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State Tax Help

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State Tax Help

State tax help Publication 534 - Introductory Material Table of Contents Important Change for 1995 Introduction How To Use This Publication Important Change for 1995 Major changes to Publications 534 and 946. State tax help  This publication, as well as Publication 946,How To Depreciate Property, has been changed. State tax help Publication 534 has been shortened. State tax help It no longer contains general information on MACRS and the section 179 deduction. State tax help It contains a discussion of the accelerated cost recovery system (ACRS), the ACRS Percentage Tables, a discussion of other methods of depreciation, and a limited discussion of listed property. State tax help We expanded Publication 946 by adding material taken from Publication 534. State tax help We added more detail to the discussions of the section 179 deduction, the modified accelerated cost recovery system (MACRS), and listed property. State tax help We replaced the partialMACRS Percentage Tables with the complete ones from Publication 534. State tax help We also added the Table of Class Lives and Recovery Periods from Publication 534. State tax help We made these changes to eliminate most of the duplication that existed in the two publications. State tax help This will save money and make it easier for you to decide which publication you need. State tax help Use this publication to figure depreciation on property you placed in service before 1987; use Publication 946 to figure depreciation on property you placed in service after 1986. State tax help Introduction The law allows you to recover your cost in business or income-producing property through yearly tax deductions. State tax help You do this by depreciating your property, that is, by deducting some of your cost on your tax return each year. State tax help You can depreciate both tangible property, such as a car, building, or machinery, and certain intangible property, such as a copyright or a patent. State tax help The amount you can deduct depends on: How much the property cost, When you began using it, How long it will take to recover your cost, and Which of several depreciation methods you use. State tax help Depreciation defined. State tax help   Depreciation is a loss in the value of property over the time the property is being used. State tax help Events that can cause property to depreciate include wear and tear, age, deterioration, and obsolescence. State tax help You can get back your cost of certain property, such as equipment you use in your business or property used for the production of income by taking deductions for depreciation. State tax help Black's Law Dictionary Amortization. State tax help   Amortization is similar to depreciation. State tax help Using amortization, you can recover your cost or basis in certain property proportionately over a specific number of years or months. State tax help Examples of costs you can amortize are the costs of starting a business, reforestation, and pollution control facilities. State tax help You can find information on amortization inchapter 12 of Publication 535, Business Expenses. State tax help Alternative minimum tax. State tax help   If you use accelerated depreciation for real property, or personal property that is leased to others, you may be liable for the alternative minimum tax. State tax help Accelerated depreciation is any method, that allows recovery at a faster rate in the earlier years than the straight line method. State tax help For more information, you may wish to see the following: Form 6251, Alternative Minimum Tax-Individuals, and Publication 542, Tax Information on Corporations. State tax help Ordering publications and forms. State tax help   To order free publications and forms, 1-800-TAX-FORM (1-800-829-3676). State tax help You can also write to the IRS Forms Distribution Center nearest you. State tax help Check your income tax package for the address. State tax help   If you have access to a personal computer and a modem, you can also get many forms and publications electronically. State tax help See How To Get Forms and Publications in your income tax package for details. State tax help Telephone help. State tax help   You can call the IRS with your tax question Monday through Friday during regular business hours. State tax help Check your telephone book for the local number or you can call1-800-829-1040. State tax help Telephone help for hearing-impaired persons. State tax help   If you have access to TDD equipment, you can call 1-800-829-4059 with your tax question or to order forms and publications. State tax help See your tax package for the hours of operation. State tax help How To Use This Publication This publication describes the kinds of property that can be depreciated and the methods used to figure depreciation on property placed in service before 1987. State tax help It is divided into three chapters and contains an appendix. State tax help Chapter 1 explains the rules for depreciating property under the Accelerated Cost Recovery System (ACRS). State tax help Chapter 2 explains the rules for depreciating property first used before 1981. State tax help Chapter 3 explains the rules for listed property. State tax help Also this chapter defines listed property. State tax help The appendix contains the ACRS Percentage Tables. State tax help Prev  Up  Next   Home   More Online Publications
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Security Forms

IRS Contractor Investigation Risk Assessment Checklist (RAC)

IRS contractors who require a background investigation prior to starting work on an IRS contract must complete the RAC xls spreadsheet. The spreadsheet is completed by the vendor and individual contractor, and should be forwarded to both the COTR of record and the Contractor Security Lifecycle Program (CSLP) office.

All fields on Tab 1 of the RAC must be completed. Tab 2 contains instructions for each field. The spreadsheet contains a variety of information required for entry into various IRS systems to initiate and/or update the contractor investigation. These systems include but are not limited to:

• PBIP (PIV Background Investigation Process) – the contractor lifecycle tracking system, which tracks personal, investigation, training, badge, and separation information.
• USAccess – government-wide system used to submit fingerprints to OPM for a criminal check.
• ABIS (Automated Background Investigation System) – the system used to initiate the actual IRS investigation.
• e-QIP – the OPM  system used to complete the SF85 or SF85P (Questionnaire for Public Trust Positions)

Other forms that may be required prior to the investigation initiation may include the Fair Credit Reporting Act (Form 13440), Tax Check Notice (Form 1379), and the Declaration for Federal Employment (OF 0306).  You will be notified regarding which forms are required when you are contacted about initiating investigations for a specific contract with the IRS.  

If you have questions or concerns please contact Contractor Security Lifecycle Program office.  Be sure to include the Contracting Officer’s Technical Representative (COTR) on any questions or communications with CSLP.

Risk Assessment Spreadsheet
13340 - Fair Credit Reporting Act
1379 - Tax Record Check Notice
OF-306 - Declaration for Federal Employment
Page Last Reviewed or Updated: 03-Feb-2014

The State Tax Help

State tax help 4. State tax help   Special Situations Table of Contents Condominiums CooperativesDepreciation Property Changed to Rental UseBasis of Property Changed to Rental Use Figuring the Depreciation Deduction Renting Part of Property Not Rented for ProfitPostponing decision. State tax help Example—Property Changed to Rental Use This chapter discusses some rental real estate activities that are subject to additional rules. State tax help Condominiums A condominium is most often a dwelling unit in a multi-unit building, but can also take other forms, such as a townhouse or garden apartment. State tax help If you own a condominium, you also own a share of the common elements, such as land, lobbies, elevators, and service areas. State tax help You and the other condominium owners may pay dues or assessments to a special corporation that is organized to take care of the common elements. State tax help Special rules apply if you rent your condominium to others. State tax help You can deduct as rental expenses all the expenses discussed in chapters 1 and 2. State tax help In addition, you can deduct any dues or assessments paid for maintenance of the common elements. State tax help You cannot deduct special assessments you pay to a condominium management corporation for improvements. State tax help However, you may be able to recover your share of the cost of any improvement by taking depreciation. State tax help Cooperatives If you live in a cooperative, you do not own your apartment. State tax help Instead, a corporation owns the apartments and you are a tenant-stockholder in the cooperative housing corporation. State tax help If you rent your apartment to others, you usually can deduct, as a rental expense, all the maintenance fees you pay to the cooperative housing corporation. State tax help In addition to the maintenance fees paid to the cooperative housing corporation, you can deduct your direct payments for repairs, upkeep, and other rental expenses, including interest paid on a loan used to buy your stock in the corporation. State tax help Depreciation You will be depreciating your stock in the corporation rather than the apartment itself. State tax help Figure your depreciation deduction as follows. State tax help Figure the depreciation for all the depreciable real property owned by the corporation. State tax help (Depreciation methods are discussed in chapter 2 of this publication and Publication 946. State tax help ) If you bought your cooperative stock after its first offering, figure the depreciable basis of this property as follows. State tax help Multiply your cost per share by the total number of outstanding shares. State tax help Add to the amount figured in (a) any mortgage debt on the property on the date you bought the stock. State tax help Subtract from the amount figured in (b) any mortgage debt that is not for the depreciable real property, such as the part for the land. State tax help Subtract from the amount figured in (1) any depreciation for space owned by the corporation that can be rented but cannot be lived in by tenant-stockholders. State tax help Divide the number of your shares of stock by the total number of shares outstanding, including any shares held by the corporation. State tax help Multiply the result of (2) by the percentage you figured in (3). State tax help This is your depreciation on the stock. State tax help Your depreciation deduction for the year cannot be more than the part of your adjusted basis (defined in chapter 2) in the stock of the corporation that is allocable to your rental property. State tax help Payments added to capital account. State tax help   Payments earmarked for a capital asset or improvement, or otherwise charged to the corporation's capital account are added to the basis of your stock in the corporation. State tax help For example, you cannot deduct a payment used to pave a community parking lot, install a new roof, or pay the principal of the corporation's mortgage. State tax help   Treat as a capital cost the amount you were assessed for capital items. State tax help This cannot be more than the amount by which your payments to the corporation exceeded your share of the corporation's mortgage interest and real estate taxes. State tax help   Your share of interest and taxes is the amount the corporation elected to allocate to you, if it reasonably reflects those expenses for your apartment. State tax help Otherwise, figure your share in the following manner. State tax help Divide the number of your shares of stock by the total number of shares outstanding, including any shares held by the corporation. State tax help Multiply the corporation's deductible interest by the number you figured in (1). State tax help This is your share of the interest. State tax help Multiply the corporation's deductible taxes by the number you figured in (1). State tax help This is your share of the taxes. State tax help Property Changed to Rental Use If you change your home or other property (or a part of it) to rental use at any time other than the beginning of your tax year, you must divide yearly expenses, such as taxes and insurance, between rental use and personal use. State tax help You can deduct as rental expenses only the part of the expense that is for the part of the year the property was used or held for rental purposes. State tax help You cannot deduct depreciation or insurance for the part of the year the property was held for personal use. State tax help However, you can include the home mortgage interest, qualified mortgage insurance premiums, and real estate tax expenses for the part of the year the property was held for personal use as an itemized deduction on Schedule A (Form 1040). State tax help Example. State tax help Your tax year is the calendar year. State tax help You moved from your home in May and started renting it out on June 1. State tax help You can deduct as rental expenses seven-twelfths of your yearly expenses, such as taxes and insurance. State tax help Starting with June, you can deduct as rental expenses the amounts you pay for items generally billed monthly, such as utilities. State tax help When figuring depreciation, treat the property as placed in service on June 1. State tax help Basis of Property Changed to Rental Use When you change property you held for personal use to rental use (for example, you rent your former home), the basis for depreciation will be the lesser of fair market value or adjusted basis on the date of conversion. State tax help Fair market value. State tax help   This is the price at which the property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts. State tax help Sales of similar property, on or about the same date, may be helpful in figuring the fair market value of the property. State tax help Figuring the basis. State tax help   The basis for depreciation is the lesser of: The fair market value of the property on the date you changed it to rental use, or Your adjusted basis on the date of the change—that is, your original cost or other basis of the property, plus the cost of permanent additions or improvements since you acquired it, minus deductions for any casualty or theft losses claimed on earlier years' income tax returns and other decreases to basis. State tax help For other increases and decreases to basis, see Adjusted Basis in chapter 2. State tax help Example. State tax help Several years ago you built your home for $140,000 on a lot that cost you $14,000. State tax help Before changing the property to rental use this year, you added $28,000 of permanent improvements to the house and claimed a $3,500 casualty loss deduction for damage to the house. State tax help Part of the improvements qualified for a $500 residential energy credit, which you claimed on your 2010 tax return. State tax help Because land is not depreciable, you can only include the cost of the house when figuring the basis for depreciation. State tax help The adjusted basis of the house at the time of the change in its use was $164,000 ($140,000 + $28,000 − $3,500 − $500). State tax help On the date of the change in use, your property had a fair market value of $168,000, of which $21,000 was for the land and $147,000 was for the house. State tax help The basis for depreciation on the house is the fair market value on the date of the change ($147,000), because it is less than your adjusted basis ($164,000). State tax help Cooperatives If you change your cooperative apartment to rental use, figure your allowable depreciation as explained earlier. State tax help (Depreciation methods are discussed in chapter 2 of this publication and Publication 946. State tax help ) The basis of all the depreciable real property owned by the cooperative housing corporation is the smaller of the following amounts. State tax help The fair market value of the property on the date you change your apartment to rental use. State tax help This is considered to be the same as the corporation's adjusted basis minus straight line depreciation, unless this value is unrealistic. State tax help The corporation's adjusted basis in the property on that date. State tax help Do not subtract depreciation when figuring the corporation's adjusted basis. State tax help If you bought the stock after its first offering, the corporation's adjusted basis in the property is the amount figured in (1) under Depreciation (under Cooperatives, near the beginning of this chapter). State tax help The fair market value of the property is considered to be the same as the corporation's adjusted basis figured in this way minus straight line depreciation, unless the value is unrealistic. State tax help Figuring the Depreciation Deduction To figure the deduction, use the depreciation system in effect when you convert your residence to rental use. State tax help Generally, that will be MACRS for any conversion after 1986. State tax help Treat the property as placed in service on the conversion date. State tax help Example. State tax help Your converted residence (see previous example under Figuring the basis) was available for rent on August 1. State tax help Using Table 2-2d (see chapter 2), the percentage for Year 1 beginning in August is 1. State tax help 364% and the depreciation deduction for Year 1 is $2,005 ($147,000 × . State tax help 01364). State tax help Renting Part of Property If you rent part of your property, you must divide certain expenses between the part of the property used for rental purposes and the part of the property used for personal purposes, as though you actually had two separate pieces of property. State tax help You can deduct the expenses related to the part of the property used for rental purposes, such as home mortgage interest, qualified mortgage insurance premiums, and real estate taxes, as rental expenses on Schedule E (Form 1040). State tax help You can also deduct as rental expenses a portion of other expenses that normally are nondeductible personal expenses, such as expenses for electricity, or painting the outside of the house. State tax help There is no change in the types of expenses deductible for the personal-use part of your property. State tax help Generally, these expenses may be deducted only if you itemize your deductions on Schedule A (Form 1040). State tax help You cannot deduct any part of the cost of the first phone line even if your tenants have unlimited use of it. State tax help You do not have to divide the expenses that belong only to the rental part of your property. State tax help For example, if you paint a room that you rent, or if you pay premiums for liability insurance in connection with renting a room in your home, your entire cost is a rental expense. State tax help If you install a second phone line strictly for your tenant's use, all of the cost of the second line is deductible as a rental expense. State tax help You can deduct depreciation on the part of the house used for rental purposes as well as on the furniture and equipment you use for rental purposes. State tax help How to divide expenses. State tax help   If an expense is for both rental use and personal use, such as mortgage interest or heat for the entire house, you must divide the expense between rental use and personal use. State tax help You can use any reasonable method for dividing the expense. State tax help It may be reasonable to divide the cost of some items (for example, water) based on the number of people using them. State tax help The two most common methods for dividing an expense are (1) the number of rooms in your home, and (2) the square footage of your home. State tax help Example. State tax help You rent a room in your house. State tax help The room is 12 × 15 feet, or 180 square feet. State tax help Your entire house has 1,800 square feet of floor space. State tax help You can deduct as a rental expense 10% of any expense that must be divided between rental use and personal use. State tax help If your heating bill for the year for the entire house was $600, $60 ($600 × . State tax help 10) is a rental expense. State tax help The balance, $540, is a personal expense that you cannot deduct. State tax help Duplex. State tax help   A common situation is the duplex where you live in one unit and rent out the other. State tax help Certain expenses apply to the entire property, such as mortgage interest and real estate taxes, and must be split to determine rental and personal expenses. State tax help Example. State tax help You own a duplex and live in one half, renting the other half. State tax help Both units are approximately the same size. State tax help Last year, you paid a total of $10,000 mortgage interest and $2,000 real estate taxes for the entire property. State tax help You can deduct $5,000 mortgage interest and $1,000 real estate taxes on Schedule E (Form 1040), and if you itemize your deductions, you can deduct the other $5,000 mortgage interest and $1,000 real estate taxes on Schedule A (Form 1040). State tax help Not Rented for Profit If you do not rent your property to make a profit, you can deduct your rental expenses only up to the amount of your rental income. State tax help You cannot deduct a loss or carry forward to the next year any rental expenses that are more than your rental income for the year. State tax help Where to report. State tax help   Report your not-for-profit rental income on Form 1040 or 1040NR, line 21. State tax help For example, if you are filing Form 1040, you can include your mortgage interest and any qualified mortgage insurance premiums (if you use the property as your main home or second home), real estate taxes, and casualty losses on the appropriate lines of Schedule A (Form 1040) if you itemize your deductions. State tax help   If you itemize your deductions, claim your other rental expenses, subject to the rules explained in chapter 1 of Publication 535, as miscellaneous itemized deductions on Schedule A (Form 1040), line 23, or Schedule A (Form 1040NR), line 9. State tax help You can deduct these expenses only if they, together with certain other miscellaneous itemized deductions, total more than 2% of your adjusted gross income. State tax help Presumption of profit. State tax help   If your rental income is more than your rental expenses for at least 3 years out of a period of 5 consecutive years, you are presumed to be renting your property to make a profit. State tax help Postponing decision. State tax help   If you are starting your rental activity and do not have 3 years showing a profit, you can elect to have the presumption made after you have the 5 years of experience required by the test. State tax help You may choose to postpone the decision of whether the rental is for profit by filing Form 5213. State tax help You must file Form 5213 within 3 years after the due date of your return (determined without extensions) for the year in which you first carried on the activity or, if earlier, within 60 days after receiving written notice from the Internal Revenue Service proposing to disallow deductions attributable to the activity. State tax help More information. State tax help   For more information about the rules for an activity not engaged in for profit, see Not-for-Profit Activities in chapter 1 of Publication 535. State tax help Example—Property Changed to Rental Use In January, Eileen Johnson bought a condominium apartment to live in. State tax help Instead of selling the house she had been living in, she decided to change it to rental property. State tax help Eileen selected a tenant and started renting the house on February 1. State tax help Eileen charges $750 a month for rent and collects it herself. State tax help Eileen also received a $750 security deposit from her tenant. State tax help Because she plans to return it to her tenant at the end of the lease, she does not include it in her income. State tax help Her rental expenses for the year are as follows. State tax help   Mortgage interest $1,800     Fire insurance (1-year policy) 100     Miscellaneous repairs (after renting) 297     Real estate taxes imposed and paid 1,200   Eileen must divide the real estate taxes, mortgage interest, and fire insurance between the personal use of the property and the rental use of the property. State tax help She can deduct eleven-twelfths of these expenses as rental expenses. State tax help She can include the balance of the allowable taxes and mortgage interest on Schedule A (Form 1040) if she itemizes. State tax help She cannot deduct the balance of the fire insurance because it is a personal expense. State tax help Eileen bought this house in 1984 for $35,000. State tax help Her property tax was based on assessed values of $10,000 for the land and $25,000 for the house. State tax help Before changing it to rental property, Eileen added several improvements to the house. State tax help She figures her adjusted basis as follows:   Improvements Cost     House $25,000     Remodeled kitchen 4,200     Recreation room 5,800     New roof 1,600     Patio and deck 2,400     Adjusted basis $39,000   On February 1, when Eileen changed her house to rental property, the property had a fair market value of $152,000. State tax help Of this amount, $35,000 was for the land and $117,000 was for the house. State tax help Because Eileen's adjusted basis is less than the fair market value on the date of the change, Eileen uses $39,000 as her basis for depreciation. State tax help As specified for residential rental property, Eileen must use the straight line method of depreciation over the GDS or ADS recovery period. State tax help She chooses the GDS recovery period of 27. State tax help 5 years. State tax help She uses Table 2-2d to find her depreciation percentage. State tax help Since she placed the property in service in February, the percentage is 3. State tax help 182%. State tax help On April 1, Eileen bought a new dishwasher for the rental property at a cost of $425. State tax help The dishwasher is personal property used in a rental real estate activity, which has a 5-year recovery period. State tax help She uses Table 2-2a to find the percentage for Year 1 under “Half-year convention” (20%) to figure her depreciation deduction. State tax help On May 1, Eileen paid $4,000 to have a furnace installed in the house. State tax help The furnace is residential rental property. State tax help Because she placed the property in service in May, the percentage from Table 2-2d is 2. State tax help 273%. State tax help Eileen figures her net rental income or loss for the house as follows: Total rental income received  ($750 × 11) $8,250 Minus: Expenses     Mortgage interest ($1,800 × 11/12) $1,650   Fire insurance ($100 × 11/12) 92   Miscellaneous repairs 297   Real estate taxes ($1,200 × 11/12) 1,100   Total expenses 3,139 Balance $5,111 Minus: Depreciation     House ($39,000 × . State tax help 03182) $1,241   Dishwasher ($425 × . State tax help 20) 85   Furnace ($4,000 × . State tax help 02273) 91   Total depreciation 1,417 Net rental income for house   $3,694       Eileen uses Schedule E, Part I, to report her rental income and expenses. State tax help She enters her income, expenses, and depreciation for the house in the column for Property A. State tax help Since all property was placed in service this year, Eileen must use Form 4562 to figure the depreciation. State tax help See the Instructions for Form 4562 for more information on preparing the form. 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