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2040 Ez Form

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2040 Ez Form

2040 ez form Index Symbols 403(b) plans Defined, Tax-sheltered annuity plan. 2040 ez form Loans from, without tax consequences, Exception for qualified plan, 403(b) plan, and government plan loans. 2040 ez form Simplified Method to be used, Who must use the Simplified Method. 2040 ez form 5% owners, 5% owners. 2040 ez form A Age 70, Age 70½. 2040 ez form Alimony (see Qualified domestic relations orders (QDROs)) Annuities 5% rate on early distributions, 5% rate on certain early distributions from deferred annuity contracts. 2040 ez form Defined, Annuity. 2040 ez form Fixed-period, Fixed-period annuities. 2040 ez form , Fixed-period annuity. 2040 ez form Guaranteed payments, Guaranteed payments. 2040 ez form Joint and survivor annuities, Joint and survivor annuities. 2040 ez form Minimum distributions from, Minimum distributions from an annuity plan. 2040 ez form Payments under, Annuity payments. 2040 ez form Qualified plan annuity starting before November 19, 1996, Qualified plan annuity starting before November 19, 1996. 2040 ez form Rollovers, Annuity contracts. 2040 ez form (see also Rollovers) Single-life, Annuities for a single life. 2040 ez form , Single-life annuity. 2040 ez form Starting date of, Annuity starting date defined. 2040 ez form , Who must use the Simplified Method. 2040 ez form , Annuity starting before November 19, 1996. 2040 ez form , Annuity starting date. 2040 ez form Before November 19, 1996, Annuity starting before November 19, 1996. 2040 ez form Distribution on or after, Distribution On or After Annuity Starting Date Transfers of contracts, Transfers of Annuity Contracts Types of, Types of pensions and annuities. 2040 ez form Variable annuities, Variable annuities. 2040 ez form , Variable Annuities, Death benefits. 2040 ez form Assistance (see Tax help) B Beneficiaries, Survivors and Beneficiaries C Capital gains Lump-sum distributions, Capital Gain Treatment Cash withdrawals (see Nonperiodic payments) Child support (see Qualified domestic relations orders (QDROs)) Corrective distributions of excess plan contributions, Corrective distributions of excess plan contributions. 2040 ez form Costs Investment in the contract, Cost (Investment in the Contract) Lump-sum distribution, determination for, Cost. 2040 ez form D Death benefits, Death benefits. 2040 ez form Death of employee, Distributions after the employee's death. 2040 ez form , Survivors of employees. 2040 ez form Death of retiree, Survivors of retirees. 2040 ez form Deductible voluntary employee contributions, Deductible voluntary employee contributions. 2040 ez form Defined contribution plans, Defined contribution plan. 2040 ez form Designated Roth accounts Costs, Designated Roth accounts. 2040 ez form Defined, Designated Roth account. 2040 ez form Qualified distributions, Designated Roth accounts. 2040 ez form Rollovers, Designated Roth accounts. 2040 ez form Disability pensions, Disability pensions. 2040 ez form , Disability Pensions Distributions, Examples (see also Rollovers) Beginning date for, Required beginning date. 2040 ez form Early distributions and penalty tax, Payment to you option. 2040 ez form , Tax on Early Distributions Employer securities, Distributions of employer securities. 2040 ez form Loans treated as, Loans Treated as Distributions Lump-sum, Distributions of employer securities. 2040 ez form , Lump-Sum Distributions, Examples Minimum required, Recapture tax for changes in distribution method under equal payment exception. 2040 ez form Nonperiodic, taxation of, Taxation of Nonperiodic Payments Periodic, taxation of, Taxation of Periodic Payments Public safety employees, Qualified public safety employees. 2040 ez form Qualified reservist, Qualified reservist distributions. 2040 ez form U. 2040 ez form S. 2040 ez form savings bonds, Distribution of U. 2040 ez form S. 2040 ez form savings bonds. 2040 ez form Dividends, Taxation of Nonperiodic Payments E Early withdrawal from deferred interest account Penalty tax on, Payment to you option. 2040 ez form , Tax on Early Distributions Employer securities, distributions of, Distributions of employer securities. 2040 ez form Estate tax, Reduction for federal estate tax. 2040 ez form Deduction, Estate tax deduction. 2040 ez form Estimated tax, Estimated tax. 2040 ez form Excess accumulation, tax on, Recapture tax for changes in distribution method under equal payment exception. 2040 ez form Excess plan contributions, corrective distributions of, Corrective distributions of excess plan contributions. 2040 ez form F Figuring taxable amount, Figuring the Taxable Amount, Distribution of U. 2040 ez form S. 2040 ez form savings bonds. 2040 ez form Fixed-period annuities, Fixed-period annuities. 2040 ez form , Fixed-period annuity. 2040 ez form Foreign employment contributions, Foreign employment contributions. 2040 ez form Form 4972, Lump-Sum Distributions W-4P, Choosing no withholding. 2040 ez form Form 1040/1040A Rollovers, How to report. 2040 ez form Form 1040X Changing your mind on lump-sum treatment, Changing your mind. 2040 ez form Form 1099-INT U. 2040 ez form S. 2040 ez form savings bonds distributions, Distribution of U. 2040 ez form S. 2040 ez form savings bonds. 2040 ez form Form 1099-R 10-year tax option for lump-sum distribution, 10-Year Tax Option Corrected form, Introduction Corrective distributions of excess plan contributions, Corrective distributions of excess plan contributions. 2040 ez form Exceptions to tax, Exceptions to tax. 2040 ez form Investment in the contract, Cost (Investment in the Contract) Loan treated as distribution from plan, Reporting by plan. 2040 ez form Rollovers, How to report. 2040 ez form Tax-free exchanges, Tax-free exchange reported on Form 1099-R. 2040 ez form Form 4972 10-year tax option for lump-sum distribution, 10-Year Tax Option Lump-sum distributions, Lump-Sum Distributions, Electing optional lump-sum treatment. 2040 ez form Form 5329 Recapture tax, Recapture tax for changes in distribution method under equal payment exception. 2040 ez form Special additional taxes (penalty taxes), Special Additional Taxes, Exceptions to tax. 2040 ez form Form RRB-1099-R, Form RRB-1099-R. 2040 ez form Form W-4P Withholding from retirement plan payments, Choosing no withholding. 2040 ez form , Nonperiodic distributions. 2040 ez form Form W-4V Voluntary withholding request for social security or railroad retirement benefits, Withholding Tax and Estimated Tax Free tax services, Free help with your tax return. 2040 ez form Frozen deposits, Frozen deposits. 2040 ez form Fully taxable payments, Fully Taxable Payments G General Rule, Partly Taxable Payments, General Rule Death of retiree under, Survivors of retirees. 2040 ez form Investment in the contract, determination of, Cost (Investment in the Contract) Guaranteed payments, Guaranteed payments. 2040 ez form H Help (see Tax help) Home purchase Loans from qualified plans for, Exception for qualified plan, 403(b) plan, and government plan loans. 2040 ez form I In-plan Roth rollovers, In-plan Roth rollovers. 2040 ez form Individual retirement accounts Minimum distributions from, Minimum distributions from an individual account plan. 2040 ez form Rollovers, Rollovers (see also Rollovers) Interest deduction Denial on loan from plan, Denial of interest deduction. 2040 ez form J Joint and survivor annuities, Joint and survivor annuities. 2040 ez form L Loans treated as distributions, Loans Treated as Distributions Local government employees Section 457 plans, Section 457 Deferred Compensation Plans Losses Lump-sum distribution, Losses. 2040 ez form Lump-sum distributions, Distributions of employer securities. 2040 ez form , Lump-Sum Distributions, Examples 10-year tax option, 10-Year Tax Option Capital gain treatment, Capital Gain Treatment Defined, Lump-Sum Distributions Election of, Changing your mind. 2040 ez form Form 4972, Lump-Sum Distributions M Minimum required distributions, Recapture tax for changes in distribution method under equal payment exception. 2040 ez form Missing children, photographs of, Reminders Multiple annuitants, Multiple annuitants. 2040 ez form Multiple-lives annuities, Multiple-lives annuity. 2040 ez form N Net Investment Income Tax, Net investment income tax. 2040 ez form , Distribution Before Annuity Starting Date From a Nonqualified Plan Net unrealized appreciation (NUA), Net unrealized appreciation (NUA). 2040 ez form Deferring tax on, Distributions of employer securities. 2040 ez form Nonperiodic payments Loan treated as, Loans Treated as Distributions Taxation of, Taxation of Nonperiodic Payments Nonqualified plans Distribution before annuity start date, Distribution Before Annuity Starting Date From a Nonqualified Plan General Rule to be used, Who must use the General Rule. 2040 ez form Loans treated as distributions from, Effect on investment in the contract. 2040 ez form Nonresident aliens Railroad retirement, Nonresident aliens. 2040 ez form P Partial rollovers, Partial rollovers. 2040 ez form Partly taxable payments, Partly Taxable Payments Penalty taxes Early distributions, Tax on Early Distributions Excess accumulation, Tax on Excess Accumulation Pensions Defined, Pension. 2040 ez form Disability pensions, Disability pensions. 2040 ez form , Disability Pensions Types of, Types of pensions and annuities. 2040 ez form Periodic payments Taxation of, Taxation of Periodic Payments Withholding tax, Periodic payments. 2040 ez form Public safety officers insurance premiums, Insurance Premiums for Retired Public Safety Officers Public school employees Tax-sheltered annuity plans for (see 403(b) plans) Publications (see Tax help) Q Qualified domestic relations orders (QDROs), Qualified domestic relations order (QDRO). 2040 ez form , Qualified domestic relations order (QDRO). 2040 ez form Alternate payee under and lump-sum distribution, Alternate payee under qualified domestic relations order. 2040 ez form Qualified employee annuities Defined, Qualified employee annuity. 2040 ez form Simplified Method to be used, Who must use the Simplified Method. 2040 ez form Qualified employee plans Defined, Qualified employee plan. 2040 ez form Simplified Method to be used, Who must use the Simplified Method. 2040 ez form Qualified plans, Who must use the General Rule. 2040 ez form (see also specific type of plan ) Distribution before annuity starting date, Distribution Before Annuity Starting Date From a Qualified Plan General Rule, Who must use the General Rule. 2040 ez form Loans from, without tax consequences, Exception for qualified plan, 403(b) plan, and government plan loans. 2040 ez form Rollovers, Qualified retirement plan. 2040 ez form Qualified settlement income Exxon Valdez litigation settlement, Qualified settlement income. 2040 ez form R Railroad retirement benefits, Railroad Retirement Benefits, Repayment of benefits received in an earlier year. 2040 ez form Taxability of, Withholding Tax and Estimated Tax Recapture tax Changes in distribution method, Recapture tax for changes in distribution method under equal payment exception. 2040 ez form Reemployment, Reemployment. 2040 ez form Related employers and related plans, Related employers and related plans. 2040 ez form Repayment of loan within 5 years, Exception for qualified plan, 403(b) plan, and government plan loans. 2040 ez form Required beginning date, Required beginning date. 2040 ez form Required distributions, minimum, Recapture tax for changes in distribution method under equal payment exception. 2040 ez form Retirement bonds, Retirement bonds. 2040 ez form Rollovers, Rollovers, Choosing the right option. 2040 ez form 20% tax rate on distribution, Eligible rollover distribution. 2040 ez form Comparison of direct payment vs. 2040 ez form direct rollover (Table 1), Choosing the right option. 2040 ez form Direct rollover to another qualified plan, Eligible rollover distribution. 2040 ez form , Direct rollover option. 2040 ez form In-plan Roth, In-plan Roth rollovers. 2040 ez form Nonspouse beneficiary, Rollovers by nonspouse beneficiary. 2040 ez form Nontaxable amounts, Rollover of nontaxable amounts. 2040 ez form Notice to recipients of eligible rollover distribution, Written explanation to recipients. 2040 ez form Property and cash distributed, Property and cash distributed. 2040 ez form Roth IRAs, Rollovers to Roth IRAs. 2040 ez form Substitution of other property, Rollovers of property. 2040 ez form Surviving spouse making, Rollover by surviving spouse. 2040 ez form S Section 457 deferred compensation plans, Section 457 Deferred Compensation Plans Securities of employer, distributions of, Distributions of employer securities. 2040 ez form Self-employed persons' rollovers, Rollovers Simplified Method, Partly Taxable Payments, Simplified Method Death of retiree under, Survivors of retirees. 2040 ez form How to use, How to use the Simplified Method. 2040 ez form Investment in the contract, determination of, Cost (Investment in the Contract) Not allowed, Who cannot use the Simplified Method. 2040 ez form Single-sum in connection with start of payments, Single-sum in connection with the start of annuity payments. 2040 ez form Single-life annuities, Annuities for a single life. 2040 ez form , Single-life annuity. 2040 ez form Social security, tax on, Withholding Tax and Estimated Tax State employees Section 457 plans, Section 457 Deferred Compensation Plans State insurer delinquency proceedings, State insurer delinquency proceedings. 2040 ez form Surviving spouse Distribution rules for, Distributions after the employee's death. 2040 ez form Rollovers by, Rollover by surviving spouse. 2040 ez form T Tables Comparison of direct payment vs. 2040 ez form direct rollover (Table 1), Choosing the right option. 2040 ez form Tax help, How To Get Tax Help Tax-free exchanges, Tax-free exchange. 2040 ez form Ten percent tax for early withdrawal, Payment to you option. 2040 ez form , Tax on Early Distributions Ten-year tax option, 10-Year Tax Option Time for making rollover, Time for making rollover. 2040 ez form Transfers of annuity contracts, Transfers of Annuity Contracts TTY/TDD information, How To Get Tax Help U U. 2040 ez form S. 2040 ez form savings bonds Distribution of, Distribution of U. 2040 ez form S. 2040 ez form savings bonds. 2040 ez form V Variable annuities, Variable annuities. 2040 ez form , Variable Annuities Voluntary employee contributions, Deductible voluntary employee contributions. 2040 ez form W Withdrawals, Withdrawals. 2040 ez form Employees withdrawing contributions, Plans that permitted withdrawal of employee contributions. 2040 ez form Withholding, Withholding Tax and Estimated Tax 10% rate used, Nonperiodic distributions. 2040 ez form 20% of eligible rollover, Withholding requirements. 2040 ez form , Payment to you option. 2040 ez form , 20% Mandatory withholding. 2040 ez form Periodic payments, Periodic payments. 2040 ez form Railroad retirement, Tax withholding. 2040 ez form Worksheets Simplified Method, How to use the Simplified Method. 2040 ez form Worksheet A, illustrated, Worksheet A. 2040 ez form Simplified Method Worksheet for Bill Smith Worksheet A, Simplified Method, Worksheet A. 2040 ez form Simplified Method Prev  Up     Home   More Online Publications
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Consumer Protection Offices

City, county, regional, and state consumer offices offer a variety of important services. They might mediate complaints, conduct investigations, prosecute offenders of consumer laws, license and regulate professional service providers, provide educational materials and advocate for consumer rights. To save time, call before sending a written complaint. Ask if the office handles the type of complaint you have and if complaint forms are provided.

State Consumer Protection Offices

Nevada Department of Business and Industry

Website: Nevada Department of Business and Industry

Address: Nevada Department of Business and Industry
Fight Fraud Task Force
555 E. Washington Ave., Suite 4900
Las Vegas, NV 89101

Phone Number: 702-486-2750

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Banking Authorities

The officials listed in this section regulate and supervise state-chartered banks. Many of them handle or refer problems and complaints about other types of financial institutions as well. Some also answer general questions about banking and consumer credit. If you are dealing with a federally chartered bank, check Federal Agencies.

Department of Business and Industry

Website: Department of Business and Industry

Address: Department of Business and Industry
Financial Institutions Division
2785 E. Desert Inn Rd., Suite 180
Las Vegas, NV 89121

Phone Number: 702-486-4120

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Insurance Regulators

Each state has its own laws and regulations for each type of insurance. The officials listed in this section enforce these laws. Many of these offices can also provide you with information to help you make informed insurance buying decisions.

Department of Business and Industry

Website: Department of Business and Industry

Address: Department of Business and Industry
Division of Insurance
2501 E. Sahara Ave., Suite 302
Las Vegas, NV 89104

Phone Number: 702-486-4009

Toll-free: 1-888-872-3234 (NV)

Department of Business and Industry

Website: Department of Business and Industry

Address: Department of Business and Industry
Division of Insurance
Consumer Services Section

1818 E. College Pkwy., Suite 103
Carson City, NV 89706

Phone Number: 775-687-0700

Toll-free: 1-888-872-3234 (NV)

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Securities Administrators

Each state has its own laws and regulations for securities brokers and securities - including stocks, mutual funds, commodities, real estate, etc. The officials and agencies listed in this section enforce these laws and regulations. Many of these offices can also provide information to help you make informed investment decisions.

Office of the Secretary of State

Website: Office of the Secretary of State

Address: Office of the Secretary of State
Securities Division
555 E. Washington Ave.,
Suite 5200
Las Vegas, NV 89101

Phone Number: 702-486-2440

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Utility Commissions

State Utility Commissions regulate services and rates for gas, electricity and telephones within your state. In some states, the utility commissions regulate other services such as water, transportation, and the moving of household goods. Many utility commissions handle consumer complaints. Sometimes, if a number of complaints are received about the same utility matter, they will conduct investigations.

Public Utilities Commission - Northern NV

Website: Public Utilities Commission - Northern NV

Address: Public Utilities Commission - Northern NV
Consumer Complaint Resolution Division
1150 E. William St.
Carson City, NV 89701-3109

Phone Number: 775-684-6100

Public Utilities Commission - Southern NV

Website: Public Utilities Commission - Southern NV

Address: Public Utilities Commission - Southern NV
Consumer Complaint Resolution Division
9075 W. Diablo Dr., Suite 250
Las Vegas, NV 89148

Phone Number: 702-486-2600

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The 2040 Ez Form

2040 ez form 2. 2040 ez form   Electing the Section 179 Deduction Table of Contents Introduction Useful Items - You may want to see: What Property Qualifies?Eligible Property Property Acquired for Business Use Property Acquired by Purchase What Property Does Not Qualify?Land and Improvements Excepted Property How Much Can You Deduct?Dollar Limits Business Income Limit Partnerships and Partners S Corporations Other Corporations How Do You Elect the Deduction? When Must You Recapture the Deduction? Introduction You can elect to recover all or part of the cost of certain qualifying property, up to a limit, by deducting it in the year you place the property in service. 2040 ez form This is the section 179 deduction. 2040 ez form You can elect the section 179 deduction instead of recovering the cost by taking depreciation deductions. 2040 ez form Estates and trusts cannot elect the section 179 deduction. 2040 ez form This chapter explains what property does and does not qualify for the section 179 deduction, what limits apply to the deduction (including special rules for partnerships and corporations), and how to elect it. 2040 ez form It also explains when and how to recapture the deduction. 2040 ez form Useful Items - You may want to see: Publication 537 Installment Sales 544 Sales and Other Dispositions of Assets 954 Tax Incentives for Distressed Communities Form (and Instructions) 4562 Depreciation and Amortization 4797 Sales of Business Property See chapter 6 for information about getting publications and forms. 2040 ez form What Property Qualifies? To qualify for the section 179 deduction, your property must meet all the following requirements. 2040 ez form It must be eligible property. 2040 ez form It must be acquired for business use. 2040 ez form It must have been acquired by purchase. 2040 ez form It must not be property described later under What Property Does Not Qualify . 2040 ez form The following discussions provide information about these requirements and exceptions. 2040 ez form Eligible Property To qualify for the section 179 deduction, your property must be one of the following types of depreciable property. 2040 ez form Tangible personal property. 2040 ez form Other tangible property (except buildings and their structural components) used as: An integral part of manufacturing, production, or extraction or of furnishing transportation, communications, electricity, gas, water, or sewage disposal services, A research facility used in connection with any of the activities in (a) above, or A facility used in connection with any of the activities in (a) for the bulk storage of fungible commodities. 2040 ez form Single purpose agricultural (livestock) or horticultural structures. 2040 ez form See chapter 7 of Publication 225 for definitions and information regarding the use requirements that apply to these structures. 2040 ez form Storage facilities (except buildings and their structural components) used in connection with distributing petroleum or any primary product of petroleum. 2040 ez form Off-the-shelf computer software. 2040 ez form Qualified real property (described below). 2040 ez form Tangible personal property. 2040 ez form   Tangible personal property is any tangible property that is not real property. 2040 ez form It includes the following property. 2040 ez form Machinery and equipment. 2040 ez form Property contained in or attached to a building (other than structural components), such as refrigerators, grocery store counters, office equipment, printing presses, testing equipment, and signs. 2040 ez form Gasoline storage tanks and pumps at retail service stations. 2040 ez form Livestock, including horses, cattle, hogs, sheep, goats, and mink and other furbearing animals. 2040 ez form   The treatment of property as tangible personal property for the section 179 deduction is not controlled by its treatment under local law. 2040 ez form For example, property may not be tangible personal property for the deduction even if treated so under local law, and some property (such as fixtures) may be tangible personal property for the deduction even if treated as real property under local law. 2040 ez form Off-the-shelf computer software. 2040 ez form   Off-the-shelf computer software placed in service during the tax year is qualifying property for purposes of the section 179 deduction. 2040 ez form This is computer software that is readily available for purchase by the general public, is subject to a nonexclusive license, and has not been substantially modified. 2040 ez form It includes any program designed to cause a computer to perform a desired function. 2040 ez form However, a database or similar item is not considered computer software unless it is in the public domain and is incidental to the operation of otherwise qualifying software. 2040 ez form Qualified real property. 2040 ez form   You can elect to treat certain qualified real property you placed in service as section 179 property for tax years beginning in 2013. 2040 ez form If this election is made, the term “section 179 property” will include any qualified real property that is: Qualified leasehold improvement property, Qualified restaurant property, or Qualified retail improvement property. 2040 ez form The maximum section 179 expense deduction that can be elected for qualified section 179 real property is $250,000 of the maximum section 179 deduction of $500,000 in 2013. 2040 ez form For more information, see Special rules for qualified section 179 real property, later. 2040 ez form Also, see Election for certain qualified section 179 real property, later, for information on how to make this election. 2040 ez form Qualified leasehold improvement property. 2040 ez form   Generally, this is any improvement to an interior part of a building (placed in service before January 1, 2014) that is nonresidential real property, provided all of the requirements discussed in chapter 3 under Qualified leasehold improvement property are met. 2040 ez form   In addition, an improvement made by the lessor does not qualify as qualified leasehold improvement property to any subsequent owner unless it is acquired from the original lessor by reason of the lessor’s death or in any of the following types of transactions. 2040 ez form A transaction to which section 381(a) applies, A mere change in the form of conducting the trade or business so long as the property is retained in the trade or business as qualified leasehold improvement property and the taxpayer retains a substantial interest in the trade or business, A like-kind exchange, involuntary conversion, or re-acquisition of real property to the extent that the basis in the property represents the carryover basis, or Certain nonrecognition transactions to the extent that your basis in the property is determined by reference to the transferor’s or distributor’s basis in the property. 2040 ez form Examples include the following. 2040 ez form A complete liquidation of a subsidiary. 2040 ez form A transfer to a corporation controlled by the transferor. 2040 ez form An exchange of property by a corporation solely for stock or securities in another corporation in a reorganization. 2040 ez form Qualified restaurant property. 2040 ez form   Qualified restaurant property is any section 1250 property that is a building or an improvement to a building placed in service after December 31, 2008, and before January 1, 2014. 2040 ez form Also, more than 50% of the building’s square footage must be devoted to preparation of meals and seating for on-premise consumption of prepared meals. 2040 ez form Qualified retail improvement property. 2040 ez form   Generally, this is any improvement (placed in service after December 31, 2008, and before January 1, 2014) to an interior portion of nonresidential real property if it meets the following requirements. 2040 ez form The portion is open to the general public and is used in the retail trade or business of selling tangible property to the general public. 2040 ez form The improvement is placed in service more than 3 years after the date the building was first placed in service. 2040 ez form The expenses are not for the enlargement of the building, any elevator or escalator, any structural components benefiting a common area, or the internal structural framework of the building. 2040 ez form In addition, an improvement made by the lessor does not qualify as qualified retail improvement property to any subsequent owner unless it is acquired from the original lessor by reason of the lessor’s death or in any of the following types of transactions. 2040 ez form A transaction to which section 381(a) applies, A mere change in the form of conducting the trade or business so long as the property is retained in the trade or business as qualified leasehold improvement property and the taxpayer retains a substantial interest in the trade or business, A like-kind exchange, involuntary conversion, or re-acquisition of real property to the extent that the basis in the property represents the carryover basis, or Certain nonrecognition transactions to the extent that your basis in the property is determined by reference to the transferor’s or distributor’s basis in the property. 2040 ez form Examples include the following. 2040 ez form A complete liquidation of a subsidiary. 2040 ez form A transfer to a corporation controlled by the transferor. 2040 ez form An exchange of property by a corporation solely for stock or securities in another corporation in a reorganization. 2040 ez form Property Acquired for Business Use To qualify for the section 179 deduction, your property must have been acquired for use in your trade or business. 2040 ez form Property you acquire only for the production of income, such as investment property, rental property (if renting property is not your trade or business), and property that produces royalties, does not qualify. 2040 ez form Partial business use. 2040 ez form   When you use property for both business and nonbusiness purposes, you can elect the section 179 deduction only if you use the property more than 50% for business in the year you place it in service. 2040 ez form If you use the property more than 50% for business, multiply the cost of the property by the percentage of business use. 2040 ez form Use the resulting business cost to figure your section 179 deduction. 2040 ez form Example. 2040 ez form May Oak bought and placed in service an item of section 179 property costing $11,000. 2040 ez form She used the property 80% for her business and 20% for personal purposes. 2040 ez form The business part of the cost of the property is $8,800 (80% × $11,000). 2040 ez form Property Acquired by Purchase To qualify for the section 179 deduction, your property must have been acquired by purchase. 2040 ez form For example, property acquired by gift or inheritance does not qualify. 2040 ez form Property is not considered acquired by purchase in the following situations. 2040 ez form It is acquired by one component member of a controlled group from another component member of the same group. 2040 ez form Its basis is determined either— In whole or in part by its adjusted basis in the hands of the person from whom it was acquired, or Under the stepped-up basis rules for property acquired from a decedent. 2040 ez form It is acquired from a related person. 2040 ez form Related persons. 2040 ez form   Related persons are described under Related persons earlier. 2040 ez form However, to determine whether property qualifies for the section 179 deduction, treat as an individual's family only his or her spouse, ancestors, and lineal descendants and substitute "50%" for "10%" each place it appears. 2040 ez form Example. 2040 ez form Ken Larch is a tailor. 2040 ez form He bought two industrial sewing machines from his father. 2040 ez form He placed both machines in service in the same year he bought them. 2040 ez form They do not qualify as section 179 property because Ken and his father are related persons. 2040 ez form He cannot claim a section 179 deduction for the cost of these machines. 2040 ez form What Property Does Not Qualify? Certain property does not qualify for the section 179 deduction. 2040 ez form This includes the following. 2040 ez form Land and Improvements Land and land improvements do not qualify as section 179 property. 2040 ez form Land improvements include swimming pools, paved parking areas, wharves, docks, bridges, and fences. 2040 ez form Excepted Property Even if the requirements explained earlier under What Property Qualifies are met, you cannot elect the section 179 deduction for the following property. 2040 ez form Certain property you lease to others (if you are a noncorporate lessor). 2040 ez form Certain property used predominantly to furnish lodging or in connection with the furnishing of lodging. 2040 ez form Air conditioning or heating units. 2040 ez form Property used predominantly outside the United States, except property described in section 168(g)(4) of the Internal Revenue Code. 2040 ez form Property used by certain tax-exempt organizations, except property used in connection with the production of income subject to the tax on unrelated trade or business income. 2040 ez form Property used by governmental units or foreign persons or entities, except property used under a lease with a term of less than 6 months. 2040 ez form Leased property. 2040 ez form   Generally, you cannot claim a section 179 deduction based on the cost of property you lease to someone else. 2040 ez form This rule does not apply to corporations. 2040 ez form However, you can claim a section 179 deduction for the cost of the following property. 2040 ez form Property you manufacture or produce and lease to others. 2040 ez form Property you purchase and lease to others if both the following tests are met. 2040 ez form The term of the lease (including options to renew) is less than 50% of the property's class life. 2040 ez form For the first 12 months after the property is transferred to the lessee, the total business deductions you are allowed on the property (other than rents and reimbursed amounts) are more than 15% of the rental income from the property. 2040 ez form Property used for lodging. 2040 ez form   Generally, you cannot claim a section 179 deduction for property used predominantly to furnish lodging or in connection with the furnishing of lodging. 2040 ez form However, this does not apply to the following types of property. 2040 ez form Nonlodging commercial facilities that are available to those not using the lodging facilities on the same basis as they are available to those using the lodging facilities. 2040 ez form Property used by a hotel or motel in connection with the trade or business of furnishing lodging where the predominant portion of the accommodations is used by transients. 2040 ez form Any certified historic structure to the extent its basis is due to qualified rehabilitation expenditures. 2040 ez form Any energy property. 2040 ez form Energy property. 2040 ez form   Energy property is property that meets the following requirements. 2040 ez form It is one of the following types of property. 2040 ez form Equipment that uses solar energy to generate electricity, to heat or cool a structure, to provide hot water for use in a structure, or to provide solar process heat, except for equipment used to generate energy to heat a swimming pool. 2040 ez form Equipment placed in service after December 31, 2005, and before January 1, 2017, that uses solar energy to illuminate the inside of a structure using fiber-optic distributed sunlight. 2040 ez form Equipment used to produce, distribute, or use energy derived from a geothermal deposit. 2040 ez form For electricity generated by geothermal power, this includes equipment up to (but not including) the electrical transmission stage. 2040 ez form Qualified fuel cell property or qualified microturbine property placed in service after December 31, 2005, and before January 1, 2017. 2040 ez form The construction, reconstruction, or erection of the property must be completed by you. 2040 ez form For property you acquire, the original use of the property must begin with you. 2040 ez form The property must meet the performance and quality standards, if any, prescribed by Income Tax Regulations in effect at the time you get the property. 2040 ez form   For periods before February 14, 2008, energy property does not include any property that is public utility property as defined by section 46(f)(5) of the Internal Revenue Code (as in effect on November 4, 1990). 2040 ez form How Much Can You Deduct? Your section 179 deduction is generally the cost of the qualifying property. 2040 ez form However, the total amount you can elect to deduct under section 179 is subject to a dollar limit and a business income limit. 2040 ez form These limits apply to each taxpayer, not to each business. 2040 ez form However, see Married Individuals under Dollar Limits , later. 2040 ez form For a passenger automobile, the total section 179 deduction and depreciation deduction are limited. 2040 ez form See Do the Passenger Automobile Limits Apply in chapter 5 . 2040 ez form If you deduct only part of the cost of qualifying property as a section 179 deduction, you can generally depreciate the cost you do not deduct. 2040 ez form Trade-in of other property. 2040 ez form   If you buy qualifying property with cash and a trade-in, its cost for purposes of the section 179 deduction includes only the cash you paid. 2040 ez form Example. 2040 ez form Silver Leaf, a retail bakery, traded two ovens having a total adjusted basis of $680 for a new oven costing $1,320. 2040 ez form They received an $800 trade-in allowance for the old ovens and paid $520 in cash for the new oven. 2040 ez form The bakery also traded a used van with an adjusted basis of $4,500 for a new van costing $9,000. 2040 ez form They received a $4,800 trade-in allowance on the used van and paid $4,200 in cash for the new van. 2040 ez form Only the portion of the new property's basis paid by cash qualifies for the section 179 deduction. 2040 ez form Therefore, Silver Leaf's qualifying costs for the section 179 deduction are $4,720 ($520 + $4,200). 2040 ez form Dollar Limits The total amount you can elect to deduct under section 179 for most property placed in service in 2013 generally cannot be more than $500,000. 2040 ez form If you acquire and place in service more than one item of qualifying property during the year, you can allocate the section 179 deduction among the items in any way, as long as the total deduction is not more than $500,000. 2040 ez form You do not have to claim the full $500,000. 2040 ez form Qualified real property (described earlier) that you elected to treat as section 179 real property is limited to $250,000 of the maximum deduction of $500,000 for 2013. 2040 ez form The amount you can elect to deduct is not affected if you place qualifying property in service in a short tax year or if you place qualifying property in service for only a part of a 12-month tax year. 2040 ez form After you apply the dollar limit to determine a tentative deduction, you must apply the business income limit (described later) to determine your actual section 179 deduction. 2040 ez form Example. 2040 ez form In 2013, you bought and placed in service $500,000 in machinery and a $25,000 circular saw for your business. 2040 ez form You elect to deduct $475,000 for the machinery and the entire $25,000 for the saw, a total of $500,000. 2040 ez form This is the maximum amount you can deduct. 2040 ez form Your $25,000 deduction for the saw completely recovered its cost. 2040 ez form Your basis for depreciation is zero. 2040 ez form The basis for depreciation of your machinery is $25,000. 2040 ez form You figure this by subtracting your $475,000 section 179 deduction for the machinery from the $500,000 cost of the machinery. 2040 ez form Situations affecting dollar limit. 2040 ez form   Under certain circumstances, the general dollar limits on the section 179 deduction may be reduced or increased or there may be additional dollar limits. 2040 ez form The general dollar limit is affected by any of the following situations. 2040 ez form The cost of your section 179 property placed in service exceeds $2,000,000. 2040 ez form Your business is an enterprise zone business. 2040 ez form You placed in service a sport utility or certain other vehicles. 2040 ez form You are married filing a joint or separate return. 2040 ez form Costs exceeding $2,000,000 If the cost of your qualifying section 179 property placed in service in a year is more than $2,000,000, you generally must reduce the dollar limit (but not below zero) by the amount of cost over $2,000,000. 2040 ez form If the cost of your section 179 property placed in service during 2013 is $2,500,000 or more, you cannot take a section 179 deduction. 2040 ez form Example. 2040 ez form In 2013, Jane Ash placed in service machinery costing $2,100,000. 2040 ez form This cost is $100,000 more than $2,000,000, so she must reduce her dollar limit to $400,000 ($500,000 − $100,000). 2040 ez form Enterprise Zone Businesses An increased section 179 deduction is available to enterprise zone businesses for qualified zone property placed in service during the tax year, in an empowerment zone. 2040 ez form For more information including the definitions of “enterprise zone business” and “qualified zone property,” see sections 1397A, 1397C, and 1397D of the Internal Revenue Code. 2040 ez form The dollar limit on the section 179 deduction is increased by the smaller of: $35,000, or The cost of section 179 property that is also qualified zone property placed in service before January 1, 2014 (including such property placed in service by your spouse, even if you are filing a separate return). 2040 ez form Note. 2040 ez form   You take into account only 50% (instead of 100%) of the cost of qualified zone property placed in service in a year when figuring the reduced dollar limit for costs exceeding $2,000,000 (explained earlier). 2040 ez form Sport Utility and Certain Other Vehicles You cannot elect to expense more than $25,000 of the cost of any heavy sport utility vehicle (SUV) and certain other vehicles placed in service during the tax year. 2040 ez form This rule applies to any 4-wheeled vehicle primarily designed or used to carry passengers over public streets, roads, or highways, that is rated at more than 6,000 pounds gross vehicle weight and not more than 14,000 pounds gross vehicle weight. 2040 ez form However, the $25,000 limit does not apply to any vehicle: Designed to seat more than nine passengers behind the driver's seat, Equipped with a cargo area (either open or enclosed by a cap) of at least six feet in interior length that is not readily accessible from the passenger compartment, or That has an integral enclosure fully enclosing the driver compartment and load carrying device, does not have seating rearward of the driver's seat, and has no body section protruding more than 30 inches ahead of the leading edge of the windshield. 2040 ez form Married Individuals If you are married, how you figure your section 179 deduction depends on whether you file jointly or separately. 2040 ez form If you file a joint return, you and your spouse are treated as one taxpayer in determining any reduction to the dollar limit, regardless of which of you purchased the property or placed it in service. 2040 ez form If you and your spouse file separate returns, you are treated as one taxpayer for the dollar limit, including the reduction for costs over $2,000,000. 2040 ez form You must allocate the dollar limit (after any reduction) between you equally, unless you both elect a different allocation. 2040 ez form If the percentages elected by each of you do not total 100%, 50% will be allocated to each of you. 2040 ez form Example. 2040 ez form Jack Elm is married. 2040 ez form He and his wife file separate returns. 2040 ez form Jack bought and placed in service $2,000,000 of qualified farm machinery in 2013. 2040 ez form His wife has her own business, and she bought and placed in service $30,000 of qualified business equipment. 2040 ez form Their combined dollar limit is $470,000. 2040 ez form This is because they must figure the limit as if they were one taxpayer. 2040 ez form They reduce the $500,000 dollar limit by the $30,000 excess of their costs over $2,000,000. 2040 ez form They elect to allocate the $470,000 dollar limit as follows. 2040 ez form $446,500 ($470,000 x 95%) to Mr. 2040 ez form Elm's machinery. 2040 ez form $23,500 ($470,000 x 5%) to Mrs. 2040 ez form Elm's equipment. 2040 ez form If they did not make an election to allocate their costs in this way, they would have to allocate $235,000 ($470,000 × 50%) to each of them. 2040 ez form Joint return after filing separate returns. 2040 ez form   If you and your spouse elect to amend your separate returns by filing a joint return after the due date for filing your return, the dollar limit on the joint return is the lesser of the following amounts. 2040 ez form The dollar limit (after reduction for any cost of section 179 property over $2,000,000). 2040 ez form The total cost of section 179 property you and your spouse elected to expense on your separate returns. 2040 ez form Example. 2040 ez form The facts are the same as in the previous example except that Jack elected to deduct $30,000 of the cost of section 179 property on his separate return and his wife elected to deduct $2,000. 2040 ez form After the due date of their returns, they file a joint return. 2040 ez form Their dollar limit for the section 179 deduction is $32,000. 2040 ez form This is the lesser of the following amounts. 2040 ez form $470,000—The dollar limit less the cost of section 179 property over $2,000,000. 2040 ez form $32,000—The total they elected to expense on their separate returns. 2040 ez form Business Income Limit The total cost you can deduct each year after you apply the dollar limit is limited to the taxable income from the active conduct of any trade or business during the year. 2040 ez form Generally, you are considered to actively conduct a trade or business if you meaningfully participate in the management or operations of the trade or business. 2040 ez form Any cost not deductible in one year under section 179 because of this limit can be carried to the next year. 2040 ez form Special rules apply to a 2013 deduction of qualified section 179 real property that is disallowed because of the business income limit. 2040 ez form See Special rules for qualified section 179 property under Carryover of disallowed deduction, later. 2040 ez form Taxable income. 2040 ez form   In general, figure taxable income for this purpose by totaling the net income and losses from all trades and businesses you actively conducted during the year. 2040 ez form Net income or loss from a trade or business includes the following items. 2040 ez form Section 1231 gains (or losses). 2040 ez form Interest from working capital of your trade or business. 2040 ez form Wages, salaries, tips, or other pay earned as an employee. 2040 ez form For information about section 1231 gains and losses, see chapter 3 in Publication 544. 2040 ez form   In addition, figure taxable income without regard to any of the following. 2040 ez form The section 179 deduction. 2040 ez form The self-employment tax deduction. 2040 ez form Any net operating loss carryback or carryforward. 2040 ez form Any unreimbursed employee business expenses. 2040 ez form Two different taxable income limits. 2040 ez form   In addition to the business income limit for your section 179 deduction, you may have a taxable income limit for some other deduction. 2040 ez form You may have to figure the limit for this other deduction taking into account the section 179 deduction. 2040 ez form If so, complete the following steps. 2040 ez form Step Action 1 Figure taxable income without the section 179 deduction or the other deduction. 2040 ez form 2 Figure a hypothetical section 179 deduction using the taxable income figured in Step 1. 2040 ez form 3 Subtract the hypothetical section 179 deduction figured in Step 2 from the taxable income figured in Step 1. 2040 ez form 4 Figure a hypothetical amount for the other deduction using the amount figured in Step 3 as taxable income. 2040 ez form 5 Subtract the hypothetical other deduction figured in Step 4 from the taxable income figured in Step 1. 2040 ez form 6 Figure your actual section 179 deduction using the taxable income figured in Step 5. 2040 ez form 7 Subtract your actual section 179 deduction figured in Step 6 from the taxable income figured in Step 1. 2040 ez form 8 Figure your actual other deduction using the taxable income figured in Step 7. 2040 ez form Example. 2040 ez form On February 1, 2013, the XYZ corporation purchased and placed in service qualifying section 179 property that cost $500,000. 2040 ez form It elects to expense the entire $500,000 cost under section 179. 2040 ez form In June, the corporation gave a charitable contribution of $10,000. 2040 ez form A corporation's limit on charitable contributions is figured after subtracting any section 179 deduction. 2040 ez form The business income limit for the section 179 deduction is figured after subtracting any allowable charitable contributions. 2040 ez form XYZ's taxable income figured without the section 179 deduction or the deduction for charitable contributions is $520,000. 2040 ez form XYZ figures its section 179 deduction and its deduction for charitable contributions as follows. 2040 ez form Step 1– Taxable income figured without either deduction is $520,000. 2040 ez form Step 2– Using $520,000 as taxable income, XYZ's hypothetical section 179 deduction is $500,000. 2040 ez form Step 3– $20,000 ($520,000 − $500,000). 2040 ez form Step 4– Using $20,000 (from Step 3) as taxable income, XYZ's hypothetical charitable contribution (limited to 10% of taxable income) is $2,000. 2040 ez form Step 5– $518,000 ($520,000 − $2,000). 2040 ez form Step 6– Using $518,000 (from Step 5) as taxable income, XYZ figures the actual section 179 deduction. 2040 ez form Because the taxable income is at least $500,000, XYZ can take a $500,000 section 179 deduction. 2040 ez form Step 7– $20,000 ($520,000 − $500,000). 2040 ez form Step 8– Using $20,000 (from Step 7) as taxable income, XYZ's actual charitable contribution (limited to 10% of taxable income) is $2,000. 2040 ez form Carryover of disallowed deduction. 2040 ez form   You can carry over for an unlimited number of years the cost of any section 179 property you elected to expense but were unable to because of the business income limit. 2040 ez form This disallowed deduction amount is shown on line 13 of Form 4562. 2040 ez form You use the amount you carry over to determine your section 179 deduction in the next year. 2040 ez form Enter that amount on line 10 of your Form 4562 for the next year. 2040 ez form   If you place more than one property in service in a year, you can select the properties for which all or a part of the costs will be carried forward. 2040 ez form Your selections must be shown in your books and records. 2040 ez form For this purpose, treat section 179 costs allocated from a partnership or an S corporation as one item of section 179 property. 2040 ez form If you do not make a selection, the total carryover will be allocated equally among the properties you elected to expense for the year. 2040 ez form   If costs from more than one year are carried forward to a subsequent year in which only part of the total carryover can be deducted, you must deduct the costs being carried forward from the earliest year first. 2040 ez form Special rules for qualified section 179 real property. 2040 ez form   You can carry over to 2013 a 2012 deduction attributable to qualified section 179 real property that you elected to expense but were unable to take because of the business income limitation. 2040 ez form Any such 2012 carryover amounts that are not deducted in 2013, plus any 2013 disallowed section 179 expense deductions attributable to qualified real property, are not carried over to 2014. 2040 ez form Instead these amounts are treated as property placed in service on the first day of 2013 for purposes of computing depreciation (including the special depreciation allowance, if applicable). 2040 ez form See section 179(f) of the Internal Revenue Code and Notice 2013-59 for more information. 2040 ez form If there is a sale or other disposition of your property (including a transfer at death) before you can use the full amount of any outstanding carryover of your disallowed section 179 deduction, neither you nor the new owner can deduct any of the unused amount. 2040 ez form Instead, you must add it back to the property's basis. 2040 ez form Partnerships and Partners The section 179 deduction limits apply both to the partnership and to each partner. 2040 ez form The partnership determines its section 179 deduction subject to the limits. 2040 ez form It then allocates the deduction among its partners. 2040 ez form Each partner adds the amount allocated from partnerships (shown on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. 2040 ez form ) to his or her nonpartnership section 179 costs and then applies the dollar limit to this total. 2040 ez form To determine any reduction in the dollar limit for costs over $2,000,000, the partner does not include any of the cost of section 179 property placed in service by the partnership. 2040 ez form After the dollar limit (reduced for any nonpartnership section 179 costs over $2,000,000) is applied, any remaining cost of the partnership and nonpartnership section 179 property is subject to the business income limit. 2040 ez form Partnership's taxable income. 2040 ez form   For purposes of the business income limit, figure the partnership's taxable income by adding together the net income and losses from all trades or businesses actively conducted by the partnership during the year. 2040 ez form See the Instructions for Form 1065 for information on how to figure partnership net income (or loss). 2040 ez form However, figure taxable income without regard to credits, tax-exempt income, the section 179 deduction, and guaranteed payments under section 707(c) of the Internal Revenue Code. 2040 ez form Partner's share of partnership's taxable income. 2040 ez form   For purposes of the business income limit, the taxable income of a partner engaged in the active conduct of one or more of a partnership's trades or businesses includes his or her allocable share of taxable income derived from the partnership's active conduct of any trade or business. 2040 ez form Example. 2040 ez form In 2013, Beech Partnership placed in service section 179 property with a total cost of $2,025,000. 2040 ez form The partnership must reduce its dollar limit by $25,000 ($2,025,000 − $2,000,000). 2040 ez form Its maximum section 179 deduction is $475,000 ($500,000 − $25,000), and it elects to expense that amount. 2040 ez form The partnership's taxable income from the active conduct of all its trades or businesses for the year was $600,000, so it can deduct the full $475,000. 2040 ez form It allocates $40,000 of its section 179 deduction and $50,000 of its taxable income to Dean, one of its partners. 2040 ez form In addition to being a partner in Beech Partnership, Dean is also a partner in the Cedar Partnership, which allocated to him a $30,000 section 179 deduction and $35,000 of its taxable income from the active conduct of its business. 2040 ez form He also conducts a business as a sole proprietor and, in 2013, placed in service in that business qualifying section 179 property costing $55,000. 2040 ez form He had a net loss of $5,000 from that business for the year. 2040 ez form Dean does not have to include section 179 partnership costs to figure any reduction in his dollar limit, so his total section 179 costs for the year are not more than $2,000,000 and his dollar limit is not reduced. 2040 ez form His maximum section 179 deduction is $500,000. 2040 ez form He elects to expense all of the $70,000 in section 179 deductions allocated from the partnerships ($40,000 from Beech Partnership plus $30,000 from Cedar Partnership), plus $55,000 of his sole proprietorship's section 179 costs, and notes that information in his books and records. 2040 ez form However, his deduction is limited to his business taxable income of $80,000 ($50,000 from Beech Partnership, plus $35,000 from Cedar Partnership minus $5,000 loss from his sole proprietorship). 2040 ez form He carries over $45,000 ($125,000 − $80,000) of the elected section 179 costs to 2014. 2040 ez form He allocates the carryover amount to the cost of section 179 property placed in service in his sole proprietorship, and notes that allocation in his books and records. 2040 ez form Different tax years. 2040 ez form   For purposes of the business income limit, if the partner's tax year and that of the partnership differ, the partner's share of the partnership's taxable income for a tax year is generally the partner's distributive share for the partnership tax year that ends with or within the partner's tax year. 2040 ez form Example. 2040 ez form John and James Oak are equal partners in Oak Partnership. 2040 ez form Oak Partnership uses a tax year ending January 31. 2040 ez form John and James both use a tax year ending December 31. 2040 ez form For its tax year ending January 31, 2013, Oak Partnership's taxable income from the active conduct of its business is $80,000, of which $70,000 was earned during 2012. 2040 ez form John and James each include $40,000 (each partner's entire share) of partnership taxable income in computing their business income limit for the 2013 tax year. 2040 ez form Adjustment of partner's basis in partnership. 2040 ez form   A partner must reduce the basis of his or her partnership interest by the total amount of section 179 expenses allocated from the partnership even if the partner cannot currently deduct the total amount. 2040 ez form If the partner disposes of his or her partnership interest, the partner's basis for determining gain or loss is increased by any outstanding carryover of disallowed section 179 expenses allocated from the partnership. 2040 ez form Adjustment of partnership's basis in section 179 property. 2040 ez form   The basis of a partnership's section 179 property must be reduced by the section 179 deduction elected by the partnership. 2040 ez form This reduction of basis must be made even if a partner cannot deduct all or part of the section 179 deduction allocated to that partner by the partnership because of the limits. 2040 ez form S Corporations Generally, the rules that apply to a partnership and its partners also apply to an S corporation and its shareholders. 2040 ez form The deduction limits apply to an S corporation and to each shareholder. 2040 ez form The S corporation allocates its deduction to the shareholders who then take their section 179 deduction subject to the limits. 2040 ez form Figuring taxable income for an S corporation. 2040 ez form   To figure taxable income (or loss) from the active conduct by an S corporation of any trade or business, you total the net income and losses from all trades or businesses actively conducted by the S corporation during the year. 2040 ez form   To figure the net income (or loss) from a trade or business actively conducted by an S corporation, you take into account the items from that trade or business that are passed through to the shareholders and used in determining each shareholder's tax liability. 2040 ez form However, you do not take into account any credits, tax-exempt income, the section 179 deduction, and deductions for compensation paid to shareholder-employees. 2040 ez form For purposes of determining the total amount of S corporation items, treat deductions and losses as negative income. 2040 ez form In figuring the taxable income of an S corporation, disregard any limits on the amount of an S corporation item that must be taken into account when figuring a shareholder's taxable income. 2040 ez form Other Corporations A corporation's taxable income from its active conduct of any trade or business is its taxable income figured with the following changes. 2040 ez form It is figured before deducting the section 179 deduction, any net operating loss deduction, and special deductions (as reported on the corporation's income tax return). 2040 ez form It is adjusted for items of income or deduction included in the amount figured in 1, above, not derived from a trade or business actively conducted by the corporation during the tax year. 2040 ez form How Do You Elect the Deduction? You elect to take the section 179 deduction by completing Part I of Form 4562. 2040 ez form If you elect the deduction for listed property (described in chapter 5), complete Part V of Form 4562 before completing Part I. 2040 ez form For property placed in service in 2013, file Form 4562 with either of the following. 2040 ez form Your original 2013 tax return, whether or not you file it timely. 2040 ez form An amended return for 2013 filed within the time prescribed by law. 2040 ez form An election made on an amended return must specify the item of section 179 property to which the election applies and the part of the cost of each such item to be taken into account. 2040 ez form The amended return must also include any resulting adjustments to taxable income. 2040 ez form You must keep records that show the specific identification of each piece of qualifying section 179 property. 2040 ez form These records must show how you acquired the property, the person you acquired it from, and when you placed it in service. 2040 ez form Election for certain qualified section 179 real property. 2040 ez form   You can elect to expense certain qualified real property that you placed in service as section 179 property for tax years beginning in 2013. 2040 ez form If you elect to treat this property as section 179 property, you must elect the application of the special rules for qualified real property described in section 179(f) of the Internal Revenue Code. 2040 ez form   To make the election, attach a statement indicating you are “electing the application of section 179(f) of the Internal Revenue Code” with either of the following. 2040 ez form Your original 2013 tax return, whether or not you file it timely. 2040 ez form An amended return for 2013 filed within the time prescribed by law. 2040 ez form The amended return must also include any adjustments to taxable income. 2040 ez form   The statement should indicate your election to expense certain qualified real property under section 179(f) on your return. 2040 ez form It must specify one or more of the three types of qualified property (described under Qualified real property ) to which the election applies, the cost of each such type, and the portion of the cost of each such property to be taken into account. 2040 ez form Also, report this on line 6 of Form 4562. 2040 ez form    The maximum section 179 expense deduction that can be taken for qualified section 179 real property is limited to $250,000. 2040 ez form Revoking an election. 2040 ez form   An election (or any specification made in the election) to take a section 179 deduction for 2013 can be revoked without IRS approval by filing an amended return. 2040 ez form The amended return must be filed within the time prescribed by law. 2040 ez form The amended return must also include any resulting adjustments to taxable income. 2040 ez form Once made, the revocation is irrevocable. 2040 ez form When Must You Recapture the Deduction? You may have to recapture the section 179 deduction if, in any year during the property's recovery period, the percentage of business use drops to 50% or less. 2040 ez form In the year the business use drops to 50% or less, you include the recapture amount as ordinary income in Part IV of Form 4797. 2040 ez form You also increase the basis of the property by the recapture amount. 2040 ez form Recovery periods for property are discussed under Which Recovery Period Applies in chapter 4 . 2040 ez form If you sell, exchange, or otherwise dispose of the property, do not figure the recapture amount under the rules explained in this discussion. 2040 ez form Instead, use the rules for recapturing depreciation explained in chapter 3 of Publication 544 under Section 1245 Property. 2040 ez form For qualified real property (described earlier), see Notice 2013-59 for determining the portion of the gain that is attributable to section 1245 property upon the sale or other disposition of qualified real property. 2040 ez form If the property is listed property (described in chapter 5 ), do not figure the recapture amount under the rules explained in this discussion when the percentage of business use drops to 50% or less. 2040 ez form Instead, use the rules for recapturing excess depreciation in chapter 5 under What Is the Business-Use Requirement. 2040 ez form Figuring the recapture amount. 2040 ez form   To figure the amount to recapture, take the following steps. 2040 ez form Figure the depreciation that would have been allowable on the section 179 deduction you claimed. 2040 ez form Begin with the year you placed the property in service and include the year of recapture. 2040 ez form Subtract the depreciation figured in (1) from the section 179 deduction you claimed. 2040 ez form The result is the amount you must recapture. 2040 ez form Example. 2040 ez form In January 2011, Paul Lamb, a calendar year taxpayer, bought and placed in service section 179 property costing $10,000. 2040 ez form The property is not listed property. 2040 ez form The property is 3-year property. 2040 ez form He elected a $5,000 section 179 deduction for the property and also elected not to claim a special depreciation allowance. 2040 ez form He used the property only for business in 2011 and 2012. 2040 ez form In 2013, he used the property 40% for business and 60% for personal use. 2040 ez form He figures his recapture amount as follows. 2040 ez form Section 179 deduction claimed (2011) $5,000. 2040 ez form 00 Minus: Allowable depreciation using Table A-1 (instead of section 179 deduction):   2011 $1,666. 2040 ez form 50   2012 2,222. 2040 ez form 50   2013 ($740. 2040 ez form 50 × 40% (business)) 296. 2040 ez form 20 4,185. 2040 ez form 20 2013 — Recapture amount $ 814. 2040 ez form 80 Paul must include $814. 2040 ez form 80 in income for 2013. 2040 ez form If any qualified zone property placed in service during the year ceases to be used in an empowerment zone by an enterprise zone business in a later year, the benefit of the increased section 179 deduction must be reported as other income on your return. 2040 ez form Prev  Up  Next   Home   More Online Publications