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Aarp Tax Aide

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Aarp Tax Aide

Aarp tax aide 3. Aarp tax aide   Claiming the Special Depreciation Allowance Table of Contents Introduction What Is Qualified Property?Qualified Reuse and Recycling Property Qualified Cellulosic Biofuel Plant Property Qualified Disaster Assistance Property Certain Qualified Property Acquired After December 31, 2007 Election to Accelerate Certain Credits in Lieu of the Special Depreciation Allowance How Much Can You Deduct? How Can You Elect Not To Claim an Allowance? When Must You Recapture an Allowance? Introduction You can take a special depreciation allowance to recover part of the cost of qualified property (defined next), placed in service during the tax year. Aarp tax aide The allowance applies only for the first year you place the property in service. Aarp tax aide For qualified property placed in service in 2013, you can take an additional 50% special allowance. Aarp tax aide The allowance is an additional deduction you can take after any section 179 deduction and before you figure regular depreciation under MACRS for the year you place the property in service. Aarp tax aide This chapter explains what is qualified property. Aarp tax aide It also includes rules regarding how to figure an allowance, how to elect not to claim an allowance, and when you must recapture an allowance. Aarp tax aide Corporations can elect to accelerate certain minimum tax credits in lieu of claiming the special depreciation allowance for eligible qualified property. Aarp tax aide See Election to Accelerate Certain Credits in Lieu of the Special Depreciation Allowance , later. Aarp tax aide See chapter 6 for information about getting publications and forms. Aarp tax aide What Is Qualified Property? Your property is qualified property if it is one of the following. Aarp tax aide Qualified reuse and recycling property. Aarp tax aide Qualified cellulosic biofuel plant property. Aarp tax aide Qualified disaster assistance property. Aarp tax aide Certain qualified property acquired after December 31, 2007. Aarp tax aide The following discussions provide information about the types of qualified property listed above for which you can take the special depreciation allowance. Aarp tax aide Qualified Reuse and Recycling Property You can take a 50% special depreciation allowance for qualified reuse and recycling property. Aarp tax aide Qualified reuse and recycling property is any machinery or equipment (not including buildings or real estate), along with any appurtenance, that is used exclusively to collect, distribute, or recycle qualified reuse and recyclable materials (as defined in section 168(m)(3)(B) of the Internal Revenue Code). Aarp tax aide Qualified reuse and recycling property also includes software necessary to operate such equipment. Aarp tax aide The property must meet the following requirements. Aarp tax aide The property must be depreciated under MACRS. Aarp tax aide The property must have a useful life of at least 5 years. Aarp tax aide The original use of the property must begin with you after August 31, 2008. Aarp tax aide You must have acquired the property by purchase (as discussed under Property Acquired by Purchase in chapter 2 ) after August 31, 2008, with no binding written contract for the acquisition in effect before September 1, 2008. Aarp tax aide The property must be placed in service for use in your trade or business after August 31, 2008. Aarp tax aide Excepted Property Qualified reuse and recycling property does not include any of the following. Aarp tax aide Any rolling stock or other equipment used to transport reuse or recyclable materials. Aarp tax aide Property required to be depreciated using the Alternative Depreciation System (ADS). Aarp tax aide For other property required to be depreciated using ADS, see Required use of ADS under Which Depreciation System (GDS or ADS) Applies , in chapter 4 . Aarp tax aide Other bonus depreciation property to which section 168(k) of the Internal Revenue Code applies. Aarp tax aide Property for which you elected not to claim any special depreciation allowance (discussed later). Aarp tax aide Property placed in service and disposed of in the same tax year. Aarp tax aide Property converted from business use to personal use in the same tax year acquired. Aarp tax aide Property converted from personal use to business use in the same or later tax year may be qualified reuse and recycling property. Aarp tax aide Qualified Cellulosic Biofuel Plant Property You can take a 50% special depreciation allowance for qualified cellulosic biofuel plant property. Aarp tax aide Cellulosic biofuel is any liquid fuel which is produced from any lignocellulosic or hemicellulosic matter that is available on a renewable or recurring basis. Aarp tax aide Examples include bagasse (from sugar cane), corn stalks, and switchgrass. Aarp tax aide The property must meet the following requirements. Aarp tax aide The property is used in the United States solely to produce cellulosic biofuel. Aarp tax aide The original use of the property must begin with you after December 20, 2006. Aarp tax aide You must have acquired the property by purchase (as discussed under Property Acquired by Purchase in chapter 2 ) after December 20, 2006, with no binding written contract for acquisition in effect before December 21, 2006. Aarp tax aide The property must be placed in service for use in your trade or business or for the production of income after October 3, 2008, and before January 3, 2013. Aarp tax aide Note. Aarp tax aide For property placed in service after January 2, 2013, and before January 1, 2014, you can take a 50% special depreciation allowance for qualified second generation biofuel plant property that is used solely in the United States to produce second generation biofuel (as defined in section 40(b)(6)(E)). Aarp tax aide The other requirements for qualified second generation biofuel plant property to be eligible for the special depreciation allowance are identical to the requirements discussed for Qualified Cellulosic Biofuel Plant Property above. Aarp tax aide Special Rules Sale-leaseback. Aarp tax aide   If you sold qualified cellulosic biofuel plant property you placed in service after October 3, 2008, and leased it back within 3 months after you originally placed it in service, the property is treated as originally placed in service no earlier than the date it is used by you under the leaseback. Aarp tax aide   The property will not qualify for the special allowance if the lessee or a related person to the lessee or lessor had a written binding contract in effect for the acquisition of the property before December 21, 2006. Aarp tax aide Syndicated leasing transactions. Aarp tax aide   If qualified cellulosic biofuel plant property is originally placed in service by a lessor after October 3, 2008, the property is sold within 3 months of the date it was placed in service, and the user of the property does not change, then the property is treated as originally placed in service by the taxpayer no earlier than the date of the last sale. Aarp tax aide   Multiple units of property subject to the same lease will be treated as originally placed in service no earlier than the date of sale if the property is sold within 3 months after the final unit is placed in service and the period between the times the first and last units are placed in service does not exceed 12 months. Aarp tax aide Excepted Property Qualified cellulosic biofuel plant property does not include any of the following. Aarp tax aide Property placed in service and disposed of in the same tax year. Aarp tax aide Property converted from business use to personal use in the same tax year it is acquired. Aarp tax aide Property converted from personal use to business use in the same or later tax year may be qualified cellulosic biomass ethanol plant property. Aarp tax aide Property required to be depreciated using the Alternative Depreciation System (ADS). Aarp tax aide For other property required to be depreciated using ADS, see Required use of ADS under Which Depreciation System (GDS or ADS) Applies , in chapter 4 . Aarp tax aide Property any portion of which is financed with the proceeds of any obligation the interest on which is exempt from tax under section 103 of the Internal Revenue Code. Aarp tax aide Property for which you elected not to claim any special depreciation allowance (discussed later). Aarp tax aide Property for which a deduction was taken under section 179C for certain qualified refinery property. Aarp tax aide Other bonus depreciation property to which section 168(k) of the Internal Revenue Code applies. Aarp tax aide Qualified Disaster Assistance Property You can take a 50% special depreciation allowance for qualified disaster assistance property placed in service in federally declared disaster areas in which the disaster occurred in 2009. Aarp tax aide A list of the federally declared disaster areas is available at the FEMA website at www. Aarp tax aide fema. Aarp tax aide gov. Aarp tax aide Your property is qualified disaster assistance property if it meets the following requirements. Aarp tax aide The property is nonresidential real property or residential real property placed in service before January 1, 2014, in a federally declared disaster area in which the disaster occurred in 2009. Aarp tax aide You must have acquired the property by purchase (as discussed under Property Acquired by Purchase in chapter 2 ) on or after the applicable disaster date, with no binding written contract for the acquisition in effect before the applicable disaster date. Aarp tax aide The property must rehabilitate property damaged, or replace property destroyed or condemned, as a result of the applicable federally declared disaster. Aarp tax aide The property must be similar in nature to, and located in the same county as, the rehabilitated or replaced property. Aarp tax aide The original use of the property within the applicable disaster area must have begun with you on or after the applicable disaster date. Aarp tax aide The property is placed in service by you on or before the date which is the last day of the fourth calendar year. Aarp tax aide Substantially all (80% or more) of the use of the property must be in the active conduct of your trade or business in a federally declared disaster area, occurring in 2009. Aarp tax aide It is not excepted property (explained later in Excepted Property ). Aarp tax aide Special Rules Sale-leaseback. Aarp tax aide   If you sold qualified disaster assistance property you placed in service after the applicable disaster date and leased it back within 3 months after you originally placed it in service, the property is treated as originally placed in service no earlier than the date it is used by you under the leaseback. Aarp tax aide   The property will not qualify for the special allowance if the lessee or a related person to the lessee or lessor had a written binding contract in effect for the acquisition of the property before the applicable disaster date. Aarp tax aide Syndicated leasing transactions. Aarp tax aide   If qualified disaster assistance property is originally placed in service by a lessor after the applicable disaster date, the property is sold within 3 months of the date it was placed in service, and the user of the property does not change, then the property is treated as originally placed in service by the taxpayer no earlier than the date of the last sale. Aarp tax aide   Multiple units of property subject to the same lease will be treated as originally placed in service no earlier than the date of sale if the property is sold within 3 months after the final unit is placed in service and the period between the times the first and last units are placed in service does not exceed 12 months. Aarp tax aide Excepted Property Qualified disaster assistance property does not include any of the following. Aarp tax aide Property required to be depreciated using the Alternative Depreciation System (ADS). Aarp tax aide For other property required to be depreciated using ADS, see Required use of ADS under Which Depreciation System (GDS or ADS) Applies , in chapter 4 . Aarp tax aide Property any portion of which is financed with the proceeds of a tax-exempt obligation under section 103 of the Internal Revenue Code. Aarp tax aide Any qualified revitalization building (defined later) placed in service before January 1, 2010, for which you have elected to claim a commercial revitalization deduction for qualified revitalization expenditures. Aarp tax aide Any property used in connection with any private or commercial golf course, country club, massage parlor, hot tub facility, suntan facility, or any store, the principal business of which is the sale of alcoholic beverages for consumption off premises. Aarp tax aide Any property for which the special allowance under section 168(k) or section 1400N(d) of the Internal Revenue Code applies. Aarp tax aide Property for which you elected not to claim any special depreciation allowance (discussed later). Aarp tax aide Property placed in service and disposed of in the same tax year. Aarp tax aide Property converted from business use to personal use in the same tax year acquired. Aarp tax aide Property converted from personal use to business use in the same or later tax year may be qualified disaster assistance property. Aarp tax aide Any gambling or animal racing property (defined later). Aarp tax aide Qualified revitalization building. Aarp tax aide   This is a commercial building and its structural components that you placed in service in a renewal community before January 1, 2010. Aarp tax aide If the building is new, the original use of the building must begin with you. Aarp tax aide If the building is not new, you must substantially rehabilitate the building and then place it in service. Aarp tax aide For more information, including definitions of substantially rehabilitated building and qualified revitalization expenditure, see section 1400I(b) of the Internal Revenue Code. Aarp tax aide Gambling or animal racing property. Aarp tax aide   Gambling or animal racing property includes the following personal and real property. Aarp tax aide Any equipment, furniture, software, or other property used directly in connection with gambling, the racing of animals, or the on-site viewing of such racing. Aarp tax aide Any real property determined by square footage (other than any portion that is less than 100 square feet) that is dedicated to gambling, the racing of animals, or the on-site viewing of such racing. Aarp tax aide Certain Qualified Property Acquired After December 31, 2007 You can take a 50% special depreciation deduction allowance for certain qualified property acquired after December 31, 2007. Aarp tax aide Your property is qualified property if it meets the following requirements. Aarp tax aide It is one of the following types of property. Aarp tax aide Tangible property depreciated under MACRS with a recovery period of 20 years or less. Aarp tax aide Water utility property. Aarp tax aide Computer software that is readily available for purchase by the general public, is subject to a nonexclusive license, and has not been substantially modified. Aarp tax aide (The cost of some computer software is treated as part of the cost of hardware and is depreciated under MACRS. Aarp tax aide ) Qualified leasehold improvement property (defined under Qualified leasehold improvement property later). Aarp tax aide You must have acquired the property after December 31, 2007, with no binding written contract for the acquisition in effect before January 1, 2008. Aarp tax aide The property must be placed in service for use in your trade or business or for the production of income before January 1, 2014 (before January 1, 2015, for certain property with a long production period and certain aircraft (defined next)). Aarp tax aide The original use of the property must begin with you after December 31, 2007. Aarp tax aide It is not excepted property (explained later in Excepted property). Aarp tax aide Qualified leasehold improvement property. Aarp tax aide    Generally, this is any improvement to an interior part of a building that is nonresidential real property, if all the following requirements are met. Aarp tax aide The improvement is made under or according to a lease by the lessee (or any sublessee) or the lessor of that part of the building. Aarp tax aide That part of the building is to be occupied exclusively by the lessee (or any sublessee) of that part. Aarp tax aide The improvement is placed in service more than 3 years after the date the building was first placed in service by any person. Aarp tax aide The improvement is section 1250 property. Aarp tax aide See chapter 3 in Publication 544, Sales and Other Dispositions of Assets, for the definition of section 1250 property. Aarp tax aide   However, a qualified leasehold improvement does not include any improvement for which the expenditure is attributable to any of the following. Aarp tax aide The enlargement of the building. Aarp tax aide Any elevator or escalator. Aarp tax aide Any structural component benefiting a common area. Aarp tax aide The internal structural framework of the building. Aarp tax aide   Generally, a binding commitment to enter into a lease is treated as a lease and the parties to the commitment are treated as the lessor and lessee. Aarp tax aide However, a lease between related persons is not treated as a lease. Aarp tax aide Related persons. Aarp tax aide   For this purpose, the following are related persons. Aarp tax aide Members of an affiliated group. Aarp tax aide An individual and a member of his or her family, including only a spouse, child, parent, brother, sister, half-brother, half-sister, ancestor, and lineal descendant. Aarp tax aide A corporation and an individual who directly or indirectly owns 80% or more of the value of the outstanding stock of that corporation. Aarp tax aide Two corporations that are members of the same controlled group. Aarp tax aide A trust fiduciary and a corporation if 80% or more of the value of the outstanding stock is directly or indirectly owned by or for the trust or grantor of the trust. Aarp tax aide The grantor and fiduciary, and the fiduciary and beneficiary, of any trust. Aarp tax aide The fiduciaries of two different trusts, and the fiduciaries and beneficiaries of two different trusts, if the same person is the grantor of both trusts. Aarp tax aide A tax-exempt educational or charitable organization and any person (or, if that person is an individual, a member of that person's family) who directly or indirectly controls the organization. Aarp tax aide Two S corporations, and an S corporation and a regular corporation, if the same persons own 80% or more of the value of the outstanding stock of each corporation. Aarp tax aide A corporation and a partnership if the same persons own both of the following. Aarp tax aide 80% or more of the value of the outstanding stock of the corporation. Aarp tax aide 80% or more of the capital or profits interest in the partnership. Aarp tax aide The executor and beneficiary of any estate. Aarp tax aide Long Production Period Property To be qualified property, long production period property must meet the following requirements. Aarp tax aide It must meet the requirements in (2)-(5), above. Aarp tax aide The property has a recovery period of at least 10 years or is transportation property. Aarp tax aide Transportation property is tangible personal property used in the trade or business of transporting persons or property. Aarp tax aide The property is subject to section 263A of the Internal Revenue Code. Aarp tax aide The property has an estimated production period exceeding 1 year and an estimated production cost exceeding $1,000,000. Aarp tax aide Noncommercial Aircraft To be qualified property, noncommercial aircraft must meet the following requirements. Aarp tax aide It must meet the requirements in (2)-(5), above. Aarp tax aide The aircraft must not be tangible personal property used in the trade or business of transporting persons or property (except for agricultural or firefighting purposes). Aarp tax aide The aircraft must be purchased (as discussed under Property Acquired by Purchase in chapter 2 ) by a purchaser who at the time of the contract for purchase, makes a nonrefundable deposit of the lesser of 10% of the cost or $100,000. Aarp tax aide The aircraft must have an estimated production period exceeding four months and a cost exceeding $200,000. Aarp tax aide Special Rules Sale-leaseback. Aarp tax aide   If you sold qualified property you placed in service after December 31, 2007, and leased it back within 3 months after you originally placed in service, the property is treated as originally placed in service no earlier than the date it is used by you under the leaseback. Aarp tax aide   The property will not qualify for the special depreciation allowance if the lessee or a related person to the lessee or lessor had a written binding contract in effect for the acquisition of the property before January 1, 2008. Aarp tax aide Syndicated leasing transactions. Aarp tax aide   If qualified property is originally placed in service by a lessor after December 31, 2007, the property is sold within 3 months of the date it was placed in service, and the user of the property does not change, then the property is treated as originally placed in service by the taxpayer no earlier than the date of the last sale. Aarp tax aide   Multiple units of property subject to the same lease will be treated as originally placed in service no earlier than the date of the last sale if the property is sold within 3 months after the final unit is placed in service and the period between the time the first and last units are placed in service does not exceed 12 months. Aarp tax aide Excepted Property Qualified property does not include any of the following. Aarp tax aide Property placed in service and disposed of in the same tax year. Aarp tax aide Property converted from business use to personal use in the same tax year acquired. Aarp tax aide Property converted from personal use to business use in the same or later tax year may be qualified property. Aarp tax aide Property required to be depreciated under the Alternative Depreciation System (ADS). Aarp tax aide This includes listed property used 50% or less in a qualified business use. Aarp tax aide For other property required to be depreciated using ADS, see Required use of ADS under Which Depreciation System (GDS or ADS) Applies , in chapter 4 . Aarp tax aide Qualified restaurant property (as defined in section 168(e)(7) of the Internal Revenue Code). Aarp tax aide Qualified retail improvement property (as defined in section 168(e)(8) of the Internal Revenue Code). Aarp tax aide Property for which you elected not to claim any special depreciation allowance (discussed later). Aarp tax aide Property for which you elected to accelerate certain credits in lieu of the special depreciation allowance (discussed next). Aarp tax aide Election to Accelerate Certain Credits in Lieu of the Special Depreciation Allowance An election made by a corporation to claim pre-2006 unused minimum tax credits in lieu of claiming the special depreciation allowance for either its first tax year ending after March 31, 2008, its first tax year ending after December 31, 2008, or its first tax year ending after December 31, 2010, continues to apply to round 2 extension property (as defined in section 168(k)(4)(I)(iv)), unless the corporation made an election not to apply the section 168(k)(4) election to round 2 extension property for its first tax year ending after December 31, 2010. Aarp tax aide For 2013, round 2 extension property generally is long production period and noncommercial aircraft if acquired after March 31, 2008, and placed in service after December 31, 2012, but before January 1, 2014. Aarp tax aide An election made by a corporation to claim pre-2006 unused minimum tax credits in lieu of claiming the special depreciation allowance for either its first tax year ending after March 31, 2008, its first tax year ending after December 31, 2008, or its first tax year ending after December 31, 2010, continues to apply to round 3 extension property (as defined in section 168(k)(4)(J)(iv)), unless the corporation makes an election not to apply the section 168(k)(4) election to round 3 extension property. Aarp tax aide If a corporation did not make a section 168(k)(4) election for either its first tax year ending after March 31, 2008, its first tax year ending after December 31, 2008, or its first tax year ending after December 31, 2010, the corporation may elect for its first tax year ending after December 31, 2012, to claim pre-2006 unused minimum tax credits in lieu of claiming the special depreciation allowance for only round 3 extension property. Aarp tax aide If you make an election to accelerate these credits in lieu of claiming the special depreciation allowance for eligible property, you must not take the 50% special depreciation allowance for the property and must depreciate the basis in the property under MACRS using the straight line method. Aarp tax aide See Which Depreciation Method Applies in chapter 4 . Aarp tax aide Once made, the election cannot be revoked without IRS consent. Aarp tax aide Additional guidance. Aarp tax aide   For additional guidance on the election to accelerate the research or minimum tax credit in lieu of claiming the special depreciation allowance, see Rev. Aarp tax aide Proc. Aarp tax aide 2008-65 on page 1082 of Internal Revenue Bulletin 2008-44, available at www. Aarp tax aide irs. Aarp tax aide gov/pub/irs-irbs/irb08-44. Aarp tax aide pdf, Rev. Aarp tax aide Proc. Aarp tax aide 2009-16 on page 449 of Internal Revenue Bulletin 2009-06, available at www. Aarp tax aide irs. Aarp tax aide gov/pub/irs-irbs/irb09-06. Aarp tax aide pdf, and Rev. Aarp tax aide Proc. Aarp tax aide 2009-33 on page 150 of Internal Revenue Bulletin 2009-29, available at www. Aarp tax aide irs. Aarp tax aide gov/pub/irs-irbs/irb09-29. Aarp tax aide pdf. Aarp tax aide Also, see Form 3800, General Business Credit; Form 8827, Credit for Prior Year Minimum Tax — Corporations; and related instructions. Aarp tax aide   Additional guidance regarding the election to accelerate the minimum tax credit in lieu of claiming the special depreciation allowance for round 2 extension property and round 3 extension property may also be available in later Internal Revenue Bulletins available at www. Aarp tax aide irs. Aarp tax aide gov/irb. Aarp tax aide How Much Can You Deduct? Figure the special depreciation allowance by multiplying the depreciable basis of qualified reuse and recycling property, qualified cellulosic biofuel plant property, qualified disaster assistance property, and certain qualified property acquired after December 31, 2007, by 50%. Aarp tax aide For qualified property other than listed property, enter the special allowance on line 14 in Part II of Form 4562. Aarp tax aide For qualified property that is listed property, enter the special allowance on line 25 in Part V of Form 4562. Aarp tax aide If you place qualified property in service in a short tax year, you can take the full amount of a special depreciation allowance. Aarp tax aide Depreciable basis. Aarp tax aide   This is the property's cost or other basis multiplied by the percentage of business/investment use, reduced by the total amount of any credits and deductions allocable to the property. Aarp tax aide   The following are examples of some credits and deductions that reduce depreciable basis. Aarp tax aide Any section 179 deduction. Aarp tax aide Any deduction for removal of barriers to the disabled and the elderly. Aarp tax aide Any disabled access credit, enhanced oil recovery credit, and credit for employer-provided childcare facilities and services. Aarp tax aide Basis adjustment to investment credit property under section 50(c) of the Internal Revenue Code. Aarp tax aide   For additional credits and deductions that affect basis, see section 1016 of the Internal Revenue Code. Aarp tax aide   For information about how to determine the cost or other basis of property, see What Is the Basis of Your Depreciable Property in chapter 1 . Aarp tax aide For a discussion of business/investment use, see Partial business or investment use under Property Used in Your Business or Income-Producing Activity in chapter 1 . Aarp tax aide Depreciating the remaining cost. Aarp tax aide   After you figure your special depreciation allowance for your qualified property, you can use the remaining cost to figure your regular MACRS depreciation deduction (discussed in chapter 4 . Aarp tax aide Therefore, you must reduce the depreciable basis of the property by the special depreciation allowance before figuring your regular MACRS depreciation deduction. Aarp tax aide Example. Aarp tax aide On November 1, 2013, Tom Brown bought and placed in service in his business qualified property that cost $450,000. Aarp tax aide He did not elect to claim a section 179 deduction. Aarp tax aide He deducts 50% of the cost ($225,000) as a special depreciation allowance for 2013. Aarp tax aide He uses the remaining $225,000 of cost to figure his regular MACRS depreciation deduction for 2013 and later years. Aarp tax aide Like-kind exchanges and involuntary conversions. Aarp tax aide   If you acquire qualified property in a like-kind exchange or involuntary conversion, the carryover basis of the acquired property is eligible for a special depreciation allowance. Aarp tax aide After you figure your special allowance, you can use the remaining carryover basis to figure your regular MACRS depreciation deduction. Aarp tax aide In the year you claim the allowance (the year you place in service the property received in the exchange or dispose of involuntarily converted property), you must reduce the carryover basis of the property by the allowance before figuring your regular MACRS depreciation deduction. Aarp tax aide See Figuring the Deduction for Property Acquired in a Nontaxable Exchange , in chapter 4 under How Is the Depreciation Deduction Figured . Aarp tax aide The excess basis (the part of the acquired property's basis that exceeds its carryover basis) is also eligible for a special depreciation allowance. Aarp tax aide How Can You Elect Not To Claim an Allowance? You can elect, for any class of property, not to deduct any special allowances for all property in such class placed in service during the tax year. Aarp tax aide To make an election, attach a statement to your return indicating what election you are making and the class of property for which you are making the election. Aarp tax aide When to make election. Aarp tax aide   Generally, you must make the election on a timely filed tax return (including extensions) for the year in which you place the property in service. Aarp tax aide   However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the original return (not including extensions). Aarp tax aide Attach the election statement to the amended return. Aarp tax aide On the amended return, write “Filed pursuant to section 301. Aarp tax aide 9100-2. Aarp tax aide ” Revoking an election. Aarp tax aide   Once you elect not to deduct a special depreciation allowance for a class of property, you cannot revoke the election without IRS consent. Aarp tax aide A request to revoke the election is a request for a letter ruling. Aarp tax aide If you elect not to have any special allowance apply, the property may be subject to an alternative minimum tax adjustment for depreciation. Aarp tax aide When Must You Recapture an Allowance? When you dispose of property for which you claimed a special depreciation allowance, any gain on the disposition is generally recaptured (included in income) as ordinary income up to the amount of the special depreciation allowance previously allowed or allowable. Aarp tax aide See When Do You Recapture MACRS Depreciation in chapter 4 or more information. Aarp tax aide Recapture of allowance deducted for qualified GO Zone property. Aarp tax aide   If, in any year after the year you claim the special depreciation allowance for qualified GO Zone property (including specified GO Zone extension property), the property ceases to be used in the GO Zone, you may have to recapture as ordinary income the excess benefit you received from claiming the special depreciation allowance. Aarp tax aide For additional guidance, see Notice 2008-25 on page 484 of Internal Revenue Bulletin 2008-9. Aarp tax aide Qualified cellulosic biomass ethanol plant property and qualified cellulosic biofuel plant property. Aarp tax aide   If, in any year after the year you claim the special depreciation allowance for any qualified cellulosic biomass ethanol plant property or qualified biofuel plant property, the property ceases to be qualified cellulosic biomass ethanol plant property or qualified biofuel plant property, you may have to recapture as ordinary income the excess benefit you received from claiming the special depreciation allowance. Aarp tax aide Recapture of allowance for qualified Recovery Assistance property. Aarp tax aide   If, in any year after the year you claim the special depreciation allowance for qualified Recovery Assistance property, the property ceases to be used in the Kansas disaster area, you may have to recapture as ordinary income the excess benefit you received from claiming the special depreciation allowance. Aarp tax aide For additional guidance, see Notice 2008-67 on page 307 of Internal Revenue Bulletin 2008-32. Aarp tax aide Recapture of allowance for qualified disaster assistance property. Aarp tax aide   If, in any year after the year you claim the special depreciation allowance for qualified disaster assistance property, the property ceases to be used in the applicable disaster area, you may have to recapture as ordinary income the excess benefit you received from claiming the special depreciation allowance. Aarp tax aide   For additional guidance, see Notice 2008-67 on page 307 of Internal Revenue Bulletin 2008-32. Aarp tax aide Prev  Up  Next   Home   More Online Publications
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The Aarp Tax Aide

Aarp tax aide Publication 557 - Introductory Material Table of Contents What's New Reminders Introduction What's New Proposed regulations on “good faith determinations”. Aarp tax aide  Proposed regulations modify standards for making a good faith determination that a foreign organization is a charitable organization, grants to which may be qualifying distributions and not taxable expenditures. Aarp tax aide The proposed regulations identify a broader class of tax practitioners upon whose written advice a private foundation may base a “good faith determination. Aarp tax aide ” See, Proposed Regulations: Reliance Standards for Making Good Faith Determinations, REG-134974-12, 2012-47 I. Aarp tax aide R. Aarp tax aide B. Aarp tax aide 553. Aarp tax aide Prop. Aarp tax aide Regs. Aarp tax aide on Good Faith Determinations. Aarp tax aide New Requirements for section 501(c)(3) Hospitals Under the Affordable Care Act. Aarp tax aide  The Affordable Care Act (ACA), enacted March 23, 2010, added new requirements that hospital organizations must satisfy in order to be described in section 501(c)(3), as well as new reporting requirements and excise taxes. Aarp tax aide On June 22, 2012, the Service issued a notice of proposed rulemaking that addresses the new requirements enacted by the ACA applicable to section 501(c)(3) hospital organizations. Aarp tax aide See, Proposed Regulations: Additional Requirements for Charitable Hospitals, REG-13026-11, 77 Fed. Aarp tax aide Reg. Aarp tax aide 38148. Aarp tax aide On April 3, 2013, the Service issued proposed regulations on the ACA's community health needs assessment (CHNA) requirements. Aarp tax aide The proposed regulations also discuss the related reporting and excise tax requirements for charitable hospitals and the consequences for failure to satisfy the section 501(r) requirements. Aarp tax aide See, Proposed Regulations: Community Health Needs Assessments for Charitable Hospitals, REG-106499-12, 78 Fed. Aarp tax aide Reg. Aarp tax aide 20,523. Aarp tax aide Timing of when an Organization is exempt for Federal Tax Purposes. Aarp tax aide  As noted in section 2. Aarp tax aide 03(4) of Revenue Procedure 2013-9, 2013-2 I. Aarp tax aide R. Aarp tax aide B. Aarp tax aide 267, the provisions in section 11. Aarp tax aide 01 regarding the effect of determination letters or rulings recognizing exempt status of organizations described in section 501(c), other than sections 501(c)(3), (9), (17), and (29), have been revised. Aarp tax aide Prior to this year, and back to 1962, when such organizations applied for recognition, the IRS would usually recognize the organizations as tax exempt from the date of formation, no matter how long the interval between the date of formation and the date of application. Aarp tax aide In addition to the practical difficulties of ascertaining an organization's purposes and activities for this period, such recognition is now potentially inconsistent with the provisions of section 6033(j), which automatically revokes the exempt status of an organization that fails to file required Form 990 series returns or notices for three consecutive years. Aarp tax aide The new procedure adopts a practice similar to the rule for section 501(c)(3) organizations for these organizations, generally permitting recognition from the date of formation if the organization has: always met the requirements for exemption, has applied within 27 months from the end of the month in which it was organized, and has not failed to file required Form 990 series returns or notices for three consecutive years. Aarp tax aide Section 11. Aarp tax aide 01(3) notes: an organization that otherwise meets the requirements for tax-exempt status and the issuance of a determination letter or ruling that does not meet the requirements for recognition from date of formation will generally be recognized from the postmark date of its application. Aarp tax aide Exempt Organizations Select Check. Aarp tax aide  The IRS has developed an on-line search tool, Exempt Organizations Select Check, that allows users to select an exempt organization and check certain information about its federal tax status and filings. Aarp tax aide It consolidates three former search sites into one, providing expanded search capability and a more efficient way to search for organizations that: Are eligible to receive tax-deductible charitable contributions (Publication 78 data). Aarp tax aide Users may rely on this list in determining deductibility of contributions, just as they did when Publication 78 was a separate electronic publication rather than part of Select Check. Aarp tax aide Have had their tax-exempt status automatically revoked under the law because they have not filed Form 990 series returns or notices annually as required for three consecutive years (Auto-Revocation List). Aarp tax aide Have filed a Form 990-N (e-Postcard) annual electronic notice. Aarp tax aide  In addition to searching for a particular organization, users may download a complete list of each of the three types of organizations through Exempt Organizations Select Check. Aarp tax aide See also Revenue Procedure 2011-33, 2011-25 I. Aarp tax aide R. Aarp tax aide B. Aarp tax aide 887. Aarp tax aide Future developments. Aarp tax aide . Aarp tax aide  The IRS has created a page on IRS. Aarp tax aide gov for information about Publication 557, at www. Aarp tax aide irs. Aarp tax aide gov/pub557. Aarp tax aide Information about any future developments affecting Publication 557 (such as legislation enacted after we release it) will be posted on that page. Aarp tax aide Reminders The Patient Protection and Affordable Care Act (ACA). Aarp tax aide   The ACA added several new laws. Aarp tax aide This includes a new excise tax on indoor tanning services, a small business health care tax credit, additional requirements for tax-exempt hospitals, and the section 501(c)(29) CO-OP program. Aarp tax aide For more information, go to IRS. Aarp tax aide gov and select Affordable Care Act Tax Provisions. Aarp tax aide Electronic filing requirement for large organizations. Aarp tax aide  For tax years ending on or after December 31, 2006, only organizations that file 250 returns during the calendar year and that have total assets of $10 million or more are required to file Form 990 electronically. Aarp tax aide For more information, go to e-file for Charities and Non-Profits. Aarp tax aide Section 501(c)(15) gross receipts. Aarp tax aide   The definition of gross receipts for purposes of determining whether small insurance companies qualify as tax-exempt under section 501(c)(15) has changed. Aarp tax aide See Notice 2006-42, 2006-19 I. Aarp tax aide R. Aarp tax aide B. Aarp tax aide 878, Notice 2006-42. Aarp tax aide Prohibited tax shelter transactions. Aarp tax aide  New excise taxes are imposed under section 4965 on certain tax-exempt organizations entering into prohibited tax shelter transactions. Aarp tax aide See T. Aarp tax aide D. Aarp tax aide 9492, Excise Taxes on Prohibited Tax Shelter Transactions and Related Disclosure Requirements, 2010-33 I. Aarp tax aide R. Aarp tax aide B. Aarp tax aide 242. Aarp tax aide See IRS Issues Final Regulations Regarding Excise Taxes on Prohibited Tax Shelter Transactions and Related Disclosure Requirement. Aarp tax aide Pension Protection Act of 2006 tax changes. Aarp tax aide  The Pension Protection Act of 2006 made numerous changes to the tax law provisions affecting tax-exempt organizations. Aarp tax aide Unless otherwise noted, most of the changes became effective on August 17, 2006. Aarp tax aide For key provisions, go to The Pension Protection Act of 2006. Aarp tax aide Section 501(c)(3) organizations must make their Form 990-T, Exempt Organization Business Tax Return (and proxy tax under section 6033(e)), open for public inspection for a period of 3 years from the date the Form 990-T is required to be filed (determined with regard to any extension of time for filing) or is actually filed, whichever is later. Aarp tax aide There is an increase in excise taxes relating to public charities, social welfare organizations, and private foundations. Aarp tax aide There are additional standards for credit counseling organizations. Aarp tax aide The definition of convention or association of churches has been modified. Aarp tax aide Entities that are not required to file Form 990 or 990-EZ must file new Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required to File Form 990 or 990-EZ. Aarp tax aide The requirements of disclosure to state officials relating to exempt organizations has been modified. Aarp tax aide There are excise taxes imposed on excess benefit transactions involving donor advised funds and sponsoring organizations. Aarp tax aide There are new excise taxes on prohibited tax shelter transactions. Aarp tax aide There is a modification of recordkeeping requirements for certain charitable contributions. Aarp tax aide Introduction This publication discusses the rules and procedures for organizations that seek recognition of exemption from federal income tax under section 501(a) of the Internal Revenue Code (the Code). Aarp tax aide It explains the procedures you must follow to obtain an appropriate ruling or determination letter recognizing your organization's exemption, as well as certain other information that applies generally to all exempt organizations. Aarp tax aide To qualify for exemption under the Code, your organization must be organized for one or more of the purposes specifically designated in the Code. Aarp tax aide Organizations that are exempt under section 501(a) include those organizations described in section 501(c). Aarp tax aide Section 501(c) organizations are covered in this publication. Aarp tax aide Chapter 1, Application, Approval, and Appeal Procedures, provides general information about the procedures for obtaining recognition of tax-exempt status. Aarp tax aide Chapter 2, Filing Requirements and Required Disclosures, contains information about annual filing requirements and other matters that may affect your organization's tax-exempt status. Aarp tax aide Chapter 3, Section 501(c)(3) Organizations, contains detailed information on various matters affecting section 501(c)(3) organizations, including a section on the determination of private foundation status. Aarp tax aide Chapter 4, Other Section 501(c) Organizations, includes separate sections for specific types of organizations described in section 501(c). Aarp tax aide Chapter 5, Excise Taxes, provides information on when excise taxes may be imposed. Aarp tax aide Organizations not discussed in this publication. Aarp tax aide   Certain organizations that may qualify for exemption are not discussed in this publication, although they are included in the Organization Reference Chart. Aarp tax aide These organizations (and the Code sections that apply to them) are as follows. Aarp tax aide Corporations organized under Acts of Congress 501(c)(1) Teachers' retirement fund associations 501(c)(11) Mutual insurance companies 501(c)(15) Corporations organized to finance crop operations 501(c)(16) Employee funded pension trusts (created before June 25, 1959) 501(c)(18) Withdrawal liability payment fund 501(c)(22) Veterans' organizations (created before 1880) 501(c)(23) National Railroad Retirement Investment Trust 501(c)(28) Religious and apostolic associations 501(d) Cooperative hospital service organizations 501(e) Cooperative service organizations of operating educational organizations 501(f)   Section 501(c)(24) organizations (section 4049 ERISA trusts) are neither discussed in the text nor listed in the Organization Reference Chart. Aarp tax aide   Similarly, farmers' cooperative associations that qualify for exemption under section 521, qualified state tuition programs described in section 529, and pension, profit-sharing, and stock bonus plans described in section 401(a) are not discussed in this publication. Aarp tax aide If you think your organization falls within one of these categories, contact the IRS for any additional information you need. Aarp tax aide For telephone assistance, call 1-877-829-5500. Aarp tax aide   Check the Table of Contents at the beginning of this publication to determine whether your organization is described in this publication. Aarp tax aide If it is, read the chapter (or section) that applies to your type of organization for the specific information you must give when applying for recognition of exemption. Aarp tax aide Organization Reference Chart. Aarp tax aide   The Organization Reference Chart enables you to locate at a glance the section of the Code under which your organization might qualify for exemption. Aarp tax aide It also shows the required application form and, if your organization meets the exemption requirements, the annual return to be filed (if any), and whether or not a contribution to your organization will be deductible by a donor. Aarp tax aide It also describes each type of qualifying organization and the general nature of its activities. Aarp tax aide   You may use the Organization Reference Chart to determine the Code section that you think applies to your organization. Aarp tax aide Any correspondence with the IRS (in requesting forms or otherwise) will be expedited if you indicate in your correspondence the appropriate Code section. Aarp tax aide Check the IRS website, IRS. Aarp tax aide gov, for the latest updates, Tax Information for Charities & Other Non-Profits, www. Aarp tax aide irs. Aarp tax aide gov/charities/index. Aarp tax aide html. Aarp tax aide Comments and suggestions. Aarp tax aide   We welcome your comments about this publication and your suggestions for future editions. Aarp tax aide   You can e-mail us while visiting our website at IRS. Aarp tax aide gov. Aarp tax aide   You can send your comments to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Aarp tax aide NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Aarp tax aide Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Aarp tax aide   If you wish telephone assistance, please call 1-877-829-5500. Aarp tax aide This toll-free telephone service is available Monday through Friday. Aarp tax aide Prev  Up  Next   Home   More Online Publications