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Taxact.com 2012

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Taxact.com 2012

Taxact. Taxact.com 2012 com 2012 5. Taxact.com 2012   Business Income Table of Contents Introduction Kinds of IncomeBartering for Property or Services Real Estate Rents Personal Property Rents Interest and Dividend Income Canceled Debt Other Income Items That Are Not IncomeAmount you can exclude. Taxact.com 2012 Short-term lease. Taxact.com 2012 Retail space. Taxact.com 2012 Qualified long-term real property. Taxact.com 2012 Guidelines for Selected Occupations Accounting for Your Income Introduction This chapter primarily explains business income and how to account for it on your tax return, what items are not considered income, and gives guidelines for selected occupations. Taxact.com 2012 If there is a connection between any income you receive and your business, the income is business income. Taxact.com 2012 A connection exists if it is clear that the payment of income would not have been made if you did not have the business. Taxact.com 2012 You can have business income even if you are not involved in the activity on a regular full-time basis. Taxact.com 2012 Income from work you do on the side in addition to your regular job can be business income. Taxact.com 2012 You report most business income, such as income from selling your products or services, on Schedule C or C-EZ. Taxact.com 2012 But you report the income from the sale of business assets, such as land and office buildings, on other forms instead of Schedule C or C-EZ. Taxact.com 2012 For information on selling business assets, see chapter 3. Taxact.com 2012 Nonemployee compensation. Taxact.com 2012 Business income includes amounts you received in your business that were properly shown on Forms 1099-MISC. Taxact.com 2012 This includes amounts reported as nonemployee compensation in box 7 of the form. Taxact.com 2012 You can find more information in the instructions on the back of the Form 1099-MISC you received. Taxact.com 2012 Kinds of Income You must report on your tax return all income you receive from your business unless it is excluded by law. Taxact.com 2012 In most cases, your business income will be in the form of cash, checks, and credit card charges. Taxact.com 2012 But business income can be in other forms, such as property or services. Taxact.com 2012 These and other types of income are explained next. Taxact.com 2012 If you are a U. Taxact.com 2012 S. Taxact.com 2012 citizen who has business income from sources outside the United States (foreign income), you must report that income on your tax return unless it is exempt from tax under U. Taxact.com 2012 S. Taxact.com 2012 law. Taxact.com 2012 If you live outside the United States, you may be able to exclude part or all of your foreign-source business income. Taxact.com 2012 For details, see Publication 54, Tax Guide for U. Taxact.com 2012 S. Taxact.com 2012 Citizens and Resident Aliens Abroad. Taxact.com 2012 Bartering for Property or Services Bartering is an exchange of property or services. Taxact.com 2012 You must include in your gross receipts, at the time received, the fair market value of property or services you receive in exchange for something else. Taxact.com 2012 If you exchange services with another person and you both have agreed ahead of time on the value of the services, that value will be accepted as the fair market value unless the value can be shown to be otherwise. Taxact.com 2012 Example 1. Taxact.com 2012 You are a self-employed lawyer. Taxact.com 2012 You perform legal services for a client, a small corporation. Taxact.com 2012 In payment for your services, you receive shares of stock in the corporation. Taxact.com 2012 You must include the fair market value of the shares in income. Taxact.com 2012 Example 2. Taxact.com 2012 You are an artist and create a work of art to compensate your landlord for the rent-free use of your apartment. Taxact.com 2012 You must include the fair rental value of the apartment in your gross receipts. Taxact.com 2012 Your landlord must include the fair market value of the work of art in his or her rental income. Taxact.com 2012 Example 3. Taxact.com 2012 You are a self-employed accountant. Taxact.com 2012 Both you and a house painter are members of a barter club, an organization that each year gives its members a directory of members and the services each member provides. Taxact.com 2012 Members get in touch with other members directly and bargain for the value of the services to be performed. Taxact.com 2012 In return for accounting services you provided for the house painter's business, the house painter painted your home. Taxact.com 2012 You must include in gross receipts the fair market value of the services you received from the house painter. Taxact.com 2012 The house painter must include the fair market value of your accounting services in his or her gross receipts. Taxact.com 2012 Example 4. Taxact.com 2012 You are a member of a barter club that uses credit units to credit or debit members' accounts for goods or services provided or received. Taxact.com 2012 As soon as units are credited to your account, you can use them to buy goods or services or sell or transfer the units to other members. Taxact.com 2012 You must include the value of credit units you received in your gross receipts for the tax year in which the units are credited to your account. Taxact.com 2012 The dollar value of units received for services by an employee of the club, who can use the units in the same manner as other members, must be included in the employee's gross income for the tax year in which received. Taxact.com 2012 It is wages subject to social security and Medicare taxes (FICA), federal unemployment taxes (FUTA), and income tax withholding. Taxact.com 2012 See Publication 15 (Circular E), Employer's Tax Guide. Taxact.com 2012 Example 5. Taxact.com 2012 You operate a plumbing business and use the cash method of accounting. Taxact.com 2012 You join a barter club and agree to provide plumbing services to any member for a specified number of hours. Taxact.com 2012 Each member has access to a directory that lists the members of the club and the services available. Taxact.com 2012 Members contact each other directly and request services to be performed. Taxact.com 2012 You are not required to provide services unless requested by another member, but you can use as many of the offered services as you wish without paying a fee. Taxact.com 2012 You must include the fair market value of any services you receive from club members in your gross receipts when you receive them even if you have not provided any services to club members. Taxact.com 2012 Information returns. Taxact.com 2012   If you are involved in a bartering transaction, you may have to file either of the following forms. Taxact.com 2012 Form 1099-B, Proceeds From Broker and Barter Exchange Transactions. Taxact.com 2012 Form 1099-MISC, Miscellaneous Income. Taxact.com 2012 For information about these forms, see the General Instructions for Certain Information Returns. Taxact.com 2012 Real Estate Rents If you are a real estate dealer who receives income from renting real property or an owner of a hotel, motel, etc. Taxact.com 2012 , who provides services (maid services, etc. Taxact.com 2012 ) for guests, report the rental income and expenses on Schedule C or C-EZ. Taxact.com 2012 If you are not a real estate dealer or the kind of owner described in the preceding sentence, report the rental income and expenses on Schedule E. Taxact.com 2012 For more information, see Publication 527, Residential Rental Property (Including Rental of Vacation Homes). Taxact.com 2012 Real estate dealer. Taxact.com 2012   You are a real estate dealer if you are engaged in the business of selling real estate to customers with the purpose of making a profit from those sales. Taxact.com 2012 Rent you receive from real estate held for sale to customers is subject to SE tax. Taxact.com 2012 However, rent you receive from real estate held for speculation or investment is not subject to SE tax. Taxact.com 2012 Trailer park owner. Taxact.com 2012   Rental income from a trailer park is subject to SE tax if you are a self-employed trailer park owner who provides trailer lots and facilities and substantial services for the convenience of your tenants. Taxact.com 2012    You generally are considered to provide substantial services for tenants if they are primarily for the tenants' convenience and normally are not provided to maintain the lots in a condition for occupancy. Taxact.com 2012 Services are substantial if the compensation for the services makes up a material part of the tenants' rental payments. Taxact.com 2012   Examples of services that are not normally provided for the tenants' convenience include supervising and maintaining a recreational hall provided by the park, distributing a monthly newsletter to tenants, operating a laundry facility, and helping tenants buy or sell their trailers. Taxact.com 2012   Examples of services that are normally provided to maintain the lots in a condition for tenant occupancy include city sewerage, electrical connections, and roadways. Taxact.com 2012 Hotels, boarding houses, and apartments. Taxact.com 2012   Rental income you receive for the use or occupancy of hotels, boarding houses, or apartment houses is subject to SE tax if you provide services for the occupants. Taxact.com 2012   Generally, you are considered to provide services for the occupants if the services are primarily for their convenience and are not services normally provided with the rental of rooms for occupancy only. Taxact.com 2012 An example of a service that is not normally provided for the convenience of the occupants is maid service. Taxact.com 2012 However, providing heat and light, cleaning stairways and lobbies, and collecting trash are services normally provided for the occupants' convenience. Taxact.com 2012 Prepaid rent. Taxact.com 2012   Advance payments received under a lease that does not put any restriction on their use or enjoyment are income in the year you receive them. Taxact.com 2012 This is true no matter what accounting method or period you use. Taxact.com 2012 Lease bonus. Taxact.com 2012   A bonus you receive from a lessee for granting a lease is an addition to the rent. Taxact.com 2012 Include it in your gross receipts in the year received. Taxact.com 2012 Lease cancellation payments. Taxact.com 2012   Report payments you receive from your lessee for canceling a lease in your gross receipts in the year received. Taxact.com 2012 Payments to third parties. Taxact.com 2012   If your lessee makes payments to someone else under an agreement to pay your debts or obligations, include the payments in your gross receipts when the lessee makes the payments. Taxact.com 2012 A common example of this kind of income is a lessee's payment of your property taxes on leased real property. Taxact.com 2012 Settlement payments. Taxact.com 2012   Payments you receive in settlement of a lessee's obligation to restore the leased property to its original condition are income in the amount that the payments exceed the adjusted basis of the leasehold improvements destroyed, damaged, removed, or disconnected by the lessee. Taxact.com 2012 Personal Property Rents If you are in the business of renting personal property (equipment, vehicles, formal wear, etc. Taxact.com 2012 ), include the rental amount you receive in your gross receipts on Schedule C or C-EZ. Taxact.com 2012 Prepaid rent and other payments described in the preceding Real Estate Rents discussion can also be received for renting personal property. Taxact.com 2012 If you receive any of those payments, include them in your gross receipts as explained in that discussion. Taxact.com 2012 Interest and Dividend Income Interest and dividends may be considered business income. Taxact.com 2012 Interest. Taxact.com 2012   Interest received on notes receivable that you have accepted in the ordinary course of business is business income. Taxact.com 2012 Interest received on loans is business income if you are in the business of lending money. Taxact.com 2012 Uncollectible loans. Taxact.com 2012   If a loan payable to you becomes uncollectible during the tax year and you use an accrual method of accounting, you must include in gross income interest accrued up to the time the loan became uncollectible. Taxact.com 2012 If the accrued interest later becomes uncollectible, you may be able to take a bad debt deduction. Taxact.com 2012 See Bad Debts in chapter 8. Taxact.com 2012 Unstated interest. Taxact.com 2012   If little or no interest is charged on an installment sale, you may have to treat a part of each payment as unstated interest. Taxact.com 2012 See Unstated Interest and Original Issue Discount (OID) in Publication 537, Installment Sales. Taxact.com 2012 Dividends. Taxact.com 2012   Generally, dividends are business income to dealers in securities. Taxact.com 2012 For most sole proprietors and statutory employees, however, dividends are nonbusiness income. Taxact.com 2012 If you hold stock as a personal investment separately from your business activity, the dividends from the stock are nonbusiness income. Taxact.com 2012   If you receive dividends from business insurance premiums you deducted in an earlier year, you must report all or part of the dividend as business income on your return. Taxact.com 2012 To find out how much you have to report, see   Recovery of items previously deducted under Other Income, later. Taxact.com 2012 Canceled Debt The following explains the general rule for including canceled debt in income and the exceptions to the general rule. Taxact.com 2012 General Rule Generally, if your debt is canceled or forgiven, other than as a gift or bequest to you, you must include the canceled amount in your gross income for tax purposes. Taxact.com 2012 Report the canceled amount on line 6 of Schedule C if you incurred the debt in your business. Taxact.com 2012 If the debt is a nonbusiness debt, report the canceled amount on line 21 of Form 1040. Taxact.com 2012 Exceptions The following discussion covers some exceptions to the general rule for canceled debt. Taxact.com 2012 Price reduced after purchase. Taxact.com 2012   If you owe a debt to the seller for property you bought and the seller reduces the amount you owe, you generally do not have income from the reduction. Taxact.com 2012 Unless you are bankrupt or insolvent, treat the amount of the reduction as a purchase price adjustment and reduce your basis in the property. Taxact.com 2012 Deductible debt. Taxact.com 2012   You do not realize income from a canceled debt to the extent the payment of the debt would have led to a deduction. Taxact.com 2012 Example. Taxact.com 2012 You get accounting services for your business on credit. Taxact.com 2012 Later, you have trouble paying your business debts, but you are not bankrupt or insolvent. Taxact.com 2012 Your accountant forgives part of the amount you owe for the accounting services. Taxact.com 2012 How you treat the canceled debt depends on your method of accounting. Taxact.com 2012 Cash method — You do not include the canceled debt in income because payment of the debt would have been deductible as a business expense. Taxact.com 2012 Accrual method — You include the canceled debt in income because the expense was deductible when you incurred the debt. Taxact.com 2012   For information on the cash and accrual methods of accounting, see chapter 2. Taxact.com 2012 Exclusions Do not include canceled debt in income in the following situations. Taxact.com 2012 However, you may be required to file Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness. Taxact.com 2012 For more information, see Form 982. Taxact.com 2012 The cancellation takes place in a bankruptcy case under title 11 of the U. Taxact.com 2012 S. Taxact.com 2012 Code (relating to bankruptcy). Taxact.com 2012 See Publication 908, Bankruptcy Tax Guide. Taxact.com 2012 The cancellation takes place when you are insolvent. Taxact.com 2012 You can exclude the canceled debt to the extent you are insolvent. Taxact.com 2012 See Publication 908. Taxact.com 2012 The canceled debt is a qualified farm debt owed to a qualified person. Taxact.com 2012 See chapter 3 in Publication 225, Farmer's Tax Guide. Taxact.com 2012 The canceled debt is a qualified real property business debt. Taxact.com 2012 This situation is explained later. Taxact.com 2012 The canceled debt is qualified principal residence indebtedness which is discharged after 2006. Taxact.com 2012 See Form 982. Taxact.com 2012 If a canceled debt is excluded from income because it takes place in a bankruptcy case, the exclusions in situations 2 through 5 do not apply. Taxact.com 2012 If it takes place when you are insolvent, the exclusions in situations 3 and 4 do not apply to the extent you are insolvent. Taxact.com 2012 Debt. Taxact.com 2012   For purposes of this discussion, debt includes any debt for which you are liable or which attaches to property you hold. Taxact.com 2012 Qualified real property business debt. Taxact.com 2012   You can elect to exclude (up to certain limits) the cancellation of qualified real property business debt. Taxact.com 2012 If you make the election, you must reduce the basis of your depreciable real property by the amount excluded. Taxact.com 2012 Make this reduction at the beginning of your tax year following the tax year in which the cancellation occurs. Taxact.com 2012 However, if you dispose of the property before that time, you must reduce its basis immediately before the disposition. Taxact.com 2012 Cancellation of qualified real property business debt. Taxact.com 2012   Qualified real property business debt is debt (other than qualified farm debt) that meets all the following conditions. Taxact.com 2012 It was incurred or assumed in connection with real property used in a trade or business. Taxact.com 2012 It was secured by such real property. Taxact.com 2012 It was incurred or assumed at either of the following times. Taxact.com 2012 Before January 1, 1993. Taxact.com 2012 After December 31, 1992, if incurred or assumed to acquire, construct, or substantially improve the real property. Taxact.com 2012 It is debt to which you choose to apply these rules. Taxact.com 2012   Qualified real property business debt includes refinancing of debt described in (3) earlier, but only to the extent it does not exceed the debt being refinanced. Taxact.com 2012   You cannot exclude more than either of the following amounts. Taxact.com 2012 The excess (if any) of: The outstanding principal of qualified real property business debt (immediately before the cancellation), over The fair market value (immediately before the cancellation) of the business real property that is security for the debt, reduced by the outstanding principal amount of any other qualified real property business debt secured by this property immediately before the cancellation. Taxact.com 2012 The total adjusted bases of depreciable real property held by you immediately before the cancellation. Taxact.com 2012 These adjusted bases are determined after any basis reduction due to a cancellation in bankruptcy, insolvency, or of qualified farm debt. Taxact.com 2012 Do not take into account depreciable real property acquired in contemplation of the cancellation. Taxact.com 2012 Election. Taxact.com 2012   To make this election, complete Form 982 and attach it to your income tax return for the tax year in which the cancellation occurs. Taxact.com 2012 You must file your return by the due date (including extensions). Taxact.com 2012 If you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Taxact.com 2012 For more information, see When To File in the form instructions. Taxact.com 2012 Other Income The following discussion explains how to treat other types of business income you may receive. Taxact.com 2012 Restricted property. Taxact.com 2012   Restricted property is property that has certain restrictions that affect its value. Taxact.com 2012 If you receive restricted stock or other property for services performed, the fair market value of the property in excess of your cost is included in your income on Schedule C or C-EZ when the restriction is lifted. Taxact.com 2012 However, you can choose to be taxed in the year you receive the property. Taxact.com 2012 For more information on including restricted property in income, see Publication 525, Taxable and Nontaxable Income. Taxact.com 2012 Gains and losses. Taxact.com 2012   Do not report on Schedule C or C-EZ a gain or loss from the disposition of property that is neither stock in trade nor held primarily for sale to customers. Taxact.com 2012 Instead, you must report these gains and losses on other forms. Taxact.com 2012 For more information, see chapter 3. Taxact.com 2012 Promissory notes. Taxact.com 2012   Report promissory notes and other evidences of debt issued to you in a sale or exchange of property that is stock in trade or held primarily for sale to customers on Schedule C or C-EZ. Taxact.com 2012 In general, you report them at their stated principal amount (minus any unstated interest) when you receive them. Taxact.com 2012 Lost income payments. Taxact.com 2012   If you reduce or stop your business activities, report on Schedule C or C-EZ any payment you receive for the lost income of your business from insurance or other sources. Taxact.com 2012 Report it on Schedule C or C-EZ even if your business is inactive when you receive the payment. Taxact.com 2012 Damages. Taxact.com 2012   You must include in gross income compensation you receive during the tax year as a result of any of the following injuries connected with your business. Taxact.com 2012 Patent infringement. Taxact.com 2012 Breach of contract or fiduciary duty. Taxact.com 2012 Antitrust injury. Taxact.com 2012 Economic injury. Taxact.com 2012   You may be entitled to a deduction against the income if it compensates you for actual economic injury. Taxact.com 2012 Your deduction is the smaller of the following amounts. Taxact.com 2012 The amount you receive or accrue for damages in the tax year reduced by the amount you pay or incur in the tax year to recover that amount. Taxact.com 2012 Your loss from the injury that you have not yet deducted. Taxact.com 2012 Punitive damages. Taxact.com 2012   You must also include punitive damages in income. Taxact.com 2012 Kickbacks. Taxact.com 2012   If you receive any kickbacks, include them in your income on Schedule C or C-EZ. Taxact.com 2012 However, do not include them if you properly treat them as a reduction of a related expense item, a capital expenditure, or cost of goods sold. Taxact.com 2012 Recovery of items previously deducted. Taxact.com 2012   If you recover a bad debt or any other item deducted in a previous year, include the recovery in income on Schedule C or C-EZ. Taxact.com 2012 However, if all or part of the deduction in earlier years did not reduce your tax, you can exclude the part that did not reduce your tax. Taxact.com 2012 If you exclude part of the recovery from income, you must include with your return a computation showing how you figured the exclusion. Taxact.com 2012 Example. Taxact.com 2012 Joe Smith, a sole proprietor, had gross income of $8,000, a bad debt deduction of $300, and other allowable deductions of $7,700. Taxact.com 2012 He also had 2 personal exemptions for a total of $7,800. Taxact.com 2012 He would not pay income tax even if he did not deduct the bad debt. Taxact.com 2012 Therefore, he will not report as income any part of the $300 he may recover in any future year. Taxact.com 2012 Exception for depreciation. Taxact.com 2012   This rule does not apply to depreciation. Taxact.com 2012 You recover depreciation using the rules explained next. Taxact.com 2012 Recapture of depreciation. Taxact.com 2012   In the following situations, you have to recapture the depreciation deduction. Taxact.com 2012 This means you include in income part or all of the depreciation you deducted in previous years. Taxact.com 2012 Listed property. Taxact.com 2012   If your business use of listed property (explained in chapter 8 under Depreciation ) falls to 50% or less in a tax year after the tax year you placed the property in service, you may have to recapture part of the depreciation deduction. Taxact.com 2012 You do this by including in income on Schedule C part of the depreciation you deducted in previous years. Taxact.com 2012 Use Part IV of Form 4797, Sales of Business Property, to figure the amount to include on Schedule C. Taxact.com 2012 For more information, see What is the Business-Use Requirement? in chapter 5 of Publication 946, How To Depreciate Property. Taxact.com 2012 That chapter explains how to determine whether property is used more than 50% in your business. Taxact.com 2012 Section 179 property. Taxact.com 2012   If you take a section 179 deduction (explained in chapter 8 under Depreciation ) for an asset and before the end of the asset's recovery period the percentage of business use drops to 50% or less, you must recapture part of the section 179 deduction. Taxact.com 2012 You do this by including in income on Schedule C part of the deduction you took. Taxact.com 2012 Use Part IV of Form 4797 to figure the amount to include on Schedule C. Taxact.com 2012 See chapter 2 in Publication 946 to find out when you recapture the deduction. Taxact.com 2012 Sale or exchange of depreciable property. Taxact.com 2012   If you sell or exchange depreciable property at a gain, you may have to treat all or part of the gain due to depreciation as ordinary income. Taxact.com 2012 You figure the income due to depreciation recapture in Part III of Form 4797. Taxact.com 2012 For more information, see chapter 4 in Publication 544, Sales and Other Dispositions of Assets. Taxact.com 2012 Items That Are Not Income In some cases the property or money you receive is not income. Taxact.com 2012 Appreciation. Taxact.com 2012   Increases in value of your property are not income until you realize the increases through a sale or other taxable disposition. Taxact.com 2012 Consignments. Taxact.com 2012   Consignments of merchandise to others to sell for you are not sales. Taxact.com 2012 The title of merchandise remains with you, the consignor, even after the consignee possesses the merchandise. Taxact.com 2012 Therefore, if you ship goods on consignment, you have no profit or loss until the consignee sells the merchandise. Taxact.com 2012 Merchandise you have shipped out on consignment is included in your inventory until it is sold. Taxact.com 2012   Do not include merchandise you receive on consignment in your inventory. Taxact.com 2012 Include your profit or commission on merchandise consigned to you in your income when you sell the merchandise or when you receive your profit or commission, depending upon the method of accounting you use. Taxact.com 2012 Construction allowances. Taxact.com 2012   If you enter into a lease after August 5, 1997, you can exclude from income the construction allowance you receive (in cash or as a rent reduction) from your landlord if you receive it under both the following conditions. Taxact.com 2012 Under a short-term lease of retail space. Taxact.com 2012 For the purpose of constructing or improving qualified long-term real property for use in your business at that retail space. Taxact.com 2012 Amount you can exclude. Taxact.com 2012   You can exclude the construction allowance to the extent it does not exceed the amount you spent for construction or improvements. Taxact.com 2012 Short-term lease. Taxact.com 2012   A short-term lease is a lease (or other agreement for occupancy or use) of retail space for 15 years or less. Taxact.com 2012 The following rules apply in determining whether the lease is for 15 years or less. Taxact.com 2012 Take into account options to renew when figuring whether the lease is for 15 years or less. Taxact.com 2012 But do not take into account any option to renew at fair market value determined at the time of renewal. Taxact.com 2012 Two or more successive leases that are part of the same transaction (or a series of related transactions) for the same or substantially similar retail space are treated as one lease. Taxact.com 2012 Retail space. Taxact.com 2012   Retail space is real property leased, occupied, or otherwise used by you as a tenant in your business of selling tangible personal property or services to the general public. Taxact.com 2012 Qualified long-term real property. Taxact.com 2012   Qualified long-term real property is nonresidential real property that is part of, or otherwise present at, your retail space and that reverts to the landlord when the lease ends. Taxact.com 2012 Exchange of like-kind property. Taxact.com 2012   If you exchange your business property or property you hold for investment solely for property of a like kind to be used in your business or to be held for investment, no gain or loss is recognized. Taxact.com 2012 This means that the gain is not taxable and the loss is not deductible. Taxact.com 2012 A common type of nontaxable exchange is the trade-in of a business automobile for another business automobile. Taxact.com 2012 For more information, see Form 8824. Taxact.com 2012 Leasehold improvements. Taxact.com 2012   If a tenant erects buildings or makes improvements to your property, the increase in the value of the property due to the improvements is not income to you. Taxact.com 2012 However, if the facts indicate that the improvements are a payment of rent to you, then the increase in value would be income. Taxact.com 2012 Loans. Taxact.com 2012   Money borrowed through a bona fide loan is not income. Taxact.com 2012 Sales tax. Taxact.com 2012   State and local sales taxes imposed on the buyer, which you were required to collect and pay over to state or local governments, are not income. Taxact.com 2012 Guidelines for Selected Occupations This section provides information to determine whether your earnings should be reported on Schedule C (Form 1040) or C-EZ (Form 1040). Taxact.com 2012 Direct seller. Taxact.com 2012   You must report all income you receive as a direct seller on Schedule C or C-EZ. Taxact.com 2012 This includes any of the following. Taxact.com 2012 Income from sales—payments you receive from customers for products they buy from you. Taxact.com 2012 Commissions, bonuses, or percentages you receive for sales and the sales of others who work under you. Taxact.com 2012 Prizes, awards, and gifts you receive from your selling business. Taxact.com 2012 You must report this income regardless of whether it is reported to you on an information return. Taxact.com 2012   You are a direct seller if you meet all the following conditions. Taxact.com 2012 You are engaged in one of the following trades or businesses. Taxact.com 2012 Selling or soliciting the sale of consumer products either in a home or other place that is not a permanent retail establishment, or to any buyer on a buy-sell basis or a deposit-commission basis for resale in a home or other place of business that is not a permanent retail establishment. Taxact.com 2012 Delivering or distributing newspapers or shopping news (including any services directly related to that trade or business). Taxact.com 2012 Substantially all your pay (whether paid in cash or not) for services described above is directly related to sales or other output (including performance of services) rather than to the number of hours worked. Taxact.com 2012 Your services are performed under a written contract between you and the person for whom you perform the services, and the contract provides that you will not be treated as an employee for federal tax purposes. Taxact.com 2012 Executor or administrator. Taxact.com 2012   If you administer a deceased person's estate, your fees are reported on Schedule C or C-EZ if you are one of the following: A professional fiduciary. Taxact.com 2012 A nonprofessional fiduciary (personal representative) and both of the following apply. Taxact.com 2012 The estate includes an active trade or business in which you actively participate. Taxact.com 2012 Your fees are related to the operation of that trade or business. Taxact.com 2012 A nonprofessional fiduciary of a single estate that requires extensive managerial activities on your part for a long period of time, provided these activities are enough to be considered a trade or business. Taxact.com 2012    If the fees do not meet the above requirements, report them on line 21 of Form 1040. Taxact.com 2012 Fishing crew member. Taxact.com 2012    If you are a member of the crew that catches fish or other water life, your earnings are reported on Schedule C or C-EZ if you meet all the requirements shown in chapter 10 under Fishing crew member . Taxact.com 2012 Insurance agent, former. Taxact.com 2012   Termination payments you receive as a former self-employed insurance agent from an insurance company because of services you performed for that company are not reported on Schedule C or C-EZ if all the following conditions are met. Taxact.com 2012 You received payments after your agreement to perform services for the company ended. Taxact.com 2012 You did not perform any services for the company after your service agreement ended and before the end of the year in which you received the payment. Taxact.com 2012 You entered into a covenant not to compete against the company for at least a 1-year period beginning on the date your service agreement ended. Taxact.com 2012 The amount of the payments depended primarily on policies sold by you or credited to your account during the last year of your service agreement or the extent to which those policies remain in force for some period after your service agreement ended, or both. Taxact.com 2012 The amount of the payment did not depend to any extent on length of service or overall earnings from services performed for the company (regardless of whether eligibility for the payments depended on length of service). Taxact.com 2012 Insurance agent, retired. Taxact.com 2012   Income paid by an insurance company to a retired self-employed insurance agent based on a percentage of commissions received before retirement is reported on Schedule C or C-EZ. Taxact.com 2012 Also, renewal commissions and deferred commissions for sales made before retirement are generally reported on Schedule C or C-EZ. Taxact.com 2012   However, renewal commissions paid to the survivor of an insurance agent are not reported on Schedule C or C-EZ. Taxact.com 2012 Newspaper carrier or distributor. Taxact.com 2012   You are a direct seller and your earnings are reported on Schedule C or C-EZ if all the following conditions apply. Taxact.com 2012 You are in the business of delivering or distributing newspapers or shopping news (including directly related services such as soliciting customers and collecting receipts). Taxact.com 2012 Substantially all your pay for these services directly relates to your sales or other output rather than to the number of hours you work. Taxact.com 2012 You perform the services under a written contract that says you will not be treated as an employee for federal tax purposes. Taxact.com 2012   This rule applies whether or not you hire others to help you make deliveries. Taxact.com 2012 It also applies whether you buy the papers from the publisher or are paid based on the number of papers you deliver. Taxact.com 2012 Newspaper or magazine vendor. Taxact.com 2012   If you are 18 or older and you sell newspapers or magazines, your earnings are reported on Schedule C or C-EZ if all the following conditions apply. Taxact.com 2012 You sell newspapers or magazines to ultimate consumers. Taxact.com 2012 You sell them at a fixed price. Taxact.com 2012 Your earnings are based on the difference between the sales price and your cost of goods sold. Taxact.com 2012   This rule applies whether or not you are guaranteed a minimum amount of earnings. Taxact.com 2012 It also applies whether or not you receive credit for unsold newspapers or magazines you return to your supplier. Taxact.com 2012 Notary public. Taxact.com 2012   Fees you receive for services you perform as a notary public are reported on Schedule C or C-EZ. Taxact.com 2012 These payments are not subject to self-employment tax (see the instructions for Schedule SE (Form 1040)). Taxact.com 2012 Public official. Taxact.com 2012   Public officials generally do not report what they earn for serving in public office on Schedule C or C-EZ. Taxact.com 2012 This rule applies to payments received by an elected tax collector from state funds on the basis of a fixed percentage of the taxes collected. Taxact.com 2012 Public office includes any elective or appointive office of the United States or its possessions, the District of Columbia, a state or its political subdivisions, or a wholly owned instrumentality of any of these. Taxact.com 2012   Public officials of state or local governments report their fees on Schedule C or C-EZ if they are paid solely on a fee basis and if their services are eligible for, but not covered by, social security under a federal-state agreement. Taxact.com 2012 Real estate agent or direct seller. Taxact.com 2012   If you are a licensed real estate agent or a direct seller, your earnings are reported on Schedule C or C-EZ if both the following apply. Taxact.com 2012 Substantially all your pay for services as a real estate agent or direct seller directly relates to your sales or other output rather than to the number of hours you work. Taxact.com 2012 You perform the services under a written contract that says you will not be treated as an employee for federal tax purposes. Taxact.com 2012 Securities dealer. Taxact.com 2012   If you are a dealer in options or commodities, your gains and losses from dealing or trading in section 1256 contracts (regulated futures contracts, foreign currency contracts, nonequity options, dealer equity options, and dealer securities futures contracts) or property related to those contracts (such as stock used to hedge options) are reported on Schedule C or C-EZ. Taxact.com 2012 For more information, see sections 1256 and 1402(i). Taxact.com 2012 Securities trader. Taxact.com 2012   You are a trader in securities if you are engaged in the business of buying and selling securities for your own account. Taxact.com 2012 As a trader in securities, your gain or loss from the disposition of securities is not reported on Schedule C or C-EZ. Taxact.com 2012 However, see Securities dealer , earlier, for an exception that applies to section 1256 contracts. Taxact.com 2012 For more information about securities traders, see Publication 550, Investment Income and Expenses. Taxact.com 2012 Accounting for Your Income Accounting for your income for income tax purposes differs at times from accounting for financial purposes. Taxact.com 2012 This section discusses some of the more common differences that may affect business transactions. Taxact.com 2012 Figure your business income on the basis of a tax year and according to your regular method of accounting (see chapter 2). Taxact.com 2012 If the sale of a product is an income-producing factor in your business, you usually have to use inventories to clearly show your income. Taxact.com 2012 Dealers in real estate are not allowed to use inventories. Taxact.com 2012 For more information on inventories, see chapter 2. Taxact.com 2012 Income paid to a third party. Taxact.com 2012   All income you earn is taxable to you. Taxact.com 2012 You cannot avoid tax by having the income paid to a third party. Taxact.com 2012 Example. Taxact.com 2012 You rent out your property and the rental agreement directs the lessee to pay the rent to your son. Taxact.com 2012 The amount paid to your son is gross income to you. Taxact.com 2012 Cash discounts. Taxact.com 2012   These are amounts the seller permits you to deduct from the invoice price for prompt payment. Taxact.com 2012 For income tax purposes, you can use either of the following two methods to account for cash discounts. Taxact.com 2012 Deduct the cash discount from purchases (see Line 36, Purchases Less Cost of Items Withdrawn for Personal Use in chapter 6). Taxact.com 2012 Credit the cash discount to a discount income account. Taxact.com 2012 You must use the chosen method every year for all your purchase discounts. Taxact.com 2012   If you use the second method, the credit balance in the account at the end of your tax year is business income. Taxact.com 2012 Under this method, you do not reduce the cost of goods sold by the cash discounts you received. Taxact.com 2012 When valuing your closing inventory, you cannot reduce the invoice price of merchandise on hand at the close of the tax year by the average or estimated discounts received on the merchandise. Taxact.com 2012 Trade discounts. Taxact.com 2012   These are reductions from list or catalog prices and usually are not written into the invoice or charged to the customer. Taxact.com 2012 Do not enter these discounts on your books of account. Taxact.com 2012 Instead, use only the net amount as the cost of the merchandise purchased. Taxact.com 2012 For more information, see Trade discounts in chapter 6. Taxact.com 2012 Payment placed in escrow. Taxact.com 2012   If the buyer of your property places part or all of the purchase price in escrow, you do not include any part of it in gross sales until you actually or constructively receive it. Taxact.com 2012 However, upon completion of the terms of the contract and the escrow agreement, you will have taxable income, even if you do not accept the money until the next year. Taxact.com 2012 Sales returns and allowances. Taxact.com 2012   Credits you allow customers for returned merchandise and any other allowances you make on sales are deductions from gross sales in figuring net sales. Taxact.com 2012 Advance payments. Taxact.com 2012   Special rules dealing with an accrual method of accounting for payments received in advance are discussed in chapter 2 under Accrual Method. Taxact.com 2012 Insurance proceeds. Taxact.com 2012   If you receive insurance or another type of reimbursement for a casualty or theft loss, you must subtract it from the loss when you figure your deduction. Taxact.com 2012 You cannot deduct the reimbursed part of a casualty or theft loss. Taxact.com 2012   For information on casualty or theft losses, see Publication 547, Casualties, Disasters, and Thefts. Taxact.com 2012 Prev  Up  Next   Home   More Online Publications
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The Taxact.com 2012

Taxact. Taxact.com 2012 com 2012 Internal Revenue Bulletin:  2009-17  April 27, 2009  Rev. Taxact.com 2012 Proc. Taxact.com 2012 2009-24 Table of Contents SECTION 1. Taxact.com 2012 PURPOSE SECTION 2. Taxact.com 2012 BACKGROUND SECTION 3. Taxact.com 2012 SCOPE SECTION 4. Taxact.com 2012 APPLICATION. Taxact.com 2012 01 In General. Taxact.com 2012 . Taxact.com 2012 02 Limitations on Depreciation Deductions for Certain Automobiles. Taxact.com 2012 . Taxact.com 2012 03 Inclusions in Income of Lessees of Passenger Automobiles. Taxact.com 2012 SECTION 5. Taxact.com 2012 EFFECTIVE DATE SECTION 6. Taxact.com 2012 DRAFTING INFORMATION SECTION 1. Taxact.com 2012 PURPOSE . Taxact.com 2012 01 This revenue procedure provides: (1) limitations on depreciation deductions for owners of passenger automobiles first placed in service by the taxpayer during calendar year 2009, including a separate table of limitations on depreciation deductions for trucks and vans; and (2) the amounts to be included in income by lessees of passenger automobiles first leased by the taxpayer during calendar year 2009, including a separate table of inclusion amounts for lessees of trucks and vans. Taxact.com 2012 . Taxact.com 2012 02 The tables detailing these depreciation limitations and lessee inclusion amounts reflect the automobile price inflation adjustments required by § 280F(d)(7) of the Internal Revenue Code. Taxact.com 2012 SECTION 2. Taxact.com 2012 BACKGROUND . Taxact.com 2012 01 For owners of passenger automobiles, § 280F(a) imposes dollar limitations on the depreciation deduction for the year that the passenger automobile is placed in service by the taxpayer and each succeeding year. Taxact.com 2012 Section 280F(d)(7) requires the amounts allowable as depreciation deductions to be increased by a price inflation adjustment amount for passenger automobiles placed in service after 1988. Taxact.com 2012 The method of calculating this price inflation amount for trucks and vans placed in service in or after calendar year 2003 uses a different CPI “automobile component” (the “new trucks” component) than that used in the price inflation amount calculation for other passenger automobiles (the “new cars” component), resulting in somewhat higher depreciation deductions for trucks and vans. Taxact.com 2012 This change reflects the higher rate of price inflation that trucks and vans have been subject to since 1988. Taxact.com 2012 . Taxact.com 2012 02 Section 168(k)(1)(A) provides a 50 percent additional first year depreciation deduction for certain new property acquired by a taxpayer after December 31, 2007, and before January 1, 2010, if no written binding contract for the acquisition of the property existed before January 1, 2008. Taxact.com 2012 Section 168(k)(2)(F)(i) increases the first year depreciation allowed under § 280F(a)(1)(A) by $8,000 for passenger automobiles to which the 50 percent additional first year depreciation deduction applies. Taxact.com 2012 . Taxact.com 2012 03 Section 168(k)(2)(D)(i) provides that the 50 percent additional first year depreciation deduction does not apply to any property required to be depreciated under the alternative depreciation system of § 168(g), including property described in § 280F(b)(1). Taxact.com 2012 Section 168(k)(2)(D)(iii) permits a taxpayer to elect to not claim the 50 percent additional first year depreciation deduction for any class of property. Taxact.com 2012 Section 168(k)(4) permits a corporation to elect to not claim the 50 percent additional first year depreciation deduction for all eligible qualified property (that is extension property or that is not extension property, as applicable) and instead to increase the business credit limitation under § 38(c) or the alternative minimum tax credit limitation under § 53(c). Taxact.com 2012 Accordingly, this revenue procedure provides tables for passenger automobiles for which the 50 percent additional depreciation deduction applies and tables for passenger automobiles for which the 50 percent additional first year depreciation deduction does not apply, including passenger automobiles in a class of property for which the taxpayer “elects out” of the 50 percent additional first year depreciation deduction or passenger automobiles that are eligible qualified property to which the § 168(k)(4) election applies. Taxact.com 2012 . Taxact.com 2012 04 For leased passenger automobiles, § 280F(c) requires a reduction in the deduction allowed to the lessee of the passenger automobile. Taxact.com 2012 The reduction must be substantially equivalent to the limitations on the depreciation deductions imposed on owners of passenger automobiles. Taxact.com 2012 Under § 1. Taxact.com 2012 280F-7(a) of the Income Tax Regulations, this reduction requires a lessee to include in gross income an inclusion amount determined by applying a formula to the amount obtained from a table. Taxact.com 2012 One table applies to lessees of trucks and vans and another table applies to all other passenger automobiles. Taxact.com 2012 Each table shows inclusion amounts for a range of fair market values for each taxable year after the passenger automobile is first leased. Taxact.com 2012 SECTION 3. Taxact.com 2012 SCOPE . Taxact.com 2012 01 The limitations on depreciation deductions in section 4. Taxact.com 2012 02(2) of this revenue procedure apply to passenger automobiles (other than leased passenger automobiles) that are placed in service by the taxpayer in calendar year 2009, and continue to apply for each taxable year that the passenger automobile remains in service. Taxact.com 2012 . Taxact.com 2012 02 The tables in section 4. Taxact.com 2012 03 of this revenue procedure apply to leased passenger automobiles for which the lease term begins during calendar year 2009. Taxact.com 2012 Lessees of these passenger automobiles must use these tables to determine the inclusion amount for each taxable year during which the passenger automobile is leased. Taxact.com 2012 See Rev. Taxact.com 2012 Proc. Taxact.com 2012 2002-14, 2002-1 C. Taxact.com 2012 B. Taxact.com 2012 450, for passenger automobiles first leased before January 1, 2003, Rev. Taxact.com 2012 Proc. Taxact.com 2012 2003-75, 2003-2 C. Taxact.com 2012 B. Taxact.com 2012 1018, for passenger automobiles first leased during calendar year 2003, Rev. Taxact.com 2012 Proc. Taxact.com 2012 2004-20, 2004-1 C. Taxact.com 2012 B. Taxact.com 2012 642, for passenger automobiles first leased during calendar year 2004, Rev. Taxact.com 2012 Proc. Taxact.com 2012 2005-13, 2005-1 C. Taxact.com 2012 B. Taxact.com 2012 759, for passenger automobiles first leased during calendar year 2005, Rev. Taxact.com 2012 Proc. Taxact.com 2012 2006-18, 2006-1 C. Taxact.com 2012 B. Taxact.com 2012 645, for passenger automobiles first leased during calendar year 2006, Rev. Taxact.com 2012 Proc. Taxact.com 2012 2007-30, 2007-1 C. Taxact.com 2012 B. Taxact.com 2012 1104, for passenger automobiles first leased during calendar year 2007, and Rev. Taxact.com 2012 Proc. Taxact.com 2012 2008-22, 2008-12 I. Taxact.com 2012 R. Taxact.com 2012 B. Taxact.com 2012 658, for passenger automobiles first leased during calendar year 2008. Taxact.com 2012 SECTION 4. Taxact.com 2012 APPLICATION . Taxact.com 2012 01 In General. Taxact.com 2012 (1) Limitations on depreciation deductions for certain automobiles. Taxact.com 2012 The limitations on depreciation deductions for passenger automobiles placed in service by the taxpayer for the first time during calendar year 2009 are in Tables 1 through 4 in section 4. Taxact.com 2012 02(2) of this revenue procedure. Taxact.com 2012 (2) Inclusions in income of lessees of passenger automobiles. Taxact.com 2012 A taxpayer first leasing a passenger automobile during calendar year 2009 must determine the inclusion amount that is added to gross income using Tables 5 and 6 in section 4. Taxact.com 2012 03 of this revenue procedure. Taxact.com 2012 In addition, the taxpayer must follow the procedures of § 1. Taxact.com 2012 280F-7(a). Taxact.com 2012 . Taxact.com 2012 02 Limitations on Depreciation Deductions for Certain Automobiles. Taxact.com 2012 (1) Amount of the inflation adjustment. Taxact.com 2012 (a) Passenger automobiles (other than trucks or vans). Taxact.com 2012 Under § 280F(d)(7)(B)(i), the automobile price inflation adjustment for any calendar year is the percentage (if any) by which the CPI automobile component for October of the preceding calendar year exceeds the CPI automobile component for October 1987. Taxact.com 2012 The term “CPI automobile component” is defined in § 280F(d)(7)(B)(ii) as the “automobile component” of the Consumer Price Index for all Urban Consumers published by the Department of Labor. Taxact.com 2012 The new car component of the CPI was 115. Taxact.com 2012 2 for October 1987 and 134. Taxact.com 2012 837 for October 2008. Taxact.com 2012 The October 2008 index exceeded the October 1987 index by 19. Taxact.com 2012 637. Taxact.com 2012 The Internal Revenue Service has, therefore, determined that the automobile price inflation adjustment for 2009 for passenger automobiles (other than trucks and vans) is 17. Taxact.com 2012 05 percent (19. Taxact.com 2012 637/115. Taxact.com 2012 2 x 100%). Taxact.com 2012 This adjustment is applicable to all passenger automobiles (other than trucks and vans) that are first placed in service in calendar year 2009. Taxact.com 2012 The dollar limitations in § 280F(a) therefore must be multiplied by a factor of 0. Taxact.com 2012 1705, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations applicable to passenger automobiles (other than trucks and vans) for calendar year 2009. Taxact.com 2012 (b) Trucks and vans. Taxact.com 2012 To determine the dollar limitations applicable to trucks and vans first placed in service during calendar year 2009, the new truck component of the CPI is used instead of the new car component. Taxact.com 2012 The new truck component of the CPI was 112. Taxact.com 2012 4 for October 1987 and 133. Taxact.com 2012 640 for October 2008. Taxact.com 2012 The October 2008 index exceeded the October 1987 index by 21. Taxact.com 2012 24. Taxact.com 2012 The Service has, therefore, determined that the automobile price inflation adjustment for 2009 for trucks and vans is 18. Taxact.com 2012 90 percent (21. Taxact.com 2012 24/112. Taxact.com 2012 4 x 100%). Taxact.com 2012 This adjustment is applicable to all trucks and vans that are first placed in service in calendar year 2009. Taxact.com 2012 The dollar limitations in § 280F(a) therefore must be multiplied by a factor of 0. Taxact.com 2012 1890, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations applicable to trucks and vans. Taxact.com 2012 (2) Amount of the limitation. Taxact.com 2012 For passenger automobiles placed in service by the taxpayer in calendar year 2009, Tables 1 through 4 contain the dollar amount of the depreciation limitation for each taxable year. Taxact.com 2012 Use Table 1 for a passenger automobile (other than a truck or van) placed in service by the taxpayer in calendar year 2009, for which the 50 percent additional first year depreciation deduction does not apply, including a passenger automobile (other than a truck or van) in a class of property for which the taxpayer elects out of the 50 percent additional first year depreciation deduction or a passenger automobile that is eligible qualified property to which the § 168(k)(4) election applies. Taxact.com 2012 Use Table 2 for a passenger automobile (other than a truck or van) placed in service by the taxpayer in calendar year 2009, for which the 50 percent additional first year depreciation deduction applies. Taxact.com 2012 Use Table 3 for a truck or van placed in service by the taxpayer in calendar year 2009, for which the 50 percent additional first year depreciation deduction does not apply, including a truck or van in a class of property for which the taxpayer elects out of the 50 percent additional first year depreciation deduction or a truck or van that is eligible qualified property to which the § 168(k)(4) election applies. Taxact.com 2012 Use Table 4 for a truck or van placed in service by the taxpayer in calendar year 2009, for which the 50 percent additional first year depreciation deduction applies. Taxact.com 2012 REV. Taxact.com 2012 PROC. Taxact.com 2012 2009-24 TABLE 1 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE BY THE TAXPAYER IN CALENDAR YEAR 2009, FOR WHICH THE 50 PERCENT ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $2,960 2nd Tax Year $4,800 3rd Tax Year $2,850 Each Succeeding Year $1,775 REV. Taxact.com 2012 PROC. Taxact.com 2012 2009-24 TABLE 2 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE BY THE TAXPAYER IN CALENDAR YEAR 2009, FOR WHICH THE 50 PERCENT ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $10,960 2nd Tax Year $4,800 3rd Tax Year $2,850 Each Succeeding Year $1,775 REV. Taxact.com 2012 PROC. Taxact.com 2012 2009-24 TABLE 3 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE BY THE TAXPAYER IN CALENDAR YEAR 2009, FOR WHICH THE 50 PERCENT ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $3,060 2nd Tax Year $4,900 3rd Tax Year $2,950 Each Succeeding Year $1,775 REV. Taxact.com 2012 PROC. Taxact.com 2012 2009-24 TABLE 4 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE BY THE TAXPAYER IN CALENDAR YEAR 2009, FOR WHICH THE 50 PERCENT ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,060 2nd Tax Year $4,900 3rd Tax Year $2,950 Each Succeeding Year $1,775 . Taxact.com 2012 03 Inclusions in Income of Lessees of Passenger Automobiles. Taxact.com 2012 The inclusion amounts for passenger automobiles first leased in calendar year 2009 are calculated under the procedures described in § 1. Taxact.com 2012 280F-7(a). Taxact.com 2012 Lessees of passenger automobiles other than trucks and vans should use Table 5 of this revenue procedure in applying these procedures, while lessees of trucks and vans should use Table 6 of this revenue procedure. Taxact.com 2012 REV. Taxact.com 2012 PROC. Taxact.com 2012 2009-24 TABLE 5 DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2009 Fair Market Value of Passenger Automobile Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & Later $18,500 $19,000 9 19 28 34 38 19,000 19,500 10 21 32 38 43 19,500 20,000 11 24 36 42 48 20,000 20,500 12 27 39 46 54 20,500 21,000 13 29 43 51 58 21,000 21,500 15 31 47 55 64 21,500 22,000 16 34 50 60 68 22,000 23,000 17 38 56 66 76 23,000 24,000 20 42 64 75 86 24,000 25,000 22 47 71 84 96 25,000 26,000 24 52 78 93 107 26,000 27,000 26 58 85 101 117 27,000 28,000 29 62 93 110 127 28,000 29,000 31 67 100 119 138 29,000 30,000 33 72 108 128 147 30,000 31,000 35 77 115 137 157 31,000 32,000 38 82 122 146 167 32,000 33,000 40 87 129 155 178 33,000 34,000 42 92 137 163 188 34,000 35,000 44 97 144 172 199 35,000 36,000 47 102 151 181 208 36,000 37,000 49 107 159 189 219 37,000 38,000 51 112 166 199 228 38,000 39,000 53 117 173 208 239 39,000 40,000 56 122 180 216 250 40,000 41,000 58 127 188 225 259 41,000 42,000 60 132 195 234 269 42,000 43,000 62 137 203 242 280 43,000 44,000 65 141 210 252 290 44,000 45,000 67 146 218 260 300 45,000 46,000 69 151 225 269 311 46,000 47,000 71 157 232 278 320 47,000 48,000 74 161 240 286 331 48,000 49,000 76 166 247 296 340 49,000 50,000 78 171 255 304 351 50,000 51,000 80 176 262 313 361 51,000 52,000 83 181 269 322 371 52,000 53,000 85 186 276 331 381 53,000 54,000 87 191 284 339 392 54,000 55,000 89 196 291 349 401 55,000 56,000 92 201 298 357 412 56,000 57,000 94 206 306 365 423 57,000 58,000 96 211 313 375 432 58,000 59,000 98 216 320 384 442 59,000 60,000 101 221 327 393 452 60,000 62,000 104 228 339 406 467 62,000 64,000 109 238 353 424 488 64,000 66,000 113 248 368 441 509 66,000 68,000 118 258 382 459 529 68,000 70,000 122 268 397 476 550 70,000 72,000 127 277 413 493 570 72,000 74,000 131 288 427 511 590 74,000 76,000 136 297 442 529 610 76,000 78,000 140 307 457 546 631 78,000 80,000 145 317 471 564 651 80,000 85,000 152 335 497 595 686 85,000 90,000 164 359 534 639 737 90,000 95,000 175 384 570 683 789 95,000 100,000 186 409 607 727 839 100,000 110,000 203 446 662 793 916 110,000 120,000 226 495 736 881 1,018 120,000 130,000 248 545 809 970 1,119 130,000 140,000 271 594 883 1,058 1,220 140,000 150,000 293 644 956 1,146 1,322 150,000 160,000 316 693 1,030 1,234 1,424 160,000 170,000 338 743 1,103 1,322 1,526 170,000 180,000 361 792 1,177 1,410 1,628 180,000 190,000 383 842 1,250 1,498 1,730 190,000 200,000 406 891 1,324 1,586 1,831 200,000 210,000 428 941 1,397 1,675 1,932 210,000 220,000 451 990 1,471 1,762 2,035 220,000 230,000 473 1,040 1,544 1,851 2,136 230,000 240,000 496 1,089 1,618 1,939 2,238 240,000 And up 518 1,139 1,691 2,027 2,340 REV. Taxact.com 2012 PROC. Taxact.com 2012 2009-24 TABLE 6 DOLLAR AMOUNTS FOR TRUCKS AND VANS WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2009 Fair Market Value of Electric Automobile Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th and Later $18,500 $19,000 8 17 25 30 35 19,000 19,500 9 19 29 35 40 19,500 20,000 10 22 33 38 45 20,000 20,500 11 25 36 43 50 20,500 21,000 12 27 40 48 55 21,000 21,500 13 30 43 52 60 21,500 22,000 15 32 47 56 66 22,000 23,000 16 36 52 64 72 23,000 24,000 18 41 60 72 83 24,000 25,000 21 45 68 81 93 25,000 26,000 23 50 75 90 103 26,000 27,000 25 56 82 98 114 27,000 28,000 27 61 89 107 124 28,000 29,000 30 65 97 116 134 29,000 30,000 32 70 104 125 144 30,000 31,000 34 75 112 134 154 31,000 32,000 36 80 119 143 164 32,000 33,000 39 85 126 151 175 33,000 34,000 41 90 134 160 184 34,000 35,000 43 95 141 169 195 35,000 36,000 45 100 148 178 205 36,000 37,000 48 105 155 187 215 37,000 38,000 50 110 163 195 226 38,000 39,000 52 115 170 204 236 39,000 40,000 55 120 177 213 246 40,000 41,000 57 125 185 221 256 41,000 42,000 59 130 192 231 266 42,000 43,000 61 135 199 240 276 43,000 44,000 64 139 207 249 286 44,000 45,000 66 144 215 257 296 45,000 46,000 68 149 222 266 307 46,000 47,000 70 155 229 274 317 47,000 48,000 73 159 237 283 327 48,000 49,000 75 164 244 292 338 49,000 50,000 77 169 251 301 348 50,000 51,000 79 174 259 310 357 51,000 52,000 82 179 266 318 368 52,000 53,000 84 184 273 328 378 53,000 54,000 86 189 281 336 388 54,000 55,000 88 194 288 345 399 55,000 56,000 91 199 295 354 408 56,000 57,000 93 204 302 363 419 57,000 58,000 95 209 310 371 429 58,000 59,000 97 214 317 381 439 59,000 60,000 100 219 324 389 450 60,000 62,000 103 226 336 402 465 62,000 64,000 107 236 351 420 485 64,000 66,000 112 246 365 438 505 66,000 68,000 116 256 380 455 526 68,000 70,000 121 266 394 473 546 70,000 72,000 125 276 409 491 566 72,000 74,000 130 286 423 509 586 74,000 76,000 134 296 438 526 607 76,000 78,000 139 305 454 543 627 78,000 80,000 143 316 467 561 648 80,000 85,000 151 333 493 592 684 85,000 90,000 163 357 531 635 735 90,000 95,000 174 382 567 680 785 95,000 100,000 185 407 604 724 836 100,000 110,000 202 444 659 790 912 110,000 120,000 225 493 733 878 1,014 120,000 130,000 247 543 806 966 1,116 130,000 140,000 270 592 880 1,054 1,218 140,000 150,000 292 642 953 1,143 1,319 150,000 160,000 315 691 1,027 1,230 1,421 160,000 170,000 337 741 1,100 1,319 1,522 170,000 180,000 360 790 1,174 1,407 1,624 180,000 190,000 382 840 1,247 1,495 1,726 190,000 200,000 405 889 1,321 1,583 1,828 200,000 210,000 427 939 1,394 1,671 1,930 210,000 220,000 450 988 1,468 1,759 2,031 220,000 230,000 472 1,038 1,541 1,847 2,134 230,000 240,000 495 1,087 1,615 1,935 2,235 240,000 and up 517 1,137 1,688 2,024 2,336 SECTION 5. Taxact.com 2012 EFFECTIVE DATE This revenue procedure applies to passenger automobiles (other than leased passenger automobiles) that are first placed in service by a taxpayer during calendar year 2009, and to leased passenger automobiles that are first leased by a taxpayer during calendar year 2009. Taxact.com 2012 SECTION 6. Taxact.com 2012 DRAFTING INFORMATION The principal author of this revenue procedure is Bernard P. Taxact.com 2012 Harvey of the Office of Associate Chief Counsel (Income Tax & Accounting). Taxact.com 2012 For further information regarding this revenue procedure, contact Mr. Taxact.com 2012 Harvey at (202) 622-4930 (not a toll-free call). Taxact.com 2012 Prev  Up  Next   Home   More Internal Revenue Bulletins