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2009 Tax Return Form

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2009 Tax Return Form

2009 tax return form Publication 542 - Main Content Table of Contents Businesses Taxed as CorporationsPersonal services. 2009 tax return form Employee-owners. 2009 tax return form Other rules. 2009 tax return form Other rules. 2009 tax return form Property Exchanged for StockNonqualified preferred stock. 2009 tax return form Liabilities. 2009 tax return form Election to reduce basis. 2009 tax return form Capital Contributions Filing and Paying Income TaxesIncome Tax Return Penalties Estimated Tax U. 2009 tax return form S. 2009 tax return form Real Property Interest Accounting MethodsSection 481(a) adjustment. 2009 tax return form Accounting Periods Recordkeeping Income, Deductions, and Special ProvisionsCosts of Going Into Business Related Persons Income From Qualifying Shipping Activities Election to Expense Qualified Refinery Property Deduction to Comply With EPA Sulfur Regulations Energy-Efficient Commercial Building Property Deduction Corporate Preference Items Dividends-Received Deduction Extraordinary Dividends Below-Market Loans Charitable Contributions Capital Losses Net Operating Losses At-Risk Limits Passive Activity Limits Figuring TaxTax Rate Schedule Alternative Minimum Tax (AMT) Credits Recapture Taxes Accumulated Earnings Tax Distributions to ShareholdersMoney or Property Distributions Distributions of Stock or Stock Rights Constructive Distributions Reporting Dividends and Other Distributions How To Get Tax Help Businesses Taxed as Corporations The rules you must use to determine whether a business is taxed as a corporation changed for businesses formed after 1996. 2009 tax return form Business formed before 1997. 2009 tax return form   A business formed before 1997 and taxed as a corporation under the old rules will generally continue to be taxed as a corporation. 2009 tax return form Business formed after 1996. 2009 tax return form   The following businesses formed after 1996 are taxed as corporations. 2009 tax return form A business formed under a federal or state law that refers to it as a corporation, body corporate, or body politic. 2009 tax return form A business formed under a state law that refers to it as a joint-stock company or joint-stock association. 2009 tax return form An insurance company. 2009 tax return form Certain banks. 2009 tax return form A business wholly owned by a state or local government. 2009 tax return form A business specifically required to be taxed as a corporation by the Internal Revenue Code (for example, certain publicly traded partnerships). 2009 tax return form Certain foreign businesses. 2009 tax return form Any other business that elects to be taxed as a corporation. 2009 tax return form For example, a limited liability company (LLC) can elect to be treated as an association taxable as a corporation by filing Form 8832, Entity Classification Election. 2009 tax return form For more information about LLCs, see Publication 3402, Taxation of Limited Liability Companies. 2009 tax return form S corporations. 2009 tax return form   Some corporations may meet the qualifications for electing to be S corporations. 2009 tax return form For information on S corporations, see the instructions for Form 1120S, U. 2009 tax return form S. 2009 tax return form Income Tax Return for an S Corporation. 2009 tax return form Personal service corporations. 2009 tax return form   A corporation is a personal service corporation if it meets all of the following requirements. 2009 tax return form Its principal activity during the “testing period” is performing personal services (defined later). 2009 tax return form Generally, the testing period for any tax year is the prior tax year. 2009 tax return form If the corporation has just been formed, the testing period begins on the first day of its tax year and ends on the earlier of: The last day of its tax year, or The last day of the calendar year in which its tax year begins. 2009 tax return form Its employee-owners substantially perform the services in (1), above. 2009 tax return form This requirement is met if more than 20% of the corporation's compensation cost for its activities of performing personal services during the testing period is for personal services performed by employee-owners. 2009 tax return form Its employee-owners own more than 10% of the fair market value of its outstanding stock on the last day of the testing period. 2009 tax return form Personal services. 2009 tax return form   Personal services include any activity performed in the fields of accounting, actuarial science, architecture, consulting, engineering, health (including veterinary services), law, and the performing arts. 2009 tax return form Employee-owners. 2009 tax return form   A person is an employee-owner of a personal service corporation if both of the following apply. 2009 tax return form He or she is an employee of the corporation or performs personal services for, or on behalf of, the corporation (even if he or she is an independent contractor for other purposes) on any day of the testing period. 2009 tax return form He or she owns any stock in the corporation at any time during the testing period. 2009 tax return form Other rules. 2009 tax return form   For other rules that apply to personal service corporations see Accounting Periods, later. 2009 tax return form Closely held corporations. 2009 tax return form   A corporation is closely held if all of the following apply. 2009 tax return form It is not a personal service corporation. 2009 tax return form At any time during the last half of the tax year, more than 50% of the value of its outstanding stock is, directly or indirectly, owned by or for five or fewer individuals. 2009 tax return form “Individual” includes certain trusts and private foundations. 2009 tax return form Other rules. 2009 tax return form   For the at-risk rules that apply to closely held corporations, seeAt-Risk Limits, later. 2009 tax return form Property Exchanged for Stock If you transfer property (or money and property) to a corporation in exchange for stock in that corporation (other than nonqualified preferred stock, described later), and immediately afterward you are in control of the corporation, the exchange is usually not taxable. 2009 tax return form This rule applies both to individuals and to groups who transfer property to a corporation. 2009 tax return form It also applies whether the corporation is being formed or is already operating. 2009 tax return form It does not apply in the following situations. 2009 tax return form The corporation is an investment company. 2009 tax return form You transfer the property in a bankruptcy or similar proceeding in exchange for stock used to pay creditors. 2009 tax return form The stock is received in exchange for the corporation's debt (other than a security) or for interest on the corporation's debt (including a security) that accrued while you held the debt. 2009 tax return form Both the corporation and any person involved in a nontaxable exchange of property for stock must attach to their income tax returns a complete statement of all facts pertinent to the exchange. 2009 tax return form For more information, see section 1. 2009 tax return form 351-3 of the Regulations. 2009 tax return form Control of a corporation. 2009 tax return form   To be in control of a corporation, you or your group of transferors must own, immediately after the exchange, at least 80% of the total combined voting power of all classes of stock entitled to vote and at least 80% of the outstanding shares of each class of nonvoting stock. 2009 tax return form Example 1. 2009 tax return form You and Bill Jones buy property for $100,000. 2009 tax return form You both organize a corporation when the property has a fair market value of $300,000. 2009 tax return form You transfer the property to the corporation for all its authorized capital stock, which has a par value of $300,000. 2009 tax return form No gain is recognized by you, Bill, or the corporation. 2009 tax return form Example 2. 2009 tax return form You and Bill transfer the property with a basis of $100,000 to a corporation in exchange for stock with a fair market value of $300,000. 2009 tax return form This represents only 75% of each class of stock of the corporation. 2009 tax return form The other 25% was already issued to someone else. 2009 tax return form You and Bill recognize a taxable gain of $200,000 on the transaction. 2009 tax return form Services rendered. 2009 tax return form   The term property does not include services rendered or to be rendered to the issuing corporation. 2009 tax return form The value of stock received for services is income to the recipient. 2009 tax return form Example. 2009 tax return form You transfer property worth $35,000 and render services valued at $3,000 to a corporation in exchange for stock valued at $38,000. 2009 tax return form Right after the exchange, you own 85% of the outstanding stock. 2009 tax return form No gain is recognized on the exchange of property. 2009 tax return form However, you recognize ordinary income of $3,000 as payment for services you rendered to the corporation. 2009 tax return form Property of relatively small value. 2009 tax return form   The term property does not include property of a relatively small value when it is compared to the value of stock and securities already owned or to be received for services by the transferor if the main purpose of the transfer is to qualify for the nonrecognition of gain or loss by other transferors. 2009 tax return form   Property transferred will not be considered to be of relatively small value if its fair market value is at least 10% of the fair market value of the stock and securities already owned or to be received for services by the transferor. 2009 tax return form Stock received in disproportion to property transferred. 2009 tax return form   If a group of transferors exchange property for corporate stock, each transferor does not have to receive stock in proportion to his or her interest in the property transferred. 2009 tax return form If a disproportionate transfer takes place, it will be treated for tax purposes in accordance with its true nature. 2009 tax return form It may be treated as if the stock were first received in proportion and then some of it used to make gifts, pay compensation for services, or satisfy the transferor's obligations. 2009 tax return form Money or other property received. 2009 tax return form   If, in an otherwise nontaxable exchange of property for corporate stock, you also receive money or property other than stock, you may have to recognize gain. 2009 tax return form You must recognize gain only up to the amount of money plus the fair market value of the other property you receive. 2009 tax return form The rules for figuring the recognized gain in this situation generally follow those for a partially nontaxable exchange discussed in Publication 544 under Like-Kind Exchanges. 2009 tax return form If the property you give up includes depreciable property, the recognized gain may have to be reported as ordinary income from depreciation. 2009 tax return form See chapter 3 of Publication 544. 2009 tax return form No loss is recognized. 2009 tax return form Nonqualified preferred stock. 2009 tax return form   Nonqualified preferred stock is treated as property other than stock. 2009 tax return form Generally, it is preferred stock with any of the following features. 2009 tax return form The holder has the right to require the issuer or a related person to redeem or buy the stock. 2009 tax return form The issuer or a related person is required to redeem or buy the stock. 2009 tax return form The issuer or a related person has the right to redeem or buy the stock and, on the issue date, it is more likely than not that the right will be exercised. 2009 tax return form The dividend rate on the stock varies with reference to interest rates, commodity prices, or similar indices. 2009 tax return form For a detailed definition of nonqualified preferred stock, see section 351(g)(2) of the Internal Revenue Code. 2009 tax return form Liabilities. 2009 tax return form   If the corporation assumes your liabilities, the exchange generally is not treated as if you received money or other property. 2009 tax return form There are two exceptions to this treatment. 2009 tax return form If the liabilities the corporation assumes are more than your adjusted basis in the property you transfer, gain is recognized up to the difference. 2009 tax return form However, if the liabilities assumed give rise to a deduction when paid, such as a trade account payable or interest, no gain is recognized. 2009 tax return form If there is no good business reason for the corporation to assume your liabilities, or if your main purpose in the exchange is to avoid federal income tax, the assumption is treated as if you received money in the amount of the liabilities. 2009 tax return form For more information on the assumption of liabilities, see section 357(d) of the Internal Revenue Code. 2009 tax return form Example. 2009 tax return form You transfer property to a corporation for stock. 2009 tax return form Immediately after the transfer, you control the corporation. 2009 tax return form You also receive $10,000 in the exchange. 2009 tax return form Your adjusted basis in the transferred property is $20,000. 2009 tax return form The stock you receive has a fair market value (FMV) of $16,000. 2009 tax return form The corporation also assumes a $5,000 mortgage on the property for which you are personally liable. 2009 tax return form Gain is realized as follows. 2009 tax return form FMV of stock received $16,000 Cash received 10,000 Liability assumed by corporation 5,000 Total received $31,000 Minus: Adjusted basis of property transferred 20,000 Realized gain $11,000   The liability assumed is not treated as money or other property. 2009 tax return form The recognized gain is limited to $10,000, the cash received. 2009 tax return form Loss on exchange. 2009 tax return form   If you have a loss from an exchange and own, directly or indirectly, more than 50% of the corporation's stock, you cannot deduct the loss. 2009 tax return form For more information, see Nondeductible Loss under Sales and Exchanges Between Related Persons in chapter 2 of Publication 544. 2009 tax return form Basis of stock or other property received. 2009 tax return form   The basis of the stock you receive is generally the adjusted basis of the property you transfer. 2009 tax return form Increase this amount by any amount treated as a dividend, plus any gain recognized on the exchange. 2009 tax return form Decrease this amount by any cash you received, the fair market value of any other property you received, and any loss recognized on the exchange. 2009 tax return form Also decrease this amount by the amount of any liability the corporation or another party to the exchange assumed from you, unless payment of the liability gives rise to a deduction when paid. 2009 tax return form    Further decreases may be required when the corporation or another party to the exchange assumes from you a liability that gives rise to a deduction when paid, if the basis of the stock would otherwise be higher than its fair market value on the date of the exchange. 2009 tax return form This rule does not apply if the entity assuming the liability acquired either substantially all of the assets or the trade or business with which the liability is associated. 2009 tax return form The basis of any other property you receive is its fair market value on the date of the trade. 2009 tax return form Basis of property transferred. 2009 tax return form   A corporation that receives property from you in exchange for its stock generally has the same basis you had in the property, increased by any gain you recognized on the exchange. 2009 tax return form However, the increase for the gain recognized may be limited. 2009 tax return form For more information, see section 362 of the Internal Revenue Code. 2009 tax return form Election to reduce basis. 2009 tax return form   In a section 351 transaction, if the adjusted basis of the property transferred exceeds the property's fair market value, the transferor and transferee may make an irrevocable election to treat the basis of the stock received by the transferor as having a basis equal to the fair market value of the property transferred. 2009 tax return form The transferor and transferee make this election by attaching a statement to their tax returns filed by the due date (including extensions) for the tax year in which the transaction occurred. 2009 tax return form However, if the transferor makes the election by including the certification provided in Notice 2005-70, 2005-41, I. 2009 tax return form R. 2009 tax return form B. 2009 tax return form 694, on or with its tax return filed by the due date (including extensions), then no election need be made by the transferee. 2009 tax return form    For more information on making this election, see section 362(e)(2)(C) of the Internal Revenue Code, and Notice 2005-70. 2009 tax return form Capital Contributions This section explains the tax treatment of contributions from shareholders and nonshareholders. 2009 tax return form Paid-in capital. 2009 tax return form   Contributions to the capital of a corporation, whether or not by shareholders, are paid-in capital. 2009 tax return form These contributions are not taxable to the corporation. 2009 tax return form Basis. 2009 tax return form   The corporation's basis of property contributed to capital by a shareholder is the same as the basis the shareholder had in the property, increased by any gain the shareholder recognized on the exchange. 2009 tax return form However, the increase for the gain recognized may be limited. 2009 tax return form For more information, see Basis of property transferred, above, and section 362 of the Internal Revenue Code. 2009 tax return form   The basis of property contributed to capital by a person other than a shareholder is zero. 2009 tax return form   If a corporation receives a cash contribution from a person other than a shareholder, the corporation must reduce the basis of any property acquired with the contribution during the 12-month period beginning on the day it received the contribution by the amount of the contribution. 2009 tax return form If the amount contributed is more than the cost of the property acquired, then reduce, but not below zero, the basis of the other properties held by the corporation on the last day of the 12-month period in the following order. 2009 tax return form Depreciable property. 2009 tax return form Amortizable property. 2009 tax return form Property subject to cost depletion but not to percentage depletion. 2009 tax return form All other remaining properties. 2009 tax return form   Reduce the basis of property in each category to zero before going on to the next category. 2009 tax return form   There may be more than one piece of property in each category. 2009 tax return form Base the reduction of the basis of each property on the following ratio:   Basis of each piece of property   Bases of all properties (within that category) If the corporation wishes to make this adjustment in some other way, it must get IRS approval. 2009 tax return form The corporation files a request for approval with its income tax return for the tax year in which it receives the contribution. 2009 tax return form Filing and Paying Income Taxes The federal income tax is a pay-as-you-go tax. 2009 tax return form A corporation generally must make estimated tax payments as it earns or receives income during its tax year. 2009 tax return form After the end of the year, the corporation must file an income tax return. 2009 tax return form This section will help you determine when and how to pay and file corporate income taxes. 2009 tax return form For certain corporations affected by Presidentially declared disasters such as hurricanes, the due dates for filing returns, paying taxes, and performing other time-sensitive acts may be extended. 2009 tax return form The IRS may also forgive the interest and penalties on any underpaid tax for the length of any extension. 2009 tax return form For more information, visit www. 2009 tax return form irs. 2009 tax return form gov/newsroom/article/0,,id=108362. 2009 tax return form 00. 2009 tax return form Income Tax Return This section will help you determine when and how to report a corporation's income tax. 2009 tax return form Who must file. 2009 tax return form   Unless exempt under section 501 of the Internal Revenue Code, all domestic corporations in existence for any part of a tax year (including corporations in bankruptcy) must file an income tax return whether or not they have taxable income. 2009 tax return form Which form to file. 2009 tax return form   A corporation generally must file Form 1120, U. 2009 tax return form S. 2009 tax return form Corporation Income Tax Return, to report its income, gains, losses, deductions, credits, and to figure its income tax liability. 2009 tax return form Certain organizations and entities must file special returns. 2009 tax return form For more information, see Special Returns for Certain Organizations, in the Instructions for Form 1120. 2009 tax return form Electronic filing. 2009 tax return form   Corporations can generally electronically file (e-file) Form 1120 and certain related forms, schedules, and attachments. 2009 tax return form Certain corporations with total assets of $10 million or more, that file at least 250 returns a year must e-file Form 1120. 2009 tax return form However, in certain instances, these corporations can request a waiver. 2009 tax return form For more information regarding electronic filing, visit www. 2009 tax return form irs. 2009 tax return form gov/efile. 2009 tax return form When to file. 2009 tax return form   Generally, a corporation must file its income tax return by the 15th day of the 3rd month after the end of its tax year. 2009 tax return form A new corporation filing a short-period return must generally file by the 15th day of the 3rd month after the short period ends. 2009 tax return form A corporation that has dissolved must generally file by the 15th day of the 3rd month after the date it dissolved. 2009 tax return form Example 1. 2009 tax return form A corporation's tax year ends December 31. 2009 tax return form It must file its income tax return by March 15th. 2009 tax return form Example 2. 2009 tax return form A corporation's tax year ends June 30. 2009 tax return form It must file its income tax return by September 15th. 2009 tax return form   If the due date falls on a Saturday, Sunday, or legal holiday, the due date is extended to the next business day. 2009 tax return form Extension of time to file. 2009 tax return form   File Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information and Other Returns, to request an extension of time to file a corporation income tax return. 2009 tax return form The IRS will grant the extension if you complete the form properly, file it, and pay any tax due by the original due date for the return. 2009 tax return form   Form 7004 does not extend the time for paying the tax due on the return. 2009 tax return form Interest, and possibly penalties, will be charged on any part of the final tax due not shown as a balance due on Form 7004. 2009 tax return form The interest is figured from the original due date of the return to the date of payment. 2009 tax return form   For more information, see the instructions for Form 7004. 2009 tax return form How to pay your taxes. 2009 tax return form   A corporation must pay its tax due in full no later than the 15th day of the 3rd month after the end of its tax year. 2009 tax return form Electronic Federal Tax Payment System (EFTPS). 2009 tax return form   Corporations generally must use EFTPS to make deposits of all tax liabilities (including social security, Medicare, withheld income, excise, and corporate income taxes). 2009 tax return form For more information on EFTPS and enrollment, visit www. 2009 tax return form eftps. 2009 tax return form gov or call 1-800-555-4477. 2009 tax return form Also see Publication 966, The Secure Way to Pay Your Federal Taxes. 2009 tax return form Note. 2009 tax return form Forms 8109 and 8109-B, Federal Tax Deposit Coupon, can no longer be used to make federal tax deposits. 2009 tax return form Penalties Generally, if the corporation receives a notice about interest and penalties after it files its return, send the IRS an explanation and we will determine if the corporation meets reasonable-cause criteria. 2009 tax return form Do not attach an explanation when the corporation's return is filed. 2009 tax return form See the instructions for your income tax return. 2009 tax return form Late filing of return. 2009 tax return form    A corporation that does not file its tax return by the due date, including extensions, may be penalized 5% of the unpaid tax for each month or part of a month the return is late, up to a maximum of 25% of the unpaid tax. 2009 tax return form If the corporation is charged a penalty for late payment of tax (discussed next) for the same period of time, the penalty for late filing is reduced by the amount of the penalty for late payment. 2009 tax return form The minimum penalty for a return that is over 60 days late is the smaller of the tax due or $100. 2009 tax return form The penalty will not be imposed if the corporation can show the failure to file on time was due to a reasonable cause. 2009 tax return form Late payment of tax. 2009 tax return form    A corporation that does not pay the tax when due may be penalized ½ of 1% of the unpaid tax for each month or part of a month the tax is not paid, up to a maximum of 25% of the unpaid tax. 2009 tax return form The penalty will not be imposed if the corporation can show that the failure to pay on time was due to a reasonable cause. 2009 tax return form Trust fund recovery penalty. 2009 tax return form   If income, social security, and Medicare taxes that a corporation must withhold from employee wages are not withheld or are not deposited or paid to the United States Treasury, the trust fund recovery penalty may apply. 2009 tax return form The penalty is the full amount of the unpaid trust fund tax. 2009 tax return form This penalty may apply to you if these unpaid taxes cannot be immediately collected from the business. 2009 tax return form   The trust fund recovery penalty may be imposed on all persons who are determined by the IRS to be responsible for collecting, accounting for, and paying these taxes, and who acted willfully in not doing so. 2009 tax return form   A responsible person can be an officer or employee of a corporation, an accountant, or a volunteer director/trustee. 2009 tax return form A responsible person also may include one who signs checks for the corporation or otherwise has authority to cause the spending of business funds. 2009 tax return form   Willfully means voluntarily, consciously, and intentionally. 2009 tax return form A responsible person acts willfully if the person knows the required actions are not taking place. 2009 tax return form   For more information on withholding and paying these taxes, see Publication 15 (Circular E), Employer's Tax Guide, and Publication 51, (Circular A), Agricultural Employer's Tax Guide. 2009 tax return form Other penalties. 2009 tax return form   Other penalties can be imposed for negligence, substantial understatement of tax, reportable transaction understatements, and fraud. 2009 tax return form See sections 6662, 6662A, and 6663 of the Internal Revenue Code. 2009 tax return form Estimated Tax Generally, a corporation must make installment payments if it expects its estimated tax for the year to be $500 or more. 2009 tax return form If the corporation does not pay the installments when they are due, it could be subject to an underpayment penalty. 2009 tax return form This section will explain how to avoid this penalty. 2009 tax return form When to pay estimated tax. 2009 tax return form   Installment payments are due by the 15th day of the 4th, 6th, 9th, and 12th months of the corporation's tax year. 2009 tax return form Example 1. 2009 tax return form Your corporation's tax year ends December 31. 2009 tax return form Installment payments are due on April 15, June 15, September 15, and December 15. 2009 tax return form Example 2. 2009 tax return form Your corporation's tax year ends June 30. 2009 tax return form Installment payments are due on October 15, December 15, March 15, and June 15. 2009 tax return form   If any due date falls on a Saturday, Sunday, or legal holiday, the installment is due on the next business day. 2009 tax return form How to figure each required installment. 2009 tax return form   Use Form 1120-W, Estimated Tax for Corporations, as a worksheet to figure each required installment of estimated tax. 2009 tax return form You will generally use one of the following two methods to figure each required installment. 2009 tax return form You should use the method that yields the smallest installment payments. 2009 tax return form Note. 2009 tax return form In these discussions, “return” generally refers to the corporation's original return. 2009 tax return form However, an amended return is considered the original return if it is filed by the due date (including extensions) of the original return. 2009 tax return form Method 1. 2009 tax return form   Each required installment is 25% of the income tax the corporation will show on its return for the current year. 2009 tax return form Method 2. 2009 tax return form   Each required installment is 25% of the income tax shown on the corporation's return for the previous year. 2009 tax return form   To use Method 2: The corporation must have filed a return for the previous year, The return must have been for a full 12 months, and The return must have shown a positive tax liability (not zero). 2009 tax return form Also, if the corporation is a large corporation, it can use Method 2 to figure the first installment only. 2009 tax return form   See the Instructions for Form 1120-W, for the definition of a large corporation and other special rules for large corporations. 2009 tax return form Other methods. 2009 tax return form   If a corporation's income is expected to vary during the year because, for example, its business is seasonal, it may be able to lower the amount of one or more required installments by using one or both of the following methods. 2009 tax return form The annualized income installment method. 2009 tax return form The adjusted seasonal installment method. 2009 tax return form Use Schedule A of Form 1120-W to determine if using one or both of these methods will lower the amount of any required installments. 2009 tax return form Refiguring required installments. 2009 tax return form   If after the corporation figures and deposits its estimated tax it finds that its tax liability for the year will be more or less than originally estimated, it may have to refigure its required installments to see if an underpayment penalty may apply. 2009 tax return form An immediate catchup payment should be made to reduce any penalty resulting from the underpayment of any earlier installments. 2009 tax return form Underpayment penalty. 2009 tax return form   If the corporation does not pay a required installment of estimated tax by its due date, it may be subject to a penalty. 2009 tax return form The penalty is figured separately for each installment due date. 2009 tax return form The corporation may owe a penalty for an earlier due date, even if it paid enough tax later to make up the underpayment. 2009 tax return form This is true even if the corporation is due a refund when its return is filed. 2009 tax return form Form 2220. 2009 tax return form   Use Form 2220, Underpayment of Estimated Tax by Corporations, to determine if a corporation is subject to the penalty for underpayment of estimated tax and to figure the amount of the penalty. 2009 tax return form   If the corporation is charged a penalty, the amount of the penalty depends on the following three factors. 2009 tax return form The amount of the underpayment. 2009 tax return form The period during which the underpayment was due and unpaid. 2009 tax return form The interest rate for underpayments published quarterly by the IRS in the Internal Revenue Bulletin. 2009 tax return form   A corporation generally does not have to file Form 2220 with its income tax return because the IRS will figure any penalty and bill the corporation. 2009 tax return form However, even if the corporation does not owe a penalty, complete and attach the form to the corporation's tax return if any of the following apply. 2009 tax return form The annualized income installment method was used to figure any required installment. 2009 tax return form The adjusted seasonal installment method was used to figure any required installment. 2009 tax return form The corporation is a large corporation figuring its first required installment based on the prior year's tax. 2009 tax return form How to pay estimated tax. 2009 tax return form   A corporation is generally required to use EFTPS to pay its taxes. 2009 tax return form See Electronic Federal Tax Payment System (EFTPS), earlier. 2009 tax return form Also see the Instructions for Form 1120-W. 2009 tax return form Quick refund of overpayments. 2009 tax return form   A corporation that has overpaid its estimated tax for the tax year may be able to apply for a quick refund. 2009 tax return form Use Form 4466, Corporation Application for Quick Refund of Overpayment of Estimated Tax, to apply for a quick refund of an overpayment of estimated tax. 2009 tax return form A corporation can apply for a quick refund if the overpayment is: At least 10% of its expected tax liability, and At least $500. 2009 tax return form Use Form 4466 to figure the corporation's expected tax liability and the overpayment of estimated tax. 2009 tax return form File Form 4466 before the 16th day of the 3rd month after the end of the tax year, but before the corporation files its income tax return. 2009 tax return form Do not file Form 4466 before the end of the corporation's tax year. 2009 tax return form An extension of time to file the corporation's income tax return will not extend the time for filing Form 4466. 2009 tax return form The IRS will act on the form within 45 days from the date you file it. 2009 tax return form U. 2009 tax return form S. 2009 tax return form Real Property Interest If a domestic corporation acquires a U. 2009 tax return form S. 2009 tax return form real property interest from a foreign person or firm, the corporation may have to withhold tax on the amount it pays for the property. 2009 tax return form The amount paid includes cash, the fair market value of other property, and any assumed liability. 2009 tax return form If a domestic corporation distributes a U. 2009 tax return form S. 2009 tax return form real property interest to a foreign person or firm, it may have to withhold tax on the fair market value of the property. 2009 tax return form A corporation that fails to withhold may be liable for the tax, and any penalties and interest that apply. 2009 tax return form For more information, see section 1445 of the Internal Revenue Code; Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities; Form 8288, U. 2009 tax return form S. 2009 tax return form Withholding Tax Return for Dispositions by Foreign Persons of U. 2009 tax return form S. 2009 tax return form Real Property Interests; and Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U. 2009 tax return form S. 2009 tax return form Real Property Interests. 2009 tax return form Accounting Methods An accounting method is a set of rules used to determine when and how income and expenses are reported. 2009 tax return form Taxable income should be determined using the method of accounting regularly used in keeping the corporation's books and records. 2009 tax return form In all cases, the method used must clearly show taxable income. 2009 tax return form Generally, permissible methods include: Cash, Accrual, or Any other method authorized by the Internal Revenue Code. 2009 tax return form Accrual method. 2009 tax return form   Generally, a corporation (other than a qualified personal service corporation) must use the accrual method of accounting if its average annual gross receipts exceed $5 million. 2009 tax return form A corporation engaged in farming operations also must use the accrual method. 2009 tax return form   If inventories are required, the accrual method generally must be used for sales and purchases of merchandise. 2009 tax return form However, qualifying taxpayers and eligible businesses of qualifying small business taxpayers are excepted from using the accrual method for eligible trades or businesses and may account for inventoriable items as materials and supplies that are not incidental. 2009 tax return form   Under the accrual method, an amount is includable in income when: All the events have occurred that fix the right to receive the income, which is the earliest of the date: The required performance takes place, Payment is due, or Payment is received; and The amount can be determined with reasonable accuracy. 2009 tax return form   Generally, an accrual basis taxpayer can deduct accrued expenses in the tax year when: All events that determine the liability have occurred, The amount of the liability can be figured with reasonable accuracy, and Economic performance takes place with respect to the expense. 2009 tax return form   There are exceptions to the economic performance rule for certain items, including recurring expenses. 2009 tax return form See section 461(h) of the Internal Revenue Code and the related regulations for the rules for determining when economic performance takes place. 2009 tax return form Nonaccrual experience method. 2009 tax return form   Accrual method corporations are not required to maintain accruals for certain amounts from the performance of services that, on the basis of their experience, will not be collected, if: The services are in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, or consulting; or The corporation's average annual gross receipts for the 3 prior tax years does not exceed $5 million. 2009 tax return form   This provision does not apply if interest is required to be paid on the amount or if there is any penalty for failure to pay the amount timely. 2009 tax return form Percentage of completion method. 2009 tax return form   Long-term contracts (except for certain real property construction contracts) must generally be accounted for using the percentage of completion method described in section 460 of the Internal Revenue Code. 2009 tax return form Mark-to-market accounting method. 2009 tax return form   Generally, dealers in securities must use the mark-to-market accounting method described in section 475 of the Internal Revenue Code. 2009 tax return form Under this method any security held by a dealer as inventory must be included in inventory at its FMV. 2009 tax return form Any security not held as inventory at the close of the tax year is treated as sold at its FMV on the last business day of the tax year. 2009 tax return form Any gain or loss must be taken into account in determining gross income. 2009 tax return form The gain or loss taken into account is treated as ordinary gain or loss. 2009 tax return form   Dealers in commodities and traders in securities and commodities can elect to use the mark-to-market accounting method. 2009 tax return form Change in accounting method. 2009 tax return form   A corporation can change its method of accounting used to report taxable income (for income as a whole or for the treatment of any material item). 2009 tax return form The corporation must file Form 3115, Application for Change in Accounting Method. 2009 tax return form For more information, see Form 3115 and Publication 538. 2009 tax return form Section 481(a) adjustment. 2009 tax return form   The corporation may have to make an adjustment under section 481(a) of the Internal Revenue Code to prevent amounts of income or expense from being duplicated or omitted. 2009 tax return form The section 481(a) adjustment period is generally 1 year for a net negative adjustment and 4 years for a net positive adjustment. 2009 tax return form However, a corporation can elect to use a 1-year adjustment period if the net section 481(a) adjustment for the change is less than $25,000. 2009 tax return form The corporation must complete the appropriate lines of Form 3115 to make the election. 2009 tax return form See the Instructions for Form 3115. 2009 tax return form Accounting Periods A corporation must figure its taxable income on the basis of a tax year. 2009 tax return form A tax year is the annual accounting period a corporation uses to keep its records and report its income and expenses. 2009 tax return form Generally, corporations can use either a calendar year or a fiscal year as its tax year. 2009 tax return form Unless special rules apply, a corporation generally adopts a tax year by filing its first federal income tax return using that tax year. 2009 tax return form For more information, see Publication 538. 2009 tax return form Personal service corporation. 2009 tax return form   A personal service corporation must use a calendar year as its tax year unless: It elects to use a 52–53 week tax year that ends with reference to the calendar year; It can establish a business purpose for a different tax year and obtains approval of the IRS. 2009 tax return form See Form 1128, Application To Adopt, Change, or Retain a Tax Year, and Publication 538; or It elects under section 444 of the Internal Revenue Code to have a tax year other than a calendar year. 2009 tax return form Use Form 8716, Election to Have a Tax Year Other Than a Required Tax Year, to make the election. 2009 tax return form   If a personal service corporation makes a section 444 election, its deduction for certain amounts paid to employee-owners may be limited. 2009 tax return form See Schedule H (Form 1120), Section 280H Limitations for a Personal Service Corporation (PSC), to figure the maximum deduction. 2009 tax return form Change of tax year. 2009 tax return form   Generally, a corporation must get the consent of the IRS before changing its tax year by filing Form 1128. 2009 tax return form However, under certain conditions, a corporation can change its tax year without getting the consent. 2009 tax return form For more information, see Form 1128 and Publication 538. 2009 tax return form Recordkeeping A corporation should keep its records for as long as they may be needed for the administration of any provision of the Internal Revenue Code. 2009 tax return form Usually records that support items of income, deductions, or credits on the return must be kept for 3 years from the date the return is due or filed, whichever is later. 2009 tax return form Keep records that verify the corporation's basis in property for as long as they are needed to figure the basis of the original or replacement property. 2009 tax return form The corporation should keep copies of all filed returns. 2009 tax return form They help in preparing future and amended returns and in the calculation of earnings and profits. 2009 tax return form Income, Deductions, and Special Provisions Rules on income and deductions that apply to individuals also apply, for the most part, to corporations. 2009 tax return form However, the following special provisions apply only to corporations. 2009 tax return form Costs of Going Into Business When you go into business, treat all costs you incur to get your business started as capital expenses. 2009 tax return form However, a corporation can elect to deduct a limited amount of start-up or organizational costs. 2009 tax return form Any costs not deducted can be amortized. 2009 tax return form Start-up costs are costs for creating an active trade or business or investigating the creation or acquisition of an active trade or business. 2009 tax return form Organizational costs are the direct costs of creating the corporation. 2009 tax return form For more information on deducting or amortizing start-up and organizational costs, see the instructions for your income tax return. 2009 tax return form Also see, Publication 535, chapter 7, Costs You Can Deduct or Capitalize, and chapter 8, Amortization. 2009 tax return form Related Persons A corporation that uses an accrual method of accounting cannot deduct business expenses and interest owed to a related person who uses the cash method of accounting until the corporation makes the payment and the corresponding amount is includible in the related person's gross income. 2009 tax return form Determine the relationship, for this rule, as of the end of the tax year for which the expense or interest would otherwise be deductible. 2009 tax return form If a deduction is denied, the rule will continue to apply even if the corporation's relationship with the person ends before the expense or interest is includible in the gross income of that person. 2009 tax return form These rules also deny the deduction of losses on the sale or exchange of property between related persons. 2009 tax return form Related persons. 2009 tax return form   For purposes of this rule, the following persons are related to a corporation. 2009 tax return form Another corporation, that is a member of the same controlled group (as defined in section 267(f) of the Internal Revenue Code). 2009 tax return form An individual who owns, directly or indirectly, more than 50% of the value of the outstanding stock of the corporation. 2009 tax return form A trust fiduciary, when the trust or the grantor of the trust owns, directly or indirectly, more than 50% in value of the outstanding stock of the corporation. 2009 tax return form An S corporation, if the same persons own more than 50% in value of the outstanding stock of each corporation. 2009 tax return form A partnership, if the same persons own more than 50% in value of the outstanding stock of the corporation and more than 50% of the capital or profits interest in the partnership. 2009 tax return form Any employee-owner, if the corporation is a personal service corporation (see Personal service corporation, earlier), regardless of the amount of stock owned by the employee-owner. 2009 tax return form Ownership of stock. 2009 tax return form   To determine whether an individual directly or indirectly owns any of the outstanding stock of a corporation, the following apply. 2009 tax return form Stock owned, directly or indirectly, by or for a corporation, partnership, estate, or trust, is treated as being owned proportionately by or for its shareholders, partners, or beneficiaries. 2009 tax return form An individual is treated as owning the stock owned, directly or indirectly, by or for the individual's family. 2009 tax return form Family includes only brothers and sisters (including half brothers and half sisters), a spouse, ancestors, and lineal descendants. 2009 tax return form Any individual owning (other than by applying (2), above) stock in a corporation, is treated as also owning the stock owned directly or indirectly by that individual's partner. 2009 tax return form To apply (1), (2), or (3), above, stock constructively owned by a person under (1) is treated as actually owned by that person. 2009 tax return form But stock constructively owned by an individual under (2) or (3) is not treated as actually owned by the individual for applying either (2) or (3) to make another person the constructive owner of that stock. 2009 tax return form Reallocation of income and deductions. 2009 tax return form   Where it is necessary to clearly show income or prevent tax evasion, the IRS can reallocate gross income, deductions, credits, or allowances between two or more organizations, trades, or businesses owned or controlled directly, or indirectly, by the same interests. 2009 tax return form Complete liquidations. 2009 tax return form   The disallowance of losses from the sale or exchange of property between related persons does not apply to liquidating distributions. 2009 tax return form More information. 2009 tax return form   For more information about the related person rules, see Publication 544. 2009 tax return form Income From Qualifying Shipping Activities A corporation may make an election to be taxed on its notional shipping income at the highest corporate tax rate. 2009 tax return form If a corporation makes this election it may exclude income from qualifying shipping activities from gross income. 2009 tax return form Also if the election is made, the corporation generally may not claim any loss, deduction, or credit with respect to qualifying shipping activities. 2009 tax return form A corporation making this election may also elect to defer gain on the disposition of a qualifying vessel. 2009 tax return form A corporation uses Form 8902, Alternative Tax on Qualifying Shipping Activities, to make the election and figure the alternative tax. 2009 tax return form For more information regarding the election, see Form 8902. 2009 tax return form Election to Expense Qualified Refinery Property A corporation can make an irrevocable election on its tax return filed by the due date (including extensions) to deduct 50% of the cost of qualified refinery property (defined in section 179C(c) of the Internal Revenue Code), placed in service before January 1, 2014. 2009 tax return form The deduction is allowed for the year in which the property is placed in service. 2009 tax return form A subchapter T cooperative can make an irrevocable election on its return by the due date (including extensions) to allocate this deduction to its owners based on their ownership interest. 2009 tax return form For more information, see section 179C of the Internal Revenue Code and the related Regulations. 2009 tax return form Deduction to Comply With EPA Sulfur Regulations A small business refiner can make an irrevocable election on its tax return filed by the due date (including extensions) to deduct up to 75% of qualified costs paid or incurred to comply with the Highway Diesel Fuel Sulfur Control Requirements of the Environmental Protection Agency (EPA). 2009 tax return form A subchapter T cooperative can make an irrevocable election on its return filed by the due date (including extensions) to allocate the deduction to its owners based on their ownership interest. 2009 tax return form For more information, see sections 45H and 179B of the Internal Revenue Code and the related Regulations. 2009 tax return form Energy-Efficient Commercial Building Property Deduction A corporation can claim a deduction for costs associated with energy-efficient commercial building property, placed in service before January 1, 2014. 2009 tax return form In order to qualify for the deduction: The costs must be associated with depreciable or amortizable property in a Standard 90. 2009 tax return form 1-2001 domestic building; The property must be either a part of the interior lighting system, the heating, cooling, ventilation and hot water system, or the building envelope (defined in section 179D(c)(1)(C) of the Internal Revenue Code); and The property must be installed as part of a plan to reduce the total annual energy and power costs of the building by 50% or more. 2009 tax return form The deduction is limited to $1. 2009 tax return form 80 per square foot of the building less the total amount of deductions taken for this property in prior tax years. 2009 tax return form Other rules and limitations apply. 2009 tax return form The corporation must reduce the basis of any property by any deduction taken. 2009 tax return form The deduction is subject to recapture if the corporation fails to fully implement an energy savings plan. 2009 tax return form For more information, see section 179D of the Internal Revenue Code. 2009 tax return form Also see Notice 2006-52, 2006-26 I. 2009 tax return form R. 2009 tax return form B. 2009 tax return form 1175, clarified and amplified by Notice 2008-40, 2008-14 I. 2009 tax return form R. 2009 tax return form B. 2009 tax return form 725, and any successor. 2009 tax return form Corporate Preference Items A corporation must make special adjustments to certain items before it takes them into account in determining its taxable income. 2009 tax return form These items are known as corporate preference items and they include the following. 2009 tax return form Gain on the disposition of section 1250 property. 2009 tax return form For more information, see section 1250 Property under Depreciation Recapture in chapter 3 of Publication 544. 2009 tax return form Percentage depletion for iron ore and coal (including lignite). 2009 tax return form For more information, see Mines and Geothermal Deposits under Mineral Property in chapter 9 of Publication 535. 2009 tax return form Amortization of pollution control facilities. 2009 tax return form For more information, see Pollution Control Facilities in chapter 8 of Publication 535 and section 291(a)(5) of the Internal Revenue Code. 2009 tax return form Mineral exploration and development costs. 2009 tax return form For more information, see Exploration Costs and Development Costs in chapter 7 of Publication 535. 2009 tax return form For more information on corporate preference items, see section 291 of the Internal Revenue Code. 2009 tax return form Dividends-Received Deduction A corporation can deduct a percentage of certain dividends received during its tax year. 2009 tax return form This section discusses the general rules that apply. 2009 tax return form The deduction is figured on Form 1120, Schedule C, or the applicable schedule of your income tax return. 2009 tax return form For more information, see the Instructions for Form 1120, or the instructions for your applicable income tax return. 2009 tax return form Dividends from domestic corporations. 2009 tax return form   A corporation can deduct, within certain limits, 70% of the dividends received if the corporation receiving the dividend owns less than 20% of the corporation distributing the dividend. 2009 tax return form If the corporation owns 20% or more of the distributing corporation's stock, it can, subject to certain limits, deduct 80% of the dividends received. 2009 tax return form Ownership. 2009 tax return form   Determine ownership, for these rules, by the amount of voting power and value of the paying corporation's stock (other than certain preferred stock) the receiving corporation owns. 2009 tax return form Small business investment companies. 2009 tax return form   Small business investment companies can deduct 100% of the dividends received from taxable domestic corporations. 2009 tax return form Dividends from regulated investment companies. 2009 tax return form   Regulated investment company dividends received are subject to certain limits. 2009 tax return form Capital gain dividends received from a regulated investment company do not qualify for the deduction. 2009 tax return form For more information, see section 854 of the Internal Revenue Code. 2009 tax return form No deduction allowed for certain dividends. 2009 tax return form   Corporations cannot take a deduction for dividends received from the following entities. 2009 tax return form A real estate investment trust (REIT). 2009 tax return form A corporation exempt from tax under section 501 or 521 of the Internal Revenue Code either for the tax year of the distribution or the preceding tax year. 2009 tax return form A corporation whose stock was held less than 46 days during the 91-day period beginning 45 days before the stock became ex-dividend with respect to the dividend. 2009 tax return form Ex-dividend means the holder has no rights to the dividend. 2009 tax return form A corporation whose preferred stock was held less than 91 days during the 181-day period beginning 90 days before the stock became ex-dividend with respect to the dividend if the dividends received are for a period or periods totaling more than 366 days. 2009 tax return form Any corporation, if your corporation is under an obligation (pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property. 2009 tax return form Dividends on deposits. 2009 tax return form   Dividends on deposits or withdrawable accounts in domestic building and loan associations, mutual savings banks, cooperative banks, and similar organizations are interest, not dividends. 2009 tax return form They do not qualify for this deduction. 2009 tax return form Limit on deduction for dividends. 2009 tax return form   The total deduction for dividends received or accrued is generally limited (in the following order) to: 80% of the difference between taxable income and the 100% deduction allowed for dividends received from affiliated corporations, or by a small business investment company, for dividends received or accrued from 20%-owned corporations, then 70% of the difference between taxable income and the 100% deduction allowed for dividends received from affiliated corporations, or by a small business investment company, for dividends received or accrued from less-than-20%-owned corporations (reducing taxable income by the total dividends received from 20%-owned corporations). 2009 tax return form Figuring the limit. 2009 tax return form   In figuring the limit, determine taxable income without the following items. 2009 tax return form The net operating loss deduction. 2009 tax return form The domestic production activities deduction. 2009 tax return form The deduction for dividends received. 2009 tax return form Any adjustment due to the nontaxable part of an extraordinary dividend (see Extraordinary Dividends, below). 2009 tax return form Any capital loss carryback to the tax year. 2009 tax return form Effect of net operating loss. 2009 tax return form   If a corporation has a net operating loss (NOL) for a tax year, the limit of 80% (or 70%) of taxable income does not apply. 2009 tax return form To determine whether a corporation has an NOL, figure the dividends-received deduction without the 80% (or 70%) of taxable income limit. 2009 tax return form Example 1. 2009 tax return form A corporation loses $25,000 from operations. 2009 tax return form It receives $100,000 in dividends from a 20%-owned corporation. 2009 tax return form Its taxable income is $75,000 ($100,000 – $25,000) before the deduction for dividends received. 2009 tax return form If it claims the full dividends-received deduction of $80,000 ($100,000 × 80%) and combines it with an operations loss of $25,000, it will have an NOL of ($5,000). 2009 tax return form Therefore, the 80% of taxable income limit does not apply. 2009 tax return form The corporation can deduct the full $80,000. 2009 tax return form Example 2. 2009 tax return form Assume the same facts as in Example 1, except that the corporation only loses $15,000 from operations. 2009 tax return form Its taxable income is $85,000 before the deduction for dividends received. 2009 tax return form After claiming the dividends-received deduction of $80,000 ($100,000 × 80%), its taxable income is $5,000. 2009 tax return form Because the corporation will not have an NOL after applying a full dividends-received deduction, its allowable dividends-received deduction is limited to 80% of its taxable income, or $68,000 ($85,000 × 80%). 2009 tax return form Extraordinary Dividends If a corporation receives an extraordinary dividend on stock held 2 years or less before the dividend announcement date, it generally must reduce its basis in the stock by the nontaxed part of the dividend. 2009 tax return form The nontaxed part is any dividends-received deduction allowable for the dividends. 2009 tax return form Extraordinary dividend. 2009 tax return form   An extraordinary dividend is any dividend on stock that equals or exceeds a certain percentage of the corporation's adjusted basis in the stock. 2009 tax return form The percentages are: 5% for stock preferred as to dividends, or 10% for other stock. 2009 tax return form Treat all dividends received that have ex-dividend dates within an 85-consecutive-day period as one dividend. 2009 tax return form Treat all dividends received that have ex-dividend dates within a 365-consecutive-day period as extraordinary dividends if the total of the dividends exceeds 20% of the corporation's adjusted basis in the stock. 2009 tax return form Disqualified preferred stock. 2009 tax return form   Any dividend on disqualified preferred stock is treated as an extraordinary dividend regardless of the period of time the corporation held the stock. 2009 tax return form   Disqualified preferred stock is any stock preferred as to dividends if any of the following apply. 2009 tax return form The stock when issued has a dividend rate that declines (or can reasonably be expected to decline) in the future. 2009 tax return form The issue price of the stock exceeds its liquidation rights or stated redemption price. 2009 tax return form The stock is otherwise structured to avoid the rules for extraordinary dividends and to enable corporate shareholders to reduce tax through a combination of dividends-received deductions and loss on the disposition of the stock. 2009 tax return form   These rules apply to stock issued after July 10, 1989, unless it was issued under a written binding contract in effect on that date, and thereafter, before the issuance of the stock. 2009 tax return form More information. 2009 tax return form   For more information on extraordinary dividends, see section 1059 of the Internal Revenue Code. 2009 tax return form Below-Market Loans If a corporation receives a below-market loan and uses the proceeds for its trade or business, it may be able to deduct the forgone interest. 2009 tax return form A below-market loan is a loan on which no interest is charged or on which interest is charged at a rate below the applicable federal rate. 2009 tax return form A below-market loan generally is treated as an arm's-length transaction in which the borrower is considered as having received both the following: A loan in exchange for a note that requires payment of interest at the applicable federal rate, and An additional payment in an amount equal to the forgone interest. 2009 tax return form Treat the additional payment as a gift, dividend, contribution to capital, payment of compensation, or other payment, depending on the substance of the transaction. 2009 tax return form Foregone interest. 2009 tax return form   For any period, forgone interest is equal to: The interest that would be payable for that period if interest accrued on the loan at the applicable federal rate and was payable annually on December 31, minus Any interest actually payable on the loan for the period. 2009 tax return form See Below-market loans, in chapter 4 of Publication 535 for more information. 2009 tax return form Charitable Contributions A corporation can claim a limited deduction for charitable contributions made in cash or other property. 2009 tax return form The contribution is deductible if made to, or for the use of, a qualified organization. 2009 tax return form For more information on qualified organizations, see Publication 526, Charitable Contributions. 2009 tax return form Also see, Exempt Organizations Select Check (EO Select Check) at www. 2009 tax return form irs. 2009 tax return form gov/charities, the on-line search tool for finding information on organizations eligible to receive tax-deductible contributions. 2009 tax return form Note. 2009 tax return form You cannot take a deduction if any of the net earnings of an organization receiving contributions benefit any private shareholder or individual. 2009 tax return form Cash method corporation. 2009 tax return form   A corporation using the cash method of accounting deducts contributions in the tax year paid. 2009 tax return form Accrual method corporation. 2009 tax return form   A corporation using an accrual method of accounting can choose to deduct unpaid contributions for the tax year the board of directors authorizes them if it pays them by the 15th day of the 3rd month after the close of that tax year. 2009 tax return form Make the choice by reporting the contribution on the corporation's return for the tax year. 2009 tax return form A declaration stating that the board of directors adopted the resolution during the tax year must accompany the return. 2009 tax return form The declaration must include the date the resolution was adopted. 2009 tax return form Limitations on deduction. 2009 tax return form   A corporation cannot deduct charitable contributions that exceed 10% of its taxable income for the tax year. 2009 tax return form Figure taxable income for this purpose without the following. 2009 tax return form The deduction for charitable contributions. 2009 tax return form The dividends-received deduction. 2009 tax return form The deduction allowed under section 249 of the Internal Revenue Code. 2009 tax return form The domestic production activities deduction. 2009 tax return form Any net operating loss carryback to the tax year. 2009 tax return form Any capital loss carryback to the tax year. 2009 tax return form Farmers and ranchers. 2009 tax return form    Corporations that are farmers and ranchers should see section 170(b)(2) of the Internal Revenue Code for special rules that may affect the deduction limit. 2009 tax return form Carryover of excess contributions. 2009 tax return form   You can carry over, within certain limits, to each of the subsequent 5 years any charitable contributions made during the current year that exceed the 10% limit. 2009 tax return form You lose any excess not used within that period. 2009 tax return form For example, if a corporation has a carryover of excess contributions paid in 2010 and it does not use all the excess on its return for 2011, it can carry any excess over to 2012, 2013, 2014, and 2015, if applicable. 2009 tax return form Any excess not used in 2015 is lost. 2009 tax return form Do not deduct a carryover of excess contributions in the carryover year until after you deduct contributions made in that year (subject to the 10% limit). 2009 tax return form You cannot deduct a carryover of excess contributions to the extent it increases a net operating loss carryover. 2009 tax return form Cash contributions. 2009 tax return form   A corporation must maintain a record of any contribution of cash, check, or other monetary contribution, regardless of the amount. 2009 tax return form The record can be a bank record, receipt, letter, or other written communication from the donee indicating the name of the organization, the date of the contribution, and the amount of the contribution. 2009 tax return form Keep the record of the contribution with the other corporate records. 2009 tax return form Do not attach the records to the corporation's return. 2009 tax return form For more information on cash contributions, see Publication 526. 2009 tax return form Gifts of $250 or more. 2009 tax return form   Generally, no deduction is allowed for any contribution of $250 or more unless the corporation gets a written acknowledgement from the donee organization. 2009 tax return form The acknowledgement should show the amount of cash contributed, a description of the property contributed, and either gives a description and a good faith estimate of the value of any goods or services provided in return for the contribution or states that no goods or services were provided in return for the contribution. 2009 tax return form The acknowledgement should be received by the due date (including extensions) of the return, or, if earlier, the date the return was filed. 2009 tax return form Keep the acknowledgement with other corporate records. 2009 tax return form Do not attach the acknowledgement to the return. 2009 tax return form Contributions of property other than cash. 2009 tax return form   If a corporation (other than a closely-held or a personal service corporation) claims a deduction of more than $500 for contributions of property other than cash, a schedule describing the property and the method used to determine its fair market value must be attached to the corporation's return. 2009 tax return form In addition the corporation should keep a record of: The approximate date and manner of acquisition of the donated property and The cost or other basis of the donated property held by the donor for less than 12 months prior to contribution. 2009 tax return form   Closely held and personal service corporations must complete and attach Form 8283, Noncash Charitable Contributions, to their returns if they claim a deduction of more than $500 for non-cash contributions. 2009 tax return form For all other corporations, if the deduction claimed for donated property exceeds $5,000, complete Form 8283 and attach it to the corporation's return. 2009 tax return form   A corporation must obtain a qualified appraisal for all deductions of property claimed in excess of $5,000. 2009 tax return form A qualified appraisal is not required for the donation of cash, publicly traded securities, inventory, and any qualified vehicles sold by a donee organization without any significant intervening use or material improvement. 2009 tax return form The appraisal should be maintained with other corporate records and only attached to the corporation's return when the deduction claimed exceeds $500,000; $20,000 for donated art work. 2009 tax return form   See Form 8283 for more information. 2009 tax return form Qualified conservation contributions. 2009 tax return form   If a corporation makes a qualified conservation contribution, the corporation must provide information regarding the legal interest being donated, the fair market value of the underlying property before and after the donation, and a description of the conservation purpose for which the property will be used. 2009 tax return form For more information, see section 170(h) of the Internal Revenue Code. 2009 tax return form Contributions of used vehicles. 2009 tax return form   A corporation is allowed a deduction for the contribution of used motor vehicles, boats, and airplanes. 2009 tax return form The deduction is limited, and other special rules apply. 2009 tax return form For more information, see Publication 526. 2009 tax return form Reduction for contributions of certain property. 2009 tax return form   For a charitable contribution of property, the corporation must reduce the contribution by the sum of: The ordinary income and short-term capital gain that would have resulted if the property were sold at its FMV and For certain contributions, the long-term capital gain that would have resulted if the property were sold at its FMV. 2009 tax return form   The reduction for the long-term capital gain applies to: Contributions of tangible personal property for use by an exempt organization for a purpose or function unrelated to the basis for its exemption; Contributions of any property to or for the use of certain private foundations except for stock for which market quotations are readily available; and Contributions of any patent, certain copyrights, trademark, trade name, trade secret, know-how, software (that is a section 197 intangible), or similar property, or applications or registrations of such property. 2009 tax return form Larger deduction. 2009 tax return form   A corporation (other than an S corporation) may be able to claim a deduction equal to the lesser of (a) the basis of the donated inventory or property plus one-half of the inventory or property's appreciation (gain if the donated inventory or property was sold at fair market value on the date of the donation), or (b) two times basis of the donated inventory or property. 2009 tax return form This deduction may be allowed for certain contributions of: Certain inventory and other property made to a donee organization and used solely for the care of the ill, the needy, and infants. 2009 tax return form Scientific property constructed by the corporation (other than an S corporation, personal holding company, or personal service corporation) and donated no later than 2 years after substantial completion of the construction. 2009 tax return form The property must be donated to a qualified organization and its original use must be by the donee for research, experimentation, or research training within the United States in the area of physical or biological science. 2009 tax return form Computer technology and equipment acquired or constructed and donated no later than 3 years after either acquisition or substantial completion of construction to an educational organization for educational purposes within the United States. 2009 tax return form Contributions to organizations conducting lobbying activities. 2009 tax return form   Contributions made to an organization that conducts lobbying activities are not deductible if: The lobbying activities relate to matters of direct financial interest to the donor's trade or business and The principal purpose of the contribution was to avoid federal income tax by obtaining a deduction for activities that would have been nondeductible under the lobbying expense rules if conducted directly by the donor. 2009 tax return form More information. 2009 tax return form   For more information on charitable contributions, including substantiation and recordkeeping requirements, see section 170 of the Internal Revenue Code, the related regulations, and Publication 526. 2009 tax return form Capital Losses A corporation can deduct capital losses only up to the amount of its capital gains. 2009 tax return form In other words, if a corporation has an excess capital loss, it cannot deduct the loss in the current tax year. 2009 tax return form Instead, it carries the loss to other tax years and deducts it from any net capital gains that occur in those years. 2009 tax return form A capital loss is carried to other years in the following order. 2009 tax return form 3 years prior to the loss year. 2009 tax return form 2 years prior to the loss year. 2009 tax return form 1 year prior to the loss year. 2009 tax return form Any loss remaining is carried forward for 5 years. 2009 tax return form When you carry a net capital loss to another tax year, treat it as a short-term loss. 2009 tax return form It does not retain its original identity as long term or short term. 2009 tax return form Example. 2009 tax return form A calendar year corporation has a net short-term capital gain of $3,000 and a net long-term capital loss of $9,000. 2009 tax return form The short-term gain offsets some of the long-term loss, leaving a net capital loss of $6,000. 2009 tax return form The corporation treats this $6,000 as a short-term loss when carried back or forward. 2009 tax return form The corporation carries the $6,000 short-term loss back 3 years. 2009 tax return form In year 1, the corporation had a net short-term capital gain of $8,000 and a net long-term capital gain of $5,000. 2009 tax return form It subtracts the $6,000 short-term loss first from the net short-term gain. 2009 tax return form This results in a net capital gain for year 1 of $7,000. 2009 tax return form This consists of a net short-term capital gain of $2,000 ($8,000 − $6,000) and a net long-term capital gain of $5,000. 2009 tax return form S corporation status. 2009 tax return form   A corporation may not carry a capital loss from, or to, a year for which it is an S corporation. 2009 tax return form Rules for carryover and carryback. 2009 tax return form   When carrying a capital loss from one year to another, the following rules apply. 2009 tax return form When figuring the current year's net capital loss, you cannot combine it with a capital loss carried from another year. 2009 tax return form In other words, you can carry capital losses only to years that would otherwise have a total net capital gain. 2009 tax return form If you carry capital losses from 2 or more years to the same year, deduct the loss from the earliest year first. 2009 tax return form You cannot use a capital loss carried from another year to produce or increase a net operating loss in the year to which you carry it back. 2009 tax return form Refunds. 2009 tax return form   When you carry back a capital loss to an earlier tax year, refigure your tax for that year. 2009 tax return form If your corrected tax is less than the tax you originally owed, use either Form 1139, Corporate Application for Tentative Refund, or Form 1120X, Amended U. 2009 tax return form S. 2009 tax return form Corporation Income Tax Return, to apply for a refund. 2009 tax return form Form 1139. 2009 tax return form    A corporation can get a refund faster by using Form 1139. 2009 tax return form It cannot file Form 1139 before filing the return for the corporation's capital loss year, but it must file Form 1139 no later than 1 year after the year it sustains the capital loss. 2009 tax return form Form 1120X. 2009 tax return form   If the corporation does not file Form 1139, it must file Form 1120X to apply for a refund. 2009 tax return form The corporation must file the Form 1120X within 3 years of the due date, includin
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With a debit card and personal identification number (PIN), you can use an Automated Teller Machine (ATM) to withdraw cash, make deposits, or transfer funds between accounts. Some ATMs charge a fee if you are not a member of the ATM network or are making a transaction at a remote location.

Retail purchases can also be made with a debit card. You enter your PIN or sign for the purchase. Some banks charge customers a fee for debit card purchases made with a PIN. Although a debit card looks like a credit card, the money for the purchase is transferred immediately from your bank account to the store's account. When you use a debit card, federal law also does not give you the right to stop payment. You must resolve the problem with the seller.

If you suspect your debit card has been lost or stolen, call the card issuer immediately. While federal law limits your liability for a lost or stolen credit card to $50, your liability for unauthorized use of your ATM or debit card can be much greater, depending on how quickly you report the loss.

  • If you report a debit card missing before it is used, you are not responsible for any unauthorized withdrawals.
  • Your liability is limited to $50 if you report the loss within two business days after you realize your debit card is missing and to $500 if you report the loss after two but before 60 days.
  • If you have not reported an unauthorized use of a debit or ATM card 60 days after your bank mails the statement documenting the unauthorized use, you could lose all the money in your bank account as well as the unused portion of your line of credit established for overdrafts.

Check the policies of your card issuer. Some offer more generous limits on a voluntary basis.

New Federal Reserve rules give debit and ATM card users additional protections covering overdrafts. Generally, banks cover your overdrafts by charging you a fee or offering an overdraft protection plan, similar to a line of credit. Under the new rules, if your bank pays overdrafts, you have the option to opt into this service for most ATM and debit card transactions. Banks must disclose this option, the amount of the overdraft fee, and the customer's right to cancel this service.

Before You Swipe Your Debit Card

Although both credit cards and debit cards are easy ways to pay for your purchases, debit cards have some different levels of consumer protection and the potential for consumer fees. Debit cards are directly connected to your bank account, so when you swipe your card make sure that you have the money in your account to pay immediately. If you don't have enough money in your account, your bank may "loan" the money and pay the overage. However they may charge you up to $35 for this courtesy, even if the dollar amount the bank covered was small. There may also be fees applied to your card when you use your card with your PIN.

Debit cards don't offer as much protection against fraudulent use, or if your card is lost or stolen. Also, if you need to dispute a purchase, you are in a weaker position because the merchant already has the money and it will only be returned if you win the dispute.

Another fact to keep in mind is when you use your debit card to make reservations for hotels or rental cars, a hold is placed on your debit card (and your checking account) which can affect your other pending transactions. Even if the hold is removed, it may take as long as a week to make the funds available to you again.

The 2009 Tax Return Form

2009 tax return form Publication 600 - Main Contents Table of Contents Actual Expenses Optional Sales Tax Tables Instructions for the State and Local General Sales Tax Deduction WorksheetWhat if you lived in more than one state? What if you lived in more than one locality? What if your local general sales tax rate changed during 2006? What if you lived in more than one locality in the same state during 2006? Actual Expenses Generally, you can deduct the actual state and local general sales taxes (including compensating use taxes) you paid in 2006 if the tax rate was the same as the general sales tax rate. 2009 tax return form However, sales taxes on food, clothing, medical supplies, and motor vehicles are deductible as a general sales tax even if the tax rate was less than the general sales tax rate. 2009 tax return form If you paid sales tax on a motor vehicle at a rate higher than the general sales tax rate, you can deduct only the amount of tax that you would have paid at the general sales tax rate on that vehicle. 2009 tax return form Motor vehicles include cars, motorcycles, motor homes, recreational vehicles, sport utility vehicles, trucks, vans, and off-road vehicles. 2009 tax return form Also include any state and local general sales taxes paid for a leased motor vehicle. 2009 tax return form Do not include sales taxes paid on items used in your trade or business. 2009 tax return form To deduct your actual expenses, enter the amount on Schedule A, line 5, and enter “ST” on the dotted line to the left of the line 5 entry space. 2009 tax return form You must keep your actual receipts showing general sales taxes paid to use this method. 2009 tax return form Refund of general sales taxes. 2009 tax return form   If you received a refund of state or local general sales taxes in 2006 for amounts paid in 2006, reduce your actual 2006 state and local general sales taxes by this amount. 2009 tax return form If you received a refund of state or local general sales taxes in 2006 for prior year purchases, do not reduce your 2006 state and local general sales taxes by this amount. 2009 tax return form But if you deducted your actual state and local general sales taxes in the earlier year and the deduction reduced your tax, you may have to include the refund in income on Form 1040, line 21. 2009 tax return form See Recoveries in Pub. 2009 tax return form 525 for details. 2009 tax return form Optional Sales Tax Tables Instead of using your actual expenses, you can use the tables on pages 5 through 7 to figure your state and local general sales tax deduction. 2009 tax return form You may also be able to add the state and local general sales taxes paid on certain specified items. 2009 tax return form To figure your state and local general sales tax deduction using the tables, complete the worksheet below. 2009 tax return form If your filing status is married filing separately, both you and your spouse elect to deduct sales taxes, and your spouse elects to use the optional sales tax tables, you also must use the tables to figure your state and local general sales tax deduction. 2009 tax return form State and Local General Sales Tax Deduction Worksheet (See the instructions that begin on page 3. 2009 tax return form ) Before you begin: See the instructions for line 1 on page 3 if: You lived in more than one state during 2006, or You had any nontaxable income in 2006. 2009 tax return form   1. 2009 tax return form Enter your state general sales taxes from the applicable table on page 5 or 6 (see page 3 of the instructions) 1. 2009 tax return form $     Next. 2009 tax return form If, for all of 2006, you lived only in Connecticut, the District of Columbia, Hawaii, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, Mississippi, New Jersey, Rhode Island, Virginia, or West Virginia, skip lines 2 through 5, enter -0- on line 6, and go to line 7. 2009 tax return form Otherwise, go to line 2       2. 2009 tax return form Did you live in Alaska, Arizona, Arkansas (Texarkana only), California (Los Angeles County only), Colorado, Georgia, Illinois, Louisiana, New York State, or North Carolina in 2006?         No. 2009 tax return form Enter -0-                   Yes. 2009 tax return form Enter your local general sales taxes from the applicable table on page 7 (see page 3 of the instructions)     2. 2009 tax return form $       3. 2009 tax return form Did your locality impose a local general sales tax in 2006? Residents of California, Nevada, and Texarkana, Arkansas, see page 3 of the instructions             No. 2009 tax return form Skip lines 3 through 5, enter -0- on line 6, and go to line 7             Yes. 2009 tax return form Enter your local general sales tax rate, but omit the percentage sign. 2009 tax return form For example, if your local general sales tax rate was 2. 2009 tax return form 5%, enter 2. 2009 tax return form 5. 2009 tax return form If your local general sales tax rate changed or you lived in more than one locality in the same state during 2006, see page 3 of the instructions. 2009 tax return form (If you do not know your local general sales tax rate, contact your local government. 2009 tax return form ) 3. 2009 tax return form . 2009 tax return form       4. 2009 tax return form Did you enter -0- on line 2 above?             No. 2009 tax return form Skip lines 4 and 5 and go to line 6             Yes. 2009 tax return form Enter your state general sales tax rate (shown in the table heading for your state), but omit the percentage sign. 2009 tax return form For example, if your state general sales tax rate is 6%, enter 6. 2009 tax return form 0 4. 2009 tax return form . 2009 tax return form       5. 2009 tax return form Divide line 3 by line 4. 2009 tax return form Enter the result as a decimal (rounded to at least three places) 5. 2009 tax return form . 2009 tax return form       6. 2009 tax return form Did you enter -0- on line 2 above?             No. 2009 tax return form Multiply line 2 by line 3   6. 2009 tax return form $     Yes. 2009 tax return form Multiply line 1 by line 5. 2009 tax return form If you lived in more than one locality in the same state during 2006, see page 4 of the instructions           7. 2009 tax return form Enter your state and local general sales taxes paid on specified items, if any (see page 4 of the instructions) 7. 2009 tax return form $   8. 2009 tax return form Deduction for general sales taxes. 2009 tax return form Add lines 1, 6, and 7. 2009 tax return form Enter the result here and the total from all your state and local general sales tax deduction worksheets, if you completed more than one, on Schedule A, line 5. 2009 tax return form Be sure to enter “ST” on the dotted line to the left of the entry space 8. 2009 tax return form $     Instructions for the State and Local General Sales Tax Deduction Worksheet Line 1. 2009 tax return form    If you lived in the same state for all of 2006, enter the applicable amount, based on your 2006 income and exemptions, from the optional state sales tax table for your state on page 5 or 6. 2009 tax return form Read down the “At least-But less than” columns for your state and find the line that includes your 2006 income. 2009 tax return form If married filing separately, do not include your spouse's income. 2009 tax return form Your 2006 income is the amount shown on your Form 1040, line 38, plus any nontaxable items, such as the following. 2009 tax return form Tax-exempt interest. 2009 tax return form Veterans' benefits. 2009 tax return form Nontaxable combat pay. 2009 tax return form Workers' compensation. 2009 tax return form Nontaxable part of social security and railroad retirement benefits. 2009 tax return form Nontaxable part of IRA, pension, or annuity distributions. 2009 tax return form Do not include rollovers. 2009 tax return form Public assistance payments. 2009 tax return form The exemptions column refers to the number of exemptions claimed on Form 1040, line 6d. 2009 tax return form Do not include any additional exemptions you listed on Form 8914 for individuals displaced by Hurricane Katrina. 2009 tax return form What if you lived in more than one state?    If you lived in more than one state during 2006, look up the table amount for each state using the above rules. 2009 tax return form If there is no table for your state, the table amount is considered to be zero. 2009 tax return form Multiply the table amount for each state you lived in by a fraction. 2009 tax return form The numerator of the fraction is the number of days you lived in the state during 2006 and the denominator is the total number of days in the year (365). 2009 tax return form Enter the total of the prorated table amounts for each state on line 1. 2009 tax return form However, if you also lived in a locality during 2006 that imposed a local general sales tax, do not enter the total on line 1. 2009 tax return form Instead, complete a separate worksheet for each state you lived in and enter the prorated amount for that state on line 1. 2009 tax return form Example. 2009 tax return form You lived in State A from January 1 through August 31, 2006 (243 days), and in State B from September 1 through December 31, 2006 (122 days). 2009 tax return form The table amount for State A is $500. 2009 tax return form The table amount for State B is $400. 2009 tax return form You would figure your state general sales tax as follows. 2009 tax return form State A: $500 x 243/365 = $333   State B: $400 x 122/365 = 134   Total = $467   If none of the localities in which you lived during 2006 imposed a local general sales tax, enter $467 on line 1 of your worksheet. 2009 tax return form Otherwise, complete a separate worksheet for State A and State B. 2009 tax return form Enter $333 on line 1 of the State A worksheet and $134 on line 1 of the State B worksheet. 2009 tax return form Line 2. 2009 tax return form   If you checked the “No” box, enter -0- on line 2, and go to line 3. 2009 tax return form If you checked the “Yes” box and lived in the same locality for all of 2006, enter the applicable amount, based on your 2006 income and exemptions, from the optional local sales tax table for your locality on page 7. 2009 tax return form Read down the “At least-But less than” columns for your locality and find the line that includes your 2006 income. 2009 tax return form See the line 1 instructions on this page to figure your 2006 income. 2009 tax return form The exemptions column refers to the number of exemptions claimed on Form 1040, line 6d. 2009 tax return form Do not include any additional exemptions you listed on Form 8914 for individuals displaced by Hurricane Katrina. 2009 tax return form What if you lived in more than one locality?   If you lived in more than one locality during 2006, look up the table amount for each locality using the above rules. 2009 tax return form If there is no table for your locality, the table amount is considered to be zero. 2009 tax return form Multiply the table amount for each locality you lived in by a fraction. 2009 tax return form The numerator of the fraction is the number of days you lived in the locality during 2006 and the denominator is the total number of days in the year (365). 2009 tax return form If you lived in more than one locality in the same state and the local general sales tax rate was the same for each locality, enter the total of the prorated table amounts for each locality in that state on line 2. 2009 tax return form Otherwise, complete a separate worksheet for lines 2 through 6 for each locality and enter each prorated table amount on line 2 of the applicable worksheet. 2009 tax return form Example. 2009 tax return form You lived in Locality 1 from January 1 through August 31, 2006 (243 days), and in Locality 2 from September 1 through December 31, 2006 (122 days). 2009 tax return form The table amount for Locality 1 is $100. 2009 tax return form The table amount for Locality 2 is $150. 2009 tax return form You would figure the amount to enter on line 2 as follows. 2009 tax return form Note that this amount may not equal your local sales tax deduction, which is figured on line 6 of the worksheet. 2009 tax return form Locality 1: $100 x 243/365 = $67   Locality 2: $150 x 122/365 = 50   Total = $117   Line 3. 2009 tax return form   If you lived in California, check the “No” box if your combined state and local general sales tax rate is 7. 2009 tax return form 25%. 2009 tax return form Otherwise, check the “Yes” box and include on line 3 only the part of the combined rate that is more than 7. 2009 tax return form 25%. 2009 tax return form   If you lived in Nevada, check the “No” box if your combined state and local general sales tax rate is 6. 2009 tax return form 5%. 2009 tax return form Otherwise, check the “Yes” box and include on line 3 only the part of the combined rate that is more than 6. 2009 tax return form 5%. 2009 tax return form   If you lived in Texarkana, Arkansas, check the “Yes” box and enter “4. 2009 tax return form 0” on line 3. 2009 tax return form Your local general sales tax rate of 4. 2009 tax return form 0% includes the additional 1. 2009 tax return form 0% Arkansas state sales tax rate for Texarkana and the 1. 2009 tax return form 5% sales tax rate for Miller County. 2009 tax return form What if your local general sales tax rate changed during 2006?    If you checked the “Yes” box and your local general sales tax rate changed during 2006, figure the rate to enter on line 3 as follows. 2009 tax return form Multiply each tax rate for the period it was in effect by a fraction. 2009 tax return form The numerator of the fraction is the number of days the rate was in effect during 2006 and the denominator is the total number of days in the year (365). 2009 tax return form Enter the total of the prorated tax rates on line 3. 2009 tax return form Example. 2009 tax return form Locality 1 imposed a 1% local general sales tax from January 1 through September 30, 2006 (273 days). 2009 tax return form The rate increased to 1. 2009 tax return form 75% for the period from October 1 through December 31, 2006 (92 days). 2009 tax return form You would enter “1. 2009 tax return form 189” on line 3, figured as follows. 2009 tax return form January 1 - September 30: 1. 2009 tax return form 00 x 273/365 = 0. 2009 tax return form 748   October 1 - December 31: 1. 2009 tax return form 75 x 92/365 = 0. 2009 tax return form 441   Total = 1. 2009 tax return form 189   What if you lived in more than one locality in the same state during 2006?    Complete a separate worksheet for lines 2 through 6 for each locality in your state if you lived in more than one locality in the same state during 2006 and either of the following applies. 2009 tax return form Each locality did not have the same local general sales tax rate. 2009 tax return form You lived in Texarkana, AR, or Los Angeles County, CA. 2009 tax return form   To figure the amount to enter on line 3 of the worksheet for each locality in which you lived (except a locality for which you used the table on page 7 to figure your local general sales tax deduction), multiply the local general sales tax rate by a fraction. 2009 tax return form The numerator of the fraction is the number of days you lived in the locality during 2006 and the denominator is the total number of days in the year (365). 2009 tax return form Example. 2009 tax return form You lived in Locality 1 from January 1 through August 31, 2006 (243 days), and in Locality 2 from September 1 through December 31, 2006 (122 days). 2009 tax return form The local general sales tax rate for Locality 1 is 1%. 2009 tax return form The rate for Locality 2 is 1. 2009 tax return form 75%. 2009 tax return form You would enter “0. 2009 tax return form 666” on line 3 for the Locality 1 worksheet and “0. 2009 tax return form 585” for the Locality 2 worksheet, figured as follows. 2009 tax return form Locality 1: 1. 2009 tax return form 00 x 243/365 = 0. 2009 tax return form 666   Locality 2: 1. 2009 tax return form 75 x 122/365 = 0. 2009 tax return form 585   Line 6. 2009 tax return form   If you lived in more than one locality in the same state during 2006, you should have completed line 1 only on the first worksheet for that state and separate worksheets for lines 2 through 6 for any other locality within that state in which you lived during 2006. 2009 tax return form If you checked the “Yes” box on line 6 of any of those worksheets, multiply line 5 of that worksheet by the amount that you entered on line 1 for that state on the first worksheet. 2009 tax return form Line 7. 2009 tax return form    Enter on line 7 any state and local general sales taxes paid on the following specified items. 2009 tax return form If you are completing more than one worksheet, include the total for line 7 on only one of the worksheets. 2009 tax return form A motor vehicle (including a car, motorcycle, motor home, recreational vehicle, sport utility vehicle, truck, van, and off-road vehicle). 2009 tax return form Also include any state and local general sales taxes paid for a leased motor vehicle. 2009 tax return form If the state sales tax rate on these items is higher than the general sales tax rate, only include the amount of tax you would have paid at the general sales tax rate. 2009 tax return form An aircraft or boat, if the tax rate was the same as the general sales tax rate. 2009 tax return form A home (including a mobile home or prefabricated home) or substantial addition to or major renovation of a home, but only if the tax rate was the same as the general sales tax rate and any of the following applies. 2009 tax return form Your state or locality imposes a general sales tax directly on the sale of a home or on the cost of a substantial addition or major renovation. 2009 tax return form You purchased the materials to build a home or substantial addition or to perform a major renovation and paid the sales tax directly. 2009 tax return form Under your state law, your contractor is considered your agent in the construction of the home or substantial addition or the performance of a major renovation. 2009 tax return form The contract must state that the contractor is authorized to act in your name and must follow your directions on construction decisions. 2009 tax return form In this case, you will be considered to have purchased any items subject to a sales tax and to have paid the sales tax directly. 2009 tax return form   Do not include sales taxes paid on items used in your trade or business. 2009 tax return form If you received a refund of state or local general sales taxes in 2006, see Refund of general sales taxes on page 1. 2009 tax return form Prev  Up  Next   Home   More Online Publications