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Tax Extension Online

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Sold on Schedule C, Lines 35 Through 42Line 35 Inventory at Beginning of Year Line 36 Purchases Less Cost of Items Withdrawn for Personal Use Line 37 Cost of Labor Line 38 Materials and Supplies Line 39 Other Costs Line 40 Add Lines 35 through 39 Line 41 Inventory at End of Year Line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extension online If different from last year's closing inventory, attach explanation   36 Purchases less cost of items withdrawn for personal use   37 Cost of labor.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

Face-to-face Tax Help

IRS Taxpayer Assistance Centers (TACs) are your source for personal tax help when you believe your tax issue can only be handled face-to-face. No appointment is necessary.

Keep in mind, many questions can be resolved online without waiting in line. Through IRS.gov you can:
• Set up a payment plan.
• Get a transcript of your tax return.
• Make a payment.
• Check on your refund.
• Find answers to many of your tax questions.

We are now referring all requests for tax return preparation services to other available resources. You can take advantage of free tax preparation through Free File, Free File Fillable Forms or through a volunteer site in your community. To find the nearest volunteer site location or to get more information about Free File, go to the top of the page and enter “Free Tax Help” in the Search box.

If you have a tax account issues and feel that it requires talking with someone face-to-face, visit your local TAC.

Caution:  Many of our offices are located in Federal Office Buildings. These buildings may not allow visitors to bring in cell phones with camera capabilities.

Multilingual assistance is available in every office. Hours of operation are subject to change.

Before visiting your local office click on "Services Provided" in the chart below to see what services are available. Services are limited and not all services are available at every TAC office and may vary from site to site. You can get these services on a walk-in basis.

City Street Address Days/Hours of Service Telephone*
Albany Clinton Ave. & N. Pearl St.
Albany, NY 12207

Monday - Friday 8:30 a.m. - 4:30 p.m.

 

Services Provided

(518) 427-4250
Bethpage 999 Stewart Ave.
Bethpage, NY 11714

Monday - Friday 8:30 a.m. - 4:30 p.m.
 

Services Provided

(516) 576-7428
Binghamton 15 Henry St.
Binghamton, NY 13901

Monday - Friday 8:30 a.m.-4:30 p.m.
(Closed for lunch 1:00 p.m. - 2:00 p.m.)

 

Services Provided

(607) 721-0338
Bronx 1200 Waters Place
Bronx, NY 10461

Monday - Friday 8:30 a.m.-4:30 p.m.

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**

 

Services Provided

(718) 536-3660
Brooklyn 2 Metro Tech, 1st floor
Brooklyn, NY 11201

Monday - Friday 8:30 a.m.-4:30 p.m.

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**
 

Services Provided

(718) 834-6559
Buffalo 130 South Elmwood Ave.
Buffalo, NY 14202

Monday - Friday 8:30 a.m.-4:30 p.m.

 

Services Provided

(716) 961-5100
Elmira 149 West Gray St.
Elmira, NY 14901

Monday - Friday 8:30 a.m.- 4:30 p.m.
(Closed for lunch 1:00 p.m. - 2:00)

 

Services Provided

(607) 767-1012
Hauppauge 1180 Veterans Memorial Hwy.
Hauppauge, NY 11788

Monday - Friday 8:30 a.m.-4:30 p.m.


Services Provided

(631) 851-4726
Jamestown

201 West Third Street
Jamestown, NY 14701

 

 

Monday - Friday 8:30 a.m.- 4:30 p.m.
(Closed for lunch 1:00 p.m. - 2:00 p.m.)

 

Services Provided

(716) 961-5100 
 Kingston 153 Sawkill Rd.
Kingston, NY 12401 

Monday - Friday 8:30 a.m.- 4:30 p.m.
(Closed for lunch 1:00 p.m. - 2:00 p.m.)

 

Services Provided

(845) 339-5384
 New York (Harlem) 2283 Third Ave.
New York, NY 10035 

Monday - Friday 8:30 a.m.-4:30 p.m.

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**

 

Services Provided

(718) 536-3699 
 New York (Downtown) 290 Broadway
New York, NY 10007 

Monday - Friday 8:30 a.m.-4:30 p.m.
 

Services Provided

(212) 436-1000
 New York (Midtown) 110 W. 44th St.
New York, NY 10036 

Monday - Friday 8:30 a.m.-4:30 p.m.

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**
 

Services Provided  

(212) 719-6631 
 Poughkeepsie 191 Main St.
Poughkeepsie, NY 12601 

Monday - Friday 8:30 a.m.-4:30 p.m.
(Closed for lunch 1:00 p.m. - 2:00 p.m.)

 

Services Provided

(845) 452-2220 
 Queensbury 375 Bay Rd.
Queensbury, NY 12804 

Monday - Friday 8:30 a.m. - 4:30 p.m.
(Closed for lunch 1:00 p.m. - 2:00 p.m.)

 

Services Provided

(518) 798-6047 
 Rego Park 59-17 Junction Blvd.
Rego Park, NY 11368 

Monday - Friday 8:30 a.m.-4:30 p.m.


 Services Provided

(718) 760-6019 
 Rochester 255 East Ave.
Rochester, NY 14604 

Monday - Friday 8:30 a.m.-4:30 p.m.
 

Services Provided

(585) 263-5840 
Staten Island/remote
Taxpayer Assistance
available at
Project Hospitality
514 Bay Street
Staten Island, NY 10304 

Monday - Friday 8:30 a.m.-4:30 p.m. 
 

Virtual Services Provided

(212) 436-1000 
 Syracuse One Park Place
300 South State Street
Syracuse, NY  13202 

Monday - Friday 8:30 a.m.-4:30 p.m.

 

Services Provided

(315) 448-0807 
 Utica 10 Broad St.
Utica, NY  13501 

Monday - Friday 8:30 a.m.-4:00 p.m.

 

 Services Provided

(315) 793-1952 
 West Nyack 242 W. Nyack Rd.
West Nyack, NY 10994 

Monday - Friday 8:30 a.m.-4:30 p.m. 
(Closed for lunch 1:00 p.m. - 2:00 p.m.)

 

Services Provided

(845) 627-1487 
 White Plains 210 E. Post Rd.
White Plains, NY 10601 

Monday - Friday 8:30 a.m.-4:30 p.m.


Services Provided

(914) 684-7302 

* Note: The phone numbers in the chart above are not toll-free for all locations. When you call, you will reach a recorded business message with information about office hours, locations and services provided in that office. If face-to-face assistance is not a priority for you, you may also get help with IRS letters or resolve tax account issues by phone, toll free at 1-800-829-1040 (individuals) or 1-800-829-4933 (businesses). 

For information on where to file your tax return please see Where to File Addresses

The Taxpayer Advocate Service: Within New York call:
 

 Albany  (518) 427-5413
 Brooklyn  (718) 834-2200
 Buffalo  (716) 961-5300
 Manhattan  (212) 436-1011

Call 1-877-777-4778 elsewhere, or see  Publication 1546, The Taxpayer Advocate Service of the IRS. For further information, see  Tax Topic 104.

Partnerships

IRS and organizations all over the country are partnering to assist taxpayers. Through these partnerships, organizations are also achieving their own goals. These mutually beneficial partnerships are strengthening outreach efforts and bringing education and assistance to millions.

For more information about these programs for individuals and families, contact the Stakeholder Partnerships, Education and Communication Office at:

Internal Revenue Service
1 Clinton Ave., Room 600
Albany, NY 12207

Internal Revenue Service
201 Como Park Blvd.
Cheektowaga, NY 14425

Internal Revenue Service
290 Broadway, 5th FL
New York, NY 10007

For more information about these programs for businesses, your local Stakeholder Liaison office establishes relationships with organizations representing small business and self-employed taxpayers. They provide information about the policies, practices and procedures the IRS uses to ensure compliance with the tax laws. To establish a relationship with us, use this list to find a contact in your state:

Stakeholder Liaison (SL) Phone Numbers for Organizations Representing Small Businesses and Self-employed Taxpayers.

Page Last Reviewed or Updated: 28-Mar-2014

The Tax Extension Online

Tax extension online Publication 3402 - Main Content Table of Contents What is a Limited Liability Company? Classification of an LLC LLCs Classified as Partnerships LLCs Classified as Disregarded Entities LLCs Classified as Corporations Subsequent Elections How To Get More InformationInternal Revenue Service Small Business Administration Other Federal Agencies What is a Limited Liability Company? For purposes of this publication, a limited liability company (LLC) is a business entity organized in the United States under state law. Tax extension online Unlike a partnership, all of the members of an LLC have limited personal liability for its debts. Tax extension online An LLC may be classified for federal income tax purposes as a partnership, corporation, or an entity disregarded as separate from its owner by applying the rules in Regulations section 301. Tax extension online 7701-3. Tax extension online The information in this publication applies to LLCs in general, and different rules may apply to special situations, including banks, insurance companies, or nonprofit organizations that are LLCs or that own LLCs. Tax extension online Check your state's requirements and the federal tax regulations for further information. Tax extension online Classification of an LLC Default classification rules. Tax extension online   An LLC with at least two members is classified as a partnership for federal income tax purposes. Tax extension online An LLC with only one member is treated as an entity disregarded as separate from its owner for income tax purposes (but as a separate entity for purposes of employment tax and certain excise taxes). Tax extension online Also, an LLC's federal tax classification can subsequently change under certain default rules discussed later. Tax extension online Elected classification. Tax extension online   If an LLC does not choose to be classified under the above default classifications, it can elect to be classified as an association taxable as a corporation or as an S corporation. Tax extension online After an LLC has determined its federal tax classification, it can later elect to change that classification. Tax extension online For details, see Subsequent Elections, later. Tax extension online LLCs Classified as Partnerships If an LLC has at least two members and is classified as a partnership, it generally must file Form 1065, U. Tax extension online S. Tax extension online Return of Partnership Income. Tax extension online Generally, an LLC classified as a partnership is subject to the same filing and reporting requirements as partnerships. Tax extension online For certain purposes, members of an LLC are treated as limited partners in a limited partnership. Tax extension online For example, LLC members are treated as limited partners for purposes of material participation under the passive activity limitation rules (see Temporary Regulation section 1. Tax extension online 469-5T(e)). Tax extension online See the Instructions for Form 1065 for reporting rules that apply specifically to LLCs. Tax extension online Member manager. Tax extension online   Only a member manager of an LLC can sign the partnership tax return. Tax extension online And only a member manager can represent the LLC as the tax matters partner under the consolidated audit proceedings in sections 6221 through 6234. Tax extension online A member manager is any owner of an interest in the LLC who, alone or together with others, has the continuing authority to make the management decisions necessary to conduct the business for which the LLC was formed. Tax extension online If there are no elected or designated member managers, each owner is treated as a member manager. Tax extension online Change in default classification. Tax extension online   If the number of members in an LLC classified as a partnership is reduced to only one member, it becomes an entity disregarded as separate from its owner under Regulations section 301. Tax extension online 7701-3(f)(2). Tax extension online However, if the LLC has made an election to be classified as a corporation (discussed later) and that elective classification is in effect at the time of the change in membership, the default classification as a disregarded entity will not apply. Tax extension online   Other tax consequences of a change in membership, such as recognition of gain or loss, are determined by the transactions through which an interest in the LLC is acquired or disposed of. Tax extension online If a partnership that becomes a disregarded entity as a result of a decrease in the number of members makes an election to be classified as a corporation, the applicable deemed transactions discussed under Subsequent Elections, later, apply. Tax extension online Example 1. Tax extension online Ethel and Francis are members of an LLC classified as a partnership for federal tax purposes. Tax extension online Each holds an equal membership interest. Tax extension online The LLC does not hold any unrealized receivables or substantially appreciated inventory. Tax extension online Ethel sells her entire interest in the LLC to Francis for $10,000. Tax extension online After the sale, the business is continued by the LLC, which is owned solely by Francis. Tax extension online No entity classification election is made after the sale to treat the LLC as a corporation for federal tax purposes. Tax extension online The partnership terminates when Francis buys Ethel's entire interest. Tax extension online Ethel must treat the transaction as the sale of a partnership interest and must report gain or loss, if any, resulting from the sale of her partnership interest. Tax extension online For purposes of determining the tax treatment of Francis, the partnership is deemed to make a liquidating distribution of all of its assets to Ethel and Francis, and after this distribution, Francis is treated as acquiring the assets deemed to have been distributed to Ethel in liquidation of Ethel's partnership interest. Tax extension online Francis's basis in the assets attributable to Ethel's one-half interest in the partnership is $10,000, the purchase price for Ethel's partnership interest. Tax extension online Upon the termination of the partnership, Francis is considered to receive a distribution of those assets attributable to Francis's former interest in the partnership. Tax extension online Francis must recognize gain or loss, if any, on the deemed distribution of the assets to the extent required by Internal Revenue Code section 731(a). Tax extension online See Partnership Distributions in Publication 541. Tax extension online Example 2. Tax extension online George and Henrietta are members of an LLC classified as a partnership for federal tax purposes. Tax extension online Each holds an equal membership interest. Tax extension online The LLC does not hold any unrealized receivables or substantially appreciated inventory. Tax extension online George and Henrietta each sell their entire interests in the LLC to Ian, an unrelated person, in exchange for $10,000. Tax extension online After the sale, the business is continued by the LLC, which is owned solely by Ian. Tax extension online No entity classification election is made after the sale to treat the LLC as a corporation for federal tax purposes. Tax extension online The partnership terminates when Ian purchases the entire interests of George and Henrietta in the LLC. Tax extension online George and Henrietta must report gain or loss, if any, resulting from the sale of their partnership interests. Tax extension online For purposes of classifying the acquisition by Ian, the partnership is deemed to make a liquidating distribution of its assets to George and Henrietta. Tax extension online Immediately following this distribution, Ian is deemed to acquire, by purchase, all of the former partnership's assets. Tax extension online   For more details on the preceding two examples, see Revenue Ruling 99-6, 1999-6 I. Tax extension online R. Tax extension online B. Tax extension online 6. Tax extension online You can find Revenue Ruling 99-6 at www. Tax extension online irs. Tax extension online gov/pub/irs-irbs/irb99-06. Tax extension online pdf. Tax extension online LLCs Classified as Disregarded Entities If an LLC has only one member and is classified as an entity disregarded as separate from its owner, its income, deductions, gains, losses, and credits are reported on the owner's income tax return. Tax extension online For example, if the owner of the LLC is an individual, the LLC's income and expenses would be reported on the following schedules filed with the owner's Form 1040: Schedule C, Profit or Loss from Business (Sole Proprietorship); Schedule C-EZ, Net Profit From Business (Sole Proprietorship); Schedule E, Supplemental Income and Loss; or Schedule F, Profit or Loss From Farming. Tax extension online Employment tax and certain excise taxes. Tax extension online   A single-member LLC that is classified as a disregarded entity for income tax purposes is treated as a separate entity for purposes of employment tax and certain excise taxes. Tax extension online For wages paid after January 1, 2009, the single-member LLC is required to use its name and employer identification number (EIN) for reporting and payment of employment taxes. Tax extension online A single-member LLC is also required to use its name and EIN to register for excise tax activities on Form 637; pay and report excise taxes reported on Forms 720, 730, 2290, and 11-C; and claim any refunds, credits, and payments on Form 8849. Tax extension online See the employment and excise tax returns for more information. Tax extension online Self-employment tax rule for disregarded entity LLCs. Tax extension online   An individual owner of a single-member LLC classified as a disregarded entity is not an employee of the LLC. Tax extension online Instead, the owner is subject to tax on the net earnings from self-employment of the LLC which is treated in the same manner as a sole-proprietorship. Tax extension online Example 3. Tax extension online LLC is a disregarded entity owned by Irene. Tax extension online LLC has three employees (Kent, Patricia, and Tex) and pays wages. Tax extension online LLC is treated as an entity separate from its owner for purposes of employment taxes. Tax extension online For the wages paid to Kent, Patricia, and Tex, LLC is liable for income tax withholding, Federal Insurance Contributions Act (FICA) taxes, and Federal Unemployment Tax Act (FUTA) taxes. Tax extension online In addition, LLC must file under its name and EIN the applicable employment tax returns; make timely employment tax deposits; and file with the Social Security Administration and furnish to LLC's employees (Kent, Patricia, and Tex) Forms W-2, Wage and Tax Statement. Tax extension online Irene is self-employed for purposes of the self-employment tax. Tax extension online Thus, Irene is subject to self-employment tax on her net earnings from self-employment with respect to LLC's activities. Tax extension online Irene is not an employee of LLC for purposes of employment taxes. Tax extension online Because LLC is treated as a sole proprietorship of Irene for income tax purposes, Irene must report the income and expenses from LLC on her Schedule C. Tax extension online Irene will figure the tax due on her net earnings from self-employment on Schedule SE. Tax extension online Irene can also deduct one-half of her self-employment tax on line 27 of her Form 1040. Tax extension online Taxpayer identification number. Tax extension online   For all income tax purposes, a single-member LLC classified as a disregarded entity must use the owner's social security number (SSN) or EIN. Tax extension online This includes all information returns and reporting related to income tax. Tax extension online For example, if a disregarded entity LLC that is owned by an individual is required to provide a Form W-9, Request for Taxpayer Identification Number and Certification, the LLC must provide the owner's SSN or EIN, not the LLC's EIN. Tax extension online   However, most new single-member LLCs classified as a disregarded entity will need to obtain an EIN for the LLC. Tax extension online An LLC will need an EIN if it has any employees or if it will be required to file any of the excise tax forms listed above (see Employment tax and certain excise taxes earlier). Tax extension online See Form SS-4, Application for Employer Identification Number, for information on applying for an EIN. Tax extension online Change in default classification. Tax extension online   If a single-member LLC classified as a disregarded entity for income tax purposes acquires an additional member, it becomes a partnership under Regulations section 301. Tax extension online 7701-3(f)(2). Tax extension online However, if the LLC has made an election to be classified as a corporation (discussed later) and that elective classification is in effect at the time of the change in membership, the default classification as a partnership will not apply. Tax extension online   Other tax consequences of a change in membership, such as recognition of gain or loss, are determined by the transactions through which an interest in the LLC is acquired or disposed of. Tax extension online If a disregarded entity that becomes a partnership as a result of an increase in the number of members makes an election to be classified as a corporation, the applicable deemed transactions discussed in Subsequent Elections, later, apply. Tax extension online Example 4. Tax extension online Bart, who is not related to Alain, buys 50% of Alain's interest in an LLC that is a disregarded entity for $5,000. Tax extension online Alain does not contribute any portion of the $5,000 to the LLC. Tax extension online Alain and Bart continue to operate the business of the LLC as co-owners of the LLC. Tax extension online The LLC is converted to a partnership when the new member, Bart, buys an interest in the disregarded entity from the owner, Alain. Tax extension online Bart's buying a 50% interest in Alain's ownership interest in the LLC is treated as Bart's buying a 50% interest in each of the LLC's assets, which are treated as owned directly by Alain for federal income tax purposes. Tax extension online Immediately thereafter, Alain and Bart are treated as contributing their respective interests in those assets to a partnership in exchange for ownership interests in the partnership. Tax extension online Alain recognizes gain or loss from the deemed sale to Bart of the 50% interest in the assets. Tax extension online Neither Alain nor Bart recognizes any gain or loss as a result of the deemed contribution of the assets to the partnership. Tax extension online Example 5. Tax extension online Charles, who is not related to Danielle, contributes $10,000 to an LLC owned by Danielle for a 50% ownership interest in the LLC. Tax extension online The LLC uses all of the contributed cash in its business. Tax extension online Charles and Danielle continue to operate the business of the LLC as co-owners of the LLC. Tax extension online The LLC is converted from a disregarded entity to a partnership when Charles contributes cash to the LLC. Tax extension online Charles's contribution is treated as a contribution to a partnership in exchange for an ownership interest in the partnership. Tax extension online Danielle is treated as contributing all of the assets of the LLC to the partnership in exchange for a partnership interest. Tax extension online Neither Charles nor Danielle recognizes gain or loss as a result of the conversion of the disregarded entity to a partnership. Tax extension online   For more details on the preceding two examples, see Revenue Ruling 99-5, 1999-6 I. Tax extension online R. Tax extension online B. Tax extension online 8. Tax extension online You can find Revenue Ruling 99-5 at www. Tax extension online irs. Tax extension online gov/pub/irs-irbs/irb99-06. Tax extension online pdf. Tax extension online LLCs Classified as Corporations An LLC with either a single member or more than one member can elect to be classified as a corporation rather than be classified as a partnership or disregarded entity under the default rules discussed earlier. Tax extension online File Form 8832, Entity Classification Election, to elect classification as a C corporation. Tax extension online File Form 2553, Election by a Small Business Corporation, to elect classification as an S corporation. Tax extension online LLCs electing classification as an S corporation are not required to file Form 8832 to elect classification as a corporation before filing Form 2553. Tax extension online By filing Form 2553, an LLC is deemed to have elected classification as a corporation in addition to the S corporation classification. Tax extension online If the LLC elects to be classified as a corporation by filing Form 8832, a copy of the LLC's Form 8832 must be attached to the federal income tax return of each direct and indirect owner of the LLC for the tax year of the owner that includes the date on which the election took effect. Tax extension online Example 6. Tax extension online Classification as a corporation without an S election. Tax extension online Wanda and Sylvester are members of an LLC. Tax extension online They agree that the LLC should be classified as a corporation but do not want to elect to have the LLC be treated as an S corporation. Tax extension online The LLC must file Form 8832. Tax extension online Example 7. Tax extension online Classification as a corporation with an S election. Tax extension online Evelyn and Carol are members of an LLC. Tax extension online They agree that the LLC should be classified as an S corporation. Tax extension online The LLC must file Form 2553 instead of Form 8832. Tax extension online If the LLC is classified as a corporation, it must file a corporation income tax return. Tax extension online If it is a C corporation, it is taxed on its taxable income and distributions to the members are includible in the members' gross income to the extent of the corporation's earnings and profits (double taxation). Tax extension online If it is an S corporation, the corporation is generally not subject to any income tax and the income, deductions, gains, losses, and credits of the corporation “pass through” to the members. Tax extension online Corporations generally file either: Form 1120, U. Tax extension online S. Tax extension online Corporation Income Tax Return; or Form 1120S, U. Tax extension online S. Tax extension online Income Tax Return for an S Corporation. Tax extension online For more information on the income taxation of corporations and their shareholders, see Publication 542, Corporations. Tax extension online For more information on the income taxation of S corporations and their shareholders, see the Instructions for Form 1120S, U. Tax extension online S. Tax extension online Income Tax Return for an S Corporation. Tax extension online Subsequent Elections An LLC can elect to change its classification. Tax extension online Generally, once an LLC has elected to change its classification, it cannot elect again to change it classification during the 60 months after the effective date of the election. Tax extension online An election by a newly formed LLC that is effective on the date of formation is not considered a change for purposes of this limitation. Tax extension online For more information and exceptions, see Regulations section 301. Tax extension online 7701-3(c) and the Form 8832 instructions. Tax extension online An election to change classification can have significant tax consequences based on the following transactions that are deemed to occur as a result of the election. Tax extension online Partnership to corporation. Tax extension online   An election to change classification from a partnership to a corporation will be treated as if the partnership contributed all of its assets and liabilities to the corporation in exchange for stock and the partnership then immediately liquidated by distributing the stock to its partners. Tax extension online   For more information, see Partnership Distributions in Publication 541 and Property Exchanged for Stock in Publication 542. Tax extension online Corporation to partnership. Tax extension online   An election to change classification from a corporation to a partnership will be treated as if the corporation distributed all of its assets and liabilities to its shareholders in liquidation and the shareholders then immediately contributed all of the distributed assets and liabilities to a new partnership. Tax extension online   For more information, see Contribution of Property in Publication 541 and Distributions to Shareholders in Publication 542. Tax extension online Corporation to disregarded entity. Tax extension online   An election to change classification from a corporation to a disregarded entity will be treated as if the corporation distributed all of its assets and liabilities to its single owner in liquidation. Tax extension online   For more information, see Distributions to Shareholders in Publication 542. Tax extension online Disregarded entity to corporation. Tax extension online   An election to change classification from a disregarded entity to a corporation will be treated as if the owner of the disregarded entity contributed all of the assets and liabilities to the corporation in exchange for stock. Tax extension online   For more information, see Property Exchanged for Stock in Publication 542. Tax extension online How To Get More Information This section describes the help the IRS and other federal agencies offer to taxpayers who operate their own businesses. Tax extension online Internal Revenue Service You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get information from the IRS in several ways. Tax extension online By selecting the method that is best for you, you will have quick and easy access to tax help. Tax extension online Contacting your Taxpayer Advocate. Tax extension online   The Taxpayer Advocate Service (TAS) is an independent organization within the IRS whose employees assist taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems that have not been resolved through normal channels, or who believe that an IRS system or procedure is not working as it should. Tax extension online   You can contact the TAS by calling the TAS toll-free case intake line at 1-877-777-4778 or TTY/TDD 1-800-829-4059 to see if you are eligible for assistance. Tax extension online You can also call or write to your local taxpayer advocate, whose phone number and address are listed in your local telephone directory and in Publication 1546, Taxpayer Advocate Service — Your Voice at the IRS. Tax extension online You can file Form 911, Request for Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance Order), or ask an IRS employee to complete it on your behalf. Tax extension online For more information, go to www. Tax extension online irs. Tax extension online gov/advocate. Tax extension online Low Income Taxpayer Clinics (LITCs). Tax extension online   LITCs are independent organizations that provide low income taxpayers with representation in federal tax controversies with the IRS for free or for a nominal charge. Tax extension online The clinics also provide tax education and outreach for taxpayers with limited English proficiency or who speak English as a second language. Tax extension online Publication 4134, Low Income Taxpayer Clinic List, provides information on clinics in your area. Tax extension online It is available at www. Tax extension online irs. Tax extension online gov or at your local IRS office. Tax extension online Small business workshops. Tax extension online   Small business workshops are designed to help the small business owner understand and fulfill their federal tax responsibilities. Tax extension online Workshops are sponsored and presented by IRS partners who are federal tax specialists. Tax extension online Workshop topics vary from a general overview of taxes to more specific topics such as recordkeeping and retirement plans. Tax extension online Although most are free, some workshops have fees associated with them. Tax extension online Any fees charged for a workshop are paid to the sponsoring organization, not the IRS. Tax extension online   For more information, visit www. Tax extension online irs. Tax extension online gov/businesses/small. Tax extension online Subscribe to e-news for small businesses. Tax extension online   Join the e-News for Small Businesses mailing list to receive updates, reminders, and other information useful to small business owners and self employed individuals. Tax extension online Visit the website at www. Tax extension online irs. Tax extension online gov/businesses/small and click on “Subscribe to e-News. Tax extension online ” Free tax services. Tax extension online   To find out what services are available, get Publication 910, IRS Guide to Free Tax Services. Tax extension online It contains a list of free tax publications and describes other free tax information services, including tax education and assistance programs and a list of TeleTax topics. Tax extension online   Accessible versions of IRS published products are available on request in a variety of alternative formats for people with disabilities. Tax extension online Internet. Tax extension online You can access the IRS website at www. Tax extension online irs. Tax extension online gov 24 hours a day, 7 days a week, to: E-file your return. Tax extension online Find out about commercial tax preparation and e-file services available free to eligible taxpayers. Tax extension online Check the status of your refund. Tax extension online Go to www. Tax extension online irs. Tax extension online gov and click on Where's My Refund. Tax extension online Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. Tax extension online If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). Tax extension online Have your tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Tax extension online Download forms, instructions, and publications. Tax extension online Order IRS products online. Tax extension online Research your tax questions online. Tax extension online Search publications online by topic or keyword. Tax extension online View Internal Revenue Bulletins (IRBs) published in the last few years. Tax extension online Figure your withholding allowances using the withholding calculator online at www. Tax extension online irs. Tax extension online gov/individuals. Tax extension online Determine if Form 6251 must be filed using our Alternative Minimum Tax (AMT) Assistant. Tax extension online Sign up to receive local and national tax news by email. Tax extension online Get information on starting and operating a small business. Tax extension online Phone. Tax extension online Many services are available by phone. Tax extension online Ordering forms, instructions, and publications. Tax extension online Call 1-800-829-3676 to order current-year forms, instructions, and publications, and prior-year forms and instructions. Tax extension online You should receive your order within 10 days. Tax extension online Asking tax questions. Tax extension online Call the IRS with your tax questions at 1-800-829-1040. Tax extension online Solving problems. Tax extension online You can get face-to-face help solving tax problems every business day in IRS Taxpayer Assistance Centers. Tax extension online An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. Tax extension online Call your local Taxpayer Assistance Center for an appointment. Tax extension online To find the number, go to www. Tax extension online irs. Tax extension online gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. Tax extension online TTY/TDD equipment. Tax extension online If you have access to TTY/TDD equipment, call 1-800-829-4059 to ask tax questions or to order forms and publications. Tax extension online TeleTax topics. Tax extension online Call 1-800-829-4477 to listen to pre-recorded messages covering various tax topics. Tax extension online Refund information. Tax extension online To check the status of your 2009 refund, call 1-800-829-1954 during business hours or 1-800-829-4477 (automated refund information 24 hours a day, 7 days a week). Tax extension online Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. Tax extension online If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). Tax extension online Have your 2009 tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Tax extension online Refunds are sent out weekly on Fridays. Tax extension online If you check the status of your refund and are not given the date it will be issued, please wait until the next week before checking back. Tax extension online Evaluating the quality of our telephone services. Tax extension online To ensure IRS representatives give accurate, courteous, and professional answers, we use several methods to evaluate the quality of our telephone services. Tax extension online One method is for a second IRS representative to listen in on or record random telephone calls. Tax extension online Another is to ask some callers to complete a short survey at the end of the call. Tax extension online Walk-in. Tax extension online Many products and services are available on a walk-in basis. Tax extension online Products. Tax extension online You can walk in to many post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Tax extension online Some IRS offices, libraries, grocery stores, copy centers, city and county government offices, credit unions, and office supply stores have a collection of products available to print from a CD or photocopy from reproducible proofs. Tax extension online Also, some IRS offices and libraries have the Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes. Tax extension online Services. Tax extension online You can walk in to your local Taxpayer Assistance Center every business day for personal, face-to-face tax help. Tax extension online An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. Tax extension online If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local Taxpayer Assistance Center where you can spread out your records and talk with an IRS representative face-to-face. Tax extension online No appointment is necessary—just walk in. Tax extension online If you prefer, you can call your local Center and leave a message requesting an appointment to resolve a tax account issue. Tax extension online A representative will call you back within 2 business days to schedule an in-person appointment at your convenience. Tax extension online If you have an ongoing, complex tax account problem or a special need, such as a disability, an appointment can be requested. Tax extension online All other issues will be handled without an appointment. Tax extension online To find the number of your local office, go to www. Tax extension online irs. Tax extension online gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. Tax extension online Mail. Tax extension online You can send your order for forms, instructions, and publications to the address below. Tax extension online You should receive a response within 10 days after your request is received. Tax extension online Internal Revenue Service1201 N. Tax extension online Mitsubishi MotorwayBloomington, IL 61705–6613 DVD for tax products. Tax extension online You can order Publication 1796, IRS Tax Products DVD, and obtain: Current-year forms, instructions, and publications. Tax extension online Prior-year forms, instructions, and publications. Tax extension online Tax Map: an electronic research tool and finding aid. Tax extension online Tax law frequently asked questions. Tax extension online Tax Topics from the IRS telephone response system. Tax extension online Internal Revenue Code—Title 26 of the U. Tax extension online S. Tax extension online Code. Tax extension online Fill-in, print, and save features for most tax forms. Tax extension online Internal Revenue Bulletins. Tax extension online Toll-free and email technical support. Tax extension online Two releases during the year. Tax extension online – The first release will ship the beginning of January. Tax extension online – The final release will ship the beginning of March. Tax extension online Purchase the DVD from National Technical Information Service (NTIS) at www. Tax extension online irs. Tax extension online gov/cdorders for $30 (no handling fee) or call 1-877-CDFORMS (1-877-233-6767) toll free to buy the DVD for $30 (plus a $6 handling fee). Tax extension online Small Business Administration The Small Business Administration (SBA) offers training and educational programs, counseling services, financial programs, and contract assistance for small business owners. Tax extension online The SBA also has publications and videos on a variety of business topics. Tax extension online The following briefly describes assistance provided by the SBA. Tax extension online Small Business Development Centers (SBDCs). Tax extension online   SBDCs provide counseling, training, and technical services to current and prospective small business owners who cannot afford the services of a private consultant. Tax extension online Help is available when beginning, improving, or expanding a small business. Tax extension online Business Information Centers (BICs). Tax extension online   BICs offer a small business reference library, management video tapes, and computer technology to help plan a business. Tax extension online BICs also offer one-on-one assistance. Tax extension online Individuals who are in business or are interested in starting a business can use BICs as often as they wish at no charge. Tax extension online Service Corps of Retired Executives (SCORE). Tax extension online   SCORE provides small business counseling and training to current and prospective small business owners. Tax extension online SCORE is made up of current and former business people who offer their expertise and knowledge to help people start, manage, and expand a small business. Tax extension online SCORE also offers a variety of small business workshops. Tax extension online    Internet. Tax extension online You can visit the SBA website at www. Tax extension online sba. Tax extension online gov. Tax extension online While visiting the SBA website, you can find a variety of information of interest to small business owners. Tax extension online    Phone. Tax extension online Call the SBA Answer Desk at 1-800-UASK-SBA (1-800-827-5722) for general information about programs available to assist small business owners. Tax extension online    Walk-in. Tax extension online You can walk in to a Small Business Development Center or Business Information Center to request assistance with your small business. Tax extension online To find the location nearest you, visit the SBA website or call the SBA Answer Desk. Tax extension online Other Federal Agencies Other federal agencies also publish publications and pamphlets to assist small businesses. Tax extension online Most of these are available from the Superintendent of Documents at the Government Printing Office. Tax extension online You can get information and order these publications and pamphlets in several ways. Tax extension online Internet. Tax extension online You can visit the GPO website at www. Tax extension online access. Tax extension online gpo. Tax extension online gov. Tax extension online Mail. Tax extension online Write to the GPO at the following address. Tax extension online Superintendent of DocumentsU. Tax extension online S. Tax extension online Government Printing OfficeP. Tax extension online O. Tax extension online Box 979050St. Tax extension online Louis, MO 63917-9000 Phone. Tax extension online Call the GPO toll-free at 1-866-512-1800 or at 202-512-1800 from the Washington, DC area. Tax extension online Prev  Up  Next   Home   More Online Publications