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Tax Return 2013

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Tax Return 2013

Tax return 2013 Publication 929 - Additional Material Table of Contents How To Get Tax HelpLow Income Taxpayer Clinics This image is too large to be displayed in the current screen. Tax return 2013 Please click the link to view the image. Tax return 2013 Form 1040A, page 1, for Joshua A. Tax return 2013 Blake This image is too large to be displayed in the current screen. Tax return 2013 Please click the link to view the image. Tax return 2013 Form 1040A, page 2, for Joshua A. Tax return 2013 Blake This image is too large to be displayed in the current screen. Tax return 2013 Please click the link to view the image. Tax return 2013 Form 8615 for Joshua A. Tax return 2013 Blake Filled-in Qualified Dividends and Capital Gain Tax Worksheet #1 Before you begin: Be sure you do not have to file Form 1040 (see the instructions for Form 1040A, line 10) 1. Tax return 2013 Enter the amount from Form 1040A, line 27 1. Tax return 2013 48,800*       2. Tax return 2013 Enter the amount from Form 1040A, line 9b 2. Tax return 2013 300*           3. Tax return 2013 Enter the amount from Form 1040A, line 10 3. Tax return 2013 200*           4. Tax return 2013 Add lines 2 and 3 4. Tax return 2013 500       5. Tax return 2013 Subtract line 4 from line 1. Tax return 2013 If zero or less, enter -0- 5. Tax return 2013 48,300       6. Tax return 2013 Enter the smaller of:                 •The amount on line 1, or                   •$36,250 if single or married filing separately,                   $72,500 if married filing jointly or qualifying widow(er),   or 6. Tax return 2013 48,800*         $48,600 if head of household. Tax return 2013                   7. Tax return 2013 Enter the smaller of line 5 or line 6 7. Tax return 2013 48,300       8. Tax return 2013 Subtract line 7 from line 6. Tax return 2013 This amount is taxed at 0% 8. Tax return 2013   500       9. Tax return 2013 Enter the smaller of line 1 or line 4 9. Tax return 2013 500       10. Tax return 2013 Enter the amount from line 8 10. Tax return 2013   500       11. Tax return 2013 Subtract line 10 from line 9 11. Tax return 2013  -0-       12. Tax return 2013 Multiply line 11 by 15% (. Tax return 2013 15) 12. Tax return 2013 -0-   13. Tax return 2013 Use the Tax Table to figure the tax on the amount on line 5. Tax return 2013 Enter the tax here 13. Tax return 2013 6,356   14. Tax return 2013 Add lines 12 and 13 14. Tax return 2013 6,356   15. Tax return 2013 Use the Tax Table to figure the tax on the amount on line 1. Tax return 2013 Enter the tax here 15. Tax return 2013 6,431   16. Tax return 2013 Tax on all taxable income. Tax return 2013 Enter the smaller of line 14 or line 15 here and on Form 1040A, line 28 16. Tax return 2013 6,356       *See the instructions under Using the Qualified Dividends and Capital Gain Tax Worksheet for line 9 tax in the Form 8615 instructions. Tax return 2013 Filled-in Qualified Dividends and Capital Gain Tax Worksheet #2 Before you begin: Be sure you do not have to file Form 1040 (see the instructions for Form 1040A, line 10) 1. Tax return 2013 Enter the amount from Form 1040A, line 27 1. Tax return 2013 1,650*       2. Tax return 2013 Enter the amount from Form 1040A, line 9b 2. Tax return 2013 750*           3. Tax return 2013 Enter the amount from Form 1040A, line 10 3. Tax return 2013 500*           4. Tax return 2013 Add lines 2 and 3 4. Tax return 2013 1,250       5. Tax return 2013 Subtract line 4 from line 1. Tax return 2013 If zero or less, enter -0- 5. Tax return 2013  400       6. Tax return 2013 Enter the smaller of:                 •The amount on line 1, or                   •$36,250 if single or married filing separately,                   $72,500 if married filing jointly or qualifying   widow(er), or 6. Tax return 2013 1,650*         $48,600 if head of household. Tax return 2013                   7. Tax return 2013 Enter the smaller of line 5 or line 6 7. Tax return 2013   400       8. Tax return 2013 Subtract line 7 from line 6. Tax return 2013 This amount is taxed at 0% 8. Tax return 2013 1,250       9. Tax return 2013 Enter the smaller of line 1 or line 4 9. Tax return 2013 1,250       10. Tax return 2013 Enter the amount from line 8 10. Tax return 2013 1,250       11. Tax return 2013 Subtract line 10 from line 9 11. Tax return 2013 -0-       12. Tax return 2013 Multiply line 11 by 15% (. Tax return 2013 15) 12. Tax return 2013 -0-   13. Tax return 2013 Use the Tax Table to figure the tax on the amount on line 5. Tax return 2013 Enter the tax here 13. Tax return 2013 41*   14. Tax return 2013 Add lines 12 and 13 14. Tax return 2013 41   15. Tax return 2013 Use the Tax Table to figure the tax on the amount on line 1. Tax return 2013 Enter the tax here 15. Tax return 2013 166*   16. Tax return 2013 Tax on all taxable income. Tax return 2013 Enter the smaller of line 14 or line 15 here and on Form 1040A, line 28 16. Tax return 2013 41       *See the instructions under Using the Qualified Dividends and Capital Gain Tax Worksheet for line 15 tax in the Form 8615 instructions. Tax return 2013 Filled-in Qualified Dividends and Capital Gain Tax Worksheet #3 Before you begin: Be sure you do not have to file Form 1040 (see the instructions for Form 1040A, line 10) 1. Tax return 2013 Enter the amount from Form 1040A, line 27 1. Tax return 2013 2,450       2. Tax return 2013 Enter the amount from Form 1040A, line 9b 2. Tax return 2013 1,050           3. Tax return 2013 Enter the amount from Form 1040A, line 10 3. Tax return 2013 700           4. Tax return 2013 Add lines 2 and 3 4. Tax return 2013 1,750       5. Tax return 2013 Subtract line 4 from line 1. Tax return 2013 If zero or less, enter -0- 5. Tax return 2013    700       6. Tax return 2013 Enter the smaller of:                 •The amount on line 1, or                   •$36,250 if single or married filing separately,                   $72,500 if married filing jointly or qualifying   widow(er), or 6. Tax return 2013 2,450         $48,600 if head of household. Tax return 2013                   7. Tax return 2013 Enter the smaller of line 5 or line 6 7. Tax return 2013  700       8. Tax return 2013 Subtract line 7 from line 6. Tax return 2013 This amount is taxed at 0% 8. Tax return 2013 1,750       9. Tax return 2013 Enter the smaller of line 1 or line 4 9. Tax return 2013 1,750       10. Tax return 2013 Enter the amount from line 8 10. Tax return 2013 1,750       11. Tax return 2013 Subtract line 10 from line 9 11. Tax return 2013 -0-       12. Tax return 2013 Multiply line 11 by 15% (. Tax return 2013 15) 12. Tax return 2013 -0-   13. Tax return 2013 Use the Tax Table to figure the tax on the amount on line 5. Tax return 2013 Enter the tax here 13. Tax return 2013  71   14. Tax return 2013 Add lines 12 and 13 14. Tax return 2013  71   15. Tax return 2013 Use the Tax Table to figure the tax on the amount on line 1. Tax return 2013 Enter the tax here 15. Tax return 2013 246   16. Tax return 2013 Tax on all taxable income. Tax return 2013 Enter the smaller of line 14 or line 15 here and on Form 1040A, line 28 16. Tax return 2013  71         How To Get Tax Help Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. Tax return 2013 Free help with your tax return. Tax return 2013   You can get free help preparing your return nationwide from IRS-certified volunteers. Tax return 2013 The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. Tax return 2013 The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Tax return 2013 Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Tax return 2013 In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. Tax return 2013 To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. Tax return 2013 gov, download the IRS2Go app, or call 1-800-906-9887. Tax return 2013   As part of the TCE program, AARP offers the Tax-Aide counseling program. Tax return 2013 To find the nearest AARP Tax-Aide site, visit AARP's website at www. Tax return 2013 aarp. Tax return 2013 org/money/taxaide or call 1-888-227-7669. Tax return 2013 For more information on these programs, go to IRS. Tax return 2013 gov and enter “VITA” in the search box. Tax return 2013 Internet. Tax return 2013    IRS. Tax return 2013 gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. Tax return 2013 Download the free IRS2Go app from the iTunes app store or from Google Play. Tax return 2013 Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. Tax return 2013 Check the status of your 2013 refund with the Where's My Refund? application on IRS. Tax return 2013 gov or download the IRS2Go app and select the Refund Status option. Tax return 2013 The IRS issues more than 9 out of 10 refunds in less than 21 days. Tax return 2013 Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. Tax return 2013 You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. Tax return 2013 The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Tax return 2013 Use the Interactive Tax Assistant (ITA) to research your tax questions. Tax return 2013 No need to wait on the phone or stand in line. Tax return 2013 The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. Tax return 2013 When you reach the response screen, you can print the entire interview and the final response for your records. Tax return 2013 New subject areas are added on a regular basis. Tax return 2013  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. Tax return 2013 gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. Tax return 2013 You can use the IRS Tax Map, to search publications and instructions by topic or keyword. Tax return 2013 The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. Tax return 2013 When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. Tax return 2013 Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. Tax return 2013 You can also ask the IRS to mail a return or an account transcript to you. Tax return 2013 Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. Tax return 2013 gov or by calling 1-800-908-9946. Tax return 2013 Tax return and tax account transcripts are generally available for the current year and the past three years. Tax return 2013 Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. Tax return 2013 Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. Tax return 2013 If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. Tax return 2013 Check the status of your amended return using Where's My Amended Return? Go to IRS. Tax return 2013 gov and enter Where's My Amended Return? in the search box. Tax return 2013 You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Tax return 2013 It can take up to 3 weeks from the date you mailed it to show up in our system. Tax return 2013 Make a payment using one of several safe and convenient electronic payment options available on IRS. Tax return 2013 gov. Tax return 2013 Select the Payment tab on the front page of IRS. Tax return 2013 gov for more information. Tax return 2013 Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. Tax return 2013 Figure your income tax withholding with the IRS Withholding Calculator on IRS. Tax return 2013 gov. Tax return 2013 Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. Tax return 2013 Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Tax return 2013 gov. Tax return 2013 Request an Electronic Filing PIN by going to IRS. Tax return 2013 gov and entering Electronic Filing PIN in the search box. Tax return 2013 Download forms, instructions and publications, including accessible versions for people with disabilities. Tax return 2013 Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. Tax return 2013 gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. Tax return 2013 An employee can answer questions about your tax account or help you set up a payment plan. Tax return 2013 Before you visit, check the Office Locator on IRS. Tax return 2013 gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. Tax return 2013 If you have a special need, such as a disability, you can request an appointment. Tax return 2013 Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. Tax return 2013 Apply for an Employer Identification Number (EIN). Tax return 2013 Go to IRS. Tax return 2013 gov and enter Apply for an EIN in the search box. Tax return 2013 Read the Internal Revenue Code, regulations, or other official guidance. Tax return 2013 Read Internal Revenue Bulletins. Tax return 2013 Sign up to receive local and national tax news and more by email. Tax return 2013 Just click on “subscriptions” above the search box on IRS. Tax return 2013 gov and choose from a variety of options. Tax return 2013    Phone. Tax return 2013 You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. Tax return 2013 Download the free IRS2Go app from the iTunes app store or from Google Play. Tax return 2013 Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS. Tax return 2013 gov, or download the IRS2Go app. Tax return 2013 Low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. Tax return 2013 The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Tax return 2013 Most VITA and TCE sites offer free electronic filing. Tax return 2013 Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. Tax return 2013 Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. Tax return 2013 Call the automated Where's My Refund? information hotline to check the status of your 2013 refund 24 hours a day, 7 days a week at 1-800-829-1954. Tax return 2013 If you e-file, you can start checking on the status of your return within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. Tax return 2013 The IRS issues more than 9 out of 10 refunds in less than 21 days. Tax return 2013 Where's My Refund? will give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. Tax return 2013 Before you call this automated hotline, have your 2013 tax return handy so you can enter your social security number, your filing status, and the exact whole dollar amount of your refund. Tax return 2013 The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Tax return 2013 Note, the above information is for our automated hotline. Tax return 2013 Our live phone and walk-in assistors can research the status of your refund only if it's been 21 days or more since you filed electronically or more than 6 weeks since you mailed your paper return. Tax return 2013 Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. Tax return 2013 You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Tax return 2013 It can take up to 3 weeks from the date you mailed it to show up in our system. Tax return 2013 Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, publications, and prior-year forms and instructions (limited to 5 years). Tax return 2013 You should receive your order within 10 business days. Tax return 2013 Call TeleTax, 1-800-829-4477, to listen to pre-recorded messages covering general and business tax information. Tax return 2013 If, between January and April 15, you still have questions about the Form 1040, 1040A, or 1040EZ (like filing requirements, dependents, credits, Schedule D, pensions and IRAs or self-employment taxes), call 1-800-829-1040. Tax return 2013 Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. Tax return 2013 The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. Tax return 2013 These individuals can also contact the IRS through relay services such as the Federal Relay Service. Tax return 2013    Walk-in. Tax return 2013 You can find a selection of forms, publications and services — in-person. Tax return 2013 Products. Tax return 2013 You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Tax return 2013 Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. Tax return 2013 Services. Tax return 2013 You can walk in to your local TAC for face-to-face tax help. Tax return 2013 An employee can answer questions about your tax account or help you set up a payment plan. Tax return 2013 Before visiting, use the Office Locator tool on IRS. Tax return 2013 gov, or choose the Contact Us option on the IRS2Go app and search Local Offices for days and hours of operation, and services provided. Tax return 2013    Mail. Tax return 2013 You can send your order for forms, instructions, and publications to the address below. Tax return 2013 You should receive a response within 10 business days after your request is received. Tax return 2013 Internal Revenue Service 1201 N. Tax return 2013 Mitsubishi Motorway Bloomington, IL 61705-6613    The Taxpayer Advocate Service Is Here to Help You. Tax return 2013 The Taxpayer Advocate Service (TAS) is your voice at the IRS. Tax return 2013 Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. Tax return 2013   What can TAS do for you? We can offer you free help with IRS problems that you can't resolve on your own. Tax return 2013 We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. Tax return 2013 You face (or your business is facing) an immediate threat of adverse action. Tax return 2013 You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. Tax return 2013   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. Tax return 2013 Here's why we can help: TAS is an independent organization within the IRS. Tax return 2013 Our advocates know how to work with the IRS. Tax return 2013 Our services are free and tailored to meet your needs. Tax return 2013 We have offices in every state, the District of Columbia, and Puerto Rico. Tax return 2013   How can you reach us? If you think TAS can help you, call your local advocate, whose number is in your local directory and at Taxpayer Advocate, or call us toll-free at 1-877-777-4778. Tax return 2013   How else does TAS help taxpayers?  TAS also works to resolve large-scale, systemic problems that affect many taxpayers. Tax return 2013 If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System. Tax return 2013 Low Income Taxpayer Clinics Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals and tax collection disputes. Tax return 2013 Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Tax return 2013 Visit Taxpayer Advocate or see IRS Publication 4134, Low Income Taxpayer Clinic List. Tax return 2013 Prev  Up  Next   Home   More Online Publications
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The Tax Return 2013

Tax return 2013 Other Methods of Depreciation Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: How To Figure the DeductionBasis Useful Life Salvage Value Methods To UseStraight Line Method Declining Balance Method Income Forecast Method How To Change Methods DispositionsSale or exchange. Tax return 2013 Property not disposed of or abandoned. Tax return 2013 Special rule for normal retirements from item accounts. Tax return 2013 Abandoned property. Tax return 2013 Single item accounts. Tax return 2013 Multiple property account. Tax return 2013 Topics - This chapter discusses: How to figure the deduction Methods to use How to change methods Dispositions Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets 551 Basis of Assets 583 Starting a Business and Keeping Records 946 How To Depreciate Property Form (and Instructions) 3115 Application for Change in Accounting Method 4562 Depreciation and Amortization Schedule C (Form 1040) Profit or Loss From Business If your property is being depreciated under ACRS, you must continue to use rules for depreciation that applied when you placed the property in service. Tax return 2013 If your property qualified for MACRS, you must depreciate it under MACRS. Tax return 2013 See Publication 946. Tax return 2013 However, you cannot use MACRS for certain property because of special rules that exclude it from MACRS. Tax return 2013 Also, you can elect to exclude certain property from being depreciated under MACRS. Tax return 2013 Property that you cannot depreciate using MACRS includes: Intangible property, Property you can elect to exclude from MACRS that you properly depreciate under a method that is not based on a term of years, Certain public utility property, Any motion picture film or video tape, Any sound recording, and Certain real and personal property placed in service before 1987. Tax return 2013 Intangible property. Tax return 2013   You cannot depreciate intangible property under ACRS or MACRS. Tax return 2013 You depreciate intangible property using any other reasonable method, usually, the straight line method. Tax return 2013 Note. Tax return 2013 The cost of certain intangible property that you acquire after August 10, 1993, must be amortized over a 15-year period. Tax return 2013 For more information, see chapter 12 of Publication 535. Tax return 2013 Public utility property. Tax return 2013   The law excludes from MACRS any public utility property for which the taxpayer does not use a normalization method of accounting. Tax return 2013 This type of property is subject to depreciation under a special rule. Tax return 2013 Videocassettes. Tax return 2013   If you are in the videocassette rental business, you can depreciate those videocassettes purchased for rental. Tax return 2013 You can depreciate the cost less salvage value of those videocassettes that have a useful life over one year using either: The straight line method, or The income forecast method. Tax return 2013 The straight line method, salvage value, and useful life are discussed later under Methods To Use. Tax return 2013 You can deduct in the year of purchase as a business expense the cost of any cassette that has a useful life of one year or less. Tax return 2013 How To Figure the Deduction Two other reasonable methods can be used to figure your deduction for property not covered under ACRS or MACRS. Tax return 2013 These methods are straight line and declining balance. Tax return 2013 To figure depreciation using these methods, you must generally determine three things about the property you intend to depreciate. Tax return 2013 They are: The basis, The useful life, and The estimated salvage value at the end of its useful life. Tax return 2013 The amount of the deduction in any year also depends on which method of depreciation you choose. Tax return 2013 Basis To deduct the proper amount of depreciation each year, first determine your basis in the property you intend to depreciate. Tax return 2013 The basis used for figuring depreciation is the same as the basis that would be used for figuring the gain on a sale. Tax return 2013 Your original basis is usually the purchase price. Tax return 2013 However, if you acquire property in some other way, such as inheriting it, getting it as a gift, or building it yourself, you have to figure your original basis in a different way. Tax return 2013 Adjusted basis. Tax return 2013   Events will often change the basis of property. Tax return 2013 When this occurs, the changed basis is called the adjusted basis. Tax return 2013 Some events, such as improvements you make, increase basis. Tax return 2013 Events such as deducting casualty losses and depreciation decrease basis. Tax return 2013 If basis is adjusted, the depreciation deduction may also have to be changed, depending on the reason for the adjustment and the method of depreciation you are using. Tax return 2013   Publication 551 explains how to figure basis for property acquired in different ways. Tax return 2013 It also discusses what items increase and decrease basis, how to figure adjusted basis, and how to allocate cost if you buy several pieces of property at one time. Tax return 2013 Useful Life The useful life of a piece of property is an estimate of how long you can expect to use it in your trade or business, or to produce income. Tax return 2013 It is the length of time over which you will make yearly depreciation deductions of your basis in the property. Tax return 2013 It is how long it will continue to be useful to you, not how long the property will last. Tax return 2013 Many things affect the useful life of property, such as: Frequency of use, Age when acquired, Your repair policy, and Environmental conditions. Tax return 2013 The useful life can also be affected by technological improvements, progress in the arts, reasonably foreseeable economic changes, shifting of business centers, prohibitory laws, and other causes. Tax return 2013 Consider all these factors before you arrive at a useful life for your property. Tax return 2013 The useful life of the same type of property varies from user to user. Tax return 2013 When you determine the useful life of your property, keep in mind your own experience with similar property. Tax return 2013 You can use the general experience of the industry you are in until you are able to determine a useful life of your property from your own experience. Tax return 2013 Change in useful life. Tax return 2013   You base your estimate of useful life on certain facts. Tax return 2013 If these facts change significantly, you can adjust your estimate of the remaining useful life. Tax return 2013 However, you redetermine the estimated useful life only when the change is substantial and there is a clear reason for making the change. Tax return 2013 Salvage Value It is important for you to accurately determine the correct salvage value of the property you want to depreciate. Tax return 2013 You generally cannot depreciate property below a reasonable salvage value. Tax return 2013 Determining salvage value. Tax return 2013   Salvage value is the estimated value of property at the end of its useful life. Tax return 2013 It is what you expect to get for the property if you sell it after you can no longer use it productively. Tax return 2013 You must estimate the salvage value of a piece of property when you first acquire it. Tax return 2013   Salvage value is affected both by how you use the property and how long you use it. Tax return 2013 If it is your policy to dispose of property that is still in good operating condition, the salvage value can be relatively large. Tax return 2013 However, if your policy is to use property until it is no longer usable, its salvage value can be its junk value. Tax return 2013 Changing salvage value. Tax return 2013   Once you determine the salvage value for property, you should not change it merely because prices have changed. Tax return 2013 However, if you redetermine the useful life of property, as discussed earlier under Change in useful life, you can also redetermine the salvage value. Tax return 2013 When you redetermine the salvage value, take into account the facts that exist at the time. Tax return 2013 Net salvage. Tax return 2013   Net salvage is the salvage value of property minus what it costs to remove it when you dispose of it. Tax return 2013 You can choose either salvage value or net salvage when you figure depreciation. Tax return 2013 You must consistently use the one you choose and the treatment of the costs of removal must be consistent with the practice adopted. Tax return 2013 However, if the cost to remove the property is more than the estimated salvage value, then net salvage is zero. Tax return 2013 Your salvage value can never be less than zero. Tax return 2013 Ten percent rule. Tax return 2013   If you acquire personal property that has a useful life of 3 years or more, you can use an amount for salvage value that is less than your actual estimate. Tax return 2013 You can subtract from your estimate of salvage value an amount equal to 10% of your basis in the property. Tax return 2013 If salvage value is less than 10% of basis, you can ignore salvage value when you figure depreciation. Tax return 2013 Methods To Use Two methods of depreciation are the straight line and declining balance methods. Tax return 2013 If ACRS or MACRS does not apply, you can use one of these methods. Tax return 2013 The straight line and declining balance methods discussed in this section are not figured in the same way as straight line or declining balance methods under MACRS. Tax return 2013 Straight Line Method Before 1981, you could use any reasonable method for every kind of depreciable property. Tax return 2013 One of these methods was the straight line method. Tax return 2013 This method was also used for intangible property. Tax return 2013 It lets you deduct the same amount of depreciation each year. Tax return 2013 To figure your deduction, determine the adjusted basis of your property, its salvage value, and its estimated useful life. Tax return 2013 Subtract the salvage value, if any, from the adjusted basis. Tax return 2013 The balance is the total amount of depreciation you can take over the useful life of the property. Tax return 2013 Divide the balance by the number of years remaining in the useful life. Tax return 2013 This gives you the amount of your yearly depreciation deduction. Tax return 2013 Unless there is a big change in adjusted basis, or useful life, this amount will stay the same throughout the time you depreciate the property. Tax return 2013 If, in the first year, you use the property for less than a full year, you must prorate your depreciation deduction for the number of months in use. Tax return 2013 Example. Tax return 2013 In April 1994, Frank bought a franchise for $5,600. Tax return 2013 It expires in 10 years. Tax return 2013 This property is intangible property that cannot be depreciated under MACRS. Tax return 2013 Frank depreciates the franchise under the straight line method, using a 10-year useful life and no salvage value. Tax return 2013 He takes the $5,600 basis and divides that amount by 10 years ($5,600 ÷ 10 = $560, a full year's use). Tax return 2013 He must prorate the $560 for his 9 months of use in 1994. Tax return 2013 This gives him a deduction of $420 ($560 ÷ 9/12). Tax return 2013 In 1995, Frank can deduct $560 for the full year. Tax return 2013 Declining Balance Method The declining balance method allows you to recover a larger amount of the cost of the property in the early years of your use of the property. Tax return 2013 The rate cannot be more than twice the straight line rate. Tax return 2013 Rate of depreciation. Tax return 2013   Under this method, you must determine your declining balance rate of depreciation. Tax return 2013 The initial step is to: Divide the number 1 by the useful life of your property to get a straight line rate. Tax return 2013 (For example, if property has a useful life of 5 years, its normal straight line rate of depreciation is ⅕, or 20%. Tax return 2013 ) Multiply this straight line rate by a number that is more than 1 but not more than 2 to determine the declining balance rate. Tax return 2013 Unless there is a change in the useful life during the time you depreciate the property, the rate of depreciation generally will not change. Tax return 2013 Depreciation deductions. Tax return 2013   After you determine the rate of depreciation, multiply the adjusted basis of the property by it. Tax return 2013 This gives you the amount of your deduction. Tax return 2013 For example, if your adjusted basis at the beginning of the first year is $10,000, and your declining balance rate is 20%, your depreciation deduction for the first year is $2,000 ($10,000 ÷ 20%). Tax return 2013 To figure your depreciation deduction in the second year, you must first adjust the basis for the amount of depreciation you deducted in the first year. Tax return 2013 Subtract the previous year's depreciation from your basis ($10,000 - $2,000 = $8,000). Tax return 2013 Multiply this amount by the rate of depreciation ($8,000 ÷ 20% = $1,600). Tax return 2013 Your depreciation deduction for the second year is $1,600. Tax return 2013   As you can see from this example, your adjusted basis in the property gets smaller each year. Tax return 2013 Also, under this method, deductions are larger in the earlier years and smaller in the later years. Tax return 2013 You can make a change to the straight line method without consent. Tax return 2013 Salvage value. Tax return 2013   Do not subtract salvage value when you figure your yearly depreciation deductions under the declining balance method. Tax return 2013 However, you cannot depreciate the property below its reasonable salvage value. Tax return 2013 Determine salvage value using the rules discussed earlier, including the special 10% rule. Tax return 2013 Example. Tax return 2013 If your adjusted basis has been decreased to $1,000 and the rate of depreciation is 20%, your depreciation deduction should be $200. Tax return 2013 But if your estimate of salvage value was $900, you can only deduct $100. Tax return 2013 This is because $100 is the amount that would lower your adjusted basis to equal salvage value. Tax return 2013 Income Forecast Method The income forecast method requires income projections for each videocassette or group of videocassettes. Tax return 2013 You can group the videocassettes by title for making this projection. Tax return 2013 You determine the depreciation by applying a fraction to the cost less salvage value of the cassette. Tax return 2013 The numerator is the income from the videocassette for the tax year and the denominator is the total projected income for the cassette. Tax return 2013 For more information on the income forecast method, see Revenue Ruling 60-358 in Cumulative Bulletin 1960, Volume 2, on page 68. Tax return 2013 How To Change Methods In some cases, you may change your method of depreciation for property depreciated under a reasonable method. Tax return 2013 If you change your method of depreciation, it is generally a change in your method of accounting. Tax return 2013 You must get IRS consent before making the change. Tax return 2013 However, you do not need permission for certain changes in your method of depreciation. Tax return 2013 The rules discussed in this section do not apply to property depreciated under ACRS or MACRS. Tax return 2013 For information on ACRS elections,see Revocation of election, in chapter 1 under Alternate ACRS Method. Tax return 2013 Change to the straight line method. Tax return 2013   You can change from the declining balance method to the straight line method at any time during the useful life of your property without IRS consent. Tax return 2013 However, if you have a written agreement with the IRS that prohibits a change, you must first get IRS permission. Tax return 2013 When the change is made, figure depreciation based on your adjusted basis in the property at that time. Tax return 2013 Your adjusted basis takes into account all previous depreciation deductions. Tax return 2013 Use the estimated remaining useful life of your property at the time of change and its estimated salvage value. Tax return 2013   You can change from the declining balance method to straight line only on the original tax return for the year you first use the straight line method. Tax return 2013 You cannot make the change on an amended return filed after the due date of the original return (including extensions). Tax return 2013   When you make the change, attach a statement to your tax return showing: When you acquired the property, Its original cost or other original basis, The total amount claimed for depreciation and other allowances since you acquired it, Its salvage value and remaining useful life, and A description of the property and its use. Tax return 2013   After you change to straight line, you cannot change back to the declining balance method or to any other method for a period of 10 years without written permission from the IRS. Tax return 2013 Changes that require permission. Tax return 2013   For most other changes in method of depreciation, you must get permission from the IRS. Tax return 2013 To request a change in method of depreciation, file Form 3115. Tax return 2013 File the application within the first 180 days of the tax year the change is to become effective. Tax return 2013 In most cases, there is a user fee that must accompany Form 3115. Tax return 2013 See the instructions for Form 3115 to determine if a fee is required. Tax return 2013 Changes granted automatically. Tax return 2013   The IRS automatically approves certain changes of a method of depreciation. Tax return 2013 But, you must file Form 3115 for these automatic changes. Tax return 2013   However, IRS can deny permission if Form 3115 is not filed on time. Tax return 2013 For more information on automatic changes, see Revenue Procedure 74-11, 1974-1 C. Tax return 2013 B. Tax return 2013 420. Tax return 2013 Changes for which approval is not automatic. Tax return 2013   The automatic change procedures do not apply to: Property or an account where you made a change in depreciation within the last 10 tax years (unless the change was made under the Class Life System), Class Life Asset Depreciation Range System, and Public utility property. Tax return 2013   You must request and receive permission for these changes. Tax return 2013 To make the request, file Form 3115 during the first 180 days of the tax year for which you want the change to be effective. Tax return 2013 Change from an improper method. Tax return 2013   If the IRS disallows the method you are using, you do not need permission to change to a proper method. Tax return 2013 You can adopt the straight line method, or any other method that would have been permitted if you had used it from the beginning. Tax return 2013 If you file your tax return using an improper method, but later file an amended return, you can use a proper method on the amended return without getting IRS permission. Tax return 2013 However, you must file the amended return before the filing date for the next tax year. Tax return 2013 Dispositions Retirement is the permanent withdrawal of depreciable property from use in your trade or business or for the production of income. Tax return 2013 You can do this by selling, exchanging, or abandoning the item of property. Tax return 2013 You can also withdraw it from use without disposing of it. Tax return 2013 For example, you could place it in a supplies or scrap account. Tax return 2013 Retirements can be either normal or abnormal depending on all facts and circumstances. Tax return 2013 The rules discussed next do not apply to MACRS and ACRS property. Tax return 2013 Normal retirement. Tax return 2013   A normal retirement is a permanent withdrawal of depreciable property from use if the following apply: The retirement is made within the useful life you estimated originally, and The property has reached a condition at which you customarily retire or would retire similar property from use. Tax return 2013 A retirement is generally considered normal unless you can show that you retired the property because of a reason you did not consider when you originally estimated the useful life of the property. Tax return 2013 Abnormal retirement. Tax return 2013   A retirement can be abnormal if you withdraw the property early or under other circumstances. Tax return 2013 For example, if the property is damaged by a fire or suddenly becomes obsolete and is now useless. Tax return 2013 Gain or loss on retirement. Tax return 2013   There are special rules for figuring the gain or loss on retirement of property. Tax return 2013 The gain or loss will depend on several factors. Tax return 2013 These include the type of withdrawal, if the withdrawal was from a single property or multiple property account, and if the retirement was normal or abnormal. Tax return 2013 A single property account contains only one item of property. Tax return 2013 A multiple property account is one in which several items have been combined with a single rate of depreciation assigned to the entire account. Tax return 2013 Sale or exchange. Tax return 2013   If property is retired by sale or exchange, you figure gain or loss by the usual rules that apply to sales or other dispositions of property. Tax return 2013 See Publication 544. Tax return 2013 Property not disposed of or abandoned. Tax return 2013   If property is retired permanently, but not disposed of or physically abandoned, you do not recognize gain. Tax return 2013 You are allowed a loss in such a case, but only if the retirement is: An abnormal retirement, A normal retirement from a single property account in which you determined the life of each item of property separately, or A normal retirement from a multiple property account in which the depreciation rate is based on the maximum expected life of the longest lived item of property and the loss occurs before the expiration of the full useful life. Tax return 2013 However, you are not allowed a loss if the depreciation rate is based on the average useful life of the items of property in the account. Tax return 2013   To figure your loss, subtract the estimated salvage or fair market value of the property at the date of retirement, whichever is more, from its adjusted basis. Tax return 2013 Special rule for normal retirements from item accounts. Tax return 2013   You can generally deduct losses upon retirement of a few depreciable items of property with similar useful lives, if: You account for each one in a separate account, and You use the average useful life to figure depreciation. Tax return 2013 However, you cannot deduct losses if you use the average useful life to figure depreciation and they have a wide range of useful lives. Tax return 2013   If you have a large number of depreciable property items and use average useful lives to figure depreciation, you cannot deduct the losses upon normal retirements from these accounts. Tax return 2013 Abandoned property. Tax return 2013   If you physically abandon property, you can deduct as a loss the adjusted basis of the property at the time of its abandonment. Tax return 2013 However, your intent must be to discard the property so that you will not use it again or retrieve it for sale, exchange, or other disposition. Tax return 2013 Basis of property retired. Tax return 2013   The basis for figuring gain or loss on the retirement of property is its adjusted basis at the time of retirement, as determined in the following discussions. Tax return 2013 Single item accounts. Tax return 2013   If an item of property is accounted for in a single item account, the adjusted basis is the basis you would use to figure gain or loss for a sale or exchange of the property. Tax return 2013 This is generally the cost or other basis of the item of property less depreciation. Tax return 2013 See Publication 551. Tax return 2013 Multiple property account. Tax return 2013   For a normal retirement from a multiple property account, if you figured depreciation using the average expected useful life, the adjusted basis is the salvage value estimated for the item of property when it was originally acquired. Tax return 2013 If you figured depreciation using the maximum expected useful life of the longest lived item of property in the account, you must use the depreciation method used for the multiple property account and a rate based on the maximum expected useful life of the item of property retired. Tax return 2013   You make the adjustment for depreciation for an abnormal retirement from a multiple property account at the rate that would be proper if the item of property was depreciated in a single property account. Tax return 2013 The method of depreciation used for the multiple property account is used. Tax return 2013 You base the rate on either the average expected useful life or the maximum expected useful life of the retired item of property, depending on the method used to determine the depreciation rate for the multiple property account. Tax return 2013 Prev  Up  Next   Home   More Online Publications