN), Social security number (SSN), or Individual taxpayer identification number (ITIN), if you are an alien individual and do not have and are not eligible to get an SSN. State tax filing software   If you normally file only a U. State tax filing software S. State tax filing software individual income tax return (such as Form 1040 or 1040NR), use your SSN or ITIN. State tax filing software You get an SSN by filing Form SS-5, Application for a Social Security Card, with the Social Security Administration. State tax filing software To get an ITIN, file Form W-7, Application for IRS Individual Taxpayer Identification Number, with the IRS. State tax filing software   If you operate a business, use your EIN. State tax filing software If you do not have an EIN, you may apply for one online. State tax filing software Go to the IRS website at irs. State tax filing software gov/businesses/small and click on the “Employer ID Numbers (EINs)” link. State tax filing software You may also apply for an EIN by calling 1-800-829-4933, or you can fax or mail Form SS-4, Application for Employer Identification Number, to the IRS. State tax filing software Claiming A Refund Generally, you may claim a refund of excise taxes on Form 8849. State tax filing software Complete and attach to Form 8849 the appropriate Form 8849 schedules. State tax filing software The instructions for Form 8849 and the separate instructions for each schedule explain the requirements for making a claim for refund. State tax filing software If you file Form 720, you can use the Schedule C (Form 720) for your refund claims for the quarter. State tax filing software See the Instructions for Form 720. State tax filing software Do not claim a refund on Form 8849 for any amount for which you have filed or will file a claim on Schedule C (Form 720) or Form 4136. State tax filing software The alternative fuel mixture credit must be claimed on Schedule C (Form 720) against your section 4081 taxable fuel liability for gasoline, diesel, and kerosene and any excess is not allowed. State tax filing software The alternative fuel credit must first be claimed on Schedule C (Form 720) against your section 4041 taxable fuel liability for alternative fuel and CNG. State tax filing software To the extent the alternative fuel credit exceeds this taxable fuel liability, a payment is allowed and may be claimed as a credit on Schedule C (Form 720), or as an income tax credit on Forms 4136, 6478, or 8864, as applicable. State tax filing software Only one claim may be made for any particular amount of alternative fuel. State tax filing software Claiming a Credit on Form 4136 For alternative fuel mixtures produced after December 31, 2011, the alternative fuel mixture credit cannot be claimed on Form 4136. State tax filing software See Biodiesel or Renewable Diesel Mixture Credit, Alternative Fuel Credit and Alternative Fuel Mixture Credit in chapter 2, earlier. State tax filing software A credit may be claimed for certain uses and sales of fuels on Form 4136 when you file your income tax return at the end of the year. State tax filing software If you meet certain requirements (discussed earlier), you may be able to make a claim during the year. State tax filing software Credit only. State tax filing software   You can claim the following taxes only as a credit on Form 4136. State tax filing software Tax on fuels used for nontaxable uses if the total for your tax year is less than $750. State tax filing software Tax on fuel you did not include in any claim for refund previously filed for any quarter of your tax year. State tax filing software Tax on fuel you used in mobile machinery (off-highway business use) that traveled less than 7,500 miles on public highways. State tax filing software Do not claim a credit for any amount for which you have filed a refund claim on Form 8849 or credit on Schedule C (Form 720). State tax filing software When to file. State tax filing software   You can claim a fuel tax credit on your income tax return for the year you used the fuel (or sold the fuel in the case of a registered ultimate vendor claim). State tax filing software You may be able to make a fuel tax claim on an amended income tax return for the year you used the fuel. State tax filing software Generally, you must file an amended return by the later of 3 years from the date you filed your original return or within 2 years from the date you paid the income tax. State tax filing software How to claim a credit. State tax filing software   How you claim a credit depends on whether you are an individual, partnership, corporation, S corporation, or farmers' cooperative association. State tax filing software Individuals. State tax filing software   You claim the credit on the “Credits from” line of Form 1040. State tax filing software Also check box b on that line. State tax filing software If you would not otherwise have to file an income tax return, you must do so to get a fuel tax credit. State tax filing software Partnerships. State tax filing software   Partnerships (other than electing large partnerships) claim the credit by including a statement on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. State tax filing software , showing each partner's share of the number of gallons of each fuel sold or used for a non