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Ammended Tax Return

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Ammended Tax Return

Ammended tax return Publication 526 - Main Content Table of Contents Organizations That Qualify To Receive Deductible ContributionsTypes of Qualified Organizations Contributions You Can DeductContributions From Which You Benefit Expenses Paid for Student Living With You Out-of-Pocket Expenses in Giving Services Expenses of Whaling Captains Contributions You Cannot DeductContributions to Individuals Contributions to Nonqualified Organizations Contributions From Which You Benefit Value of Time or Services Personal Expenses Appraisal Fees Contributions to Donor-Advised Funds Partial Interest in Property Contributions of PropertyContributions Subject to Special Rules Determining Fair Market Value Giving Property That Has Decreased in Value Giving Property That Has Increased in Value Penalty When To DeductChecks. Ammended tax return Text message. Ammended tax return Credit card. Ammended tax return Pay-by-phone account. Ammended tax return Stock certificate. Ammended tax return Promissory note. Ammended tax return Option. Ammended tax return Borrowed funds. Ammended tax return Conditional gift. Ammended tax return Limits on Deductions50% Limit 30% Limit Special 30% Limit for Capital Gain Property 20% Limit Special 50% Limit for Qualified Conservation Contributions How To Figure Your Deduction When Limits Apply Records To KeepCash Contributions Noncash Contributions Out-of-Pocket Expenses How To ReportReporting expenses for student living with you. Ammended tax return Total deduction over $500. Ammended tax return Deduction over $5,000 for one item. Ammended tax return Vehicle donations. Ammended tax return Clothing and household items not in good used condition. Ammended tax return Easement on building in historic district. Ammended tax return Deduction over $500,000. Ammended tax return How To Get Tax HelpLow Income Taxpayer Clinics Organizations That Qualify To Receive Deductible Contributions You can deduct your contributions only if you make them to a qualified organization. Ammended tax return Most organizations, other than churches and governments, must apply to the IRS to become a qualified organization. Ammended tax return How to check whether an organization can receive deductible charitable contributions. Ammended tax return   You can ask any organization whether it is a qualified organization, and most will be able to tell you. Ammended tax return Or go to IRS. Ammended tax return gov. Ammended tax return Click on “Tools” and then on “Exempt Organizations Select Check” (www. Ammended tax return irs. Ammended tax return gov/Charities-&-Non-Profits/Exempt-Organizations-Select-Check). Ammended tax return This online tool will enable you to search for qualified organizations. Ammended tax return You can also call the IRS to find out if an organization is qualified. Ammended tax return Call 1-877-829-5500. Ammended tax return People who are deaf, hard of hearing, or have a speech disability and who have access to TTY/TDD equipment can call 1-800-829-4059. Ammended tax return Deaf or hard of hearing individuals can also contact the IRS through relay services such as the Federal Relay Service at www. Ammended tax return gsa. Ammended tax return gov/fedrelay. Ammended tax return Types of Qualified Organizations Generally, only the following types of organizations can be qualified organizations. Ammended tax return A community chest, corporation, trust, fund, or foundation organized or created in or under the laws of the United States, any state, the District of Columbia, or any possession of the United States (including Puerto Rico). Ammended tax return It must, however, be organized and operated only for charitable, religious, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals. Ammended tax return Certain organizations that foster national or international amateur sports competition also qualify. Ammended tax return War veterans' organizations, including posts, auxiliaries, trusts, or foundations, organized in the United States or any of its possessions (including Puerto Rico). Ammended tax return Domestic fraternal societies, orders, and associations operating under the lodge system. Ammended tax return (Your contribution to this type of organization is deductible only if it is to be used solely for charitable, religious, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals. Ammended tax return ) Certain nonprofit cemetery companies or corporations. Ammended tax return (Your contribution to this type of organization is not deductible if it can be used for the care of a specific lot or mausoleum crypt. Ammended tax return ) The United States or any state, the District of Columbia, a U. Ammended tax return S. Ammended tax return possession (including Puerto Rico), a political subdivision of a state or U. Ammended tax return S. Ammended tax return possession, or an Indian tribal government or any of its subdivisions that perform substantial government functions. Ammended tax return (Your contribution to this type of organization is deductible only if it is to be used solely for public purposes. Ammended tax return ) Example 1. Ammended tax return You contribute cash to your city's police department to be used as a reward for information about a crime. Ammended tax return The city police department is a qualified organization, and your contribution is for a public purpose. Ammended tax return You can deduct your contribution. Ammended tax return Example 2. Ammended tax return You make a voluntary contribution to the social security trust fund, not earmarked for a specific account. Ammended tax return Because the trust fund is part of the U. Ammended tax return S. Ammended tax return Government, you contributed to a qualified organization. Ammended tax return You can deduct your contribution. Ammended tax return Examples. Ammended tax return   The following list gives some examples of qualified organizations. Ammended tax return Churches, a convention or association of churches, temples, synagogues, mosques, and other religious organizations. Ammended tax return Most nonprofit charitable organizations such as the American Red Cross and the United Way. Ammended tax return Most nonprofit educational organizations, including the Boy Scouts of America, Girl Scouts of America, colleges, and museums. Ammended tax return This also includes nonprofit daycare centers that provide childcare to the general public if substantially all the childcare is provided to enable parents and guardians to be gainfully employed. Ammended tax return However, if your contribution is a substitute for tuition or other enrollment fee, it is not deductible as a charitable contribution, as explained later under Contributions You Cannot Deduct . Ammended tax return Nonprofit hospitals and medical research organizations. Ammended tax return Utility company emergency energy programs, if the utility company is an agent for a charitable organization that assists individuals with emergency energy needs. Ammended tax return Nonprofit volunteer fire companies. Ammended tax return Nonprofit organizations that develop and maintain public parks and recreation facilities. Ammended tax return Civil defense organizations. Ammended tax return Canadian charities. Ammended tax return   You may be able to deduct contributions to certain Canadian charitable organizations covered under an income tax treaty with Canada. Ammended tax return To deduct your contribution to a Canadian charity, you generally must have income from sources in Canada. Ammended tax return See Publication 597, Information on the United States-Canada Income Tax Treaty, for information on how to figure your deduction. Ammended tax return Mexican charities. Ammended tax return   Under the U. Ammended tax return S. Ammended tax return -Mexico income tax treaty, a contribution to a Mexican charitable organization may be deductible, but only if and to the extent the contribution would have been treated as a charitable contribution to a public charity created or organized under U. Ammended tax return S. Ammended tax return law. Ammended tax return To deduct your contribution to a Mexican charity, you must have income from sources in Mexico. Ammended tax return The limits described in Limits on Deductions , later, apply and are figured using your income from Mexican sources. Ammended tax return Israeli charities. Ammended tax return   Under the U. Ammended tax return S. Ammended tax return -Israel income tax treaty, a contribution to an Israeli charitable organization is deductible if and to the extent the contribution would have been treated as a charitable contribution if the organization had been created or organized under U. Ammended tax return S. Ammended tax return law. Ammended tax return To deduct your contribution to an Israeli charity, you must have income from sources in Israel. Ammended tax return The limits described in Limits on Deductions , later, apply. Ammended tax return The deduction is also limited to 25% of your adjusted gross income from Israeli sources. Ammended tax return Contributions You Can Deduct Generally, you can deduct contributions of money or property you make to, or for the use of, a qualified organization. Ammended tax return A contribution is “for the use of” a qualified organization when it is held in a legally enforceable trust for the qualified organization or in a similar legal arrangement. Ammended tax return The contributions must be made to a qualified organization and not set aside for use by a specific person. Ammended tax return If you give property to a qualified organization, you generally can deduct the fair market value of the property at the time of the contribution. Ammended tax return See Contributions of Property , later. Ammended tax return Your deduction for charitable contributions generally cannot be more than 50% of your adjusted gross income (AGI), but in some cases 20% and 30% limits may apply. Ammended tax return In addition, the total of your charitable contributions deduction and certain other itemized deductions may be limited. Ammended tax return See Limits on Deductions , later. Ammended tax return Table 1 in this publication gives examples of contributions you can and cannot deduct. Ammended tax return Contributions From Which You Benefit If you receive a benefit as a result of making a contribution to a qualified organization, you can deduct only the amount of your contribution that is more than the value of the benefit you receive. Ammended tax return Also see Contributions From Which You Benefit under Contributions You Cannot Deduct, later. Ammended tax return If you pay more than fair market value to a qualified organization for goods or services, the excess may be a charitable contribution. Ammended tax return For the excess amount to qualify, you must pay it with the intent to make a charitable contribution. Ammended tax return Example 1. Ammended tax return You pay $65 for a ticket to a dinner-dance at a church. Ammended tax return Your entire $65 payment goes to the church. Ammended tax return The ticket to the dinner-dance has a fair market value of $25. Ammended tax return When you buy your ticket, you know its value is less than your payment. Ammended tax return To figure the amount of your charitable contribution, subtract the value of the benefit you receive ($25) from your total payment ($65). Ammended tax return You can deduct $40 as a charitable contribution to the church. Ammended tax return Example 2. Ammended tax return At a fundraising auction conducted by a charity, you pay $600 for a week's stay at a beach house. Ammended tax return The amount you pay is no more than the fair rental value. Ammended tax return You have not made a deductible charitable contribution. Ammended tax return Athletic events. Ammended tax return   If you make a payment to, or for the benefit of, a college or university and, as a result, you receive the right to buy tickets to an athletic event in the athletic stadium of the college or university, you can deduct 80% of the payment as a charitable contribution. Ammended tax return   If any part of your payment is for tickets (rather than the right to buy tickets), that part is not deductible. Ammended tax return Subtract the price of the tickets from your payment. Ammended tax return You can deduct 80% of the remaining amount as a charitable contribution. Ammended tax return Example 1. Ammended tax return You pay $300 a year for membership in a university's athletic scholarship program. Ammended tax return The only benefit of membership is that you have the right to buy one season ticket for a seat in a designated area of the stadium at the university's home football games. Ammended tax return You can deduct $240 (80% of $300) as a charitable contribution. Ammended tax return Example 2. Ammended tax return The facts are the same as in Example 1 except your $300 payment includes the purchase of one season ticket for the stated ticket price of $120. Ammended tax return You must subtract the usual price of a ticket ($120) from your $300 payment. Ammended tax return The result is $180. Ammended tax return Your deductible charitable contribution is $144 (80% of $180). Ammended tax return Charity benefit events. Ammended tax return   If you pay a qualified organization more than fair market value for the right to attend a charity ball, banquet, show, sporting event, or other benefit event, you can deduct only the amount that is more than the value of the privileges or other benefits you receive. Ammended tax return   If there is an established charge for the event, that charge is the value of your benefit. Ammended tax return If there is no established charge, the reasonable value of the right to attend the event is the value of your benefit. Ammended tax return Whether you use the tickets or other privileges has no effect on the amount you can deduct. Ammended tax return However, if you return the ticket to the qualified organization for resale, you can deduct the entire amount you paid for the ticket. Ammended tax return    Even if the ticket or other evidence of payment indicates that the payment is a “contribution,” this does not mean you can deduct the entire amount. Ammended tax return If the ticket shows the price of admission and the amount of the contribution, you can deduct the contribution amount. Ammended tax return Example. Ammended tax return You pay $40 to see a special showing of a movie for the benefit of a qualified organization. Ammended tax return Printed on the ticket is “Contribution–$40. Ammended tax return ” If the regular price for the movie is $8, your contribution is $32 ($40 payment − $8 regular price). Ammended tax return Membership fees or dues. Ammended tax return   You may be able to deduct membership fees or dues you pay to a qualified organization. Ammended tax return However, you can deduct only the amount that is more than the value of the benefits you receive. Ammended tax return   You cannot deduct dues, fees, or assessments paid to country clubs and other social organizations. Ammended tax return They are not qualified organizations. Ammended tax return Certain membership benefits can be disregarded. Ammended tax return   Both you and the organization can disregard the following membership benefits if you get them in return for an annual payment of $75 or less. Ammended tax return Any rights or privileges, other than those discussed under Athletic events , earlier, that you can use frequently while you are a member, such as: Free or discounted admission to the organization's facilities or events, Free or discounted parking, Preferred access to goods or services, and Discounts on the purchase of goods and services. Ammended tax return Admission, while you are a member, to events open only to members of the organization if the organization reasonably projects that the cost per person (excluding any allocated overhead) is not more than $10. Ammended tax return 20. Ammended tax return Token items. Ammended tax return   You do not have to reduce your contribution by the value of any benefit you receive if both of the following are true. Ammended tax return You receive only a small item or other benefit of token value. Ammended tax return The qualified organization correctly determines that the value of the item or benefit you received is not substantial and informs you that you can deduct your payment in full. Ammended tax return The organization determines whether the value of an item or benefit is substantial by using Revenue Procedures 90-12 and 92-49 and the inflation adjustment in Revenue Procedure 2012–41. Ammended tax return Written statement. Ammended tax return   A qualified organization must give you a written statement if you make a payment of more than $75 that is partly a contribution and partly for goods or services. Ammended tax return The statement must say you can deduct only the amount of your payment that is more than the value of the goods or services you received. Ammended tax return It must also give you a good faith estimate of the value of those goods or services. Ammended tax return   The organization can give you the statement either when it solicits or when it receives the payment from you. Ammended tax return Exception. Ammended tax return   An organization will not have to give you this statement if one of the following is true. Ammended tax return The organization is: A governmental organization described in (5) under Types of Qualified Organizations , earlier, or An organization formed only for religious purposes, and the only benefit you receive is an intangible religious benefit (such as admission to a religious ceremony) that generally is not sold in commercial transactions outside the donative context. Ammended tax return You receive only items whose value is not substantial as described under Token items , earlier. Ammended tax return You receive only membership benefits that can be disregarded, as described under Membership fees or dues , earlier. Ammended tax return Expenses Paid for Student Living With You You may be able to deduct some expenses of having a student live with you. Ammended tax return You can deduct qualifying expenses for a foreign or American student who: Lives in your home under a written agreement between you and a qualified organization (defined later) as part of a program of the organization to provide educational opportunities for the student, Is not your relative (defined later) or dependent (also defined later), and Is a full-time student in the twelfth or any lower grade at a school in the United States. Ammended tax return You can deduct up to $50 a month for each full calendar month the student lives with you. Ammended tax return Any month when conditions (1) through (3) above are met for 15 or more days counts as a full month. Ammended tax return Qualified organization. Ammended tax return   For these purposes, a qualified organization can be any of the organizations described earlier under Types of Qualified Organizations , except those in (4) and (5). Ammended tax return For example, if you are providing a home for a student as part of a state or local government program, you cannot deduct your expenses as charitable contributions. Ammended tax return But see Foster parents under Out-of-Pocket Expenses in Giving Services, later, if you provide the home as a foster parent. Ammended tax return Relative. Ammended tax return   The term “relative” means any of the following persons. Ammended tax return Your child, stepchild, foster child, or a descendant of any of them (for example, your grandchild). Ammended tax return A legally adopted child is considered your child. Ammended tax return Your brother, sister, half brother, half sister, stepbrother, or stepsister. Ammended tax return Your father, mother, grandparent, or other direct ancestor. Ammended tax return Your stepfather or stepmother. Ammended tax return A son or daughter of your brother or sister. Ammended tax return A brother or sister of your father or mother. Ammended tax return Your son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law. Ammended tax return Dependent. Ammended tax return   For this purpose, the term “dependent” means: A person you can claim as a dependent, or A person you could have claimed as a dependent except that: He or she received gross income of $3,900 or more, He or she filed a joint return, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. Ammended tax return    Foreign students brought to this country under a qualified international education exchange program and placed in American homes for a temporary period generally are not U. Ammended tax return S. Ammended tax return residents and cannot be claimed as dependents. Ammended tax return Qualifying expenses. Ammended tax return   You may be able to deduct the cost of books, tuition, food, clothing, transportation, medical and dental care, entertainment, and other amounts you actually spend for the well-being of the student. Ammended tax return Expenses that do not qualify. Ammended tax return   You cannot deduct depreciation on your home, the fair market value of lodging, and similar items not considered amounts actually spent by you. Ammended tax return Nor can you deduct general household expenses, such as taxes, insurance, and repairs. Ammended tax return Reimbursed expenses. Ammended tax return   In most cases, you cannot claim a charitable contribution deduction if you are compensated or reimbursed for any part of the costs of having a student live with you. Ammended tax return However, you may be able to claim a charitable contribution deduction for the unreimbursed portion of your expenses if you are reimbursed only for an extraordinary or one-time item, such as a hospital bill or vacation trip, you paid in advance at the request of the student's parents or the sponsoring organization. Ammended tax return Mutual exchange program. Ammended tax return   You cannot deduct the costs of a foreign student living in your home under a mutual exchange program through which your child will live with a family in a foreign country. Ammended tax return Reporting expenses. Ammended tax return   For a list of what you must file with your return if you deduct expenses for a student living with you, see Reporting expenses for student living with you under How To Report, later. Ammended tax return Out-of-Pocket Expenses in Giving Services Table 2. Ammended tax return Volunteers' Questions and Answers If you volunteer for a qualified organization, the following questions and answers may apply to you. Ammended tax return All of the rules explained in this publication also apply. Ammended tax return See, in particular, Out-of-Pocket Expenses in Giving Services . Ammended tax return Question Answer I volunteer 6 hours a week in the office of a qualified organization. Ammended tax return The receptionist is paid $10 an hour for the same work. Ammended tax return Can I deduct $60 a week for my time? No, you cannot deduct the value of your time or services. Ammended tax return  The office is 30 miles from my home. Ammended tax return Can I deduct any of my car expenses for these trips? Yes, you can deduct the costs of gas and oil that are directly related to getting to and from the place where you volunteer. Ammended tax return If you do not want to figure your actual costs, you can deduct 14 cents for each mile. Ammended tax return I volunteer as a Red Cross nurse's aide at a hospital. Ammended tax return Can I deduct the cost of the uniforms I must wear? Yes, you can deduct the cost of buying and cleaning your uniforms if the hospital is a qualified organization, the uniforms are not suitable for everyday use, and you must wear them when volunteering. Ammended tax return I pay a babysitter to watch my children while I volunteer for a qualified organization. Ammended tax return Can I deduct these costs? No, you cannot deduct payments for childcare expenses as a charitable contribution, even if you would be unable to volunteer without childcare. Ammended tax return (If you have childcare expenses so you can work for pay, see Publication 503, Child and Dependent Care Expenses. Ammended tax return ) Although you cannot deduct the value of your services given to a qualified organization, you may be able to deduct some amounts you pay in giving services to a qualified organization. Ammended tax return The amounts must be: Unreimbursed, Directly connected with the services, Expenses you had only because of the services you gave, and Not personal, living, or family expenses. Ammended tax return Table 2 contains questions and answers that apply to some individuals who volunteer their services. Ammended tax return Underprivileged youths selected by charity. Ammended tax return   You can deduct reasonable unreimbursed out-of-pocket expenses you pay to allow underprivileged youths to attend athletic events, movies, or dinners. Ammended tax return The youths must be selected by a charitable organization whose goal is to reduce juvenile delinquency. Ammended tax return Your own similar expenses in accompanying the youths are not deductible. Ammended tax return Conventions. Ammended tax return   If a qualified organization selects you to attend a convention as its representative, you can deduct your unreimbursed expenses for travel, including reasonable amounts for meals and lodging, while away from home overnight for the convention. Ammended tax return However, see Travel , later. Ammended tax return   You cannot deduct personal expenses for sightseeing, fishing parties, theater tickets, or nightclubs. Ammended tax return You also cannot deduct travel, meals and lodging, and other expenses for your spouse or children. Ammended tax return   You cannot deduct your travel expenses in attending a church convention if you go only as a member of your church rather than as a chosen representative. Ammended tax return You can, however, deduct unreimbursed expenses that are directly connected with giving services for your church during the convention. Ammended tax return Uniforms. Ammended tax return   You can deduct the cost and upkeep of uniforms that are not suitable for everyday use and that you must wear while performing donated services for a charitable organization. Ammended tax return Foster parents. Ammended tax return   You may be able to deduct as a charitable contribution some of the costs of being a foster parent (foster care provider) if you have no profit motive in providing the foster care and are not, in fact, making a profit. Ammended tax return A qualified organization must select the individuals you take into your home for foster care. Ammended tax return   You can deduct expenses that meet both of the following requirements. Ammended tax return They are unreimbursed out-of-pocket expenses to feed, clothe, and care for the foster child. Ammended tax return They are incurred primarily to benefit the qualified organization. Ammended tax return   Unreimbursed expenses that you cannot deduct as charitable contributions may be considered support provided by you in determining whether you can claim the foster child as a dependent. Ammended tax return For details, see Publication 501, Exemptions, Standard Deduction, and Filing Information. Ammended tax return Example. Ammended tax return You cared for a foster child because you wanted to adopt her, not to benefit the agency that placed her in your home. Ammended tax return Your unreimbursed expenses are not deductible as charitable contributions. Ammended tax return Church deacon. Ammended tax return   You can deduct as a charitable contribution any unreimbursed expenses you have while in a permanent diaconate program established by your church. Ammended tax return These expenses include the cost of vestments, books, and transportation required in order to serve in the program as either a deacon candidate or an ordained deacon. Ammended tax return Car expenses. Ammended tax return   You can deduct as a charitable contribution any unreimbursed out-of-pocket expenses, such as the cost of gas and oil, directly related to the use of your car in giving services to a charitable organization. Ammended tax return You cannot deduct general repair and maintenance expenses, depreciation, registration fees, or the costs of tires or insurance. Ammended tax return   If you do not want to deduct your actual expenses, you can use a standard mileage rate of 14 cents a mile to figure your contribution. Ammended tax return   You can deduct parking fees and tolls whether you use your actual expenses or the standard mileage rate. Ammended tax return   You must keep reliable written records of your car expenses. Ammended tax return For more information, see Car expenses under Records To Keep, later. Ammended tax return Travel. Ammended tax return   Generally, you can claim a charitable contribution deduction for travel expenses necessarily incurred while you are away from home performing services for a charitable organization only if there is no significant element of personal pleasure, recreation, or vacation in the travel. Ammended tax return This applies whether you pay the expenses directly or indirectly. Ammended tax return You are paying the expenses indirectly if you make a payment to the charitable organization and the organization pays for your travel expenses. Ammended tax return   The deduction for travel expenses will not be denied simply because you enjoy providing services to the charitable organization. Ammended tax return Even if you enjoy the trip, you can take a charitable contribution deduction for your travel expenses if you are on duty in a genuine and substantial sense throughout the trip. Ammended tax return However, if you have only nominal duties, or if for significant parts of the trip you do not have any duties, you cannot deduct your travel expenses. Ammended tax return Example 1. Ammended tax return You are a troop leader for a tax-exempt youth group and you take the group on a camping trip. Ammended tax return You are responsible for overseeing the setup of the camp and for providing adult supervision for other activities during the entire trip. Ammended tax return You participate in the activities of the group and enjoy your time with them. Ammended tax return You oversee the breaking of camp and you transport the group home. Ammended tax return You can deduct your travel expenses. Ammended tax return Example 2. Ammended tax return You sail from one island to another and spend 8 hours a day counting whales and other forms of marine life. Ammended tax return The project is sponsored by a charitable organization. Ammended tax return In most circumstances, you cannot deduct your expenses. Ammended tax return Example 3. Ammended tax return You work for several hours each morning on an archeological dig sponsored by a charitable organization. Ammended tax return The rest of the day is free for recreation and sightseeing. Ammended tax return You cannot take a charitable contribution deduction even though you work very hard during those few hours. Ammended tax return Example 4. Ammended tax return You spend the entire day attending a charitable organization's regional meeting as a chosen representative. Ammended tax return In the evening you go to the theater. Ammended tax return You can claim your travel expenses as charitable contributions, but you cannot claim the cost of your evening at the theater. Ammended tax return Daily allowance (per diem). Ammended tax return   If you provide services for a charitable organization and receive a daily allowance to cover reasonable travel expenses, including meals and lodging while away from home overnight, you must include in income any part of the allowance that is more than your deductible travel expenses. Ammended tax return You may be able to deduct any necessary travel expenses that are more than the allowance. Ammended tax return Deductible travel expenses. Ammended tax return   These include: Air, rail, and bus transportation, Out-of-pocket expenses for your car, Taxi fares or other costs of transportation between the airport or station and your hotel, Lodging costs, and The cost of meals. Ammended tax return Because these travel expenses are not business-related, they are not subject to the same limits as business related expenses. Ammended tax return For information on business travel expenses, see Travel in Publication 463, Travel, Entertainment, Gift, and Car Expenses. Ammended tax return Expenses of Whaling Captains You may be able to deduct as a charitable contribution any reasonable and necessary whaling expenses you pay during the year to carry out sanctioned whaling activities. Ammended tax return The deduction is limited to $10,000 a year. Ammended tax return To claim the deduction, you must be recognized by the Alaska Eskimo Whaling Commission as a whaling captain charged with the responsibility of maintaining and carrying out sanctioned whaling activities. Ammended tax return Sanctioned whaling activities are subsistence bowhead whale hunting activities conducted under the management plan of the Alaska Eskimo Whaling Commission. Ammended tax return Whaling expenses include expenses for: Acquiring and maintaining whaling boats, weapons, and gear used in sanctioned whaling activities, Supplying food for the crew and other provisions for carrying out these activities, and Storing and distributing the catch from these activities. Ammended tax return You must keep records showing the time, place, date, amount, and nature of the expenses. Ammended tax return For details, see Revenue Procedure 2006-50, which is on page 944 of Internal Revenue Bulletin 2006-47 at www. Ammended tax return irs. Ammended tax return gov/pub/irs-irbs/irb06-47. Ammended tax return pdf. Ammended tax return Contributions You Cannot Deduct There are some contributions you cannot deduct and others you can deduct only in part. Ammended tax return You cannot deduct as a charitable contribution: A contribution to a specific individual, A contribution to a nonqualified organization, The part of a contribution from which you receive or expect to receive a benefit, The value of your time or services, Your personal expenses, A qualified charitable distribution from an individual retirement arrangement (IRA), Appraisal fees, Certain contributions to donor-advised funds, or Certain contributions of partial interests in property. Ammended tax return Detailed discussions of these items follow. Ammended tax return Contributions to Individuals You cannot deduct contributions to specific individuals, including the following. Ammended tax return Contributions to fraternal societies made for the purpose of paying medical or burial expenses of members. Ammended tax return Contributions to individuals who are needy or worthy. Ammended tax return You cannot deduct these contributions even if you make them to a qualified organization for the benefit of a specific person. Ammended tax return But you can deduct a contribution to a qualified organization that helps needy or worthy individuals if you do not indicate that your contribution is for a specific person. Ammended tax return Example. Ammended tax return You can deduct contributions to a qualified organization for flood relief, hurricane relief, or other disaster relief. Ammended tax return However, you cannot deduct contributions earmarked for relief of a particular individual or family. Ammended tax return Payments to a member of the clergy that can be spent as he or she wishes, such as for personal expenses. Ammended tax return Expenses you paid for another person who provided services to a qualified organization. Ammended tax return Example. Ammended tax return Your son does missionary work. Ammended tax return You pay his expenses. Ammended tax return You cannot claim a deduction for your son's unreimbursed expenses related to his contribution of services. Ammended tax return Payments to a hospital that are for a specific patient's care or for services for a specific patient. Ammended tax return You cannot deduct these payments even if the hospital is operated by a city, state, or other qualified organization. Ammended tax return Contributions to Nonqualified Organizations You cannot deduct contributions to organizations that are not qualified to receive tax-deductible contributions, including the following. Ammended tax return Certain state bar associations if: The bar is not a political subdivision of a state, The bar has private, as well as public, purposes, such as promoting the professional interests of members, and Your contribution is unrestricted and can be used for private purposes. Ammended tax return Chambers of commerce and other business leagues or organizations. Ammended tax return Civic leagues and associations. Ammended tax return Communist organizations. Ammended tax return Country clubs and other social clubs. Ammended tax return Foreign organizations other than certain Canadian, Israeli, or Mexican charitable organizations. Ammended tax return (See Canadian charities , Mexican charities , and Israeli charities under Organizations That Qualify To Receive Deductible Contributions, earlier. Ammended tax return ) Also, you cannot deduct a contribution you made to any qualifying organization if the contribution is earmarked to go to a foreign organization. Ammended tax return However, certain contributions to a qualified organization for use in a program conducted by a foreign charity may be deductible as long as they are not earmarked to go to the foreign charity. Ammended tax return For the contribution to be deductible, the qualified organization must approve the program as furthering its own exempt purposes and must keep control over the use of the contributed funds. Ammended tax return The contribution is also deductible if the foreign charity is only an administrative arm of the qualified organization. Ammended tax return Homeowners' associations. Ammended tax return Labor unions. Ammended tax return But you may be able to deduct union dues as a miscellaneous itemized deduction, subject to the 2%-of-adjusted-gross-income limit, on Schedule A (Form 1040). Ammended tax return See Publication 529, Miscellaneous Deductions. Ammended tax return Political organizations and candidates. Ammended tax return Contributions From Which You Benefit If you receive or expect to receive a financial or economic benefit as a result of making a contribution to a qualified organization, you cannot deduct the part of the contribution that represents the value of the benefit you receive. Ammended tax return See Contributions From Which You Benefit under Contributions You Can Deduct, earlier. Ammended tax return These contributions include the following. Ammended tax return Contributions for lobbying. Ammended tax return This includes amounts you earmark for use in, or in connection with, influencing specific legislation. Ammended tax return Contributions to a retirement home for room, board, maintenance, or admittance. Ammended tax return Also, if the amount of your contribution depends on the type or size of apartment you will occupy, it is not a charitable contribution. Ammended tax return Costs of raffles, bingo, lottery, etc. Ammended tax return You cannot deduct as a charitable contribution amounts you pay to buy raffle or lottery tickets or to play bingo or other games of chance. Ammended tax return For information on how to report gambling winnings and losses, see Deductions Not Subject to the 2% Limit in Publication 529. Ammended tax return Dues to fraternal orders and similar groups. Ammended tax return However, see Membership fees or dues under Contributions From Which You Benefit, earlier. Ammended tax return Tuition, or amounts you pay instead of tuition. Ammended tax return You cannot deduct as a charitable contribution amounts you pay as tuition even if you pay them for children to attend parochial schools or qualifying nonprofit daycare centers. Ammended tax return You also cannot deduct any fixed amount you must pay in addition to, or instead of, tuition to enroll in a private school, even if it is designated as a “donation. Ammended tax return ” Contributions connected with split-dollar insurance arrangements. Ammended tax return You cannot deduct any part of a contribution to a charitable organization if, in connection with the contribution, the organization directly or indirectly pays, has paid, or is expected to pay any premium on any life insurance, annuity, or endowment contract for which you, any member of your family, or any other person chosen by you (other than a qualified charitable organization) is a beneficiary. Ammended tax return Example. Ammended tax return You donate money to a charitable organization. Ammended tax return The charity uses the money to purchase a cash value life insurance policy. Ammended tax return The beneficiaries under the insurance policy include members of your family. Ammended tax return Even though the charity may eventually get some benefit out of the insurance policy, you cannot deduct any part of the donation. Ammended tax return Qualified Charitable Distributions A qualified charitable distribution (QCD) is a distribution made directly by the trustee of your individual retirement arrangement (IRA), other than a SEP or SIMPLE IRA, to certain qualified organizations. Ammended tax return You must have been at least age 70½ when the distribution was made. Ammended tax return Your total QCDs for the year cannot be more than $100,000. Ammended tax return If all the requirements are met, a QCD is nontaxable, but you cannot claim a charitable contribution deduction for a QCD. Ammended tax return See Publication 590, Individual Retirement Arrangements (IRAs), for more information about QCDs. Ammended tax return Value of Time or Services You cannot deduct the value of your time or services, including: Blood donations to the American Red Cross or to blood banks, and The value of income lost while you work as an unpaid volunteer for a qualified organization. Ammended tax return Personal Expenses You cannot deduct personal, living, or family expenses, such as the following items. Ammended tax return The cost of meals you eat while you perform services for a qualified organization, unless it is necessary for you to be away from home overnight while performing the services. Ammended tax return Adoption expenses, including fees paid to an adoption agency and the costs of keeping a child in your home before adoption is final. Ammended tax return However, you may be able to claim a tax credit for these expenses. Ammended tax return Also, you may be able to exclude from your gross income amounts paid or reimbursed by your employer for your adoption expenses. Ammended tax return See Form 8839, Qualified Adoption Expenses, and its instructions, for more information. Ammended tax return You also may be able to claim an exemption for the child. Ammended tax return See Exemptions for Dependents in Publication 501 for more information. Ammended tax return Appraisal Fees You cannot deduct as a charitable contribution any fees you pay to find the fair market value of donated property. Ammended tax return But you can claim them, subject to the 2%-of-adjusted-gross-income limit, as a miscellaneous itemized deduction on Schedule A (Form 1040). Ammended tax return See Deductions Subject to the 2% Limit in Publication 529 for more information. Ammended tax return Contributions to Donor-Advised Funds You cannot deduct a contribution to a donor-advised fund if: The qualified organization that sponsors the fund is a war veterans' organization, a fraternal society, or a nonprofit cemetery company, or You do not have an acknowledgment from that sponsoring organization that it has exclusive legal control over the assets contributed. Ammended tax return There are also other circumstances in which you cannot deduct your contribution to a donor-advised fund. Ammended tax return Generally, a donor-advised fund is a fund or account in which a donor can, because of being a donor, advise the fund how to distribute or invest amounts held in the fund. Ammended tax return For details, see Internal Revenue Code section 170(f)(18). Ammended tax return Partial Interest in Property Generally, you cannot deduct a contribution of less than your entire interest in property. Ammended tax return For details, see Partial Interest in Property under Contributions of Property, later. Ammended tax return Contributions of Property If you contribute property to a qualified organization, the amount of your charitable contribution is generally the fair market value of the property at the time of the contribution. Ammended tax return However, if the property has increased in value, you may have to make some adjustments to the amount of your deduction. Ammended tax return See Giving Property That Has Increased in Value , later. Ammended tax return For information about the records you must keep and the information you must furnish with your return if you donate property, see Records To Keep and How To Report , later. Ammended tax return Contributions Subject to Special Rules Special rules apply if you contribute: Clothing or household items, A car, boat, or airplane, Taxidermy property, Property subject to a debt, A partial interest in property, A fractional interest in tangible personal property, A qualified conservation contribution, A future interest in tangible personal property, Inventory from your business, or A patent or other intellectual property. Ammended tax return These special rules are described next. Ammended tax return Clothing and Household Items You cannot take a deduction for clothing or household items you donate unless the clothing or household items are in good used condition or better. Ammended tax return Exception. Ammended tax return   You can take a deduction for a contribution of an item of clothing or a household item that is not in good used condition or better if you deduct more than $500 for it and include a qualified appraisal of it with your return. Ammended tax return Household items. Ammended tax return   Household items include: Furniture and furnishings, Electronics, Appliances, Linens, and Other similar items. Ammended tax return   Household items do not include: Food, Paintings, antiques, and other objects of art, Jewelry and gems, and Collections. Ammended tax return Fair market value. Ammended tax return   To determine the fair market value of these items, use the rules under Determining Fair Market Value , later. Ammended tax return Cars, Boats, and Airplanes The following rules apply to any donation of a qualified vehicle. Ammended tax return A qualified vehicle is: A car or any motor vehicle manufactured mainly for use on public streets, roads, and highways, A boat, or An airplane. Ammended tax return Deduction more than $500. Ammended tax return   If you donate a qualified vehicle with a claimed fair market value of more than $500, you can deduct the smaller of: The gross proceeds from the sale of the vehicle by the organization, or The vehicle's fair market value on the date of the contribution. Ammended tax return If the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to figure the deductible amount, as described under Giving Property That Has Increased in Value , later. Ammended tax return Form 1098-C. Ammended tax return   You must attach to your return Copy B of the Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, (or other statement containing the same information as Form 1098-C) you received from the organization. Ammended tax return The Form 1098-C (or other statement) will show the gross proceeds from the sale of the vehicle. Ammended tax return   If you e-file your return, you must: Attach Copy B of Form 1098-C to Form 8453, U. Ammended tax return S. Ammended tax return Individual Income Tax Transmittal for an IRS e-file Return, and mail the forms to the IRS, or Include Copy B of Form 1098-C as a pdf attachment if your software program allows it. Ammended tax return   If you do not attach Form 1098-C (or other statement), you cannot deduct your contribution. Ammended tax return    You must get Form 1098-C (or other statement) within 30 days of the sale of the vehicle. Ammended tax return But if exception 1 or 2 (described later) applies, you must get Form 1098-C (or other statement) within 30 days of your donation. Ammended tax return Filing deadline approaching and still no Form 1098-C. Ammended tax return   If the filing deadline is approaching and you still do not have a Form 1098-C, you have two choices. Ammended tax return Request an automatic 6-month extension of time to file your return. Ammended tax return You can get this extension by filing Form 4868, Application for Automatic Extension of Time To File U. Ammended tax return S. Ammended tax return Individual Income Tax Return. Ammended tax return For more information, see the instructions for Form 4868. Ammended tax return File the return on time without claiming the deduction for the qualified vehicle. Ammended tax return After receiving the Form 1098-C, file an amended return, Form 1040X, Amended U. Ammended tax return S. Ammended tax return Individual Income Tax Return, claiming the deduction. Ammended tax return Attach Copy B of Form 1098-C (or other statement) to the amended return. Ammended tax return Exceptions. Ammended tax return   There are two exceptions to the rules just described for deductions of more than $500. Ammended tax return Exception 1—vehicle used or improved by organization. Ammended tax return   If the qualified organization makes a significant intervening use of or material improvement to the vehicle before transferring it, you generally can deduct the vehicle's fair market value at the time of the contribution. Ammended tax return But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. Ammended tax return The Form 1098-C (or other statement) will show whether this exception applies. Ammended tax return    Exception 2—vehicle given or sold to needy individual. Ammended tax return   If the qualified organization will give the vehicle, or sell it for a price well below fair market value, to a needy individual to further the organization's charitable purpose, you generally can deduct the vehicle's fair market value at the time of the contribution. Ammended tax return But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. Ammended tax return The Form 1098-C (or other statement) will show whether this exception applies. Ammended tax return   This exception does not apply if the organization sells the vehicle at auction. Ammended tax return In that case, you cannot deduct the vehicle's fair market value. Ammended tax return Example. Ammended tax return Anita donates a used car to a qualified organization. Ammended tax return She bought it 3 years ago for $9,000. Ammended tax return A used car guide shows the fair market value for this type of car is $6,000. Ammended tax return However, Anita gets a Form 1098-C from the organization showing the car was sold for $2,900. Ammended tax return Neither exception 1 nor exception 2 applies. Ammended tax return If Anita itemizes her deductions, she can deduct $2,900 for her donation. Ammended tax return She must attach Form 1098-C and Form 8283 to her return. Ammended tax return Deduction $500 or less. Ammended tax return   If the qualified organization sells the vehicle for $500 or less and exceptions 1 and 2 do not apply, you can deduct the smaller of: $500, or The vehicle's fair market value on the date of the contribution. Ammended tax return But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. Ammended tax return   If the vehicle's fair market value is at least $250 but not more than $500, you must have a written statement from the qualified organization acknowledging your donation. Ammended tax return The statement must contain the information and meet the tests for an acknowledgment described under Contributions of $250 or More under Records To Keep, later. Ammended tax return Fair market value. Ammended tax return   To determine a vehicle's fair market value, use the rules described under Determining Fair Market Value , later. Ammended tax return Donations of inventory. Ammended tax return   The vehicle donation rules just described do not apply to donations of inventory. Ammended tax return For example, these rules do not apply if you are a car dealer who donates a car you had been holding for sale to customers. Ammended tax return See Inventory , later. Ammended tax return Taxidermy Property If you donate taxidermy property to a qualified organization, your deduction is limited to your basis in the property or its fair market value, whichever is less. Ammended tax return This applies if you prepared, stuffed, or mounted the property or paid or incurred the cost of preparing, stuffing, or mounting the property. Ammended tax return Your basis for this purpose includes only the cost of preparing, stuffing, and mounting the property. Ammended tax return Your basis does not include transportation or travel costs. Ammended tax return It also does not include the direct or indirect costs for hunting or killing an animal, such as equipment costs. Ammended tax return In addition, it does not include the value of your time. Ammended tax return Taxidermy property means any work of art that: Is the reproduction or preservation of an animal, in whole or in part, Is prepared, stuffed, or mounted to recreate one or more characteristics of the animal, and Contains a part of the body of the dead animal. Ammended tax return Property Subject to a Debt If you contribute property subject to a debt (such as a mortgage), you must reduce the fair market value of the property by: Any allowable deduction for interest you paid (or will pay) that is attributable to any period after the contribution, and If the property is a bond, the lesser of: Any allowable deduction for interest you paid (or will pay) to buy or carry the bond that is attributable to any period before the contribution, or The interest, including bond discount, receivable on the bond that is attributable to any period before the contribution, and that is not includible in your income due to your accounting method. Ammended tax return This prevents you from deducting the same amount as both investment interest and a charitable contribution. Ammended tax return If the recipient (or another person) assumes the debt, you must also reduce the fair market value of the property by the amount of the outstanding debt assumed. Ammended tax return The amount of the debt is also treated as an amount realized on the sale or exchange of property for purposes of figuring your taxable gain (if any). Ammended tax return For more information, see Bargain Sales under Giving Property That Has Increased in Value, later. Ammended tax return Partial Interest in Property Generally, you cannot deduct a charitable contribution of less than your entire interest in property. Ammended tax return Right to use property. Ammended tax return   A contribution of the right to use property is a contribution of less than your entire interest in that property and is not deductible. Ammended tax return Example 1. Ammended tax return You own a 10-story office building and donate rent-free use of the top floor to a charitable organization. Ammended tax return Because you still own the building, you have contributed a partial interest in the property and cannot take a deduction for the contribution. Ammended tax return Example 2. Ammended tax return Mandy White owns a vacation home at the beach that she sometimes rents to others. Ammended tax return For a fund-raising auction at her church, she donated the right to use the vacation home for 1 week. Ammended tax return At the auction, the church received and accepted a bid from Lauren Green equal to the fair rental value of the home for 1 week. Ammended tax return Mandy cannot claim a deduction because of the partial interest rule. Ammended tax return Lauren cannot claim a deduction either, because she received a benefit equal to the amount of her payment. Ammended tax return See Contributions From Which You Benefit , earlier. Ammended tax return Exceptions. Ammended tax return   You can deduct a charitable contribution of a partial interest in property only if that interest represents one of the following items. Ammended tax return A remainder interest in your personal home or farm. Ammended tax return A remainder interest is one that passes to a beneficiary after the end of an earlier interest in the property. Ammended tax return Example. Ammended tax return You keep the right to live in your home during your lifetime and give your church a remainder interest that begins upon your death. Ammended tax return You can deduct the value of the remainder interest. Ammended tax return An undivided part of your entire interest. Ammended tax return This must consist of a part of every substantial interest or right you own in the property and must last as long as your interest in the property lasts. Ammended tax return But see Fractional Interest in Tangible Personal Property , later. Ammended tax return Example. Ammended tax return You contribute voting stock to a qualified organization but keep the right to vote the stock. Ammended tax return The right to vote is a substantial right in the stock. Ammended tax return You have not contributed an undivided part of your entire interest and cannot deduct your contribution. Ammended tax return A partial interest that would be deductible if transferred to certain types of trusts. Ammended tax return A qualified conservation contribution (defined later). Ammended tax return For information about how to figure the value of a contribution of a partial interest in property, see Partial Interest in Property Not in Trust in Publication 561. Ammended tax return Fractional Interest in Tangible Personal Property You cannot deduct a charitable contribution of a fractional interest in tangible personal property unless all interests in the property are held immediately before the contribution by: You, or You and the qualifying organization receiving the contribution. Ammended tax return If you make an additional contribution later, the fair market value of that contribution will be determined by using the smaller of: The fair market value of the property at the time of the initial contribution, or The fair market value of the property at the time of the additional contribution. Ammended tax return Tangible personal property is defined later under Future Interest in Tangible Personal Property . Ammended tax return A fractional interest in property is an undivided portion of your entire interest in the property. Ammended tax return Example. Ammended tax return An undivided one-quarter interest in a painting that entitles an art museum to possession of the painting for 3 months of each year is a fractional interest in the property. Ammended tax return Recapture of deduction. Ammended tax return   You must recapture your charitable contribution deduction by including it in your income if both of the following statements are true. Ammended tax return You contributed a fractional interest in tangible personal property after August 17, 2006. Ammended tax return You do not contribute the rest of your interests in the property to the original recipient or, if it no longer exists, another qualified organization on or before the earlier of: The date that is 10 years after the date of the initial contribution, or The date of your death. Ammended tax return   Recapture is also required if the qualified organization has not taken substantial physical possession of the property and used it in a way related to the organization's purpose during the period beginning on the date of the initial contribution and ending on the earlier of: The date that is 10 years after the date of the initial contribution, or The date of your death. Ammended tax return Additional tax. Ammended tax return   If you must recapture your deduction, you must also pay interest and an additional tax equal to 10% of the amount recaptured. Ammended tax return Qualified Conservation Contribution A qualified conservation contribution is a contribution of a qualified real property interest to a qualified organization to be used only for conservation purposes. Ammended tax return Qualified organization. Ammended tax return   For purposes of a qualified conservation contribution, a qualified organization is: A governmental unit, A publicly supported charity, or An organization controlled by, and operated for the exclusive benefit of, a governmental unit or a publicly supported charity. Ammended tax return The organization also must have a commitment to protect the conservation purposes of the donation and must have the resources to enforce the restrictions. Ammended tax return   A publicly supported charity is an organization of the type described in (1) under Types of Qualified Organizations , earlier, that normally receives a substantial part of its support, other than income from its exempt activities, from direct or indirect contributions from the general public or from governmental units. Ammended tax return Qualified real property interest. Ammended tax return   This is any of the following interests in real property. Ammended tax return Your entire interest in real estate other than a mineral interest (subsurface oil, gas, or other minerals, and the right of access to these minerals). Ammended tax return A remainder interest. Ammended tax return A restriction (granted in perpetuity) on the use that may be made of the real property. Ammended tax return Conservation purposes. Ammended tax return   Your contribution must be made only for one of the following conservation purposes. Ammended tax return Preserving land areas for outdoor recreation by, or for the education of, the general public. Ammended tax return Protecting a relatively natural habitat of fish, wildlife, or plants, or a similar ecosystem. Ammended tax return Preserving open space, including farmland and forest land, if it yields a significant public benefit. Ammended tax return The open space must be preserved either for the scenic enjoyment of the general public or under a clearly defined federal, state, or local governmental conservation policy. Ammended tax return Preserving a historically important land area or a certified historic structure. Ammended tax return Building in registered historic district. Ammended tax return   If a building in a registered historic district is a certified historic structure, a contribution of a qualified real property interest that is an easement or other restriction on the exterior of the building is deductible only if it meets all of the following conditions. Ammended tax return The restriction must preserve the entire exterior of the building (including its front, sides, rear, and height) and must prohibit any change to the exterior of the building that is inconsistent with its historical character. Ammended tax return You and the organization receiving the contribution must enter into a written agreement certifying, under penalty of perjury, that the organization: Is a qualified organization with a purpose of environmental protection, land conservation, open space preservation, or historic preservation, and Has the resources to manage and enforce the restriction and a commitment to do so. Ammended tax return You must include with your return: A qualified appraisal, Photographs of the building's entire exterior, and A description of all restrictions on development of the building, such as zoning laws and restrictive covenants. Ammended tax return   If you claimed the rehabilitation credit for the building for any of the 5 years before the year of the contribution, your charitable deduction is reduced. Ammended tax return For more information, see Form 3468, Investment Credit, and Internal Revenue Code section 170(f)(14). Ammended tax return   If you claim a deduction of more than $10,000, your deduction will not be allowed unless you pay a $500 filing fee. Ammended tax return See Form 8283-V, Payment Voucher for Filing Fee Under Section 170(f)(13), and its instructions. Ammended tax return You may be able to deduct the filing fee as a miscellaneous itemized deduction, subject to the 2%-of-adjusted-gross-income limit, on Schedule A (Form 1040). Ammended tax return See Deductions Subject to the 2% Limit in Publication 529 for more information. Ammended tax return More information. Ammended tax return   For information about determining the fair market value of qualified conservation contributions, see Publication 561. Ammended tax return For information about the limits that apply to deductions for this type of contribution, see Limits on Deductions , later. Ammended tax return For more information about qualified conservation contributions, see Regulations section 1. Ammended tax return 170A-14. Ammended tax return Future Interest in Tangible Personal Property You cannot deduct the value of a charitable contribution of a future interest in tangible personal property until all intervening interests in and rights to the actual possession or enjoyment of the property have either expired or been turned over to someone other than yourself, a related person, or a related organization. Ammended tax return But see Fractional Interest in Tangible Personal Property , earlier, and Tangible personal property put to unrelated use , later. Ammended tax return Related persons include your spouse, children, grandchildren, brothers, sisters, and parents. Ammended tax return Related organizations may include a partnership or corporation in which you have an interest, or an estate or trust with which you have a connection. Ammended tax return Tangible personal property. Ammended tax return   This is any property, other than land or buildings, that can be seen or touched. Ammended tax return It includes furniture, books, jewelry, paintings, and cars. Ammended tax return Future interest. Ammended tax return   This is any interest that is to begin at some future time, regardless of whether it is designated as a future interest under state law. Ammended tax return Example. Ammended tax return You own an antique car that you contribute to a museum. Ammended tax return You give up ownership, but retain the right to keep the car in your garage with your personal collection. Ammended tax return Because you keep an interest in the property, you cannot deduct the contribution. Ammended tax return If you turn the car over to the museum in a later year, giving up all rights to its use, possession, and enjoyment, you can take a deduction for the contribution in that later year. Ammended tax return Inventory If you contribute inventory (property you sell in the course of your business), the amount you can deduct is the smaller of its fair market value on the day you contributed it or its basis. Ammended tax return The basis of contributed inventory is any cost incurred for the inventory in an earlier year that you would otherwise include in your opening inventory for the year of the contribution. Ammended tax return You must remove the amount of your charitable contribution deduction from your opening inventory. Ammended tax return It is not part of the cost of goods sold. Ammended tax return If the cost of donated inventory is not included in your opening inventory, the inventory's basis is zero and you cannot claim a charitable contribution deduction. Ammended tax return Treat the inventory's cost as you would ordinarily treat it under your method of accounting. Ammended tax return For example, include the purchase price of inventory bought and donated in the same year in the cost of goods sold for that year. Ammended tax return A special rule applies to certain donations of food inventory. Ammended tax return See Food Inventory, later. Ammended tax return Patents and Other Intellectual Property If you donate intellectual property to a qualified organization, your deduction is limited to the basis of the property or the fair market value of the property, whichever is smaller. Ammended tax return Intellectual property means any of the following: Patents. Ammended tax return Copyrights (other than a copyright described in Internal Revenue Code sections 1221(a)(3) or 1231(b)(1)(C)). Ammended tax return Trademarks. Ammended tax return Trade names. Ammended tax return Trade secrets. Ammended tax return Know-how. Ammended tax return Software (other than software described in Internal Revenue Code section 197(e)(3)(A)(i)). Ammended tax return Other similar property or applications or registrations of such property. Ammended tax return Additional deduction based on income. Ammended tax return   You may be able to claim additional charitable contribution deductions in the year of the contribution and years following, based on the income, if any, from the donated property. Ammended tax return   The following table shows the percentage of income from the property that you can deduct for each of your tax years ending on or after the date of the contribution. Ammended tax return In the table, “tax year 1,” for example, means your first tax year ending on or after the date of the contribution. Ammended tax return However, you can take the additional deduction only to the extent the total of the amounts figured using this table is more than the amount of the deduction claimed for the original donation of the property. Ammended tax return   After the legal life of the intellectual property ends, or after the 10th anniversary of the donation, whichever is earlier, no additional deduction is allowed. Ammended tax return The additional deductions cannot be taken for intellectual property donated to certain private foundations. Ammended tax return Tax year Deductible percentage 1 100% 2 100% 3 90% 4 80% 5 70% 6 60% 7 50% 8 40% 9 30% 10 20% 11 10% 12 10% Reporting requirements. Ammended tax return   You must inform the organization at the time of the donation that you intend to treat the donation as a contribution subject to the provisions just discussed. Ammended tax return   The organization is required to file an information return showing the income from the property, with a copy to you. Ammended tax return This is done on Form 8899, Notice of Income From Donated Intellectual Property. Ammended tax return Determining Fair Market Value This section discusses general guidelines for determining the fair market value of various types of donated property. Ammended tax return Publication 561 contains a more complete discussion. Ammended tax return Fair market value is the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts. Ammended tax return Used clothing. Ammended tax return   The fair market value of used clothing and other personal items is usually far less than the price you paid for them. Ammended tax return There are no fixed formulas or methods for finding the value of items of clothing. Ammended tax return   You should claim as the value the price that buyers of used items actually pay in used clothing stores, such as consignment or thrift shops. Ammended tax return      Also see Clothing and Household Items , earlier. Ammended tax return Example. Ammended tax return    Kristin donated a coat to a thrift store operated by her church. Ammended tax return She paid $300 for the coat 3 years ago. Ammended tax return Similar coats in the thrift store sell for $50. Ammended tax return The fair market value of the coat is $50. Ammended tax return Kristin's donation is limited to $50. Ammended tax return Household items. Ammended tax return   The fair market value of used household items, such as furniture, appliances, and linens, is usually much lower than the price paid when new. Ammended tax return These items may have little or no market value because they are in a worn condition, out of style, or no longer useful. Ammended tax return For these reasons, formulas (such as using a percentage of the cost to buy a new replacement item) are not acceptable in determining value. Ammended tax return   You should support your valuation with photographs, canceled checks, receipts from your purchase of the items, or other evidence. Ammended tax return Magazine or newspaper articles and photographs that describe the items and statements by the recipients of the items are also useful. Ammended tax return Do not include any of this evidence with your tax return. Ammended tax return   If the property is valuable because it is old or unique, see the discussion under Paintings, Antiques, and Other Objects of Art in Publication 561. Ammended tax return   Also see Clothing and Household Items , earlier. Ammended tax return Cars, boats, and airplanes. Ammended tax return   If you contribute a car, boat, or airplane to a charitable organization, you must determine its fair market value. Ammended tax return Boats. Ammended tax return   Except for small, inexpensive boats, the valuation of boats should be based on an appraisal by a marine surveyor or appraiser because the physical condition is critical to the value. Ammended tax return Cars. Ammended tax return   Certain commercial firms and trade organizations publish used car pricing guides, commonly called “blue books,” containing complete dealer sale prices or dealer average prices for recent model years. Ammended tax return The guides may be published monthly or seasonally, and for different regions of the country. Ammended tax return These guides also provide estimates for adjusting for unusual equipment, unusual mileage, and physical condition. Ammended tax return The prices are not “official” and these publications are not considered an appraisal of any specific donated property. Ammended tax return But they do provide clues for making an appraisal and suggest relative prices for comparison with current sales and offerings in your area. Ammended tax return   These publications are sometimes available from public libraries, or from the loan officer at a bank, credit union, or finance company. Ammended tax return You can also find used car pricing information on the Internet. Ammended tax return   To find the fair market value of a donated car, use the price listed in a used car guide for a private party sale, not the dealer retail value. Ammended tax return However, the fair market value may be less if the car has engine trouble, body damage, high mileage, or any type of excessive wear. Ammended tax return The fair market value of a donated car is the same as the price listed in a used car guide for a private party sale only if the guide lists a sales price for a car that is the same make, model, and year, sold in the same area, in the same condition, with the same or similar options or accessories, and with the same or similar warranties as the donated car. Ammended tax return Example. Ammended tax return You donate a used car in poor condition to a local high school for use by students studying car repair. Ammended tax return A used car guide shows the dealer retail value for this type of car in poor condition is $1,600. Ammended tax return However, the guide shows the price for a private party sale of the car is only $750. Ammended tax return The fair market value of the car is considered to be $750. Ammended tax return Large quantities. Ammended tax return   If you contribute a large number of the same item, fair market value is the price at which comparable numbers of the item are being sold. Ammended tax return Example. Ammended tax return You purchase 500 bibles for $1,000. Ammended tax return The person who sells them to you says the retail value of these bibles is $3,000. Ammended tax return If you contribute the bibles to a qualified organization, you can claim a deduction only for the price at which similar numbers of the same bible are currently being sold. Ammended tax return Your charitable contribution is $1,000, unless you can show that similar numbers of that bible wer
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The Ammended Tax Return

Ammended tax return Publication 551 - Main Content Table of Contents Cost BasisStocks and Bonds Real Property Business Assets Allocating the Basis Adjusted BasisIncreases to Basis Decreases to Basis Adjustments to Basis Example Basis Other Than CostProperty Received for Services Taxable Exchanges Nontaxable Exchanges Property Transferred From a Spouse Property Received as a Gift Inherited Property Property Changed to Business or Rental Use How To Get Tax HelpLow Income Taxpayer Clinics (LITCs). Ammended tax return Cost Basis The basis of property you buy is usually its cost. Ammended tax return The cost is the amount you pay in cash, debt obligations, other property, or services. Ammended tax return Your cost also includes amounts you pay for the following items. Ammended tax return Sales tax, Freight, Installation and testing, Excise taxes, Legal and accounting fees (when they must be capitalized), Revenue stamps, Recording fees, and Real estate taxes (if assumed for the seller). Ammended tax return  You may also have to capitalize (add to basis) certain other costs related to buying or producing property. Ammended tax return Loans with low or no interest. Ammended tax return   If you buy property on a time-payment plan that charges little or no interest, the basis of your property is your stated purchase price, minus the amount considered to be unstated interest. Ammended tax return You generally have unstated interest if your interest rate is less than the applicable federal rate. Ammended tax return For more information, see Unstated Interest and Original Issue Discount in Publication 537. Ammended tax return Purchase of a business. Ammended tax return   When you purchase a trade or business, you generally purchase all assets used in the business operations, such as land, buildings, and machinery. Ammended tax return Allocate the price among the various assets, including any section 197 intangibles. Ammended tax return See Allocating the Basis, later. Ammended tax return Stocks and Bonds The basis of stocks or bonds you buy is generally the purchase price plus any costs of purchase, such as commissions and recording or transfer fees. Ammended tax return If you get stocks or bonds other than by purchase, your basis is usually determined by the fair market value (FMV) or the previous owner's adjusted basis of the stock. Ammended tax return You must adjust the basis of stocks for certain events that occur after purchase. Ammended tax return See Stocks and Bonds in chapter 4 of Publication 550 for more information on the basis of stock. Ammended tax return Identifying stock or bonds sold. Ammended tax return   If you can adequately identify the shares of stock or the bonds you sold, their basis is the cost or other basis of the particular shares of stock or bonds. Ammended tax return If you buy and sell securities at various times in varying quantities and you cannot adequately identify the shares you sell, the basis of the securities you sell is the basis of the securities you acquired first. Ammended tax return For more information about identifying securities you sell, see Stocks and Bonds under Basis of Investment Property in chapter 4 of Publication 550. Ammended tax return Mutual fund shares. Ammended tax return   If you sell mutual fund shares acquired at different times and prices, you can choose to use an average basis. Ammended tax return For more information, see Publication 550. Ammended tax return Real Property Real property, also called real estate, is land and generally anything built on or attached to it. Ammended tax return If you buy real property, certain fees and other expenses become part of your cost basis in the property. Ammended tax return Real estate taxes. Ammended tax return   If you pay real estate taxes the seller owed on real property you bought, and the seller did not reimburse you, treat those taxes as part of your basis. Ammended tax return You cannot deduct them as taxes. Ammended tax return   If you reimburse the seller for taxes the seller paid for you, you can usually deduct that amount as an expense in the year of purchase. Ammended tax return Do not include that amount in the basis of the property. Ammended tax return If you did not reimburse the seller, you must reduce your basis by the amount of those taxes. Ammended tax return Settlement costs. Ammended tax return   Your basis includes the settlement fees and closing costs for buying property. Ammended tax return You cannot include in your basis the fees and costs for getting a loan on property. Ammended tax return A fee for buying property is a cost that must be paid even if you bought the property for cash. Ammended tax return   The following items are some of the settlement fees or closing costs you can include in the basis of your property. Ammended tax return Abstract fees (abstract of title fees); Charges for installing utility services; Legal fees (including title search and preparation of the sales contract and deed); Recording fees; Surveys; Transfer taxes; Owner's title insurance; and Any amounts the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, charges for improvements or repairs, and sales commissions. Ammended tax return   Settlement costs do not include amounts placed in escrow for the future payment of items such as taxes and insurance. Ammended tax return   The following items are some settlement fees and closing costs you cannot include in the basis of the property. Ammended tax return Casualty insurance premiums. Ammended tax return Rent for occupancy of the property before closing. Ammended tax return Charges for utilities or other services related to occupancy of the property before closing. Ammended tax return Charges connected with getting a loan. Ammended tax return The following are examples of these charges. Ammended tax return Points (discount points, loan origination fees). Ammended tax return Mortgage insurance premiums. Ammended tax return Loan assumption fees. Ammended tax return Cost of a credit report. Ammended tax return Fees for an appraisal required by a lender. Ammended tax return Fees for refinancing a mortgage. Ammended tax return If these costs relate to business property, items (1) through (3) are deductible as business expenses. Ammended tax return Items (4) and (5) must be capitalized as costs of getting a loan and can be deducted over the period of the loan. Ammended tax return Points. Ammended tax return   If you pay points to obtain a loan (including a mortgage, second mortgage, line of credit, or a home equity loan), do not add the points to the basis of the related property. Ammended tax return Generally, you deduct the points over the term of the loan. Ammended tax return For more information on how to deduct points, see Points in chapter 4 of Publication 535. Ammended tax return Points on home mortgage. Ammended tax return   Special rules may apply to points you and the seller pay when you obtain a mortgage to purchase your main home. Ammended tax return If certain requirements are met, you can deduct the points in full for the year in which they are paid. Ammended tax return Reduce the basis of your home by any seller-paid points. Ammended tax return For more information, see Points in Publication 936, Home Mortgage Interest Deduction. Ammended tax return Assumption of mortgage. Ammended tax return   If you buy property and assume (or buy subject to) an existing mortgage on the property, your basis includes the amount you pay for the property plus the amount to be paid on the mortgage. Ammended tax return Example. Ammended tax return If you buy a building for $20,000 cash and assume a mortgage of $80,000 on it, your basis is $100,000. Ammended tax return Constructing assets. Ammended tax return   If you build property or have assets built for you, your expenses for this construction are part of your basis. Ammended tax return Some of these expenses include the following costs. Ammended tax return Land, Labor and materials, Architect's fees, Building permit charges, Payments to contractors, Payments for rental equipment, and Inspection fees. Ammended tax return In addition, if you own a business and use your employees, material, and equipment to build an asset, do not deduct the following expenses. Ammended tax return You must include them in the asset's basis. Ammended tax return Employee wages paid for the construction work, reduced by any employment credits allowed; Depreciation on equipment you own while it is used in the construction; Operating and maintenance costs for equipment used in the construction; and The cost of business supplies and materials used in the construction. Ammended tax return    Do not include the value of your own labor, or any other labor you did not pay for, in the basis of any property you construct. Ammended tax return Business Assets If you purchase property to use in your business, your basis is usually its actual cost to you. Ammended tax return If you construct, create, or otherwise produce property, you must capitalize the costs as your basis. Ammended tax return In certain circumstances, you may be subject to the uniform capitalization rules, next. Ammended tax return Uniform Capitalization Rules The uniform capitalization rules specify the costs you add to basis in certain circumstances. Ammended tax return Activities subject to the rules. Ammended tax return   You must use the uniform capitalization rules if you do any of the following in your trade or business or activity carried on for profit. Ammended tax return Produce real or tangible personal property for use in the business or activity, Produce real or tangible personal property for sale to customers, or Acquire property for resale. Ammended tax return However, this rule does not apply to personal property if your average annual gross receipts for the 3 previous tax years are $10 million or less. Ammended tax return   You produce property if you construct, build, install, manufacture, develop, improve, create, raise, or grow the property. Ammended tax return Treat property produced for you under a contract as produced by you up to the amount you pay or costs you otherwise incur for the property. Ammended tax return Tangible personal property includes films, sound recordings, video tapes, books, or similar property. Ammended tax return    Under the uniform capitalization rules, you must capitalize all direct costs and an allocable part of most indirect costs you incur due to your production or resale activities. Ammended tax return To capitalize means to include certain expenses in the basis of property you produce or in your inventory costs rather than deduct them as a current expense. Ammended tax return You recover these costs through deductions for depreciation, amortization, or cost of goods sold when you use, sell, or otherwise dispose of the property. Ammended tax return   Any cost you cannot use to figure your taxable income for any tax year is not subject to the uniform capitalization rules. Ammended tax return Example. Ammended tax return If you incur a business meal expense for which your deduction would be limited to 50% of the cost of the meal, that amount is subject to the uniform capitalization rules. Ammended tax return The nondeductible part of the cost is not subject to the uniform capitalization rules. Ammended tax return More information. Ammended tax return   For more information about these rules, see the regulations under section 263A of the Internal Revenue Code and Publication 538, Accounting Periods and Methods. Ammended tax return Exceptions. Ammended tax return   The following are not subject to the uniform capitalization rules. Ammended tax return Property you produce that you do not use in your trade, business, or activity conducted for profit; Qualified creative expenses you pay or incur as a free-lance (self-employed) writer, photographer, or artist that are otherwise deductible on your tax return; Property you produce under a long-term contract, except for certain home construction contracts; Research and experimental expenses deductible under section 174 of the Internal Revenue Code; and Costs for personal property acquired for resale if your (or your predecessor's) average annual gross receipts for the 3 previous tax years do not exceed $10 million. Ammended tax return For other exceptions to the uniform capitalization rules, see section 1. Ammended tax return 263A-1(b) of the regulations. Ammended tax return   For information on the special rules that apply to costs incurred in the business of farming, see chapter 6 of Publication 225, Farmer's Tax Guide. Ammended tax return Intangible Assets Intangible assets include goodwill, patents, copyrights, trademarks, trade names, and franchises. Ammended tax return The basis of an intangible asset is usually the cost to buy or create it. Ammended tax return If you acquire multiple assets, for example a going business for a lump sum, see Allocating the Basis below to figure the basis of the individual assets. Ammended tax return The basis of certain intangibles can be amortized. Ammended tax return See chapter 8 of Publication 535 for information on the amortization of these costs. Ammended tax return Patents. Ammended tax return   The basis of a patent you get for an invention is the cost of development, such as research and experimental expenditures, drawings, working models, and attorneys' and governmental fees. Ammended tax return If you deduct the research and experimental expenditures as current business expenses, you cannot include them in the basis of the patent. Ammended tax return The value of the inventor's time spent on an invention is not part of the basis. Ammended tax return Copyrights. Ammended tax return   If you are an author, the basis of a copyright will usually be the cost of getting the copyright plus copyright fees, attorneys' fees, clerical assistance, and the cost of plates that remain in your possession. Ammended tax return Do not include the value of your time as the author, or any other person's time you did not pay for. Ammended tax return Franchises, trademarks, and trade names. Ammended tax return   If you buy a franchise, trademark, or trade name, the basis is its cost, unless you can deduct your payments as a business expense. Ammended tax return Allocating the Basis If you buy multiple assets for a lump sum, allocate the amount you pay among the assets you receive. Ammended tax return You must make this allocation to figure your basis for depreciation and gain or loss on a later disposition of any of these assets. Ammended tax return See Trade or Business Acquired below. Ammended tax return Group of Assets Acquired If you buy multiple assets for a lump sum, you and the seller may agree to a specific allocation of the purchase price among the assets in the sales contract. Ammended tax return If this allocation is based on the value of each asset and you and the seller have adverse tax interests, the allocation generally will be accepted. Ammended tax return However, see Trade or Business Acquired, next. Ammended tax return Trade or Business Acquired If you acquire a trade or business, allocate the consideration paid to the various assets acquired. Ammended tax return Generally, reduce the consideration paid by any cash and general deposit accounts (including checking and savings accounts) received. Ammended tax return Allocate the remaining consideration to the other business assets received in proportion to (but not more than) their fair market value in the following order. Ammended tax return Certificates of deposit, U. Ammended tax return S. Ammended tax return Government securities, foreign currency, and actively traded personal property, including stock and securities. Ammended tax return Accounts receivable, other debt instruments, and assets you mark to market at least annually for federal income tax purposes. Ammended tax return Property of a kind that would properly be included in inventory if on hand at the end of the tax year or property held primarily for sale to customers in the ordinary course of business. Ammended tax return All other assets except section 197 intangibles, goodwill, and going concern value. Ammended tax return Section 197 intangibles except goodwill and going concern value. Ammended tax return Goodwill and going concern value (whether or not they qualify as section 197 intangibles). Ammended tax return Agreement. Ammended tax return   The buyer and seller may enter into a written agreement as to the allocation of any consideration or the fair market value (FMV) of any of the assets. Ammended tax return This agreement is binding on both parties unless the IRS determines the amounts are not appropriate. Ammended tax return Reporting requirement. Ammended tax return   Both the buyer and seller involved in the sale of business assets must report to the IRS the allocation of the sales price among section 197 intangibles and the other business assets. Ammended tax return Use Form 8594 to provide this information. Ammended tax return The buyer and seller should each attach Form 8594 to their federal income tax return for the year in which the sale occurred. Ammended tax return More information. Ammended tax return   See Sale of a Business in chapter 2 of Publication 544 for more information. Ammended tax return Land and Buildings If you buy buildings and the land on which they stand for a lump sum, allocate the basis of the property among the land and the buildings so you can figure the depreciation allowable on the buildings. Ammended tax return Figure the basis of each asset by multiplying the lump sum by a fraction. Ammended tax return The numerator is the FMV of that asset and the denominator is the FMV of the whole property at the time of purchase. Ammended tax return If you are not certain of the FMV of the land and buildings, you can allocate the basis based on their assessed values for real estate tax purposes. Ammended tax return Demolition of building. Ammended tax return   Add demolition costs and other losses incurred for the demolition of any building to the basis of the land on which the demolished building was located. Ammended tax return Do not claim the costs as a current deduction. Ammended tax return Modification of building. Ammended tax return   A modification of a building will not be treated as a demolition if the following conditions are satisfied. Ammended tax return 75 percent or more of the existing external walls of the building are retained in place as internal or external walls, and 75 percent or more of the existing internal structural framework of the building is retained in place. Ammended tax return   If the building is a certified historic structure, the modification must also be part of a certified rehabilitation. Ammended tax return   If these conditions are met, add the costs of the modifications to the basis of the building. Ammended tax return Subdivided lots. Ammended tax return   If you buy a tract of land and subdivide it, you must determine the basis of each lot. Ammended tax return This is necessary because you must figure the gain or loss on the sale of each individual lot. Ammended tax return As a result, you do not recover your entire cost in the tract until you have sold all of the lots. Ammended tax return   To determine the basis of an individual lot, multiply the total cost of the tract by a fraction. Ammended tax return The numerator is the FMV of the lot and the denominator is the FMV of the entire tract. Ammended tax return Future improvement costs. Ammended tax return   If you are a developer and sell subdivided lots before the development work is completed, you can (with IRS consent) include in the basis of the properties sold an allocation of the estimated future cost for common improvements. Ammended tax return See Revenue Procedure 92–29 for more information, including an explanation of the procedures for getting consent from the IRS. Ammended tax return Use of erroneous cost basis. Ammended tax return   If you made a mistake in figuring the cost basis of subdivided lots sold in previous years, you cannot correct the mistake for years for which the statute of limitations (generally 3 tax years) has expired. Ammended tax return Figure the basis of any remaining lots by allocating the correct original cost basis of the entire tract among the original lots. Ammended tax return Example. Ammended tax return You bought a tract of land to which you assigned a cost of $15,000. Ammended tax return You subdivided the land into 15 building lots of equal size and equitably divided your basis so that each lot had a basis of $1,000. Ammended tax return You treated the sale of each lot as a separate transaction and figured gain or loss separately on each sale. Ammended tax return Several years later you determine that your original basis in the tract was $22,500 and not $15,000. Ammended tax return You sold eight lots using $8,000 of basis in years for which the statute of limitations has expired. Ammended tax return You now can take $1,500 of basis into account for figuring gain or loss only on the sale of each of the remaining seven lots ($22,500 basis divided among all 15 lots). Ammended tax return You cannot refigure the basis of the eight lots sold in tax years barred by the statute of limitations. Ammended tax return Adjusted Basis Before figuring gain or loss on a sale, exchange, or other disposition of property or figuring allowable depreciation, depletion, or amortization, you must usually make certain adjustments to the basis of the property. Ammended tax return The result of these adjustments to the basis is the adjusted basis. Ammended tax return Increases to Basis Increase the basis of any property by all items properly added to a capital account. Ammended tax return These include the cost of any improvements having a useful life of more than 1 year. Ammended tax return Rehabilitation expenses also increase basis. Ammended tax return However, you must subtract any rehabilitation credit allowed for these expenses before you add them to your basis. Ammended tax return If you have to recapture any of the credit, increase your basis by the recaptured amount. Ammended tax return If you make additions or improvements to business property, keep separate accounts for them. Ammended tax return Also, you must depreciate the basis of each according to the depreciation rules that would apply to the underlying property if you had placed it in service at the same time you placed the addition or improvement in service. Ammended tax return For more information, see Publication 946. Ammended tax return The following items increase the basis of property. Ammended tax return The cost of extending utility service lines to the property; Impact fees; Legal fees, such as the cost of defending and perfecting title; Legal fees for obtaining a decrease in an assessment levied against property to pay for local improvements; Zoning costs; and The capitalized value of a redeemable ground rent. Ammended tax return Assessments for Local Improvements Increase the basis of property by assessments for items such as paving roads and building ditches that increase the value of the property assessed. Ammended tax return Do not deduct them as taxes. Ammended tax return However, you can deduct as taxes charges for maintenance, repairs, or interest charges related to the improvements. Ammended tax return Example. Ammended tax return Your city changes the street in front of your store into an enclosed pedestrian mall and assesses you and other affected landowners for the cost of the conversion. Ammended tax return Add the assessment to your property's basis. Ammended tax return In this example, the assessment is a depreciable asset. Ammended tax return Deducting vs. Ammended tax return Capitalizing Costs Do not add to your basis costs you can deduct as current expenses. Ammended tax return For example, amounts paid for incidental repairs or maintenance that are deductible as business expenses cannot be added to basis. Ammended tax return However, you can choose either to deduct or to capitalize certain other costs. Ammended tax return If you capitalize these costs, include them in your basis. Ammended tax return If you deduct them, do not include them in your basis. Ammended tax return See Uniform Capitalization Rules earlier. Ammended tax return The costs you can choose to deduct or to capitalize include the following. Ammended tax return Carrying charges, such as interest and taxes, that you pay to own property, except carrying charges that must be capitalized under the uniform capitalization rules; Research and experimentation costs; Intangible drilling and development costs for oil, gas, and geothermal wells; Exploration costs for new mineral deposits; Mining development costs for a new mineral deposit; Costs of establishing, maintaining, or increasing the circulation of a newspaper or other periodical; and Costs of removing architectural and transportation barriers to people with disabilities and the elderly. Ammended tax return If you claim the disabled access credit, you must reduce the amount you deduct or capitalize by the amount of the credit. Ammended tax return For more information about deducting or capitalizing costs, see chapter 7 in Publication 535. Ammended tax return Table 1. Ammended tax return Examples of Increases and Decreases to Basis Increases to Basis Decreases to Basis Capital improvements:   Putting an addition on your home   Replacing an entire roof  Paving your driveway  Installing central air conditioning Rewiring your home Exclusion from income of subsidies for energy conservation measures  Casualty or theft loss deductions and insurance reimbursements  Vehicle credits Assessments for local improvements: Water connections Sidewalks Roads Section 179 deduction  Casualty losses: Restoring damaged property Depreciation  Nontaxable corporate distributions Legal fees:  Cost of defending and perfecting a title   Zoning costs   Decreases to Basis The following are some items that reduce the basis of property. Ammended tax return Section 179 deduction; Nontaxable corporate distributions; Deductions previously allowed (or allowable) for amortization, depreciation, and depletion; Exclusion of subsidies for energy conservation measures; Vehicle credits; Residential energy credits; Postponed gain from sale of home; Investment credit (part or all) taken; Casualty and theft losses and insurance reimbursement; Certain canceled debt excluded from income; Rebates from a manufacturer or seller; Easements; Gas-guzzler tax; Adoption tax benefits; and Credit for employer-provided child care. Ammended tax return Some of these items are discussed next. Ammended tax return Casualties and Thefts If you have a casualty or theft loss, decrease the basis in your property by any insurance or other reimbursement and by any deductible loss not covered by insurance. Ammended tax return You must increase your basis in the property by the amount you spend on repairs that substantially prolong the life of the property, increase its value, or adapt it to a different use. Ammended tax return To make this determination, compare the repaired property to the property before the casualty. Ammended tax return For more information on casualty and theft losses, see Publication 547, Casualties, Disasters, and Thefts. Ammended tax return Easements The amount you receive for granting an easement is generally considered to be a sale of an interest in real property. Ammended tax return It reduces the basis of the affected part of the property. Ammended tax return If the amount received is more than the basis of the part of the property affected by the easement, reduce your basis in that part to zero and treat the excess as a recognized gain. Ammended tax return Vehicle Credits Unless you elect not to claim the qualified plug-in electric vehicle credit, the alternative motor vehicle credit, or the qualified plug-in electric drive motor vehicle credit, you may have to reduce the basis of each qualified vehicle by certain amounts reported. Ammended tax return For more information, see Form 8834, Qualified Plug-in Electric and Electric Vehicle Credit; Form 8910, Alternative Motor Vehicle Credit; Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit;and the related instructions. Ammended tax return Gas-Guzzler Tax Decrease the basis in your car by the gas-guzzler (fuel economy) tax if you begin using the car within 1 year of the date of its first sale for ultimate use. Ammended tax return This rule also applies to someone who later buys the car and begins using it not more than 1 year after the original sale for ultimate use. Ammended tax return If the car is imported, the one-year period begins on the date of entry or withdrawal of the car from the warehouse if that date is later than the date of the first sale for ultimate use. Ammended tax return Section 179 Deduction If you take the section 179 deduction for all or part of the cost of qualifying business property, decrease the basis of the property by the deduction. Ammended tax return For more information about the section 179 deduction, see Publication 946. Ammended tax return Exclusion of Subsidies for Energy Conservation Measures You can exclude from gross income any subsidy you received from a public utility company for the purchase or installation of any energy conservation measure for a dwelling unit. Ammended tax return Reduce the basis of the property for which you received the subsidy by the excluded amount. Ammended tax return For more information on this subsidy, see Publication 525. Ammended tax return Depreciation Decrease the basis of property by the depreciation you deducted, or could have deducted, on your tax returns under the method of depreciation you chose. Ammended tax return If you took less depreciation than you could have under the method chosen, decrease the basis by the amount you could have taken under that method. Ammended tax return If you did not take a depreciation deduction, reduce the basis by the full amount of the depreciation you could have taken. Ammended tax return Unless a timely election is made not to deduct the special depreciation allowance for property placed in service after September 10, 2001, decrease the property's basis by the special depreciation allowance you deducted or could have deducted. Ammended tax return If you deducted more depreciation than you should have, decrease your basis by the amount equal to the depreciation you should have deducted plus the part of the excess depreciation you deducted that actually reduced your tax liability for the year. Ammended tax return In decreasing your basis for depreciation, take into account the amount deducted on your tax returns as depreciation and any depreciation capitalized under the uniform capitalization rules. Ammended tax return For information on figuring depreciation, see Publication 946. Ammended tax return If you are claiming depreciation on a business vehicle, see Publication 463. Ammended tax return If the car is not used more than 50% for business during the tax year, you may have to recapture excess depreciation. Ammended tax return Include the excess depreciation in your gross income and add it to your basis in the property. Ammended tax return For information on the computation of excess depreciation, see chapter 4 in Publication 463. Ammended tax return Canceled Debt Excluded From Income If a debt you owe is canceled or forgiven, other than as a gift or bequest, you generally must include the canceled amount in your gross income for tax purposes. Ammended tax return A debt includes any indebtedness for which you are liable or which attaches to property you hold. Ammended tax return You can exclude canceled debt from income in the following situations. Ammended tax return Debt canceled in a bankruptcy case or when you are insolvent, Qualified farm debt, and Qualified real property business debt (provided you are not a C corporation). Ammended tax return If you exclude from income canceled debt under situation (1) or (2), you may have to reduce the basis of your depreciable and nondepreciable property. Ammended tax return However, in situation (3), you must reduce the basis of your depreciable property by the excluded amount. Ammended tax return For more information about canceled debt in a bankruptcy case or during insolvency, see Publication 908, Bankruptcy Tax Guide. Ammended tax return For more information about canceled debt that is qualified farm debt, see chapter 3 in Publication 225. Ammended tax return For more information about qualified real property business debt, see chapter 5 in Publication 334, Tax Guide for Small Business. Ammended tax return Postponed Gain From Sale of Home If you postponed gain from the sale of your main home before May 7, 1997, you must reduce the basis of your new home by the postponed gain. Ammended tax return For more information on the rules for the sale of a home, see Publication 523. Ammended tax return Adoption Tax Benefits If you claim an adoption credit for the cost of improvements you added to the basis of your home, decrease the basis of your home by the credit allowed. Ammended tax return This also applies to amounts you received under an employer's adoption assistance program and excluded from income. Ammended tax return For more information Form 8839, Qualified Adoption Expenses. Ammended tax return Employer-Provided Child Care If you are an employer, you can claim the employer-provided child care credit on amounts you paid or incurred to acquire, construct, rehabilitate, or expand property used as part of your qualified child care facility. Ammended tax return You must reduce your basis in that property by the credit claimed. Ammended tax return For more information, see Form 8882, Credit for Employer-Provided Child Care Facilities and Services. Ammended tax return Adjustments to Basis Example In January 2005, you paid $80,000 for real property to be used as a factory. Ammended tax return You also paid commissions of $2,000 and title search and legal fees of $600. Ammended tax return You allocated the total cost of $82,600 between the land and the building—$10,325 for the land and $72,275 for the building. Ammended tax return Immediately you spent $20,000 in remodeling the building before you placed it in service. Ammended tax return You were allowed depreciation of $14,526 for the years 2005 through 2009. Ammended tax return In 2008 you had a $5,000 casualty loss from a that was not covered by insurance on the building. Ammended tax return You claimed a deduction for this loss. Ammended tax return You spent $5,500 to repair the damages and extend the useful life of the building. Ammended tax return The adjusted basis of the building on January 1, 2010, is figured as follows: Original cost of building including fees and commissions $72,275 Adjustments to basis:     Add:         Improvements 20,000   Repair of damages 5,500       $97,775 Subtract:       Depreciation $14,526     Deducted casualty loss 5,000 19,526 Adjusted basis on January 1, 2010 $78,249 The basis of the land, $10,325, remains unchanged. Ammended tax return It is not affected by any of the above adjustments. Ammended tax return Basis Other Than Cost There are many times when you cannot use cost as basis. Ammended tax return In these cases, the fair market value or the adjusted basis of property may be used. Ammended tax return Adjusted basis is discussed earlier. Ammended tax return Fair market value (FMV). Ammended tax return   FMV is the price at which property would change hands between a buyer and a seller, neither having to buy or sell, and both having reasonable knowledge of all necessary facts. Ammended tax return Sales of similar property on or about the same date may be helpful in figuring the property's FMV. Ammended tax return Property Received for Services If you receive property for services, include the property's FMV in income. Ammended tax return The amount you include in income becomes your basis. Ammended tax return If the services were performed for a price agreed on beforehand, it will be accepted as the FMV of the property if there is no evidence to the contrary. Ammended tax return Bargain Purchases A bargain purchase is a purchase of an item for less than its FMV. Ammended tax return If, as compensation for services, you purchase goods or other property at less than FMV, include the difference between the purchase price and the property's FMV in your income. Ammended tax return Your basis in the property is its FMV (your purchase price plus the amount you include in income). Ammended tax return If the difference between your purchase price and the FMV represents a qualified employee discount, do not include the difference in income. Ammended tax return However, your basis in the property is still its FMV. Ammended tax return See Employee Discounts in Publication 15-B. Ammended tax return Restricted Property If you receive property for your services and the property is subject to certain restrictions, your basis in the property is its FMV when it becomes substantially vested unless you make the election discussed later. Ammended tax return Property becomes substantially vested when your rights in the property or the rights of any person to whom you transfer the property are not subject to a substantial risk of forfeiture. Ammended tax return There is substantial risk of forfeiture when the rights to full enjoyment of the property depend on the future performance of substantial services by any person. Ammended tax return When the property becomes substantially vested, include the FMV, less any amount you paid for the property, in income. Ammended tax return Example. Ammended tax return Your employer gives you stock for services performed under the condition that you will have to return the stock unless you complete 5 years of service. Ammended tax return The stock is under a substantial risk of forfeiture and is not substantially vested when you receive it. Ammended tax return You do not report any income until you have completed the 5 years of service that satisfy the condition. Ammended tax return Fair market value. Ammended tax return   Figure the FMV of property you received without considering any restriction except one that by its terms will never end. Ammended tax return Example. Ammended tax return You received stock from your employer for services you performed. Ammended tax return If you want to sell the stock while you are still employed, you must sell the stock to your employer at book value. Ammended tax return At your retirement or death, you or your estate must offer to sell the stock to your employer at its book value. Ammended tax return This is a restriction that by its terms will never end and you must consider it when you figure the FMV. Ammended tax return Election. Ammended tax return   You can choose to include in your gross income the FMV of the property at the time of transfer, less any amount you paid for it. Ammended tax return If you make this choice, the substantially vested rules do not apply. Ammended tax return Your basis is the amount you paid plus the amount you included in income. Ammended tax return   See the discussion of Restricted Property in Publication 525 for more information. Ammended tax return Taxable Exchanges A taxable exchange is one in which the gain is taxable or the loss is deductible. Ammended tax return A taxable gain or deductible loss is also known as a recognized gain or loss. Ammended tax return If you receive property in exchange for other property in a taxable exchange, the basis of property you receive is usually its FMV at the time of the exchange. Ammended tax return A taxable exchange occurs when you receive cash or property not similar or related in use to the property exchanged. Ammended tax return Example. Ammended tax return You trade a tract of farm land with an adjusted basis of $3,000 for a tractor that has an FMV of $6,000. Ammended tax return You must report a taxable gain of $3,000 for the land. Ammended tax return The tractor has a basis of $6,000. Ammended tax return Involuntary Conversions If you receive property as a result of an involuntary conversion, such as a casualty, theft, or condemnation, you can figure the basis of the replacement property you receive using the basis of the converted property. Ammended tax return Similar or related property. Ammended tax return   If you receive replacement property similar or related in service or use to the converted property, the replacement property's basis is the old property's basis on the date of the conversion. Ammended tax return However, make the following adjustments. Ammended tax return Decrease the basis by the following. Ammended tax return Any loss you recognize on the conversion, and Any money you receive that you do not spend on similar property. Ammended tax return Increase the basis by the following. Ammended tax return Any gain you recognize on the conversion, and Any cost of acquiring the replacement property. Ammended tax return Money or property not similar or related. Ammended tax return   If you receive money or property not similar or related in service or use to the converted property, and you buy replacement property similar or related in service or use to the converted property, the basis of the new property is its cost decreased by the gain not recognized on the conversion. Ammended tax return Example. Ammended tax return The state condemned your property. Ammended tax return The property had an adjusted basis of $26,000 and the state paid you $31,000 for it. Ammended tax return You realized a gain of $5,000 ($31,000 − $26,000). Ammended tax return You bought replacement property similar in use to the converted property for $29,000. Ammended tax return You recognize a gain of $2,000 ($31,000 − $29,000), the unspent part of the payment from the state. Ammended tax return Your gain not recognized is $3,000, the difference between the $5,000 realized gain and the $2,000 recognized gain. Ammended tax return The basis of the new property is figured as follows: Cost of replacement property $29,000 Minus: Gain not recognized 3,000 Basis of the replacement property $26,000 Allocating the basis. Ammended tax return   If you buy more than one piece of replacement property, allocate your basis among the properties based on their respective costs. Ammended tax return Example. Ammended tax return The state in the previous example condemned your unimproved real property and the replacement property you bought was improved real property with both land and buildings. Ammended tax return Allocate the replacement property's $26,000 basis between land and buildings based on their respective costs. Ammended tax return More information. Ammended tax return   For more information about condemnations, see Involuntary Conversions in Publication 544. Ammended tax return For more information about casualty and theft losses, see Publication 547. Ammended tax return Nontaxable Exchanges A nontaxable exchange is an exchange in which you are not taxed on any gain and you cannot deduct any loss. Ammended tax return If you receive property in a nontaxable exchange, its basis is usually the same as the basis of the property you transferred. Ammended tax return A nontaxable gain or loss is also known as an unrecognized gain or loss. Ammended tax return Like-Kind Exchanges The exchange of property for the same kind of property is the most common type of nontaxable exchange. Ammended tax return To qualify as a like-kind exchange, you must hold for business or investment purposes both the property you transfer and the property you receive. Ammended tax return There must also be an exchange of like-kind property. Ammended tax return For more information, see Like-Kind Exchanges in Publication 544. Ammended tax return The basis of the property you receive is the same as the basis of the property you gave up. Ammended tax return Example. Ammended tax return You exchange real estate (adjusted basis $50,000, FMV $80,000) held for investment for other real estate (FMV $80,000) held for investment. Ammended tax return Your basis in the new property is the same as the basis of the old ($50,000). Ammended tax return Exchange expenses. Ammended tax return   Exchange expenses are generally the closing costs you pay. Ammended tax return They include such items as brokerage commissions, attorney fees, deed preparation fees, etc. Ammended tax return Add them to the basis of the like-kind property received. Ammended tax return Property plus cash. Ammended tax return   If you trade property in a like-kind exchange and also pay money, the basis of the property received is the basis of the property you gave up increased by the money you paid. Ammended tax return Example. Ammended tax return You trade in a truck (adjusted basis $3,000) for another truck (FMV $7,500) and pay $4,000. Ammended tax return Your basis in the new truck is $7,000 (the $3,000 basis of the old truck plus the $4,000 paid). Ammended tax return Special rules for related persons. Ammended tax return   If a like-kind exchange takes place directly or indirectly between related persons and either party disposes of the property within 2 years after the exchange, the exchange no longer qualifies for like-kind exchange treatment. Ammended tax return Each person must report any gain or loss not recognized on the original exchange. Ammended tax return Each person reports it on the tax return filed for the year in which the later disposition occurs. Ammended tax return If this rule applies, the basis of the property received in the original exchange will be its fair market value. Ammended tax return   These rules generally do not apply to the following kinds of property dispositions. Ammended tax return Dispositions due to the death of either related person, Involuntary conversions, and Dispositions in which neither the original exchange nor the subsequent disposition had as a main purpose the avoidance of federal income tax. Ammended tax return Related persons. Ammended tax return   Generally, related persons are ancestors, lineal descendants, brothers and sisters (whole or half), and a spouse. Ammended tax return   For other related persons (for example, two corporations, an individual and a corporation, a grantor and fiduciary, etc. Ammended tax return ), see Nondeductible Loss in chapter 2 of Publication 544. Ammended tax return Exchange of business property. Ammended tax return   Exchanging the assets of one business for the assets of another business is a multiple property exchange. Ammended tax return For information on figuring basis, see Multiple Property Exchanges in chapter 1 of Publication 544. Ammended tax return Partially Nontaxable Exchange A partially nontaxable exchange is an exchange in which you receive unlike property or money in addition to like property. Ammended tax return The basis of the property you receive is the same as the basis of the property you gave up, with the following adjustments. Ammended tax return Decrease the basis by the following amounts. Ammended tax return Any money you receive, and Any loss you recognize on the exchange. Ammended tax return Increase the basis by the following amounts. Ammended tax return Any additional costs you incur, and Any gain you recognize on the exchange. Ammended tax return If the other party to the exchange assumes your liabilities, treat the debt assumption as money you received in the exchange. Ammended tax return Example. Ammended tax return You traded a truck (adjusted basis $6,000) for a new truck (FMV $5,200) and $1,000 cash. Ammended tax return You realized a gain of $200 ($6,200 − $6,000). Ammended tax return This is the FMV of the truck received plus the cash minus the adjusted basis of the truck you traded ($5,200 + $1,000 – $6,000). Ammended tax return You include all the gain in income (recognized gain) because the gain is less than the cash received. Ammended tax return Your basis in the new truck is: Adjusted basis of old truck $6,000 Minus: Cash received (adjustment 1(a)) 1,000   $5,000 Plus: Gain recognized (adjustment 2(b)) 200 Basis of new truck $5,200 Allocation of basis. Ammended tax return   Allocate the basis first to the unlike property, other than money, up to its FMV on the date of the exchange. Ammended tax return The rest is the basis of the like property. Ammended tax return Example. Ammended tax return You had an adjusted basis of $15,000 in real estate you held for investment. Ammended tax return You exchanged it for other real estate to be held for investment with an FMV of $12,500, a truck with an FMV of $3,000, and $1,000 cash. Ammended tax return The truck is unlike property. Ammended tax return You realized a gain of $1,500 ($16,500 − $15,000). Ammended tax return This is the FMV of the real estate received plus the FMV of the truck received plus the cash minus the adjusted basis of the real estate you traded ($12,500 + $3,000 + $1,000 – $15,000). Ammended tax return You include in income (recognize) all $1,500 of the gain because it is less than the FMV of the unlike property plus the cash received. Ammended tax return Your basis in the properties you received is figured as follows. Ammended tax return Adjusted basis of real estate transferred $15,000 Minus: Cash received (adjustment 1(a)) 1,000   $14,000 Plus: Gain recognized (adjustment 2(b)) 1,500 Total basis of properties received $15,500 Allocate the total basis of $15,500 first to the unlike property — the truck ($3,000). Ammended tax return This is the truck's FMV. Ammended tax return The rest ($12,500) is the basis of the real estate. Ammended tax return Sale and Purchase If you sell property and buy similar property in two mutually dependent transactions, you may have to treat the sale and purchase as a single nontaxable exchange. Ammended tax return Example. Ammended tax return You are a salesperson and you use one of your cars 100% for business. Ammended tax return You have used this car in your sales activities for 2 years and have depreciated it. Ammended tax return Your adjusted basis in the car is $22,600 and its FMV is $23,100. Ammended tax return You are interested in a new car, which sells for $28,000. Ammended tax return If you trade your old car and pay $4,900 for the new one, your basis for depreciation for the new car would be $27,500 ($4,900 plus the $22,600 basis of your old car). Ammended tax return However, you want a higher basis for depreciating the new car, so you agree to pay the dealer $28,000 for the new car if he will pay you $23,100 for your old car. Ammended tax return Because the two transactions are dependent on each other, you are treated as having exchanged your old car for the new one and paid $4,900 ($28,000 − $23,100). Ammended tax return Your basis for depreciating the new car is $27,500, the same as if you traded the old car. Ammended tax return Partial Business Use of Property If you have property used partly for business and partly for personal use, and you exchange it in a nontaxable exchange for property to be used wholly or partly in your business, the basis of the property you receive is figured as if you had exchanged two properties. Ammended tax return The first is an exchange of like-kind property. Ammended tax return The second is personal-use property on which gain is recognized and loss is not recognized. Ammended tax return First, figure your adjusted basis in the property as if you transferred two separate properties. Ammended tax return Figure the adjusted basis of each part of the property by taking into account any adjustments to basis. Ammended tax return Deduct the depreciation you took or could have taken from the adjusted basis of the business part. Ammended tax return Then figure the amount realized for your property and allocate it to the business and nonbusiness parts of the property. Ammended tax return The business part of the property is permitted to be exchanged tax free. Ammended tax return However, you must recognize any gain from the exchange of the nonbusiness part. Ammended tax return You are deemed to have received, in exchange for the nonbusiness part, an amount equal to its FMV on the date of the exchange. Ammended tax return The basis of the property you acquired is the total basis of the property transferred (adjusted to the date of the exchange), increased by any gain recognized on the nonbusiness part. Ammended tax return If the nonbusiness part of the property transferred is your main home, you may qualify to exclude from income all or part of the gain on that part. Ammended tax return For more information, see Publication 523. Ammended tax return Trade of car used partly in business. Ammended tax return   If you trade in a car you used partly in your business for another car you will use in your business, your basis for depreciation of the new car is not the same as your basis for figuring a gain or loss on its sale. Ammended tax return   For information on figuring your basis for depreciation, see Publication 463. Ammended tax return Property Transferred From a Spouse The basis of property transferred to you or transferred in trust for your benefit by your spouse (or former spouse if the transfer is incident to divorce), is the same as your spouse's adjusted basis. Ammended tax return However, adjust your basis for any gain recognized by your spouse or former spouse on property transferred in trust. Ammended tax return This rule applies only to a transfer of property in trust in which the liabilities assumed, plus the liabilities to which the property is subject, are more than the adjusted basis of the property transferred. Ammended tax return If the property transferred to you is a series E, series EE, or series I United States savings bond, the transferor must include in income the interest accrued to the date of transfer. Ammended tax return Your basis in the bond immediately after the transfer is equal to the transferor's basis increased by the interest income includible in the transferor's income. Ammended tax return For more information on these bonds, see Publication 550. Ammended tax return At the time of the transfer, the transferor must give you the records necessary to determine the adjusted basis and holding period of the property as of the date of transfer. Ammended tax return For more information, see Publication 504, Divorced or Separated Individuals. Ammended tax return Property Received as a Gift To figure the basis of property you receive as a gift, you must know its adjusted basis (defined earlier) to the donor just before it was given to you, its FMV at the time it was given to you, and any gift tax paid on it. Ammended tax return FMV Less Than Donor's Adjusted Basis If the FMV of the property at the time of the gift is less than the donor's adjusted basis, your basis depends on whether you have a gain or a loss when you dispose of the property. Ammended tax return Your basis for figuring gain is the same as the donor's adjusted basis plus or minus any required adjustment to basis while you held the property. Ammended tax return Your basis for figuring loss is its FMV when you received the gift plus or minus any required adjustment to basis while you held the property (see Adjusted Basis earlier). Ammended tax return If you use the donor's adjusted basis for figuring a gain and get a loss, and then use the FMV for figuring a loss and have a gain, you have neither gain nor loss on the sale or disposition of the property. Ammended tax return Example. Ammended tax return You received an acre of land as a gift. Ammended tax return At the time of the gift, the land had an FMV of $8,000. Ammended tax return The donor's adjusted basis was $10,000. Ammended tax return After you received the land, no events occurred to increase or decrease your basis. Ammended tax return If you sell the land for $12,000, you will have a $2,000 gain because you must use the donor's adjusted basis ($10,000) at the time of the gift as your basis to figure gain. Ammended tax return If you sell the land for $7,000, you will have a $1,000 loss because you must use the FMV ($8,000) at the time of the gift as your basis to figure a loss. Ammended tax return If the sales price is between $8,000 and $10,000, you have neither gain nor loss. Ammended tax return For instance, if the sales price was $9,000 and you tried to figure a gain using the donor's adjusted basis ($10,000), you would get a $1,000 loss. Ammended tax return If you then tried to figure a loss using the FMV ($8,000), you would get a $1,000 gain. Ammended tax return Business property. Ammended tax return   If you hold the gift as business property, your basis for figuring any depreciation, depletion, or amortization deduction is the same as the donor's adjusted basis plus or minus any required adjustments to basis while you hold the property. Ammended tax return FMV Equal to or More Than Donor's Adjusted Basis If the FMV of the property is equal to or greater than the donor's adjusted basis, your basis is the donor's adjusted basis at the time you received the gift. Ammended tax return Increase your basis by all or part of any gift tax paid, depending on the date of the gift. Ammended tax return Also, for figuring gain or loss from a sale or other disposition of the property, or for figuring depreciation, depletion, or amortization deductions on business property, you must increase or decrease your basis by any required adjustments to basis while you held the property. Ammended tax return See Adjusted Basis earlier. Ammended tax return Gift received before 1977. Ammended tax return   If you received a gift before 1977, increase your basis in the gift (the donor's adjusted basis) by any gift tax paid on it. Ammended tax return However, do not increase your basis above the FMV of the gift at the time it was given to you. Ammended tax return Example 1. Ammended tax return You were given a house in 1976 with an FMV of $21,000. Ammended tax return The donor's adjusted basis was $20,000. Ammended tax return The donor paid a gift tax of $500. Ammended tax return Your basis is $20,500, the donor's adjusted basis plus the gift tax paid. Ammended tax return Example 2. Ammended tax return If, in Example 1, the gift tax paid had been $1,500, your basis would be $21,000. Ammended tax return This is the donor's adjusted basis plus the gift tax paid, limited to the FMV of the house at the time you received the gift. Ammended tax return Gift received after 1976. Ammended tax return   If you received a gift after 1976, increase your basis in the gift (the donor's adjusted basis) by the part of the gift tax paid on it that is due to the net increase in value of the gift. Ammended tax return Figure the increase by multiplying the gift tax paid by a fraction. Ammended tax return The numerator of the fraction is the net increase in value of the gift and the denominator is the amount of the gift. Ammended tax return   The net increase in value of the gift is the FMV of the gift less the donor's adjusted basis. Ammended tax return The amount of the gift is its value for gift tax purposes after reduction by any annual exclusion and marital or charitable deduction that applies to the gift. Ammended tax return For information on the gift tax, see Publication 950, Introduction to Estate and Gift Taxes. Ammended tax return Example. Ammended tax return In 2010, you received a gift of property from your mother that had an FMV of $50,000. Ammended tax return Her adjusted basis was $20,000. Ammended tax return The amount of the gift for gift tax purposes was $37,000 ($50,000 minus the $13,000 annual exclusion). Ammended tax return She paid a gift tax of $9,000. Ammended tax return Your basis, $27,290, is figured as follows: Fair market value $50,000 Minus: Adjusted basis 20,000 Net increase in value $30,000 Gift tax paid $9,000 Multiplied by ($30,000 ÷ $37,000) . Ammended tax return 81 Gift tax due to net increase in value $7,290 Adjusted basis of property to your mother 20,000 Your basis in the property $27,290 Inherited Property Special rules apply to property acquired from a decedent who died in 2010. Ammended tax return See Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010, for details. Ammended tax return If you inherited property from a decedent who died before 2010, your basis in property you inherit from a decedent is generally one of the following. Ammended tax return The FMV of the property at the date of the individual's death. Ammended tax return The FMV on the alternate valuation date if the personal representative for the estate chooses to use alternate valuation. Ammended tax return For information on the alternate valuation date, see the Instructions for Form 706. Ammended tax return The value under the special-use valuation method for real property used in farming or a closely held business if chosen for estate tax purposes. Ammended tax return This method is discussed later. Ammended tax return The decedent's adjusted basis in land to the extent of the value excluded from the decedent's taxable estate as a qualified conservation easement. Ammended tax return For information on a qualified conservation easement, see the Instructions for Form 706. Ammended tax return If a federal estate tax return does not have to be filed, your basis in the inherited property is its appraised value at the date of death for state inheritance or transmission taxes. Ammended tax return For more information, see the Instructions for Form 706. Ammended tax return Appreciated property. Ammended tax return   The above rule does not apply to appreciated property you receive from a decedent if you or your spouse originally gave the property to the decedent within 1 year before the decedent's death. Ammended tax return Your basis in this property is the same as the decedent's adjusted basis in the property immediately before his or her death, rather than its FMV. Ammended tax return Appreciated property is any property whose FMV on the day it was given to the decedent is more than its adjusted basis. Ammended tax return Community Property In community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), husband and wife are each usually considered to own half the community property. Ammended tax return When either spouse dies, the total value of the community property, even the part belonging to the surviving spouse, generally becomes the basis of the entire property. Ammended tax return For this rule to apply, at least half the value of the community property interest must be includable in the decedent's gross estate, whether or not the estate must file a return. Ammended tax return For example, you and your spouse owned community property that had a basis of $80,000. Ammended tax return When your spouse died, half the FMV of the community interest was includible in your spouse's estate. Ammended tax return The FMV of the community interest was $100,000. Ammended tax return The basis of your half of the property after the death of your spouse is $50,000 (half of the $100,000 FMV). Ammended tax return The basis of the other half to your spouse's heirs is also $50,000. Ammended tax return For more information on community property, see Publication 555, Community Property. Ammended tax return Property Held by Surviving Tenant The following example explains the rule for the basis of property held by a surviving tenant in joint tenancy or tenancy by the entirety. Ammended tax return Example. Ammended tax return John and Jim owned, as joint tenants with right of survivorship, business property they purchased for $30,000. Ammended tax return John furnished two-thirds of the purchase price and Jim furnished one-third. Ammended tax return Depreciation deductions allowed before John's death were $12,000. Ammended tax return Under local law, each had a half interest in the income from the property. Ammended tax return At the date of John's death, the property had an FMV of $60,000, two-thirds of which is includable in John's estate. Ammended tax return Jim figures his basis in the property at the date of John's death as follows: Interest Jim bought with his own funds—1/3 of $30,000 cost $10,000   Interest Jim received on John's death—2/3 of $60,000 FMV 40,000 $50,000 Minus: ½ of $12,000 depreciation before John's death 6,000 Jim's basis at the date of John's death $44,000 If Jim had not contributed any part of the purchase price, his basis at the date of John's death would be $54,000. Ammended tax return This is figured by subtracting from the $60,000 FMV, the $6,000 depreciation allocated to Jim's half interest before the date of death. Ammended tax return If under local law Jim had no interest in the income from the property and he contributed no part of the purchase price, his basis at John's death would be $60,000, the FMV of the property. Ammended tax return Qualified Joint Interest Include one-half of the value of a qualified joint interest in the decedent's gross estate. Ammended tax return It does not matter how much each spouse contributed to the purchase price. Ammended tax return Also, it does not matter which spouse dies first. Ammended tax return A qualified joint interest is any interest in property held by husband and wife as either of the following. Ammended tax return Tenants by the entirety, or Joint tenants with right of survivorship if husband and wife are the only joint tenants. Ammended tax return Basis. Ammended tax return   As the surviving spouse, your basis in property you owned with your spouse as a qualified joint interest is the cost of your half of the property with certain adjustments. Ammended tax return Decrease the cost by any deductions allowed to you for depreciation and depletion. Ammended tax return Increase the reduced cost by your basis in the half you inherited. Ammended tax return Farm or Closely Held Business Under certain conditions, when a person dies the executor or personal representative of that person's estate can choose to value the qualified real property on other than its FMV. Ammended tax return If so, the executor or personal representative values the qualified real property based on its use as a farm or its use in a closely held business. Ammended tax return If the executor or personal representative chooses this method of valuation for estate tax purposes, that value is the basis of the property for the heirs. Ammended tax return Qualified heirs should be able to get the necessary value from the executor or personal representative of the estate. Ammended tax return Special-use valuation. Ammended tax return   If you are a qualified heir who received special-use valuation property, your basis in the property is the estate's or trust's basis in that property immediately before the distribution. Ammended tax return Increase your basis by any gain recognized by the estate or trust because of post-death appreciation. Ammended tax return Post-death appreciation is the property's FMV on the date of distribution minus the property's FMV either on the date of the individual's death or the alternate valuation date. Ammended tax return Figure all FMVs without regard to the special-use valuation. Ammended tax return   You can elect to increase your basis in special-use valuation property if it becomes subject to the additional estate tax. Ammended tax return This tax is assessed if, within 10 years after the death of the decedent, you transfer the property to a person who is not a member of your family or the property stops being used as a farm or in a closely held business. Ammended tax return   To increase your basis in the property, you must make an irrevocable election and pay interest on the additional estate tax figured from the date 9 months after the decedent's death until the date of the payment of the additional estate tax. Ammended tax return If you meet these requirements, increase your basis in the property to its FMV on the date of the decedent's death or the alternate valuation date. Ammended tax return The increase in your basis is considered to have occurred immediately before the event that results in the additional estate tax. Ammended tax return   You make the election by filing with Form 706-A a statement that does all of the following. Ammended tax return Contains your name, address, and taxpayer identification number and those of the estate; Identifies the election as an election under section 1016(c) of the Internal Revenue Code; Specifies the property for which the election is made; and Provides any additional information required by the Instructions for Form 706-A. Ammended tax return   For more information, see the Instructions for Form 706 and the Instructions for Form 706-A. Ammended tax return Property Changed to Business or Rental Use If you hold property for personal use and then change it to business use or use it to produce rent, you must figure its basis for depreciation. Ammended tax return An example of changing property held for personal use to business use would be renting out your former main home. Ammended tax return Basis for depreciation. Ammended tax return   The basis for depreciation is the lesser of the following amounts. Ammended tax return The FMV of the property on the date of the change, or Your adjusted basis on the date of the change. Ammended tax return Example. Ammended tax return Several years ago you paid $160,000 to have your home built on a lot that cost $25,000. Ammended tax return You paid $20,000 for permanent improvements to the house and claimed a $2,000 casualty loss deduction for damage to the house before changing the property to rental use last year. Ammended tax return Because land is not depreciable, you include only the cost of the house when figuring the basis for depreciation. Ammended tax return Your adjusted basis in the house when you changed its use was $178,000 ($160,000 + $20,000 − $2,000). Ammended tax return On the same date, your property had an FMV of $180,000, of which $15,000 was for the land and $165,000 was for the house. Ammended tax return The basis for figuring depreciation on the house is its FMV on the date of change ($165,000) because it is less than your adjusted basis ($178,000). Ammended tax return Sale of property. Ammended tax return   If you later sell or dispose of property changed to business or rental use, the basis of the property you use will depend on whether you are figuring gain or loss. Ammended tax return Gain. Ammended tax return   The basis for figuring a gain is your adjusted basis when you sell the property. Ammended tax return Example. Ammended tax return Assume the same facts as in the previous example except that you sell the property at a gain after being allowed depreciation deductions of $37,500. Ammended tax return Your adjusted basis for figuring gain is $165,500 ($178,000 + $25,000 (land) − $37,500). Ammended tax return Loss. Ammended tax return   Figure the basis for a loss starting with the smaller of your adjusted basis or the FMV of the property at the time of the change to business or rental use. Ammended tax return Then adjust this amount for the period after the change in the property's use, as discussed earlier under Adjusted Basis, to arrive at a basis for loss. Ammended tax return Example. Ammended tax return Assume the same facts as in the previous example, except that you sell the property at a loss after being allowed depreciation deductions of $37,500. Ammended tax return In this case, you would start with the FMV on the date of the change to rental use ($180,000) because it is less than the adjusted basis of $203,000 ($178,000 + $25,000) on that date. Ammended tax return Reduce that amount ($180,000) by the depreciation deductions to arrive at a basis for loss of $142,500 ($180,000 − $37,500). Ammended tax return How To Get Tax Help You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get more information from the IRS in several ways. Ammended tax return By selecting the method that is best for you, you will have quick and easy access to tax help. Ammended tax return Contacting your Taxpayer Advocate. Ammended tax return   The Taxpayer Advocate Service (TAS) is an independent organization within the IRS. Ammended tax return We help taxpayers who are experiencing economic harm, such as not being able to provide necessities like housing, transportation, or food; taxpayers who are seeking help in resolving tax problems with the IRS; and those who believe that an IRS system or procedure is not working as it should. Ammended tax return Here are seven things every taxpayer should know about TAS. Ammended tax return TAS is your voice at the IRS. Ammended tax return Our service is free, confidential, and tailored to meet your needs. Ammended tax return You may be eligible for our help if you have tried to resolve your tax problem through normal IRS channels and have gotten nowhere, or you believe an IRS procedure just isn't working as it should. Ammended tax return We help taxpayers whose problems are causing financial difficulty or significant cost, including the cost of professional representation. Ammended tax return This includes businesses as well as individuals. Ammended tax return Our employees know the IRS and how to navigate it. Ammended tax return If you qualify for our help, we'll assign your case to an advocate who will listen to your problem, help you understand what needs to be done to resolve it, and stay with you every step of the way until your problem is resolved. Ammended tax return We have at least one local taxpayer advocate in every state, the District of Columbia, and Puerto Rico. Ammended tax return You can call your local advocate, whose number is in your phone book, in Publication 1546, Taxpayer Advocate Service—Your Voice at the IRS, and on our website at www. Ammended tax return irs. Ammended tax return gov/advocate. Ammended tax return You can also call our toll-free line at 1-877-777-4778 or TTY/TDD 1-800-829-4059. Ammended tax return You can learn about your rights and responsibilities as a taxpayer by visiting our online tax toolkit at www. Ammended tax return taxtoolkit. Ammended tax return irs. Ammended tax return gov. Ammended tax return You can get updates on hot tax topics by visiting our YouTube channel at www. Ammended tax return youtube. Ammended tax return com/tasnta and our Facebook page at www. Ammended tax return facebook. Ammended tax return com/YourVoiceAtIRS, or by following our tweets at www. Ammended tax return twitter. Ammended tax return com/YourVoiceAtIRS. Ammended tax return Low Income Taxpayer Clinics (LITCs). Ammended tax return   The Low Income Taxpayer Clinic program serves individuals who have a problem with the IRS and whose income is below a certain level. Ammended tax return LITCs are independent from the IRS. Ammended tax return Most LITCs can provide representation before the IRS or in court on audits, tax collection disputes, and other issues for free or a small fee. Ammended tax return If an individual's native language is not English, some clinics can provide multilingual information about taxpayer rights and responsibilities. Ammended tax return For more information, see Publication 4134, Low Income Taxpayer Clinic List. Ammended tax return This publication is available at IRS. Ammended tax return gov, by calling 1-800-TAX-FORM (1-800-829-3676), or at your local IRS office. Ammended tax return Free tax services. Ammended tax return   Publication 910, IRS Guide to Free Tax Services, is your guide to IRS services and resources. Ammended tax return Learn about free tax information from the IRS, including publications, services, and education and assistance programs. Ammended tax return The publication also has an index of over 100 TeleTax topics (recorded tax information) you can listen to on the telephone. Ammended tax return The majority of the information and services listed in this publication are available to you free of charge. Ammended tax return If there is a fee associated with a resource or service, it is listed in the publication. Ammended tax return   Accessible versions of IRS published products are available on request in a variety of alternative formats for people with d