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Can I File My 2012 Taxes Late

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Can I File My 2012 Taxes Late

Can i file my 2012 taxes late Publication 597 - Introductory Material Table of Contents Introduction Introduction This publication provides information on the income tax treaty between the United States and Canada. Can i file my 2012 taxes late It discusses a number of treaty provisions that often apply to U. Can i file my 2012 taxes late S. Can i file my 2012 taxes late citizens or residents who may be liable for Canadian tax. Can i file my 2012 taxes late Treaty provisions are generally reciprocal (the same rules apply to both treaty countries). Can i file my 2012 taxes late Therefore, a Canadian resident who receives income from the United States may refer to this publication to see if a treaty provision may affect the tax to be paid to the United States. Can i file my 2012 taxes late This publication does not deal with Canadian income tax laws; nor does it provide Canada's interpretation of treaty articles, definitions, or specific terms not defined in the treaty itself. Can i file my 2012 taxes late The United States—Canada income tax treaty was signed on September 26, 1980. Can i file my 2012 taxes late It has been amended by five protocols, the most recent of which generally became effective January 1, 2009. Can i file my 2012 taxes late In this publication, the term “article” refers to the particular article of the treaty, as amended. Can i file my 2012 taxes late Prev  Up  Next   Home   More Online Publications
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IRS Releases FY 2013 Data Book

 

IR-2014-34, March 21, 2014

WASHINGTON — The Internal Revenue Service today released the 2013 IRS Data Book, a snapshot of agency activities for the fiscal year.

The report describes activities conducted by the IRS from Oct. 1, 2012, to Sept. 30, 2013, and includes information about returns filed, taxes collected, enforcement, taxpayer assistance and the IRS budget and workforce, among others.

During fiscal year 2013, the IRS collected almost $2.9 trillion in federal revenue and processed 240 million returns, of which 151 million were filed electronically. Out of the 146 million individual income tax returns filed, almost 83 percent were e-filed. More than 118 million individual income tax return filers received a tax refund, which totaled almost $312.8 billion. On average, the IRS spent 41 cents to collect $100 in tax revenue during the fiscal year, matching low-cost results for 2008 and 2001.

The IRS examined just under one percent of all tax returns filed and about one percent of all individual income tax returns during fiscal year 2013. Of the 1.4 million individual tax returns examined, over 39,000 resulted in additional refunds. The IRS provided taxpayer assistance through 456 million visits to IRS.gov and assisted almost 91 million taxpayers through its toll-free telephone helpline or at walk-in sites.

An electronic version of the 2013 Data Book can be found on the Tax Stats page of IRS.gov.

Printed copies of the IRS Data Book, Publication 55B, will be available by mid-April 2014 from the U.S. Government Printing Office. To obtain a copy, write to the Superintendent of Documents, P.O. Box 371954, Pittsburgh, PA 15250-7954, or call (202) 512-1800 for voicemail, or fax a request to (202) 512-2250.

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Page Last Reviewed or Updated: 21-Mar-2014

The Can I File My 2012 Taxes Late

Can i file my 2012 taxes late 9. Can i file my 2012 taxes late   Depletion Table of Contents Introduction Topics - This chapter discusses: Who Can Claim Depletion? Mineral PropertyCost Depletion Percentage Depletion Oil and Gas Wells Mines and Geothermal Deposits Lessor's Gross Income TimberTimber units. Can i file my 2012 taxes late Depletion unit. Can i file my 2012 taxes late Introduction Depletion is the using up of natural resources by mining, drilling, quarrying stone, or cutting timber. Can i file my 2012 taxes late The depletion deduction allows an owner or operator to account for the reduction of a product's reserves. Can i file my 2012 taxes late There are two ways of figuring depletion: cost depletion and percentage depletion. Can i file my 2012 taxes late For mineral property, you generally must use the method that gives you the larger deduction. Can i file my 2012 taxes late For standing timber, you must use cost depletion. Can i file my 2012 taxes late Topics - This chapter discusses: Who can claim depletion Mineral property Timber Who Can Claim Depletion? If you have an economic interest in mineral property or standing timber, you can take a deduction for depletion. Can i file my 2012 taxes late More than one person can have an economic interest in the same mineral deposit or timber. Can i file my 2012 taxes late In the case of leased property, the depletion deduction is divided between the lessor and the lessee. Can i file my 2012 taxes late You have an economic interest if both the following apply. Can i file my 2012 taxes late You have acquired by investment any interest in mineral deposits or standing timber. Can i file my 2012 taxes late You have a legal right to income from the extraction of the mineral or cutting of the timber to which you must look for a return of your capital investment. Can i file my 2012 taxes late A contractual relationship that allows you an economic or monetary advantage from products of the mineral deposit or standing timber is not, in itself, an economic interest. Can i file my 2012 taxes late A production payment carved out of, or retained on the sale of, mineral property is not an economic interest. Can i file my 2012 taxes late Individuals, corporations, estates, and trusts who claim depletion deductions may be liable for alternative minimum tax. Can i file my 2012 taxes late Basis adjustment for depletion. Can i file my 2012 taxes late   You must reduce the basis of your property by the depletion allowed or allowable, whichever is greater. Can i file my 2012 taxes late Mineral Property Mineral property includes oil and gas wells, mines, and other natural deposits (including geothermal deposits). Can i file my 2012 taxes late For this purpose, the term “property” means each separate interest you own in each mineral deposit in each separate tract or parcel of land. Can i file my 2012 taxes late You can treat two or more separate interests as one property or as separate properties. Can i file my 2012 taxes late See section 614 of the Internal Revenue Code and the related regulations for rules on how to treat separate mineral interests. Can i file my 2012 taxes late There are two ways of figuring depletion on mineral property. Can i file my 2012 taxes late Cost depletion. Can i file my 2012 taxes late Percentage depletion. Can i file my 2012 taxes late Generally, you must use the method that gives you the larger deduction. Can i file my 2012 taxes late However, unless you are an independent producer or royalty owner, you generally cannot use percentage depletion for oil and gas wells. Can i file my 2012 taxes late See Oil and Gas Wells , later. Can i file my 2012 taxes late Cost Depletion To figure cost depletion you must first determine the following. Can i file my 2012 taxes late The property's basis for depletion. Can i file my 2012 taxes late The total recoverable units of mineral in the property's natural deposit. Can i file my 2012 taxes late The number of units of mineral sold during the tax year. Can i file my 2012 taxes late Basis for depletion. Can i file my 2012 taxes late   To figure the property's basis for depletion, subtract all the following from the property's adjusted basis. Can i file my 2012 taxes late Amounts recoverable through: Depreciation deductions, Deferred expenses (including deferred exploration and development costs), and Deductions other than depletion. Can i file my 2012 taxes late The residual value of land and improvements at the end of operations. Can i file my 2012 taxes late The cost or value of land acquired for purposes other than mineral production. Can i file my 2012 taxes late Adjusted basis. Can i file my 2012 taxes late   The adjusted basis of your property is your original cost or other basis, plus certain additions and improvements, and minus certain deductions such as depletion allowed or allowable and casualty losses. Can i file my 2012 taxes late Your adjusted basis can never be less than zero. Can i file my 2012 taxes late See Publication 551, Basis of Assets, for more information on adjusted basis. Can i file my 2012 taxes late Total recoverable units. Can i file my 2012 taxes late   The total recoverable units is the sum of the following. Can i file my 2012 taxes late The number of units of mineral remaining at the end of the year (including units recovered but not sold). Can i file my 2012 taxes late The number of units of mineral sold during the tax year (determined under your method of accounting, as explained next). Can i file my 2012 taxes late   You must estimate or determine recoverable units (tons, pounds, ounces, barrels, thousands of cubic feet, or other measure) of mineral products using the current industry method and the most accurate and reliable information you can obtain. Can i file my 2012 taxes late You must include ores and minerals that are developed, in sight, blocked out, or assured. Can i file my 2012 taxes late You must also include probable or prospective ores or minerals that are believed to exist based on good evidence. Can i file my 2012 taxes late But see Elective safe harbor for owners of oil and gas property , later. Can i file my 2012 taxes late Number of units sold. Can i file my 2012 taxes late   You determine the number of units sold during the tax year based on your method of accounting. Can i file my 2012 taxes late Use the following table to make this determination. Can i file my 2012 taxes late    IF you  use . Can i file my 2012 taxes late . Can i file my 2012 taxes late . Can i file my 2012 taxes late THEN the units sold during the year are . Can i file my 2012 taxes late . Can i file my 2012 taxes late . Can i file my 2012 taxes late The cash method of accounting The units sold for which you receive payment during the tax year (regardless of the year of sale). Can i file my 2012 taxes late An accrual method of accounting The units sold based on your inventories and method of accounting for inventory. Can i file my 2012 taxes late   The number of units sold during the tax year does not include any for which depletion deductions were allowed or allowable in earlier years. Can i file my 2012 taxes late Figuring the cost depletion deduction. Can i file my 2012 taxes late   Once you have figured your property's basis for depletion, the total recoverable units, and the number of units sold during the tax year, you can figure your cost depletion deduction by taking the following steps. Can i file my 2012 taxes late Step Action Result 1 Divide your property's basis for depletion by total recoverable units. Can i file my 2012 taxes late Rate per unit. Can i file my 2012 taxes late 2 Multiply the rate per unit by units sold during the tax year. Can i file my 2012 taxes late Cost depletion deduction. Can i file my 2012 taxes late You must keep accounts for the depletion of each property and adjust these accounts each year for units sold and depletion claimed. Can i file my 2012 taxes late Elective safe harbor for owners of oil and gas property. Can i file my 2012 taxes late   Instead of using the method described earlier to determine the total recoverable units, you can use an elective safe harbor. Can i file my 2012 taxes late If you choose the elective safe harbor, the total recoverable units equal 105% of a property's proven reserves (both developed and undeveloped). Can i file my 2012 taxes late For details, see Revenue Procedure 2004-19 on page 563 of Internal Revenue Bulletin 2004-10, available at www. Can i file my 2012 taxes late irs. Can i file my 2012 taxes late gov/pub/irs-irbs/irb04-10. Can i file my 2012 taxes late pdf. Can i file my 2012 taxes late   To make the election, attach a statement to your timely filed (including extensions) original return for the first tax year for which the safe harbor is elected. Can i file my 2012 taxes late The statement must indicate that you are electing the safe harbor provided by Revenue Procedure 2004-19. Can i file my 2012 taxes late The election, if made, is effective for the tax year in which it is made and all later years. Can i file my 2012 taxes late It cannot be revoked for the tax year in which it is elected, but may be revoked in a later year. Can i file my 2012 taxes late Once revoked, it cannot be re-elected for the next 5 years. Can i file my 2012 taxes late Percentage Depletion To figure percentage depletion, you multiply a certain percentage, specified for each mineral, by your gross income from the property during the tax year. Can i file my 2012 taxes late The rates to be used and other rules for oil and gas wells are discussed later under Independent Producers and Royalty Owners and under Natural Gas Wells . Can i file my 2012 taxes late Rates and other rules for percentage depletion of other specific minerals are found later in Mines and Geothermal Deposits . Can i file my 2012 taxes late Gross income. Can i file my 2012 taxes late   When figuring percentage depletion, subtract from your gross income from the property the following amounts. Can i file my 2012 taxes late Any rents or royalties you paid or incurred for the property. Can i file my 2012 taxes late The part of any bonus you paid for a lease on the property allocable to the product sold (or that otherwise gives rise to gross income) for the tax year. Can i file my 2012 taxes late A bonus payment includes amounts you paid as a lessee to satisfy a production payment retained by the lessor. Can i file my 2012 taxes late   Use the following fraction to figure the part of the bonus you must subtract. Can i file my 2012 taxes late No. Can i file my 2012 taxes late of units sold in the tax year Recoverable units from the property × Bonus Payments For oil and gas wells and geothermal deposits, more information about the definition of gross income from the property is under Oil and Gas Wells , later. Can i file my 2012 taxes late For other property, more information about the definition of gross income from the property is under Mines and Geothermal Deposits , later. Can i file my 2012 taxes late Taxable income limit. Can i file my 2012 taxes late   The percentage depletion deduction generally cannot be more than 50% (100% for oil and gas property) of your taxable income from the property figured without the depletion deduction and the domestic production activities deduction. Can i file my 2012 taxes late   Taxable income from the property means gross income from the property minus all allowable deductions (except any deduction for depletion or domestic production activities) attributable to mining processes, including mining transportation. Can i file my 2012 taxes late These deductible items include, but are not limited to, the following. Can i file my 2012 taxes late Operating expenses. Can i file my 2012 taxes late Certain selling expenses. Can i file my 2012 taxes late Administrative and financial overhead. Can i file my 2012 taxes late Depreciation. Can i file my 2012 taxes late Intangible drilling and development costs. Can i file my 2012 taxes late Exploration and development expenditures. Can i file my 2012 taxes late Deductible taxes (see chapter 5), but not taxes that you capitalize or take as a credit. Can i file my 2012 taxes late Losses sustained. Can i file my 2012 taxes late   The following rules apply when figuring your taxable income from the property for purposes of the taxable income limit. Can i file my 2012 taxes late Do not deduct any net operating loss deduction from the gross income from the property. Can i file my 2012 taxes late Corporations do not deduct charitable contributions from the gross income from the property. Can i file my 2012 taxes late If, during the year, you dispose of an item of section 1245 property that was used in connection with mineral property, reduce any allowable deduction for mining expenses by the part of any gain you must report as ordinary income that is allocable to the mineral property. Can i file my 2012 taxes late See section 1. Can i file my 2012 taxes late 613-5(b)(1) of the regulations for information on how to figure the ordinary gain allocable to the property. Can i file my 2012 taxes late Oil and Gas Wells You cannot claim percentage depletion for an oil or gas well unless at least one of the following applies. Can i file my 2012 taxes late You are either an independent producer or a royalty owner. Can i file my 2012 taxes late The well produces natural gas that is either sold under a fixed contract or produced from geopressured brine. Can i file my 2012 taxes late If you are an independent producer or royalty owner, see Independent Producers and Royalty Owners , next. Can i file my 2012 taxes late For information on the depletion deduction for wells that produce natural gas that is either sold under a fixed contract or produced from geopressured brine, see Natural Gas Wells , later. Can i file my 2012 taxes late Independent Producers and Royalty Owners If you are an independent producer or royalty owner, you figure percentage depletion using a rate of 15% of the gross income from the property based on your average daily production of domestic crude oil or domestic natural gas up to your depletable oil or natural gas quantity. Can i file my 2012 taxes late However, certain refiners, as explained next, and certain retailers and transferees of proven oil and gas properties, as explained next, cannot claim percentage depletion. Can i file my 2012 taxes late For information on figuring the deduction, see Figuring percentage depletion , later. Can i file my 2012 taxes late Refiners who cannot claim percentage depletion. Can i file my 2012 taxes late   You cannot claim percentage depletion if you or a related person refine crude oil and you and the related person refined more than 75,000 barrels on any day during the tax year based on average (rather than actual) daily refinery runs for the tax year. Can i file my 2012 taxes late The average daily refinery run is computed by dividing total refinery runs for the tax year by the total number of days in the tax year. Can i file my 2012 taxes late Related person. Can i file my 2012 taxes late   You and another person are related persons if either of you holds a significant ownership interest in the other person or if a third person holds a significant ownership interest in both of you. Can i file my 2012 taxes late For example, a corporation, partnership, estate, or trust and anyone who holds a significant ownership interest in it are related persons. Can i file my 2012 taxes late A partnership and a trust are related persons if one person holds a significant ownership interest in each of them. Can i file my 2012 taxes late For purposes of the related person rules, significant ownership interest means direct or indirect ownership of 5% or more in any one of the following. Can i file my 2012 taxes late The value of the outstanding stock of a corporation. Can i file my 2012 taxes late The interest in the profits or capital of a partnership. Can i file my 2012 taxes late The beneficial interests in an estate or trust. Can i file my 2012 taxes late Any interest owned by or for a corporation, partnership, trust, or estate is considered to be owned directly both by itself and proportionately by its shareholders, partners, or beneficiaries. Can i file my 2012 taxes late Retailers who cannot claim percentage depletion. Can i file my 2012 taxes late   You cannot claim percentage depletion if both the following apply. Can i file my 2012 taxes late You sell oil or natural gas or their by-products directly or through a related person in any of the following situations. Can i file my 2012 taxes late Through a retail outlet operated by you or a related person. Can i file my 2012 taxes late To any person who is required under an agreement with you or a related person to use a trademark, trade name, or service mark or name owned by you or a related person in marketing or distributing oil, natural gas, or their by-products. Can i file my 2012 taxes late To any person given authority under an agreement with you or a related person to occupy any retail outlet owned, leased, or controlled by you or a related person. Can i file my 2012 taxes late The combined gross receipts from sales (not counting resales) of oil, natural gas, or their by-products by all retail outlets taken into account in (1) are more than $5 million for the tax year. Can i file my 2012 taxes late   For the purpose of determining if this rule applies, do not count the following. Can i file my 2012 taxes late Bulk sales (sales in very large quantities) of oil or natural gas to commercial or industrial users. Can i file my 2012 taxes late Bulk sales of aviation fuels to the Department of Defense. Can i file my 2012 taxes late Sales of oil or natural gas or their by-products outside the United States if none of your domestic production or that of a related person is exported during the tax year or the prior tax year. Can i file my 2012 taxes late Related person. Can i file my 2012 taxes late   To determine if you and another person are related persons, see Related person under Refiners who cannot claim percentage depletion, earlier. Can i file my 2012 taxes late Sales through a related person. Can i file my 2012 taxes late   You are considered to be selling through a related person if any sale by the related person produces gross income from which you may benefit because of your direct or indirect ownership interest in the person. Can i file my 2012 taxes late   You are not considered to be selling through a related person who is a retailer if all the following apply. Can i file my 2012 taxes late You do not have a significant ownership interest in the retailer. Can i file my 2012 taxes late You sell your production to persons who are not related to either you or the retailer. Can i file my 2012 taxes late The retailer does not buy oil or natural gas from your customers or persons related to your customers. Can i file my 2012 taxes late There are no arrangements for the retailer to acquire oil or natural gas you produced for resale or made available for purchase by the retailer. Can i file my 2012 taxes late Neither you nor the retailer knows of or controls the final disposition of the oil or natural gas you sold or the original source of the petroleum products the retailer acquired for resale. Can i file my 2012 taxes late Transferees who cannot claim percentage depletion. Can i file my 2012 taxes late   You cannot claim percentage depletion if you received your interest in a proven oil or gas property by transfer after 1974 and before October 12, 1990. Can i file my 2012 taxes late For a definition of the term “transfer,” see section 1. Can i file my 2012 taxes late 613A-7(n) of the regulations. Can i file my 2012 taxes late For a definition of the term “interest in proven oil or gas property,” see section 1. Can i file my 2012 taxes late 613A-7(p) of the regulations. Can i file my 2012 taxes late Figuring percentage depletion. Can i file my 2012 taxes late   Generally, as an independent producer or royalty owner, you figure your percentage depletion by computing your average daily production of domestic oil or gas and comparing it to your depletable oil or gas quantity. Can i file my 2012 taxes late If your average daily production does not exceed your depletable oil or gas quantity, you figure your percentage depletion by multiplying the gross income from the oil or gas property (defined later) by 15%. Can i file my 2012 taxes late If your average daily production of domestic oil or gas exceeds your depletable oil or gas quantity, you must make an allocation as explained later under Average daily production. Can i file my 2012 taxes late   In addition, there is a limit on the percentage depletion deduction. Can i file my 2012 taxes late See Taxable income limit , later. Can i file my 2012 taxes late Average daily production. Can i file my 2012 taxes late   Figure your average daily production by dividing your total domestic production of oil or gas for the tax year by the number of days in your tax year. Can i file my 2012 taxes late Partial interest. Can i file my 2012 taxes late   If you have a partial interest in the production from a property, figure your share of the production by multiplying total production from the property by your percentage of interest in the revenues from the property. Can i file my 2012 taxes late   You have a partial interest in the production from a property if you have a net profits interest in the property. Can i file my 2012 taxes late To figure the share of production for your net profits interest, you must first determine your percentage participation (as measured by the net profits) in the gross revenue from the property. Can i file my 2012 taxes late To figure this percentage, you divide the income you receive for your net profits interest by the gross revenue from the property. Can i file my 2012 taxes late Then multiply the total production from the property by your percentage participation to figure your share of the production. Can i file my 2012 taxes late Example. Can i file my 2012 taxes late Javier Robles owns oil property in which Pablo Olmos owns a 20% net profits interest. Can i file my 2012 taxes late During the year, the property produced 10,000 barrels of oil, which Javier sold for $200,000. Can i file my 2012 taxes late Javier had expenses of $90,000 attributable to the property. Can i file my 2012 taxes late The property generated a net profit of $110,000 ($200,000 − $90,000). Can i file my 2012 taxes late Pablo received income of $22,000 ($110,000 × . Can i file my 2012 taxes late 20) for his net profits interest. Can i file my 2012 taxes late Pablo determined his percentage participation to be 11% by dividing $22,000 (the income he received) by $200,000 (the gross revenue from the property). Can i file my 2012 taxes late Pablo determined his share of the oil production to be 1,100 barrels (10,000 barrels × 11%). Can i file my 2012 taxes late Depletable oil or natural gas quantity. Can i file my 2012 taxes late   Generally, your depletable oil quantity is 1,000 barrels. Can i file my 2012 taxes late Your depletable natural gas quantity is 6,000 cubic feet multiplied by the number of barrels of your depletable oil quantity that you choose to apply. Can i file my 2012 taxes late If you claim depletion on both oil and natural gas, you must reduce your depletable oil quantity (1,000 barrels) by the number of barrels you use to figure your depletable natural gas quantity. Can i file my 2012 taxes late Example. Can i file my 2012 taxes late You have both oil and natural gas production. Can i file my 2012 taxes late To figure your depletable natural gas quantity, you choose to apply 360 barrels of your 1000-barrel depletable oil quantity. Can i file my 2012 taxes late Your depletable natural gas quantity is 2. Can i file my 2012 taxes late 16 million cubic feet of gas (360 × 6000). Can i file my 2012 taxes late You must reduce your depletable oil quantity to 640 barrels (1000 − 360). Can i file my 2012 taxes late If you have production from marginal wells, see section 613A(c)(6) of the Internal Revenue Code to figure your depletable oil or natural gas quantity. Can i file my 2012 taxes late Also, see Notice 2012-50, available at www. Can i file my 2012 taxes late irs. Can i file my 2012 taxes late gov/irb/2012–31_IRB/index. Can i file my 2012 taxes late html. Can i file my 2012 taxes late Business entities and family members. Can i file my 2012 taxes late   You must allocate the depletable oil or gas quantity among the following related persons in proportion to each entity's or family member's production of domestic oil or gas for the year. Can i file my 2012 taxes late Corporations, trusts, and estates if 50% or more of the beneficial interest is owned by the same or related persons (considering only persons that own at least 5% of the beneficial interest). Can i file my 2012 taxes late You and your spouse and minor children. Can i file my 2012 taxes late A related person is anyone mentioned in the related persons discussion under Nondeductible loss in chapter 2 of Publication 544, except that for purposes of this allocation, item (1) in that discussion includes only an individual, his or her spouse, and minor children. Can i file my 2012 taxes late Controlled group of corporations. Can i file my 2012 taxes late   Members of the same controlled group of corporations are treated as one taxpayer when figuring the depletable oil or natural gas quantity. Can i file my 2012 taxes late They share the depletable quantity. Can i file my 2012 taxes late A controlled group of corporations is defined in section 1563(a) of the Internal Revenue Code, except that, for this purpose, the stock ownership requirement in that definition is “more than 50%” rather than “at least 80%. Can i file my 2012 taxes late ” Gross income from the property. Can i file my 2012 taxes late   For purposes of percentage depletion, gross income from the property (in the case of oil and gas wells) is the amount you receive from the sale of the oil or gas in the immediate vicinity of the well. Can i file my 2012 taxes late If you do not sell the oil or gas on the property, but manufacture or convert it into a refined product before sale or transport it before sale, the gross income from the property is the representative market or field price (RMFP) of the oil or gas, before conversion or transportation. Can i file my 2012 taxes late   If you sold gas after you removed it from the premises for a price that is lower than the RMFP, determine gross income from the property for percentage depletion purposes without regard to the RMFP. Can i file my 2012 taxes late   Gross income from the property does not include lease bonuses, advance royalties, or other amounts payable without regard to production from the property. Can i file my 2012 taxes late Average daily production exceeds depletable quantities. Can i file my 2012 taxes late   If your average daily production for the year is more than your depletable oil or natural gas quantity, figure your allowance for depletion for each domestic oil or natural gas property as follows. Can i file my 2012 taxes late Figure your average daily production of oil or natural gas for the year. Can i file my 2012 taxes late Figure your depletable oil or natural gas quantity for the year. Can i file my 2012 taxes late Figure depletion for all oil or natural gas produced from the property using a percentage depletion rate of 15%. Can i file my 2012 taxes late Multiply the result figured in (3) by a fraction, the numerator of which is the result figured in (2) and the denominator of which is the result figured in (1). Can i file my 2012 taxes late This is your depletion allowance for that property for the year. Can i file my 2012 taxes late Taxable income limit. Can i file my 2012 taxes late   If you are an independent producer or royalty owner of oil and gas, your deduction for percentage depletion is limited to the smaller of the following. Can i file my 2012 taxes late 100% of your taxable income from the property figured without the deduction for depletion and the deduction for domestic production activities under section 199 of the Internal Revenue Code. Can i file my 2012 taxes late For a definition of taxable income from the property, see Taxable income limit , earlier, under Mineral Property. Can i file my 2012 taxes late 65% of your taxable income from all sources, figured without the depletion allowance, the deduction for domestic production activities, any net operating loss carryback, and any capital loss carryback. Can i file my 2012 taxes late You can carry over to the following year any amount you cannot deduct because of the 65%-of-taxable-income limit. Can i file my 2012 taxes late Add it to your depletion allowance (before applying any limits) for the following year. Can i file my 2012 taxes late Partnerships and S Corporations Generally, each partner or S corporation shareholder, and not the partnership or S corporation, figures the depletion allowance separately. Can i file my 2012 taxes late (However, see Electing large partnerships must figure depletion allowance , later. Can i file my 2012 taxes late ) Each partner or shareholder must decide whether to use cost or percentage depletion. Can i file my 2012 taxes late If a partner or shareholder uses percentage depletion, he or she must apply the 65%-of-taxable-income limit using his or her taxable income from all sources. Can i file my 2012 taxes late Partner's or shareholder's adjusted basis. Can i file my 2012 taxes late   The partnership or S corporation must allocate to each partner or shareholder his or her share of the adjusted basis of each oil or gas property held by the partnership or S corporation. Can i file my 2012 taxes late The partnership or S corporation makes the allocation as of the date it acquires the oil or gas property. Can i file my 2012 taxes late   Each partner's share of the adjusted basis of the oil or gas property generally is figured according to that partner's interest in partnership capital. Can i file my 2012 taxes late However, in some cases, it is figured according to the partner's interest in partnership income. Can i file my 2012 taxes late   The partnership or S corporation adjusts the partner's or shareholder's share of the adjusted basis of the oil and gas property for any capital expenditures made for the property and for any change in partnership or S corporation interests. Can i file my 2012 taxes late Recordkeeping. Can i file my 2012 taxes late Each partner or shareholder must separately keep records of his or her share of the adjusted basis in each oil and gas property of the partnership or S corporation. Can i file my 2012 taxes late The partner or shareholder must reduce his or her adjusted basis by the depletion allowed or allowable on the property each year. Can i file my 2012 taxes late The partner or shareholder must use that reduced adjusted basis to figure cost depletion or his or her gain or loss if the partnership or S corporation disposes of the property. Can i file my 2012 taxes late Reporting the deduction. Can i file my 2012 taxes late   Information that you, as a partner or shareholder, use to figure your depletion deduction on oil and gas properties is reported by the partnership or S corporation on Schedule K-1 (Form 1065) or on Schedule K-1 (Form 1120S). Can i file my 2012 taxes late Deduct oil and gas depletion for your partnership or S corporation interest on Schedule E (Form 1040). Can i file my 2012 taxes late The depletion deducted on Schedule E is included in figuring income or loss from rental real estate or royalty properties. Can i file my 2012 taxes late The instructions for Schedule E explain where to report this income or loss and whether you need to file either of the following forms. Can i file my 2012 taxes late Form 6198, At-Risk Limitations. Can i file my 2012 taxes late Form 8582, Passive Activity Loss Limitations. Can i file my 2012 taxes late Electing large partnerships must figure depletion allowance. Can i file my 2012 taxes late   An electing large partnership, rather than each partner, generally must figure the depletion allowance. Can i file my 2012 taxes late The partnership figures the depletion allowance without taking into account the 65-percent-of-taxable-income limit and the depletable oil or natural gas quantity. Can i file my 2012 taxes late Also, the adjusted basis of a partner's interest in the partnership is not affected by the depletion allowance. Can i file my 2012 taxes late   An electing large partnership is one that meets both the following requirements. Can i file my 2012 taxes late The partnership had 100 or more partners in the preceding year. Can i file my 2012 taxes late The partnership chooses to be an electing large partnership. Can i file my 2012 taxes late Disqualified persons. Can i file my 2012 taxes late   An electing large partnership does not figure the depletion allowance of its partners that are disqualified persons. Can i file my 2012 taxes late Disqualified persons must figure it themselves, as explained earlier. Can i file my 2012 taxes late   All the following are disqualified persons. Can i file my 2012 taxes late Refiners who cannot claim percentage depletion (discussed under Independent Producers and Royalty Owners , earlier). Can i file my 2012 taxes late Retailers who cannot claim percentage depletion (discussed under Independent Producers and Royalty Owners , earlier). Can i file my 2012 taxes late Any partner whose average daily production of domestic crude oil and natural gas is more than 500 barrels during the tax year in which the partnership tax year ends. Can i file my 2012 taxes late Average daily production is discussed earlier. Can i file my 2012 taxes late Natural Gas Wells You can use percentage depletion for a well that produces natural gas that is either Sold under a fixed contract, or Produced from geopressured brine. Can i file my 2012 taxes late Natural gas sold under a fixed contract. Can i file my 2012 taxes late   Natural gas sold under a fixed contract qualifies for a percentage depletion rate of 22%. Can i file my 2012 taxes late This is domestic natural gas sold by the producer under a contract that does not provide for a price increase to reflect any increase in the seller's tax liability because of the repeal of percentage depletion for gas. Can i file my 2012 taxes late The contract must have been in effect from February 1, 1975, until the date of sale of the gas. Can i file my 2012 taxes late Price increases after February 1, 1975, are presumed to take the increase in tax liability into account unless demonstrated otherwise by clear and convincing evidence. Can i file my 2012 taxes late Natural gas from geopressured brine. Can i file my 2012 taxes late   Qualified natural gas from geopressured brine is eligible for a percentage depletion rate of 10%. Can i file my 2012 taxes late This is natural gas that is both the following. Can i file my 2012 taxes late Produced from a well you began to drill after September 1978 and before 1984. Can i file my 2012 taxes late Determined in accordance with section 503 of the Natural Gas Policy Act of 1978 to be produced from geopressured brine. Can i file my 2012 taxes late Mines and Geothermal Deposits Certain mines, wells, and other natural deposits, including geothermal deposits, qualify for percentage depletion. Can i file my 2012 taxes late Mines and other natural deposits. Can i file my 2012 taxes late   For a natural deposit, the percentage of your gross income from the property that you can deduct as depletion depends on the type of deposit. Can i file my 2012 taxes late   The following is a list of the percentage depletion rates for the more common minerals. Can i file my 2012 taxes late DEPOSITS RATE Sulphur, uranium, and, if from deposits in the United States, asbestos, lead ore, zinc ore, nickel ore, and mica 22% Gold, silver, copper, iron ore, and certain oil shale, if from deposits in the United States 15% Borax, granite, limestone, marble, mollusk shells, potash, slate, soapstone, and carbon dioxide produced from a well 14% Coal, lignite, and sodium chloride 10% Clay and shale used or sold for use in making sewer pipe or bricks or used or sold for use as sintered or burned lightweight aggregates 7½% Clay used or sold for use in making drainage and roofing tile, flower pots, and kindred products, and gravel, sand, and stone (other than stone used or sold for use by a mine owner or operator as dimension or ornamental stone) 5%   You can find a complete list of minerals and their percentage depletion rates in section 613(b) of the Internal Revenue Code. Can i file my 2012 taxes late Corporate deduction for iron ore and coal. Can i file my 2012 taxes late   The percentage depletion deduction of a corporation for iron ore and coal (including lignite) is reduced by 20% of: The percentage depletion deduction for the tax year (figured without this reduction), minus The adjusted basis of the property at the close of the tax year (figured without the depletion deduction for the tax year). Can i file my 2012 taxes late Gross income from the property. Can i file my 2012 taxes late   For property other than a geothermal deposit or an oil or gas well, gross income from the property means the gross income from mining. Can i file my 2012 taxes late Mining includes all the following. Can i file my 2012 taxes late Extracting ores or minerals from the ground. Can i file my 2012 taxes late Applying certain treatment processes described later. Can i file my 2012 taxes late Transporting ores or minerals (generally, not more than 50 miles) from the point of extraction to the plants or mills in which the treatment processes are applied. Can i file my 2012 taxes late Excise tax. Can i file my 2012 taxes late   Gross income from mining includes the separately stated excise tax received by a mine operator from the sale of coal to compensate the operator for the excise tax the mine operator must pay to finance black lung benefits. Can i file my 2012 taxes late Extraction. Can i file my 2012 taxes late   Extracting ores or minerals from the ground includes extraction by mine owners or operators of ores or minerals from the waste or residue of prior mining. Can i file my 2012 taxes late This does not apply to extraction from waste or residue of prior mining by the purchaser of the waste or residue or the purchaser of the rights to extract ores or minerals from the waste or residue. Can i file my 2012 taxes late Treatment processes. Can i file my 2012 taxes late   The processes included as mining depend on the ore or mineral mined. Can i file my 2012 taxes late To qualify as mining, the treatment processes must be applied by the mine owner or operator. Can i file my 2012 taxes late For a listing of treatment processes considered as mining, see section 613(c)(4) of the Internal Revenue Code and the related regulations. Can i file my 2012 taxes late Transportation of more than 50 miles. Can i file my 2012 taxes late   If the IRS finds that the ore or mineral must be transported more than 50 miles to plants or mills to be treated because of physical and other requirements, the additional authorized transportation is considered mining and included in the computation of gross income from mining. Can i file my 2012 taxes late    If you wish to include transportation of more than 50 miles in the computation of gross income from mining, request an advance ruling from the IRS. Can i file my 2012 taxes late Include in the request the facts about the physical and other requirements that prevented the construction and operation of the plant within 50 miles of the point of extraction. Can i file my 2012 taxes late For more information about requesting an advance ruling, see Revenue Procedure 2013-1, available at www. Can i file my 2012 taxes late irs. Can i file my 2012 taxes late gov/irb/2013-01_IRB/ar11. Can i file my 2012 taxes late html. Can i file my 2012 taxes late Disposal of coal or iron ore. Can i file my 2012 taxes late   You cannot take a depletion deduction for coal (including lignite) or iron ore mined in the United States if both the following apply. Can i file my 2012 taxes late You disposed of it after holding it for more than 1 year. Can i file my 2012 taxes late You disposed of it under a contract under which you retain an economic interest in the coal or iron ore. Can i file my 2012 taxes late Treat any gain on the disposition as a capital gain. Can i file my 2012 taxes late Disposal to related person. Can i file my 2012 taxes late   This rule does not apply if you dispose of the coal or iron ore to one of the following persons. Can i file my 2012 taxes late A related person (as listed in chapter 2 of Publication 544). Can i file my 2012 taxes late A person owned or controlled by the same interests that own or control you. Can i file my 2012 taxes late Geothermal deposits. Can i file my 2012 taxes late   Geothermal deposits located in the United States or its possessions qualify for a percentage depletion rate of 15%. Can i file my 2012 taxes late A geothermal deposit is a geothermal reservoir of natural heat stored in rocks or in a watery liquid or vapor. Can i file my 2012 taxes late For percentage depletion purposes, a geothermal deposit is not considered a gas well. Can i file my 2012 taxes late   Figure gross income from the property for a geothermal steam well in the same way as for oil and gas wells. Can i file my 2012 taxes late See Gross income from the property , earlier, under Oil and Gas Wells. Can i file my 2012 taxes late Percentage depletion on a geothermal deposit cannot be more than 50% of your taxable income from the property. Can i file my 2012 taxes late Lessor's Gross Income In the case of leased property, the depletion deduction is divided between the lessor and the lessee. Can i file my 2012 taxes late A lessor's gross income from the property that qualifies for percentage depletion usually is the total of the royalties received from the lease. Can i file my 2012 taxes late Bonuses and advanced royalties. Can i file my 2012 taxes late   Bonuses and advanced royalties are payments a lessee makes before production to a lessor for the grant of rights in a lease or for minerals, gas, or oil to be extracted from leased property. Can i file my 2012 taxes late If you are the lessor, your income from bonuses and advanced royalties received is subject to an allowance for depletion, as explained in the next two paragraphs. Can i file my 2012 taxes late Figuring cost depletion. Can i file my 2012 taxes late   To figure cost depletion on a bonus, multiply your adjusted basis in the property by a fraction, the numerator of which is the bonus and the denominator of which is the total bonus and royalties expected to be received. Can i file my 2012 taxes late To figure cost depletion on advanced royalties, use the computation explained earlier under Cost Depletion , treating the number of units for which the advanced royalty is received as the number of units sold. Can i file my 2012 taxes late Figuring percentage depletion. Can i file my 2012 taxes late   In the case of mines, wells, and other natural deposits other than gas, oil, or geothermal property, you may use the percentage rates discussed earlier under Mines and Geothermal Deposits . Can i file my 2012 taxes late Any bonus or advanced royalty payments are generally part of the gross income from the property to which the rates are applied in making the calculation. Can i file my 2012 taxes late However, for oil, gas, or geothermal property, gross income does not include lease bonuses, advanced royalties, or other amounts payable without regard to production from the property. Can i file my 2012 taxes late Ending the lease. Can i file my 2012 taxes late   If you receive a bonus on a lease that ends or is abandoned before you derive any income from mineral extraction, include in income the depletion deduction you took. Can i file my 2012 taxes late Do this for the year the lease ends or is abandoned. Can i file my 2012 taxes late Also increase your adjusted basis in the property to restore the depletion deduction you previously subtracted. Can i file my 2012 taxes late   For advanced royalties, include in income the depletion claimed on minerals for which the advanced royalties were paid if the minerals were not produced before the lease ended. Can i file my 2012 taxes late Include this amount in income for the year the lease ends. Can i file my 2012 taxes late Increase your adjusted basis in the property by the amount you include in income. Can i file my 2012 taxes late Delay rentals. Can i file my 2012 taxes late   These are payments for deferring development of the property. Can i file my 2012 taxes late Since delay rentals are ordinary rent, they are ordinary income that is not subject to depletion. Can i file my 2012 taxes late These rentals can be avoided by either abandoning the lease, beginning development operations, or obtaining production. Can i file my 2012 taxes late Timber You can figure timber depletion only by the cost method. Can i file my 2012 taxes late Percentage depletion does not apply to timber. Can i file my 2012 taxes late Base your depletion on your cost or other basis in the timber. Can i file my 2012 taxes late Your cost does not include the cost of land or any amounts recoverable through depreciation. Can i file my 2012 taxes late Depletion takes place when you cut standing timber. Can i file my 2012 taxes late You can figure your depletion deduction when the quantity of cut timber is first accurately measured in the process of exploitation. Can i file my 2012 taxes late Figuring cost depletion. Can i file my 2012 taxes late   To figure your cost depletion allowance, you multiply the number of timber units cut by your depletion unit. Can i file my 2012 taxes late Timber units. Can i file my 2012 taxes late   When you acquire timber property, you must make an estimate of the quantity of marketable timber that exists on the property. Can i file my 2012 taxes late You measure the timber using board feet, log scale, cords, or other units. Can i file my 2012 taxes late If you later determine that you have more or less units of timber, you must adjust the original estimate. Can i file my 2012 taxes late   The term “timber property” means your economic interest in standing timber in each tract or block representing a separate timber account. Can i file my 2012 taxes late Depletion unit. Can i file my 2012 taxes late   You figure your depletion unit each year by taking the following steps. Can i file my 2012 taxes late Determine your cost or adjusted basis of the timber on hand at the beginning of the year. Can i file my 2012 taxes late Adjusted basis is defined under Cost Depletion in the discussion on Mineral Property. Can i file my 2012 taxes late Add to the amount determined in (1) the cost of any timber units acquired during the year and any additions to capital. Can i file my 2012 taxes late Figure the number of timber units to take into account by adding the number of timber units acquired during the year to the number of timber units on hand in the account at the beginning of the year and then adding (or subtracting) any correction to the estimate of the number of timber units remaining in the account. Can i file my 2012 taxes late Divide the result of (2) by the result of (3). Can i file my 2012 taxes late This is your depletion unit. Can i file my 2012 taxes late Example. Can i file my 2012 taxes late You bought a timber tract for $160,000 and the land was worth as much as the timber. Can i file my 2012 taxes late Your basis for the timber is $80,000. Can i file my 2012 taxes late Based on an estimated one million board feet (1,000 MBF) of standing timber, you figure your depletion unit to be $80 per MBF ($80,000 ÷ 1,000). Can i file my 2012 taxes late If you cut 500 MBF of timber, your depletion allowance would be $40,000 (500 MBF × $80). Can i file my 2012 taxes late When to claim depletion. Can i file my 2012 taxes late   Claim your depletion allowance as a deduction in the year of sale or other disposition of the products cut from the timber, unless you choose to treat the cutting of timber as a sale or exchange (explained below). Can i file my 2012 taxes late Include allowable depletion for timber products not sold during the tax year the timber is cut as a cost item in the closing inventory of timber products for the year. Can i file my 2012 taxes late The inventory is your basis for determining gain or loss in the tax year you sell the timber products. Can i file my 2012 taxes late Example. Can i file my 2012 taxes late The facts are the same as in the previous example except that you sold only half of the timber products in the cutting year. Can i file my 2012 taxes late You would deduct $20,000 of the $40,000 depletion that year. Can i file my 2012 taxes late You would add the remaining $20,000 depletion to your closing inventory of timber products. Can i file my 2012 taxes late Electing to treat the cutting of timber as a sale or exchange. Can i file my 2012 taxes late   You can elect, under certain circumstances, to treat the cutting of timber held for more than 1 year as a sale or exchange. Can i file my 2012 taxes late You must make the election on your income tax return for the tax year to which it applies. Can i file my 2012 taxes late If you make this election, subtract the adjusted basis for depletion from the fair market value of the timber on the first day of the tax year in which you cut it to figure the gain or loss on the cutting. Can i file my 2012 taxes late You generally report the gain as long-term capital gain. Can i file my 2012 taxes late The fair market value then becomes your basis for figuring your ordinary gain or loss on the sale or other disposition of the products cut from the timber. Can i file my 2012 taxes late For more information, see Timber in chapter 2 of Publication 544, Sales and Other Dispositions of Assets. Can i file my 2012 taxes late   You may revoke an election to treat the cutting of timber as a sale or exchange without IRS's consent. Can i file my 2012 taxes late The prior election (and revocation) is disregarded for purposes of making a subsequent election. Can i file my 2012 taxes late See Form T (Timber), Forest Activities Schedule, for more information. Can i file my 2012 taxes late Form T. Can i file my 2012 taxes late   Complete and attach Form T (Timber) to your income tax return if you claim a deduction for timber depletion, choose to treat the cutting of timber as a sale or exchange, or make an outright sale of timber. Can i file my 2012 taxes late Prev  Up  Next   Home   More Online Publications