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Where Can I File My 2011 Taxes

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Where Can I File My 2011 Taxes

Where can i file my 2011 taxes 9. Where can i file my 2011 taxes   Depletion Table of Contents Introduction Topics - This chapter discusses: Who Can Claim Depletion? Mineral PropertyCost Depletion Percentage Depletion Oil and Gas Wells Mines and Geothermal Deposits Lessor's Gross Income TimberTimber units. Where can i file my 2011 taxes Depletion unit. Where can i file my 2011 taxes Introduction Depletion is the using up of natural resources by mining, drilling, quarrying stone, or cutting timber. Where can i file my 2011 taxes The depletion deduction allows an owner or operator to account for the reduction of a product's reserves. Where can i file my 2011 taxes There are two ways of figuring depletion: cost depletion and percentage depletion. Where can i file my 2011 taxes For mineral property, you generally must use the method that gives you the larger deduction. Where can i file my 2011 taxes For standing timber, you must use cost depletion. Where can i file my 2011 taxes Topics - This chapter discusses: Who can claim depletion Mineral property Timber Who Can Claim Depletion? If you have an economic interest in mineral property or standing timber, you can take a deduction for depletion. Where can i file my 2011 taxes More than one person can have an economic interest in the same mineral deposit or timber. Where can i file my 2011 taxes In the case of leased property, the depletion deduction is divided between the lessor and the lessee. Where can i file my 2011 taxes You have an economic interest if both the following apply. Where can i file my 2011 taxes You have acquired by investment any interest in mineral deposits or standing timber. Where can i file my 2011 taxes You have a legal right to income from the extraction of the mineral or cutting of the timber to which you must look for a return of your capital investment. Where can i file my 2011 taxes A contractual relationship that allows you an economic or monetary advantage from products of the mineral deposit or standing timber is not, in itself, an economic interest. Where can i file my 2011 taxes A production payment carved out of, or retained on the sale of, mineral property is not an economic interest. Where can i file my 2011 taxes Individuals, corporations, estates, and trusts who claim depletion deductions may be liable for alternative minimum tax. Where can i file my 2011 taxes Basis adjustment for depletion. Where can i file my 2011 taxes   You must reduce the basis of your property by the depletion allowed or allowable, whichever is greater. Where can i file my 2011 taxes Mineral Property Mineral property includes oil and gas wells, mines, and other natural deposits (including geothermal deposits). Where can i file my 2011 taxes For this purpose, the term “property” means each separate interest you own in each mineral deposit in each separate tract or parcel of land. Where can i file my 2011 taxes You can treat two or more separate interests as one property or as separate properties. Where can i file my 2011 taxes See section 614 of the Internal Revenue Code and the related regulations for rules on how to treat separate mineral interests. Where can i file my 2011 taxes There are two ways of figuring depletion on mineral property. Where can i file my 2011 taxes Cost depletion. Where can i file my 2011 taxes Percentage depletion. Where can i file my 2011 taxes Generally, you must use the method that gives you the larger deduction. Where can i file my 2011 taxes However, unless you are an independent producer or royalty owner, you generally cannot use percentage depletion for oil and gas wells. Where can i file my 2011 taxes See Oil and Gas Wells , later. Where can i file my 2011 taxes Cost Depletion To figure cost depletion you must first determine the following. Where can i file my 2011 taxes The property's basis for depletion. Where can i file my 2011 taxes The total recoverable units of mineral in the property's natural deposit. Where can i file my 2011 taxes The number of units of mineral sold during the tax year. Where can i file my 2011 taxes Basis for depletion. Where can i file my 2011 taxes   To figure the property's basis for depletion, subtract all the following from the property's adjusted basis. Where can i file my 2011 taxes Amounts recoverable through: Depreciation deductions, Deferred expenses (including deferred exploration and development costs), and Deductions other than depletion. Where can i file my 2011 taxes The residual value of land and improvements at the end of operations. Where can i file my 2011 taxes The cost or value of land acquired for purposes other than mineral production. Where can i file my 2011 taxes Adjusted basis. Where can i file my 2011 taxes   The adjusted basis of your property is your original cost or other basis, plus certain additions and improvements, and minus certain deductions such as depletion allowed or allowable and casualty losses. Where can i file my 2011 taxes Your adjusted basis can never be less than zero. Where can i file my 2011 taxes See Publication 551, Basis of Assets, for more information on adjusted basis. Where can i file my 2011 taxes Total recoverable units. Where can i file my 2011 taxes   The total recoverable units is the sum of the following. Where can i file my 2011 taxes The number of units of mineral remaining at the end of the year (including units recovered but not sold). Where can i file my 2011 taxes The number of units of mineral sold during the tax year (determined under your method of accounting, as explained next). Where can i file my 2011 taxes   You must estimate or determine recoverable units (tons, pounds, ounces, barrels, thousands of cubic feet, or other measure) of mineral products using the current industry method and the most accurate and reliable information you can obtain. Where can i file my 2011 taxes You must include ores and minerals that are developed, in sight, blocked out, or assured. Where can i file my 2011 taxes You must also include probable or prospective ores or minerals that are believed to exist based on good evidence. Where can i file my 2011 taxes But see Elective safe harbor for owners of oil and gas property , later. Where can i file my 2011 taxes Number of units sold. Where can i file my 2011 taxes   You determine the number of units sold during the tax year based on your method of accounting. Where can i file my 2011 taxes Use the following table to make this determination. Where can i file my 2011 taxes    IF you  use . Where can i file my 2011 taxes . Where can i file my 2011 taxes . Where can i file my 2011 taxes THEN the units sold during the year are . Where can i file my 2011 taxes . Where can i file my 2011 taxes . Where can i file my 2011 taxes The cash method of accounting The units sold for which you receive payment during the tax year (regardless of the year of sale). Where can i file my 2011 taxes An accrual method of accounting The units sold based on your inventories and method of accounting for inventory. Where can i file my 2011 taxes   The number of units sold during the tax year does not include any for which depletion deductions were allowed or allowable in earlier years. Where can i file my 2011 taxes Figuring the cost depletion deduction. Where can i file my 2011 taxes   Once you have figured your property's basis for depletion, the total recoverable units, and the number of units sold during the tax year, you can figure your cost depletion deduction by taking the following steps. Where can i file my 2011 taxes Step Action Result 1 Divide your property's basis for depletion by total recoverable units. Where can i file my 2011 taxes Rate per unit. Where can i file my 2011 taxes 2 Multiply the rate per unit by units sold during the tax year. Where can i file my 2011 taxes Cost depletion deduction. Where can i file my 2011 taxes You must keep accounts for the depletion of each property and adjust these accounts each year for units sold and depletion claimed. Where can i file my 2011 taxes Elective safe harbor for owners of oil and gas property. Where can i file my 2011 taxes   Instead of using the method described earlier to determine the total recoverable units, you can use an elective safe harbor. Where can i file my 2011 taxes If you choose the elective safe harbor, the total recoverable units equal 105% of a property's proven reserves (both developed and undeveloped). Where can i file my 2011 taxes For details, see Revenue Procedure 2004-19 on page 563 of Internal Revenue Bulletin 2004-10, available at www. Where can i file my 2011 taxes irs. Where can i file my 2011 taxes gov/pub/irs-irbs/irb04-10. Where can i file my 2011 taxes pdf. Where can i file my 2011 taxes   To make the election, attach a statement to your timely filed (including extensions) original return for the first tax year for which the safe harbor is elected. Where can i file my 2011 taxes The statement must indicate that you are electing the safe harbor provided by Revenue Procedure 2004-19. Where can i file my 2011 taxes The election, if made, is effective for the tax year in which it is made and all later years. Where can i file my 2011 taxes It cannot be revoked for the tax year in which it is elected, but may be revoked in a later year. Where can i file my 2011 taxes Once revoked, it cannot be re-elected for the next 5 years. Where can i file my 2011 taxes Percentage Depletion To figure percentage depletion, you multiply a certain percentage, specified for each mineral, by your gross income from the property during the tax year. Where can i file my 2011 taxes The rates to be used and other rules for oil and gas wells are discussed later under Independent Producers and Royalty Owners and under Natural Gas Wells . Where can i file my 2011 taxes Rates and other rules for percentage depletion of other specific minerals are found later in Mines and Geothermal Deposits . Where can i file my 2011 taxes Gross income. Where can i file my 2011 taxes   When figuring percentage depletion, subtract from your gross income from the property the following amounts. Where can i file my 2011 taxes Any rents or royalties you paid or incurred for the property. Where can i file my 2011 taxes The part of any bonus you paid for a lease on the property allocable to the product sold (or that otherwise gives rise to gross income) for the tax year. Where can i file my 2011 taxes A bonus payment includes amounts you paid as a lessee to satisfy a production payment retained by the lessor. Where can i file my 2011 taxes   Use the following fraction to figure the part of the bonus you must subtract. Where can i file my 2011 taxes No. Where can i file my 2011 taxes of units sold in the tax year Recoverable units from the property × Bonus Payments For oil and gas wells and geothermal deposits, more information about the definition of gross income from the property is under Oil and Gas Wells , later. Where can i file my 2011 taxes For other property, more information about the definition of gross income from the property is under Mines and Geothermal Deposits , later. Where can i file my 2011 taxes Taxable income limit. Where can i file my 2011 taxes   The percentage depletion deduction generally cannot be more than 50% (100% for oil and gas property) of your taxable income from the property figured without the depletion deduction and the domestic production activities deduction. Where can i file my 2011 taxes   Taxable income from the property means gross income from the property minus all allowable deductions (except any deduction for depletion or domestic production activities) attributable to mining processes, including mining transportation. Where can i file my 2011 taxes These deductible items include, but are not limited to, the following. Where can i file my 2011 taxes Operating expenses. Where can i file my 2011 taxes Certain selling expenses. Where can i file my 2011 taxes Administrative and financial overhead. Where can i file my 2011 taxes Depreciation. Where can i file my 2011 taxes Intangible drilling and development costs. Where can i file my 2011 taxes Exploration and development expenditures. Where can i file my 2011 taxes Deductible taxes (see chapter 5), but not taxes that you capitalize or take as a credit. Where can i file my 2011 taxes Losses sustained. Where can i file my 2011 taxes   The following rules apply when figuring your taxable income from the property for purposes of the taxable income limit. Where can i file my 2011 taxes Do not deduct any net operating loss deduction from the gross income from the property. Where can i file my 2011 taxes Corporations do not deduct charitable contributions from the gross income from the property. Where can i file my 2011 taxes If, during the year, you dispose of an item of section 1245 property that was used in connection with mineral property, reduce any allowable deduction for mining expenses by the part of any gain you must report as ordinary income that is allocable to the mineral property. Where can i file my 2011 taxes See section 1. Where can i file my 2011 taxes 613-5(b)(1) of the regulations for information on how to figure the ordinary gain allocable to the property. Where can i file my 2011 taxes Oil and Gas Wells You cannot claim percentage depletion for an oil or gas well unless at least one of the following applies. Where can i file my 2011 taxes You are either an independent producer or a royalty owner. Where can i file my 2011 taxes The well produces natural gas that is either sold under a fixed contract or produced from geopressured brine. Where can i file my 2011 taxes If you are an independent producer or royalty owner, see Independent Producers and Royalty Owners , next. Where can i file my 2011 taxes For information on the depletion deduction for wells that produce natural gas that is either sold under a fixed contract or produced from geopressured brine, see Natural Gas Wells , later. Where can i file my 2011 taxes Independent Producers and Royalty Owners If you are an independent producer or royalty owner, you figure percentage depletion using a rate of 15% of the gross income from the property based on your average daily production of domestic crude oil or domestic natural gas up to your depletable oil or natural gas quantity. Where can i file my 2011 taxes However, certain refiners, as explained next, and certain retailers and transferees of proven oil and gas properties, as explained next, cannot claim percentage depletion. Where can i file my 2011 taxes For information on figuring the deduction, see Figuring percentage depletion , later. Where can i file my 2011 taxes Refiners who cannot claim percentage depletion. Where can i file my 2011 taxes   You cannot claim percentage depletion if you or a related person refine crude oil and you and the related person refined more than 75,000 barrels on any day during the tax year based on average (rather than actual) daily refinery runs for the tax year. Where can i file my 2011 taxes The average daily refinery run is computed by dividing total refinery runs for the tax year by the total number of days in the tax year. Where can i file my 2011 taxes Related person. Where can i file my 2011 taxes   You and another person are related persons if either of you holds a significant ownership interest in the other person or if a third person holds a significant ownership interest in both of you. Where can i file my 2011 taxes For example, a corporation, partnership, estate, or trust and anyone who holds a significant ownership interest in it are related persons. Where can i file my 2011 taxes A partnership and a trust are related persons if one person holds a significant ownership interest in each of them. Where can i file my 2011 taxes For purposes of the related person rules, significant ownership interest means direct or indirect ownership of 5% or more in any one of the following. Where can i file my 2011 taxes The value of the outstanding stock of a corporation. Where can i file my 2011 taxes The interest in the profits or capital of a partnership. Where can i file my 2011 taxes The beneficial interests in an estate or trust. Where can i file my 2011 taxes Any interest owned by or for a corporation, partnership, trust, or estate is considered to be owned directly both by itself and proportionately by its shareholders, partners, or beneficiaries. Where can i file my 2011 taxes Retailers who cannot claim percentage depletion. Where can i file my 2011 taxes   You cannot claim percentage depletion if both the following apply. Where can i file my 2011 taxes You sell oil or natural gas or their by-products directly or through a related person in any of the following situations. Where can i file my 2011 taxes Through a retail outlet operated by you or a related person. Where can i file my 2011 taxes To any person who is required under an agreement with you or a related person to use a trademark, trade name, or service mark or name owned by you or a related person in marketing or distributing oil, natural gas, or their by-products. Where can i file my 2011 taxes To any person given authority under an agreement with you or a related person to occupy any retail outlet owned, leased, or controlled by you or a related person. Where can i file my 2011 taxes The combined gross receipts from sales (not counting resales) of oil, natural gas, or their by-products by all retail outlets taken into account in (1) are more than $5 million for the tax year. Where can i file my 2011 taxes   For the purpose of determining if this rule applies, do not count the following. Where can i file my 2011 taxes Bulk sales (sales in very large quantities) of oil or natural gas to commercial or industrial users. Where can i file my 2011 taxes Bulk sales of aviation fuels to the Department of Defense. Where can i file my 2011 taxes Sales of oil or natural gas or their by-products outside the United States if none of your domestic production or that of a related person is exported during the tax year or the prior tax year. Where can i file my 2011 taxes Related person. Where can i file my 2011 taxes   To determine if you and another person are related persons, see Related person under Refiners who cannot claim percentage depletion, earlier. Where can i file my 2011 taxes Sales through a related person. Where can i file my 2011 taxes   You are considered to be selling through a related person if any sale by the related person produces gross income from which you may benefit because of your direct or indirect ownership interest in the person. Where can i file my 2011 taxes   You are not considered to be selling through a related person who is a retailer if all the following apply. Where can i file my 2011 taxes You do not have a significant ownership interest in the retailer. Where can i file my 2011 taxes You sell your production to persons who are not related to either you or the retailer. Where can i file my 2011 taxes The retailer does not buy oil or natural gas from your customers or persons related to your customers. Where can i file my 2011 taxes There are no arrangements for the retailer to acquire oil or natural gas you produced for resale or made available for purchase by the retailer. Where can i file my 2011 taxes Neither you nor the retailer knows of or controls the final disposition of the oil or natural gas you sold or the original source of the petroleum products the retailer acquired for resale. Where can i file my 2011 taxes Transferees who cannot claim percentage depletion. Where can i file my 2011 taxes   You cannot claim percentage depletion if you received your interest in a proven oil or gas property by transfer after 1974 and before October 12, 1990. Where can i file my 2011 taxes For a definition of the term “transfer,” see section 1. Where can i file my 2011 taxes 613A-7(n) of the regulations. Where can i file my 2011 taxes For a definition of the term “interest in proven oil or gas property,” see section 1. Where can i file my 2011 taxes 613A-7(p) of the regulations. Where can i file my 2011 taxes Figuring percentage depletion. Where can i file my 2011 taxes   Generally, as an independent producer or royalty owner, you figure your percentage depletion by computing your average daily production of domestic oil or gas and comparing it to your depletable oil or gas quantity. Where can i file my 2011 taxes If your average daily production does not exceed your depletable oil or gas quantity, you figure your percentage depletion by multiplying the gross income from the oil or gas property (defined later) by 15%. Where can i file my 2011 taxes If your average daily production of domestic oil or gas exceeds your depletable oil or gas quantity, you must make an allocation as explained later under Average daily production. Where can i file my 2011 taxes   In addition, there is a limit on the percentage depletion deduction. Where can i file my 2011 taxes See Taxable income limit , later. Where can i file my 2011 taxes Average daily production. Where can i file my 2011 taxes   Figure your average daily production by dividing your total domestic production of oil or gas for the tax year by the number of days in your tax year. Where can i file my 2011 taxes Partial interest. Where can i file my 2011 taxes   If you have a partial interest in the production from a property, figure your share of the production by multiplying total production from the property by your percentage of interest in the revenues from the property. Where can i file my 2011 taxes   You have a partial interest in the production from a property if you have a net profits interest in the property. Where can i file my 2011 taxes To figure the share of production for your net profits interest, you must first determine your percentage participation (as measured by the net profits) in the gross revenue from the property. Where can i file my 2011 taxes To figure this percentage, you divide the income you receive for your net profits interest by the gross revenue from the property. Where can i file my 2011 taxes Then multiply the total production from the property by your percentage participation to figure your share of the production. Where can i file my 2011 taxes Example. Where can i file my 2011 taxes Javier Robles owns oil property in which Pablo Olmos owns a 20% net profits interest. Where can i file my 2011 taxes During the year, the property produced 10,000 barrels of oil, which Javier sold for $200,000. Where can i file my 2011 taxes Javier had expenses of $90,000 attributable to the property. Where can i file my 2011 taxes The property generated a net profit of $110,000 ($200,000 − $90,000). Where can i file my 2011 taxes Pablo received income of $22,000 ($110,000 × . Where can i file my 2011 taxes 20) for his net profits interest. Where can i file my 2011 taxes Pablo determined his percentage participation to be 11% by dividing $22,000 (the income he received) by $200,000 (the gross revenue from the property). Where can i file my 2011 taxes Pablo determined his share of the oil production to be 1,100 barrels (10,000 barrels × 11%). Where can i file my 2011 taxes Depletable oil or natural gas quantity. Where can i file my 2011 taxes   Generally, your depletable oil quantity is 1,000 barrels. Where can i file my 2011 taxes Your depletable natural gas quantity is 6,000 cubic feet multiplied by the number of barrels of your depletable oil quantity that you choose to apply. Where can i file my 2011 taxes If you claim depletion on both oil and natural gas, you must reduce your depletable oil quantity (1,000 barrels) by the number of barrels you use to figure your depletable natural gas quantity. Where can i file my 2011 taxes Example. Where can i file my 2011 taxes You have both oil and natural gas production. Where can i file my 2011 taxes To figure your depletable natural gas quantity, you choose to apply 360 barrels of your 1000-barrel depletable oil quantity. Where can i file my 2011 taxes Your depletable natural gas quantity is 2. Where can i file my 2011 taxes 16 million cubic feet of gas (360 × 6000). Where can i file my 2011 taxes You must reduce your depletable oil quantity to 640 barrels (1000 − 360). Where can i file my 2011 taxes If you have production from marginal wells, see section 613A(c)(6) of the Internal Revenue Code to figure your depletable oil or natural gas quantity. Where can i file my 2011 taxes Also, see Notice 2012-50, available at www. Where can i file my 2011 taxes irs. Where can i file my 2011 taxes gov/irb/2012–31_IRB/index. Where can i file my 2011 taxes html. Where can i file my 2011 taxes Business entities and family members. Where can i file my 2011 taxes   You must allocate the depletable oil or gas quantity among the following related persons in proportion to each entity's or family member's production of domestic oil or gas for the year. Where can i file my 2011 taxes Corporations, trusts, and estates if 50% or more of the beneficial interest is owned by the same or related persons (considering only persons that own at least 5% of the beneficial interest). Where can i file my 2011 taxes You and your spouse and minor children. Where can i file my 2011 taxes A related person is anyone mentioned in the related persons discussion under Nondeductible loss in chapter 2 of Publication 544, except that for purposes of this allocation, item (1) in that discussion includes only an individual, his or her spouse, and minor children. Where can i file my 2011 taxes Controlled group of corporations. Where can i file my 2011 taxes   Members of the same controlled group of corporations are treated as one taxpayer when figuring the depletable oil or natural gas quantity. Where can i file my 2011 taxes They share the depletable quantity. Where can i file my 2011 taxes A controlled group of corporations is defined in section 1563(a) of the Internal Revenue Code, except that, for this purpose, the stock ownership requirement in that definition is “more than 50%” rather than “at least 80%. Where can i file my 2011 taxes ” Gross income from the property. Where can i file my 2011 taxes   For purposes of percentage depletion, gross income from the property (in the case of oil and gas wells) is the amount you receive from the sale of the oil or gas in the immediate vicinity of the well. Where can i file my 2011 taxes If you do not sell the oil or gas on the property, but manufacture or convert it into a refined product before sale or transport it before sale, the gross income from the property is the representative market or field price (RMFP) of the oil or gas, before conversion or transportation. Where can i file my 2011 taxes   If you sold gas after you removed it from the premises for a price that is lower than the RMFP, determine gross income from the property for percentage depletion purposes without regard to the RMFP. Where can i file my 2011 taxes   Gross income from the property does not include lease bonuses, advance royalties, or other amounts payable without regard to production from the property. Where can i file my 2011 taxes Average daily production exceeds depletable quantities. Where can i file my 2011 taxes   If your average daily production for the year is more than your depletable oil or natural gas quantity, figure your allowance for depletion for each domestic oil or natural gas property as follows. Where can i file my 2011 taxes Figure your average daily production of oil or natural gas for the year. Where can i file my 2011 taxes Figure your depletable oil or natural gas quantity for the year. Where can i file my 2011 taxes Figure depletion for all oil or natural gas produced from the property using a percentage depletion rate of 15%. Where can i file my 2011 taxes Multiply the result figured in (3) by a fraction, the numerator of which is the result figured in (2) and the denominator of which is the result figured in (1). Where can i file my 2011 taxes This is your depletion allowance for that property for the year. Where can i file my 2011 taxes Taxable income limit. Where can i file my 2011 taxes   If you are an independent producer or royalty owner of oil and gas, your deduction for percentage depletion is limited to the smaller of the following. Where can i file my 2011 taxes 100% of your taxable income from the property figured without the deduction for depletion and the deduction for domestic production activities under section 199 of the Internal Revenue Code. Where can i file my 2011 taxes For a definition of taxable income from the property, see Taxable income limit , earlier, under Mineral Property. Where can i file my 2011 taxes 65% of your taxable income from all sources, figured without the depletion allowance, the deduction for domestic production activities, any net operating loss carryback, and any capital loss carryback. Where can i file my 2011 taxes You can carry over to the following year any amount you cannot deduct because of the 65%-of-taxable-income limit. Where can i file my 2011 taxes Add it to your depletion allowance (before applying any limits) for the following year. Where can i file my 2011 taxes Partnerships and S Corporations Generally, each partner or S corporation shareholder, and not the partnership or S corporation, figures the depletion allowance separately. Where can i file my 2011 taxes (However, see Electing large partnerships must figure depletion allowance , later. Where can i file my 2011 taxes ) Each partner or shareholder must decide whether to use cost or percentage depletion. Where can i file my 2011 taxes If a partner or shareholder uses percentage depletion, he or she must apply the 65%-of-taxable-income limit using his or her taxable income from all sources. Where can i file my 2011 taxes Partner's or shareholder's adjusted basis. Where can i file my 2011 taxes   The partnership or S corporation must allocate to each partner or shareholder his or her share of the adjusted basis of each oil or gas property held by the partnership or S corporation. Where can i file my 2011 taxes The partnership or S corporation makes the allocation as of the date it acquires the oil or gas property. Where can i file my 2011 taxes   Each partner's share of the adjusted basis of the oil or gas property generally is figured according to that partner's interest in partnership capital. Where can i file my 2011 taxes However, in some cases, it is figured according to the partner's interest in partnership income. Where can i file my 2011 taxes   The partnership or S corporation adjusts the partner's or shareholder's share of the adjusted basis of the oil and gas property for any capital expenditures made for the property and for any change in partnership or S corporation interests. Where can i file my 2011 taxes Recordkeeping. Where can i file my 2011 taxes Each partner or shareholder must separately keep records of his or her share of the adjusted basis in each oil and gas property of the partnership or S corporation. Where can i file my 2011 taxes The partner or shareholder must reduce his or her adjusted basis by the depletion allowed or allowable on the property each year. Where can i file my 2011 taxes The partner or shareholder must use that reduced adjusted basis to figure cost depletion or his or her gain or loss if the partnership or S corporation disposes of the property. Where can i file my 2011 taxes Reporting the deduction. Where can i file my 2011 taxes   Information that you, as a partner or shareholder, use to figure your depletion deduction on oil and gas properties is reported by the partnership or S corporation on Schedule K-1 (Form 1065) or on Schedule K-1 (Form 1120S). Where can i file my 2011 taxes Deduct oil and gas depletion for your partnership or S corporation interest on Schedule E (Form 1040). Where can i file my 2011 taxes The depletion deducted on Schedule E is included in figuring income or loss from rental real estate or royalty properties. Where can i file my 2011 taxes The instructions for Schedule E explain where to report this income or loss and whether you need to file either of the following forms. Where can i file my 2011 taxes Form 6198, At-Risk Limitations. Where can i file my 2011 taxes Form 8582, Passive Activity Loss Limitations. Where can i file my 2011 taxes Electing large partnerships must figure depletion allowance. Where can i file my 2011 taxes   An electing large partnership, rather than each partner, generally must figure the depletion allowance. Where can i file my 2011 taxes The partnership figures the depletion allowance without taking into account the 65-percent-of-taxable-income limit and the depletable oil or natural gas quantity. Where can i file my 2011 taxes Also, the adjusted basis of a partner's interest in the partnership is not affected by the depletion allowance. Where can i file my 2011 taxes   An electing large partnership is one that meets both the following requirements. Where can i file my 2011 taxes The partnership had 100 or more partners in the preceding year. Where can i file my 2011 taxes The partnership chooses to be an electing large partnership. Where can i file my 2011 taxes Disqualified persons. Where can i file my 2011 taxes   An electing large partnership does not figure the depletion allowance of its partners that are disqualified persons. Where can i file my 2011 taxes Disqualified persons must figure it themselves, as explained earlier. Where can i file my 2011 taxes   All the following are disqualified persons. Where can i file my 2011 taxes Refiners who cannot claim percentage depletion (discussed under Independent Producers and Royalty Owners , earlier). Where can i file my 2011 taxes Retailers who cannot claim percentage depletion (discussed under Independent Producers and Royalty Owners , earlier). Where can i file my 2011 taxes Any partner whose average daily production of domestic crude oil and natural gas is more than 500 barrels during the tax year in which the partnership tax year ends. Where can i file my 2011 taxes Average daily production is discussed earlier. Where can i file my 2011 taxes Natural Gas Wells You can use percentage depletion for a well that produces natural gas that is either Sold under a fixed contract, or Produced from geopressured brine. Where can i file my 2011 taxes Natural gas sold under a fixed contract. Where can i file my 2011 taxes   Natural gas sold under a fixed contract qualifies for a percentage depletion rate of 22%. Where can i file my 2011 taxes This is domestic natural gas sold by the producer under a contract that does not provide for a price increase to reflect any increase in the seller's tax liability because of the repeal of percentage depletion for gas. Where can i file my 2011 taxes The contract must have been in effect from February 1, 1975, until the date of sale of the gas. Where can i file my 2011 taxes Price increases after February 1, 1975, are presumed to take the increase in tax liability into account unless demonstrated otherwise by clear and convincing evidence. Where can i file my 2011 taxes Natural gas from geopressured brine. Where can i file my 2011 taxes   Qualified natural gas from geopressured brine is eligible for a percentage depletion rate of 10%. Where can i file my 2011 taxes This is natural gas that is both the following. Where can i file my 2011 taxes Produced from a well you began to drill after September 1978 and before 1984. Where can i file my 2011 taxes Determined in accordance with section 503 of the Natural Gas Policy Act of 1978 to be produced from geopressured brine. Where can i file my 2011 taxes Mines and Geothermal Deposits Certain mines, wells, and other natural deposits, including geothermal deposits, qualify for percentage depletion. Where can i file my 2011 taxes Mines and other natural deposits. Where can i file my 2011 taxes   For a natural deposit, the percentage of your gross income from the property that you can deduct as depletion depends on the type of deposit. Where can i file my 2011 taxes   The following is a list of the percentage depletion rates for the more common minerals. Where can i file my 2011 taxes DEPOSITS RATE Sulphur, uranium, and, if from deposits in the United States, asbestos, lead ore, zinc ore, nickel ore, and mica 22% Gold, silver, copper, iron ore, and certain oil shale, if from deposits in the United States 15% Borax, granite, limestone, marble, mollusk shells, potash, slate, soapstone, and carbon dioxide produced from a well 14% Coal, lignite, and sodium chloride 10% Clay and shale used or sold for use in making sewer pipe or bricks or used or sold for use as sintered or burned lightweight aggregates 7½% Clay used or sold for use in making drainage and roofing tile, flower pots, and kindred products, and gravel, sand, and stone (other than stone used or sold for use by a mine owner or operator as dimension or ornamental stone) 5%   You can find a complete list of minerals and their percentage depletion rates in section 613(b) of the Internal Revenue Code. Where can i file my 2011 taxes Corporate deduction for iron ore and coal. Where can i file my 2011 taxes   The percentage depletion deduction of a corporation for iron ore and coal (including lignite) is reduced by 20% of: The percentage depletion deduction for the tax year (figured without this reduction), minus The adjusted basis of the property at the close of the tax year (figured without the depletion deduction for the tax year). Where can i file my 2011 taxes Gross income from the property. Where can i file my 2011 taxes   For property other than a geothermal deposit or an oil or gas well, gross income from the property means the gross income from mining. Where can i file my 2011 taxes Mining includes all the following. Where can i file my 2011 taxes Extracting ores or minerals from the ground. Where can i file my 2011 taxes Applying certain treatment processes described later. Where can i file my 2011 taxes Transporting ores or minerals (generally, not more than 50 miles) from the point of extraction to the plants or mills in which the treatment processes are applied. Where can i file my 2011 taxes Excise tax. Where can i file my 2011 taxes   Gross income from mining includes the separately stated excise tax received by a mine operator from the sale of coal to compensate the operator for the excise tax the mine operator must pay to finance black lung benefits. Where can i file my 2011 taxes Extraction. Where can i file my 2011 taxes   Extracting ores or minerals from the ground includes extraction by mine owners or operators of ores or minerals from the waste or residue of prior mining. Where can i file my 2011 taxes This does not apply to extraction from waste or residue of prior mining by the purchaser of the waste or residue or the purchaser of the rights to extract ores or minerals from the waste or residue. Where can i file my 2011 taxes Treatment processes. Where can i file my 2011 taxes   The processes included as mining depend on the ore or mineral mined. Where can i file my 2011 taxes To qualify as mining, the treatment processes must be applied by the mine owner or operator. Where can i file my 2011 taxes For a listing of treatment processes considered as mining, see section 613(c)(4) of the Internal Revenue Code and the related regulations. Where can i file my 2011 taxes Transportation of more than 50 miles. Where can i file my 2011 taxes   If the IRS finds that the ore or mineral must be transported more than 50 miles to plants or mills to be treated because of physical and other requirements, the additional authorized transportation is considered mining and included in the computation of gross income from mining. Where can i file my 2011 taxes    If you wish to include transportation of more than 50 miles in the computation of gross income from mining, request an advance ruling from the IRS. Where can i file my 2011 taxes Include in the request the facts about the physical and other requirements that prevented the construction and operation of the plant within 50 miles of the point of extraction. Where can i file my 2011 taxes For more information about requesting an advance ruling, see Revenue Procedure 2013-1, available at www. Where can i file my 2011 taxes irs. Where can i file my 2011 taxes gov/irb/2013-01_IRB/ar11. Where can i file my 2011 taxes html. Where can i file my 2011 taxes Disposal of coal or iron ore. Where can i file my 2011 taxes   You cannot take a depletion deduction for coal (including lignite) or iron ore mined in the United States if both the following apply. Where can i file my 2011 taxes You disposed of it after holding it for more than 1 year. Where can i file my 2011 taxes You disposed of it under a contract under which you retain an economic interest in the coal or iron ore. Where can i file my 2011 taxes Treat any gain on the disposition as a capital gain. Where can i file my 2011 taxes Disposal to related person. Where can i file my 2011 taxes   This rule does not apply if you dispose of the coal or iron ore to one of the following persons. Where can i file my 2011 taxes A related person (as listed in chapter 2 of Publication 544). Where can i file my 2011 taxes A person owned or controlled by the same interests that own or control you. Where can i file my 2011 taxes Geothermal deposits. Where can i file my 2011 taxes   Geothermal deposits located in the United States or its possessions qualify for a percentage depletion rate of 15%. Where can i file my 2011 taxes A geothermal deposit is a geothermal reservoir of natural heat stored in rocks or in a watery liquid or vapor. Where can i file my 2011 taxes For percentage depletion purposes, a geothermal deposit is not considered a gas well. Where can i file my 2011 taxes   Figure gross income from the property for a geothermal steam well in the same way as for oil and gas wells. Where can i file my 2011 taxes See Gross income from the property , earlier, under Oil and Gas Wells. Where can i file my 2011 taxes Percentage depletion on a geothermal deposit cannot be more than 50% of your taxable income from the property. Where can i file my 2011 taxes Lessor's Gross Income In the case of leased property, the depletion deduction is divided between the lessor and the lessee. Where can i file my 2011 taxes A lessor's gross income from the property that qualifies for percentage depletion usually is the total of the royalties received from the lease. Where can i file my 2011 taxes Bonuses and advanced royalties. Where can i file my 2011 taxes   Bonuses and advanced royalties are payments a lessee makes before production to a lessor for the grant of rights in a lease or for minerals, gas, or oil to be extracted from leased property. Where can i file my 2011 taxes If you are the lessor, your income from bonuses and advanced royalties received is subject to an allowance for depletion, as explained in the next two paragraphs. Where can i file my 2011 taxes Figuring cost depletion. Where can i file my 2011 taxes   To figure cost depletion on a bonus, multiply your adjusted basis in the property by a fraction, the numerator of which is the bonus and the denominator of which is the total bonus and royalties expected to be received. Where can i file my 2011 taxes To figure cost depletion on advanced royalties, use the computation explained earlier under Cost Depletion , treating the number of units for which the advanced royalty is received as the number of units sold. Where can i file my 2011 taxes Figuring percentage depletion. Where can i file my 2011 taxes   In the case of mines, wells, and other natural deposits other than gas, oil, or geothermal property, you may use the percentage rates discussed earlier under Mines and Geothermal Deposits . Where can i file my 2011 taxes Any bonus or advanced royalty payments are generally part of the gross income from the property to which the rates are applied in making the calculation. Where can i file my 2011 taxes However, for oil, gas, or geothermal property, gross income does not include lease bonuses, advanced royalties, or other amounts payable without regard to production from the property. Where can i file my 2011 taxes Ending the lease. Where can i file my 2011 taxes   If you receive a bonus on a lease that ends or is abandoned before you derive any income from mineral extraction, include in income the depletion deduction you took. Where can i file my 2011 taxes Do this for the year the lease ends or is abandoned. Where can i file my 2011 taxes Also increase your adjusted basis in the property to restore the depletion deduction you previously subtracted. Where can i file my 2011 taxes   For advanced royalties, include in income the depletion claimed on minerals for which the advanced royalties were paid if the minerals were not produced before the lease ended. Where can i file my 2011 taxes Include this amount in income for the year the lease ends. Where can i file my 2011 taxes Increase your adjusted basis in the property by the amount you include in income. Where can i file my 2011 taxes Delay rentals. Where can i file my 2011 taxes   These are payments for deferring development of the property. Where can i file my 2011 taxes Since delay rentals are ordinary rent, they are ordinary income that is not subject to depletion. Where can i file my 2011 taxes These rentals can be avoided by either abandoning the lease, beginning development operations, or obtaining production. Where can i file my 2011 taxes Timber You can figure timber depletion only by the cost method. Where can i file my 2011 taxes Percentage depletion does not apply to timber. Where can i file my 2011 taxes Base your depletion on your cost or other basis in the timber. Where can i file my 2011 taxes Your cost does not include the cost of land or any amounts recoverable through depreciation. Where can i file my 2011 taxes Depletion takes place when you cut standing timber. Where can i file my 2011 taxes You can figure your depletion deduction when the quantity of cut timber is first accurately measured in the process of exploitation. Where can i file my 2011 taxes Figuring cost depletion. Where can i file my 2011 taxes   To figure your cost depletion allowance, you multiply the number of timber units cut by your depletion unit. Where can i file my 2011 taxes Timber units. Where can i file my 2011 taxes   When you acquire timber property, you must make an estimate of the quantity of marketable timber that exists on the property. Where can i file my 2011 taxes You measure the timber using board feet, log scale, cords, or other units. Where can i file my 2011 taxes If you later determine that you have more or less units of timber, you must adjust the original estimate. Where can i file my 2011 taxes   The term “timber property” means your economic interest in standing timber in each tract or block representing a separate timber account. Where can i file my 2011 taxes Depletion unit. Where can i file my 2011 taxes   You figure your depletion unit each year by taking the following steps. Where can i file my 2011 taxes Determine your cost or adjusted basis of the timber on hand at the beginning of the year. Where can i file my 2011 taxes Adjusted basis is defined under Cost Depletion in the discussion on Mineral Property. Where can i file my 2011 taxes Add to the amount determined in (1) the cost of any timber units acquired during the year and any additions to capital. Where can i file my 2011 taxes Figure the number of timber units to take into account by adding the number of timber units acquired during the year to the number of timber units on hand in the account at the beginning of the year and then adding (or subtracting) any correction to the estimate of the number of timber units remaining in the account. Where can i file my 2011 taxes Divide the result of (2) by the result of (3). Where can i file my 2011 taxes This is your depletion unit. Where can i file my 2011 taxes Example. Where can i file my 2011 taxes You bought a timber tract for $160,000 and the land was worth as much as the timber. Where can i file my 2011 taxes Your basis for the timber is $80,000. Where can i file my 2011 taxes Based on an estimated one million board feet (1,000 MBF) of standing timber, you figure your depletion unit to be $80 per MBF ($80,000 ÷ 1,000). Where can i file my 2011 taxes If you cut 500 MBF of timber, your depletion allowance would be $40,000 (500 MBF × $80). Where can i file my 2011 taxes When to claim depletion. Where can i file my 2011 taxes   Claim your depletion allowance as a deduction in the year of sale or other disposition of the products cut from the timber, unless you choose to treat the cutting of timber as a sale or exchange (explained below). Where can i file my 2011 taxes Include allowable depletion for timber products not sold during the tax year the timber is cut as a cost item in the closing inventory of timber products for the year. Where can i file my 2011 taxes The inventory is your basis for determining gain or loss in the tax year you sell the timber products. Where can i file my 2011 taxes Example. Where can i file my 2011 taxes The facts are the same as in the previous example except that you sold only half of the timber products in the cutting year. Where can i file my 2011 taxes You would deduct $20,000 of the $40,000 depletion that year. Where can i file my 2011 taxes You would add the remaining $20,000 depletion to your closing inventory of timber products. Where can i file my 2011 taxes Electing to treat the cutting of timber as a sale or exchange. Where can i file my 2011 taxes   You can elect, under certain circumstances, to treat the cutting of timber held for more than 1 year as a sale or exchange. Where can i file my 2011 taxes You must make the election on your income tax return for the tax year to which it applies. Where can i file my 2011 taxes If you make this election, subtract the adjusted basis for depletion from the fair market value of the timber on the first day of the tax year in which you cut it to figure the gain or loss on the cutting. Where can i file my 2011 taxes You generally report the gain as long-term capital gain. Where can i file my 2011 taxes The fair market value then becomes your basis for figuring your ordinary gain or loss on the sale or other disposition of the products cut from the timber. Where can i file my 2011 taxes For more information, see Timber in chapter 2 of Publication 544, Sales and Other Dispositions of Assets. Where can i file my 2011 taxes   You may revoke an election to treat the cutting of timber as a sale or exchange without IRS's consent. Where can i file my 2011 taxes The prior election (and revocation) is disregarded for purposes of making a subsequent election. Where can i file my 2011 taxes See Form T (Timber), Forest Activities Schedule, for more information. Where can i file my 2011 taxes Form T. Where can i file my 2011 taxes   Complete and attach Form T (Timber) to your income tax return if you claim a deduction for timber depletion, choose to treat the cutting of timber as a sale or exchange, or make an outright sale of timber. Where can i file my 2011 taxes Prev  Up  Next   Home   More Online Publications
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Where can i file my 2011 taxes 4. Where can i file my 2011 taxes   Reporting Gains and Losses Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Information Returns Schedule D and Form 8949Long and Short Term Net Gain or Loss Treatment of Capital Losses Capital Gains Tax Rates Form 4797Mark-to-market election. Where can i file my 2011 taxes Introduction This chapter explains how to report capital gains and losses and ordinary gains and losses from sales, exchanges, and other dispositions of property. Where can i file my 2011 taxes Although this discussion refers to Schedule D (Form 1040) and Form 8949, many of the rules discussed here also apply to taxpayers other than individuals. Where can i file my 2011 taxes However, the rules for property held for personal use usually will not apply to taxpayers other than individuals. Where can i file my 2011 taxes Topics - This chapter discusses: Information returns Schedule D (Form 1040) Form 4797 Form 8949 Useful Items - You may want to see: Publication 550 Investment Income and Expenses 537 Installment Sales Form (and Instructions) Schedule D (Form 1040) Capital Gains and Losses 1099-B Proceeds From Broker and Barter Exchange Transactions 1099-S Proceeds From Real Estate Transactions 4684 Casualties and Thefts 4797 Sales of Business Property 6252 Installment Sale Income 6781 Gains and Losses from Section 1256 Contracts and Straddles 8824 Like-Kind Exchanges 8949 Sales and Other Dispositions of Capital Assets See chapter 5 for information about getting publications and forms. Where can i file my 2011 taxes Information Returns If you sell or exchange certain assets, you should receive an information return showing the proceeds of the sale. Where can i file my 2011 taxes This information is also provided to the IRS. Where can i file my 2011 taxes Form 1099-B. Where can i file my 2011 taxes   If you sold property, such as stocks, bonds, or certain commodities, through a broker, you should receive Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, or a substitute statement from the broker. Where can i file my 2011 taxes Use the Form 1099-B or a substitute statement to complete Form 8949 and/or Schedule D. Where can i file my 2011 taxes Whether or not you receive 1099-B, you must report all taxable sales of stock, bonds, commodities, etc. Where can i file my 2011 taxes on Form 8949 and/or Schedule D, as applicable. Where can i file my 2011 taxes For more information on figuring gains and losses from these transactions, see chapter 4 in Publication 550. Where can i file my 2011 taxes For information on reporting the gains and losses, see the Instructions for Form 8949 and the Instructions for Schedule D (Form 1040). Where can i file my 2011 taxes Form 1099-S. Where can i file my 2011 taxes   An information return must be provided on certain real estate transactions. Where can i file my 2011 taxes Generally, the person responsible for closing the transaction (the “real estate reporting person”) must report on Form 1099-S sales or exchanges of the following types of property. Where can i file my 2011 taxes Land (improved or unimproved), including air space. Where can i file my 2011 taxes An inherently permanent structure, including any residential, commercial, or industrial building. Where can i file my 2011 taxes A condominium unit and its related fixtures and common elements (including land). Where can i file my 2011 taxes Stock in a cooperative housing corporation. Where can i file my 2011 taxes If you sold or exchanged any of the above types of property, the “real estate reporting person” must give you a copy of Form 1099-S or a statement containing the same information as the Form 1099-S. Where can i file my 2011 taxes The “real estate reporting person” could include the buyer's attorney, your attorney, the title or escrow company, a mortgage lender, your broker, the buyer's broker, or the person acquiring the biggest interest in the property. Where can i file my 2011 taxes   For more information see chapter 4 in Publication 550. Where can i file my 2011 taxes Also, see the Instructions for Form 8949. Where can i file my 2011 taxes Schedule D and Form 8949 Form 8949. Where can i file my 2011 taxes   Individuals, corporations, and partnerships, use Form 8949 to report the following. Where can i file my 2011 taxes    Sales or exchanges of capital assets, including stocks, bonds, etc. Where can i file my 2011 taxes , and real estate (if not reported on another form or schedule such as Form 4684, 4797, 6252, 6781, or 8824). Where can i file my 2011 taxes Include these transactions even if you did not receive a Form 1099-B or 1099-S. Where can i file my 2011 taxes Gains from involuntary conversions (other than from casualty or theft) of capital assets not held for business or profit. Where can i file my 2011 taxes Nonbusiness bad debts. Where can i file my 2011 taxes   Individuals, If you are filing a joint return, complete as many copies of Form 8949 as you need to report all of your and your spouse's transactions. Where can i file my 2011 taxes You and your spouse may list your transactions on separate forms or you may combine them. Where can i file my 2011 taxes However, you must include on your Schedule D the totals from all Forms 8949 for both you and your spouse. Where can i file my 2011 taxes    Corporations and electing large partnerships also use Form 8949 to report their share of gain or loss from a partnership, S Corporation, estate or trust. Where can i file my 2011 taxes   Business entities meeting certain criteria, may have an exception to some of the normal requirements for completing Form 8949. Where can i file my 2011 taxes See the Instructions for Form 8949. Where can i file my 2011 taxes Schedule D. Where can i file my 2011 taxes    Use Schedule D (Form 1040) to figure the overall gain or loss from transactions reported on Form 8949, and to report certain transactions you do not have to report on Form 8949. Where can i file my 2011 taxes Before completing Schedule D, you may have to complete other forms as shown below. Where can i file my 2011 taxes    Complete all applicable lines of Form 8949 before completing lines 1b, 2, 3, 8b, 9, or 10 of your applicable Schedule D. Where can i file my 2011 taxes Enter on Schedule D the combined totals from all your Forms 8949. Where can i file my 2011 taxes For a sale, exchange, or involuntary conversion of business property, complete Form 4797 (discussed later). Where can i file my 2011 taxes For a like-kind exchange, complete Form 8824. Where can i file my 2011 taxes See Reporting the exchange under Like-Kind Exchanges in chapter 1. Where can i file my 2011 taxes For an installment sale, complete Form 6252. Where can i file my 2011 taxes See Publication 537. Where can i file my 2011 taxes For an involuntary conversion due to casualty or theft, complete Form 4684. Where can i file my 2011 taxes See Publication 547, Casualties, Disasters, and Thefts. Where can i file my 2011 taxes For a disposition of an interest in, or property used in, an activity to which the at-risk rules apply, complete Form 6198, At-Risk Limitations. Where can i file my 2011 taxes See Publication 925, Passive Activity and At-Risk Rules. Where can i file my 2011 taxes For a disposition of an interest in, or property used in, a passive activity, complete Form 8582, Passive Activity Loss Limitations. Where can i file my 2011 taxes See Publication 925. Where can i file my 2011 taxes For gains and losses from section 1256 contracts and straddles, complete Form 6781. Where can i file my 2011 taxes See Publication 550. Where can i file my 2011 taxes Personal-use property. Where can i file my 2011 taxes   Report gain on the sale or exchange of property held for personal use (such as your home) on Form 8949 and Schedule D (Form 1040), as applicable. Where can i file my 2011 taxes Loss from the sale or exchange of property held for personal use is not deductible. Where can i file my 2011 taxes But if you had a loss from the sale or exchange of real estate held for personal use for which you received a Form 1099-S, report the transaction on Form 8949 and Schedule D, even though the loss is not deductible. Where can i file my 2011 taxes See the Instructions for Schedule D (Form 1040) and the Instructions for Form 8949 for information on how to report the transaction. Where can i file my 2011 taxes Long and Short Term Where you report a capital gain or loss depends on how long you own the asset before you sell or exchange it. Where can i file my 2011 taxes The time you own an asset before disposing of it is the holding period. Where can i file my 2011 taxes If you received a Form 1099-B, (or substitute statement) box 1c may help you determine whether the gain or loss is short-term or long-term. Where can i file my 2011 taxes If you hold a capital asset 1 year or less, the gain or loss from its disposition is short term. Where can i file my 2011 taxes Report it in Part I of Form 8949 and/or Schedule D, as applicable. Where can i file my 2011 taxes If you hold a capital asset longer than 1 year, the gain or loss from its disposition is long term. Where can i file my 2011 taxes Report it in Part II of Form 8949 and/or Schedule D, as applicable. Where can i file my 2011 taxes   Table 4-1. Where can i file my 2011 taxes Do I Have a Short-Term or Long-Term Gain or Loss? IF you hold the property. Where can i file my 2011 taxes . Where can i file my 2011 taxes . Where can i file my 2011 taxes  THEN you have a. Where can i file my 2011 taxes . Where can i file my 2011 taxes . Where can i file my 2011 taxes 1 year or less, Short-term capital gain or  loss. Where can i file my 2011 taxes More than 1 year, Long-term capital gain or  loss. Where can i file my 2011 taxes These distinctions are essential to correctly arrive at your net capital gain or loss. Where can i file my 2011 taxes Capital losses are allowed in full against capital gains plus up to $3,000 of ordinary income. Where can i file my 2011 taxes See Capital Gains Tax Rates, later. Where can i file my 2011 taxes Holding period. Where can i file my 2011 taxes   To figure if you held property longer than 1 year, start counting on the day following the day you acquired the property. Where can i file my 2011 taxes The day you disposed of the property is part of your holding period. Where can i file my 2011 taxes Example. Where can i file my 2011 taxes If you bought an asset on June 19, 2012, you should start counting on June 20, 2012. Where can i file my 2011 taxes If you sold the asset on June 19, 2013, your holding period is not longer than 1 year, but if you sold it on June 20, 2013, your holding period is longer than 1 year. Where can i file my 2011 taxes Patent property. Where can i file my 2011 taxes   If you dispose of patent property, you generally are considered to have held the property longer than 1 year, no matter how long you actually held it. Where can i file my 2011 taxes For more information, see Patents in chapter 2. Where can i file my 2011 taxes Inherited property. Where can i file my 2011 taxes   If you inherit property, you are considered to have held the property longer than 1 year, regardless of how long you actually held it. Where can i file my 2011 taxes Installment sale. Where can i file my 2011 taxes   The gain from an installment sale of an asset qualifying for long-term capital gain treatment in the year of sale continues to be long term in later tax years. Where can i file my 2011 taxes If it is short term in the year of sale, it continues to be short term when payments are received in later tax years. Where can i file my 2011 taxes    The date the installment payment is received determines the capital gains rate that should be applied not the date the asset was sold under an installment contract. Where can i file my 2011 taxes Nontaxable exchange. Where can i file my 2011 taxes   If you acquire an asset in exchange for another asset and your basis for the new asset is figured, in whole or in part, by using your basis in the old property, the holding period of the new property includes the holding period of the old property. Where can i file my 2011 taxes That is, it begins on the same day as your holding period for the old property. Where can i file my 2011 taxes Example. Where can i file my 2011 taxes You bought machinery on December 4, 2012. Where can i file my 2011 taxes On June 4, 2013, you traded this machinery for other machinery in a nontaxable exchange. Where can i file my 2011 taxes On December 5, 2013, you sold the machinery you got in the exchange. Where can i file my 2011 taxes Your holding period for this machinery began on December 5, 2012. Where can i file my 2011 taxes Therefore, you held it longer than 1 year. Where can i file my 2011 taxes Corporate liquidation. Where can i file my 2011 taxes   The holding period for property you receive in a liquidation generally starts on the day after you receive it if gain or loss is recognized. Where can i file my 2011 taxes Profit-sharing plan. Where can i file my 2011 taxes   The holding period of common stock withdrawn from a qualified contributory profit-sharing plan begins on the day following the day the plan trustee delivered the stock to the transfer agent with instructions to reissue the stock in your name. Where can i file my 2011 taxes Gift. Where can i file my 2011 taxes   If you receive a gift of property and your basis in it is figured using the donor's basis, your holding period includes the donor's holding period. Where can i file my 2011 taxes For more information on basis, see Publication 551, Basis of Assets. Where can i file my 2011 taxes Real property. Where can i file my 2011 taxes   To figure how long you held real property, start counting on the day after you received title to it or, if earlier, the day after you took possession of it and assumed the burdens and privileges of ownership. Where can i file my 2011 taxes   However, taking possession of real property under an option agreement is not enough to start the holding period. Where can i file my 2011 taxes The holding period cannot start until there is an actual contract of sale. Where can i file my 2011 taxes The holding period of the seller cannot end before that time. Where can i file my 2011 taxes Repossession. Where can i file my 2011 taxes   If you sell real property but keep a security interest in it and then later repossess it, your holding period for a later sale includes the period you held the property before the original sale, as well as the period after the repossession. Where can i file my 2011 taxes Your holding period does not include the time between the original sale and the repossession. Where can i file my 2011 taxes That is, it does not include the period during which the first buyer held the property. Where can i file my 2011 taxes Nonbusiness bad debts. Where can i file my 2011 taxes   Nonbusiness bad debts are short-term capital losses. Where can i file my 2011 taxes For information on nonbusiness bad debts, see chapter 4 of Publication 550. Where can i file my 2011 taxes    Net Gain or Loss The totals for short-term capital gains and losses and the totals for long-term capital gains and losses must be figured separately. Where can i file my 2011 taxes Net short-term capital gain or loss. Where can i file my 2011 taxes   Combine your short-term capital gains and losses, including your share of short-term capital gains or losses from partnerships, S corporations, and fiduciaries and any short-term capital loss carryover. Where can i file my 2011 taxes Do this by adding all your short-term capital gains. Where can i file my 2011 taxes Then add all your short-term capital losses. Where can i file my 2011 taxes Subtract the lesser total from the other. Where can i file my 2011 taxes The result is your net short-term capital gain or loss. Where can i file my 2011 taxes Net long-term capital gain or loss. Where can i file my 2011 taxes   Follow the same steps to combine your long-term capital gains and losses. Where can i file my 2011 taxes Include the following items. Where can i file my 2011 taxes Net section 1231 gain from Part I, Form 4797, after any adjustment for nonrecaptured section 1231 losses from prior tax years. Where can i file my 2011 taxes Capital gain distributions from regulated investment companies (mutual funds) and real estate investment trusts. Where can i file my 2011 taxes Your share of long-term capital gains or losses from partnerships, S corporations, and fiduciaries. Where can i file my 2011 taxes Any long-term capital loss carryover. Where can i file my 2011 taxes The result from combining these items with other long-term capital gains and losses is your net long-term capital gain or loss. Where can i file my 2011 taxes Net gain. Where can i file my 2011 taxes   If the total of your capital gains is more than the total of your capital losses, the difference is taxable. Where can i file my 2011 taxes Different tax rates may apply to the part that is a net capital gain. Where can i file my 2011 taxes See Capital Gains Tax Rates, later. Where can i file my 2011 taxes Net loss. Where can i file my 2011 taxes   If the total of your capital losses is more than the total of your capital gains, the difference is deductible. Where can i file my 2011 taxes But there are limits on how much loss you can deduct and when you can deduct it. Where can i file my 2011 taxes See Treatment of Capital Losses, next. Where can i file my 2011 taxes    Treatment of Capital Losses If your capital losses are more than your capital gains, you can deduct the difference as a capital loss deduction even if you do not have ordinary income to offset it. Where can i file my 2011 taxes The yearly limit on the amount of the capital loss you can deduct is $3,000 ($1,500 if you are married and file a separate return). Where can i file my 2011 taxes Table 4-2. Where can i file my 2011 taxes Holding Period for Different Types of Acquisitions Type of acquisition: When your holding period starts: Stocks and bonds bought on a securities market Day after trading date you bought security. Where can i file my 2011 taxes Ends on trading date you sold security. Where can i file my 2011 taxes U. Where can i file my 2011 taxes S. Where can i file my 2011 taxes Treasury notes and bonds If bought at auction, day after notification of bid acceptance. Where can i file my 2011 taxes If bought through subscription, day after subscription was submitted. Where can i file my 2011 taxes Nontaxable exchanges Day after date you acquired old property. Where can i file my 2011 taxes Gift If your basis is giver's adjusted basis, same day as giver's holding period began. Where can i file my 2011 taxes If your basis is FMV, day after date of gift. Where can i file my 2011 taxes Real property bought Generally, day after date you received title to the property. Where can i file my 2011 taxes Real property repossessed Day after date you originally received title to the property, but does not include time between the original sale and date of repossession. Where can i file my 2011 taxes Capital loss carryover. Where can i file my 2011 taxes   Generally, you have a capital loss carryover if either of the following situations applies to you. Where can i file my 2011 taxes Your net loss is more than the yearly limit. Where can i file my 2011 taxes Your taxable income without your deduction for exemptions is less than zero. Where can i file my 2011 taxes If either of these situations applies to you for 2013, see Capital Losses under Reporting Capital Gains and Losses in chapter 4 of Publication 550 to figure the amount you can carryover to 2014. Where can i file my 2011 taxes Example. Where can i file my 2011 taxes Bob and Gloria Sampson sold property in 2013. Where can i file my 2011 taxes The sale resulted in a capital loss of $7,000. Where can i file my 2011 taxes The Sampsons had no other capital transactions. Where can i file my 2011 taxes On their joint 2013 return, the Sampsons deduct $3,000, the yearly limit. Where can i file my 2011 taxes They had taxable income of $2,000. Where can i file my 2011 taxes The unused part of the loss, $4,000 ($7,000 − $3,000), is carried over to 2014. Where can i file my 2011 taxes If the Sampsons' capital loss had been $2,000, it would not have been more than the yearly limit. Where can i file my 2011 taxes Their capital loss deduction would have been $2,000. Where can i file my 2011 taxes They would have no carryover to 2014. Where can i file my 2011 taxes Short-term and long-term losses. Where can i file my 2011 taxes   When you carry over a loss, it retains its original character as either long term or short term. Where can i file my 2011 taxes A short-term loss you carry over to the next tax year is added to short-term losses occurring in that year. Where can i file my 2011 taxes A long-term loss you carry over to the next tax year is added to long-term losses occurring in that year. Where can i file my 2011 taxes A long-term capital loss you carry over to the next year reduces that year's long-term gains before its short-term gains. Where can i file my 2011 taxes   If you have both short-term and long-term losses, your short-term losses are used first against your allowable capital loss deduction. Where can i file my 2011 taxes If, after using your short-term losses, you have not reached the limit on the capital loss deduction, use your long-term losses until you reach the limit. Where can i file my 2011 taxes To figure your capital loss carryover from 2013 to 2014 use the Capital Loss Carryover Worksheet in the 2013 Instructions for Schedule D (Form 1040). Where can i file my 2011 taxes Joint and separate returns. Where can i file my 2011 taxes   On a joint return, the capital gains and losses of spouses are figured as the gains and losses of an individual. Where can i file my 2011 taxes If you are married and filing a separate return, your yearly capital loss deduction is limited to $1,500. Where can i file my 2011 taxes Neither you nor your spouse can deduct any part of the other's loss. Where can i file my 2011 taxes   If you and your spouse once filed separate returns and are now filing a joint return, combine your separate capital loss carryovers. Where can i file my 2011 taxes However, if you and your spouse once filed jointly and are now filing separately, any capital loss carryover from the joint return can be deducted only on the return of the spouse who actually had the loss. Where can i file my 2011 taxes Death of taxpayer. Where can i file my 2011 taxes   Capital losses cannot be carried over after a taxpayer's death. Where can i file my 2011 taxes They are deductible only on the final income tax return filed on the decedent's behalf. Where can i file my 2011 taxes The yearly limit discussed earlier still applies in this situation. Where can i file my 2011 taxes Even if the loss is greater than the limit, the decedent's estate cannot deduct the difference or carry it over to following years. Where can i file my 2011 taxes Corporations. Where can i file my 2011 taxes   A corporation can deduct capital losses only up to the amount of its capital gains. Where can i file my 2011 taxes In other words, if a corporation has a net capital loss, it cannot be deducted in the current tax year. Where can i file my 2011 taxes It must be carried to other tax years and deducted from capital gains occurring in those years. Where can i file my 2011 taxes For more information, see Publication 542. Where can i file my 2011 taxes Capital Gains Tax Rates The tax rates that apply to a net capital gain are generally lower than the tax rates that apply to other income. Where can i file my 2011 taxes These lower rates are called the maximum capital gains rates. Where can i file my 2011 taxes The term “net capital gain” means the amount by which your net long-term capital gain for the year is more than your net short-term capital loss. Where can i file my 2011 taxes For 2013, the maximum tax rates for individuals are 0%, 15%, 20%, 25%, and 28%. Where can i file my 2011 taxes Also, individuals, use the Qualified Dividends and Capital Gain Worksheet in the Instructions for Form 1040, or the Schedule D Tax Computation Worksheet in the Instructions for Schedule D (Form 1040) (whichever applies) to figure your tax if you have qualified dividends or net capital gain. Where can i file my 2011 taxes For more information, see chapter 4 of Publication 550. Where can i file my 2011 taxes Also see the Instructions for Schedule D (Form 1040). Where can i file my 2011 taxes Unrecaptured section 1250 gain. Where can i file my 2011 taxes   Generally, this is the part of any long-term capital gain on section 1250 property (real property) that is due to depreciation. Where can i file my 2011 taxes Unrecaptured section 1250 gain cannot be more than the net section 1231 gain or include any gain otherwise treated as ordinary income. Where can i file my 2011 taxes Use the worksheet in the Schedule D instructions to figure your unrecaptured section 1250 gain. Where can i file my 2011 taxes For more information about section 1250 property and net section 1231 gain, see chapter 3. Where can i file my 2011 taxes Form 4797 Use Form 4797 to report: The sale or exchange of: Property used in your trade or business; Depreciable and amortizable property; Oil, gas, geothermal, or other mineral properties; and Section 126 property. Where can i file my 2011 taxes The involuntary conversion (from other than casualty or theft) of property used in your trade or business and capital assets held in connection with a trade or business or a transaction entered into for profit. Where can i file my 2011 taxes The disposition of noncapital assets (other than inventory or property held primarily for sale to customers in the ordinary course of your trade or business). Where can i file my 2011 taxes The disposition of capital assets not reported on Schedule D. Where can i file my 2011 taxes The gain or loss (including any related recapture) for partners and S corporation shareholders from certain section 179 property dispositions by partnerships (other than electing large partnerships) and S corporations. Where can i file my 2011 taxes The computation of recapture amounts under sections 179 and 280F(b)(2) when the business use of section 179 or listed property decreases to 50% or less. Where can i file my 2011 taxes Gains or losses treated as ordinary gains or losses, if you are a trader in securities or commodities and made a mark-to-market election under Internal Revenue Code section 475(f). Where can i file my 2011 taxes You can use Form 4797 with Form 1040, 1065, 1120, or 1120S. Where can i file my 2011 taxes Section 1231 gains and losses. Where can i file my 2011 taxes   Show any section 1231 gains and losses in Part I. Where can i file my 2011 taxes Carry a net gain to Schedule D (Form 1040) as a long-term capital gain. Where can i file my 2011 taxes Carry a net loss to Part II of Form 4797 as an ordinary loss. Where can i file my 2011 taxes   If you had any nonrecaptured net section 1231 losses from the preceding 5 tax years, reduce your net gain by those losses and report the amount of the reduction as an ordinary gain in Part II. Where can i file my 2011 taxes Report any remaining gain on Schedule D (Form 1040). Where can i file my 2011 taxes See Section 1231 Gains and Losses in chapter 3. Where can i file my 2011 taxes Ordinary gains and losses. Where can i file my 2011 taxes   Show any ordinary gains and losses in Part II. Where can i file my 2011 taxes This includes a net loss or a recapture of losses from prior years figured in Part I of Form 4797. Where can i file my 2011 taxes It also includes ordinary gain figured in Part III. Where can i file my 2011 taxes Mark-to-market election. Where can i file my 2011 taxes   If you made a mark-to-market election, you should report all gains and losses from trading as ordinary gains and losses in Part II of Form 4797, instead of as capital gains and losses on Form 8949 and Schedule D (Form 1040). Where can i file my 2011 taxes See the Instructions for Form 4797. Where can i file my 2011 taxes Also see Special Rules for Traders in Securities, in chapter 4 of Publication 550. Where can i file my 2011 taxes Ordinary income from depreciation. Where can i file my 2011 taxes   Figure the ordinary income from depreciation on personal property and additional depreciation on real property (as discussed in chapter 3) in Part III. Where can i file my 2011 taxes Carry the ordinary income to Part II of Form 4797 as an ordinary gain. Where can i file my 2011 taxes Carry any remaining gain to Part I as section 1231 gain, unless it is from a casualty or theft. Where can i file my 2011 taxes Carry any remaining gain from a casualty or theft to Form 4684. Where can i file my 2011 taxes Prev  Up  Next   Home   More Online Publications