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File 2009 Taxes Online Late

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File 2009 Taxes Online Late

File 2009 taxes online late Part Two -   Excise Taxes Other Than Fuel Taxes Table of Contents 3. File 2009 taxes online late   Environmental TaxesOil Spill Liability Tax ODCs Imported Taxable Products Floor Stocks Tax 4. File 2009 taxes online late   Communications and Air Transportation TaxesUncollected Tax Report Communications TaxLocal-only service. File 2009 taxes online late Private communication service. File 2009 taxes online late Exemptions Credits or Refunds Air Transportation TaxesTransportation of Persons by Air International Air Travel Facilities Transportation of Property by Air Special Rules on Transportation Taxes 5. File 2009 taxes online late   Manufacturers TaxesImporter. File 2009 taxes online late Use considered sale. File 2009 taxes online late Lease considered sale. File 2009 taxes online late Bonus goods. File 2009 taxes online late Taxable Event ExemptionsRequirements for Exempt Sales Credits or Refunds Sport Fishing EquipmentRelated person. File 2009 taxes online late Bows, Quivers, Broadheads, and Points Arrow ShaftsExemption for certain wooden arrows. File 2009 taxes online late CoalExported. File 2009 taxes online late Taxable TiresQualifying intercity or local bus. File 2009 taxes online late Qualifying school bus. File 2009 taxes online late Gas Guzzler TaxVehicles not subject to tax. File 2009 taxes online late Imported automobiles. File 2009 taxes online late VaccinesConditions to allowance. File 2009 taxes online late Taxable Medical Devices 6. File 2009 taxes online late   Retail Tax on Heavy Trucks, Trailers, and TractorsHighway vehicle. File 2009 taxes online late Vehicles not considered highway vehicles. File 2009 taxes online late Idling reduction device. File 2009 taxes online late Separate purchase. File 2009 taxes online late Leases. File 2009 taxes online late Exported vehicle. File 2009 taxes online late Tax on resale of tax-paid trailers and semitrailers. File 2009 taxes online late Use treated as sale. File 2009 taxes online late Sale. File 2009 taxes online late Long-term lease. File 2009 taxes online late Short-term lease. File 2009 taxes online late Related person. File 2009 taxes online late Exclusions from tax base. File 2009 taxes online late Sales not at arm's length. File 2009 taxes online late Installment sales. File 2009 taxes online late Repairs and modifications. File 2009 taxes online late Further manufacture. File 2009 taxes online late Rail trailers and rail vans. File 2009 taxes online late Parts and accessories. File 2009 taxes online late Trash containers. File 2009 taxes online late House trailers. File 2009 taxes online late Camper coaches or bodies for self-propelled mobile homes. File 2009 taxes online late Farm feed, seed, and fertilizer equipment. File 2009 taxes online late Ambulances and hearses. File 2009 taxes online late Truck-tractors. File 2009 taxes online late Concrete mixers. File 2009 taxes online late Registration requirement. File 2009 taxes online late Further manufacture. File 2009 taxes online late 7. File 2009 taxes online late   Ship Passenger Tax 8. File 2009 taxes online late   Foreign Insurance TaxesPremium. File 2009 taxes online late 9. File 2009 taxes online late   Obligations Not in Registered Form 10. File 2009 taxes online late   Indoor Tanning Services Tax 11. File 2009 taxes online late   Patient-Centered Outcomes Research Fee Prev  Up  Next   Home   More Online Publications
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Tax Relief for Victims of Hurricane Irene in Puerto Rico

Updated 9/29/11 to add the municipalities of Adjuntas, Ciales, Guaynabo.

Updated 9/13/11 to add the municipalities of Fajardo, Gurabo, Las Piedras, Naguabo, Naranjito, Río Grande, San Lorenzo, Trujillo Alto, Vega Baja, Vieques and Villalba.

Updated 9/6/11 to add the municipalities of Arroyo, Aguas Buenas, Cidra, Coamo, Comerio, Humacao, Jayuya, Juncos, Orocovis, Patillas and Ponce.

SP-FL-2011-14, Aug. 30, 2011

MIAMI — Victims of Hurricane Irene that began on Aug. 21, 2011 in parts of Puerto Rico may qualify for tax relief from the Internal Revenue Service.

The President has declared the following municipalities a federal disaster area: Adjuntas, Arroyo, Aguas Buenas, Caguas, Canóvanas, Carolina, Cayey, Cidra, Ciales, Coamo, Comerío, Fajardo, Guaynabo, Gurabo, Humacao, Jayuya, Juncos, Las Piedras, Loíza, Luquillo, Naguabo, Naranjito, Orocovis, Patillas, Ponce, Río Grande,  San Juan, San Lorenzo, Trujillo Alto, Vega Baja, Vieques and Villalba. Individuals who reside or have a business in these municipalities may qualify for tax relief.

The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after Aug. 21, and on or before Oct. 31, have been postponed to Oct. 31, 2011. This includes corporations and other businesses that previously obtained an extension until Sept. 15 to file their 2010 returns, and individuals and businesses that received a similar extension until Oct. 17. It also includes the estimated tax payment for the third quarter, normally due Sept. 15.  

In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after Aug. 21, and on or before Sept. 6, as long as the deposits are made by Sept. 6, 2011.

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 1-866-562-5227 to request this tax relief.

Covered Disaster Area

The municipalities listed above constitute a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and are entitled to the relief detailed below.

Affected Taxpayers

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

Grant of Relief

Under section 7508A, the IRS gives affected taxpayers until Oct. 31 to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after Aug. 21 and on or before Oct. 31.

The IRS also gives affected taxpayers until Oct. 31 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after Aug. 21 and on or before Oct. 31.

This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after Aug. 21 and on or before Sept. 6 provided the taxpayer makes these deposits by Sept. 6.

Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.
Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation “Puerto Rico/Hurricane Irene” at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Taxpayers may download forms and publications from the official IRS website, irs.gov, or order them by calling 1-800-TAX-FORM (1-800-829-3676). The IRS toll-free number for general tax questions is 1-800-829-1040.

Related Information

SP-FL-2011-14SP, Alivio Tributario a Víctimas del Huracán Irene en Puerto Rico
Disaster Assistance and Emergency Relief for Individuals and Businesses
Recent IRS Disaster Relief Announcements

 

Page Last Reviewed or Updated: 20-Mar-2014

The File 2009 Taxes Online Late

File 2009 taxes online late 1. File 2009 taxes online late   Overview of Depreciation Table of Contents Introduction Useful Items - You may want to see: What Property Can Be Depreciated?Property You Own Property Used in Your Business or Income-Producing Activity Property Having a Determinable Useful Life Property Lasting More Than One Year What Property Cannot Be Depreciated?Land Excepted Property When Does Depreciation Begin and End?Placed in Service Idle Property Cost or Other Basis Fully Recovered Retired From Service What Method Can You Use To Depreciate Your Property?Property You Placed in Service Before 1987 Property Owned or Used in 1986 Intangible Property Corporate or Partnership Property Acquired in a Nontaxable Transfer Election To Exclude Property From MACRS What Is the Basis of Your Depreciable Property?Cost as Basis Other Basis Adjusted Basis How Do You Treat Repairs and Improvements? Do You Have To File Form 4562? How Do You Correct Depreciation Deductions?Filing an Amended Return Changing Your Accounting Method Introduction Depreciation is an annual income tax deduction that allows you to recover the cost or other basis of certain property over the time you use the property. File 2009 taxes online late It is an allowance for the wear and tear, deterioration, or obsolescence of the property. File 2009 taxes online late This chapter discusses the general rules for depreciating property and answers the following questions. File 2009 taxes online late What property can be depreciated? What property cannot be depreciated? When does depreciation begin and end? What method can you use to depreciate your property? What is the basis of your depreciable property? How do you treat repairs and improvements? Do you have to file Form 4562? How do you correct depreciation deductions? Useful Items - You may want to see: Publication 534 Depreciating Property Placed in Service Before 1987 535 Business Expenses 538 Accounting Periods and Methods 551 Basis of Assets Form (and Instructions) Sch C (Form 1040) Profit or Loss From Business Sch C-EZ (Form 1040) Net Profit From Business 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses 3115 Application for Change in Accounting Method 4562 Depreciation and Amortization See chapter 6 for information about getting publications and forms. File 2009 taxes online late What Property Can Be Depreciated? You can depreciate most types of tangible property (except land), such as buildings, machinery, vehicles, furniture, and equipment. File 2009 taxes online late You also can depreciate certain intangible property, such as patents, copyrights, and computer software. File 2009 taxes online late To be depreciable, the property must meet all the following requirements. File 2009 taxes online late It must be property you own. File 2009 taxes online late It must be used in your business or income-producing activity. File 2009 taxes online late It must have a determinable useful life. File 2009 taxes online late It must be expected to last more than one year. File 2009 taxes online late The following discussions provide information about these requirements. File 2009 taxes online late Property You Own To claim depreciation, you usually must be the owner of the property. File 2009 taxes online late You are considered as owning property even if it is subject to a debt. File 2009 taxes online late Example 1. File 2009 taxes online late You made a down payment to purchase rental property and assumed the previous owner's mortgage. File 2009 taxes online late You own the property and you can depreciate it. File 2009 taxes online late Example 2. File 2009 taxes online late You bought a new van that you will use only for your courier business. File 2009 taxes online late You will be making payments on the van over the next 5 years. File 2009 taxes online late You own the van and you can depreciate it. File 2009 taxes online late Leased property. File 2009 taxes online late   You can depreciate leased property only if you retain the incidents of ownership in the property (explained below). File 2009 taxes online late This means you bear the burden of exhaustion of the capital investment in the property. File 2009 taxes online late Therefore, if you lease property from someone to use in your trade or business or for the production of income, you generally cannot depreciate its cost because you do not retain the incidents of ownership. File 2009 taxes online late You can, however, depreciate any capital improvements you make to the property. File 2009 taxes online late See How Do You Treat Repairs and Improvements later in this chapter and Additions and Improvements under Which Recovery Period Applies in chapter 4. File 2009 taxes online late   If you lease property to someone, you generally can depreciate its cost even if the lessee (the person leasing from you) has agreed to preserve, replace, renew, and maintain the property. File 2009 taxes online late However, if the lease provides that the lessee is to maintain the property and return to you the same property or its equivalent in value at the expiration of the lease in as good condition and value as when leased, you cannot depreciate the cost of the property. File 2009 taxes online late Incidents of ownership. File 2009 taxes online late   Incidents of ownership in property include the following. File 2009 taxes online late The legal title to the property. File 2009 taxes online late The legal obligation to pay for the property. File 2009 taxes online late The responsibility to pay maintenance and operating expenses. File 2009 taxes online late The duty to pay any taxes on the property. File 2009 taxes online late The risk of loss if the property is destroyed, condemned, or diminished in value through obsolescence or exhaustion. File 2009 taxes online late Life tenant. File 2009 taxes online late   Generally, if you hold business or investment property as a life tenant, you can depreciate it as if you were the absolute owner of the property. File 2009 taxes online late However, see Certain term interests in property under Excepted Property, later. File 2009 taxes online late Cooperative apartments. File 2009 taxes online late   If you are a tenant-stockholder in a cooperative housing corporation and use your cooperative apartment in your business or for the production of income, you can depreciate your stock in the corporation, even though the corporation owns the apartment. File 2009 taxes online late   Figure your depreciation deduction as follows. File 2009 taxes online late Figure the depreciation for all the depreciable real property owned by the corporation in which you have a proprietary lease or right of tenancy. File 2009 taxes online late If you bought your cooperative stock after its first offering, figure the depreciable basis of this property as follows. File 2009 taxes online late Multiply your cost per share by the total number of outstanding shares, including any shares held by the corporation. File 2009 taxes online late Add to the amount figured in (a) any mortgage debt on the property on the date you bought the stock. File 2009 taxes online late Subtract from the amount figured in (b) any mortgage debt that is not for the depreciable real property, such as the part for the land. File 2009 taxes online late Subtract from the amount figured in (1) any depreciation for space owned by the corporation that can be rented but cannot be lived in by tenant-stockholders. File 2009 taxes online late Divide the number of your shares of stock by the total number of outstanding shares, including any shares held by the corporation. File 2009 taxes online late Multiply the result of (2) by the percentage you figured in (3). File 2009 taxes online late This is your depreciation on the stock. File 2009 taxes online late   Your depreciation deduction for the year cannot be more than the part of your adjusted basis in the stock of the corporation that is allocable to your business or income-producing property. File 2009 taxes online late You must also reduce your depreciation deduction if only a portion of the property is used in a business or for the production of income. File 2009 taxes online late Example. File 2009 taxes online late You figure your share of the cooperative housing corporation's depreciation to be $30,000. File 2009 taxes online late Your adjusted basis in the stock of the corporation is $50,000. File 2009 taxes online late You use one half of your apartment solely for business purposes. File 2009 taxes online late Your depreciation deduction for the stock for the year cannot be more than $25,000 (½ of $50,000). File 2009 taxes online late Change to business use. File 2009 taxes online late   If you change your cooperative apartment to business use, figure your allowable depreciation as explained earlier. File 2009 taxes online late The basis of all the depreciable real property owned by the cooperative housing corporation is the smaller of the following amounts. File 2009 taxes online late The fair market value of the property on the date you change your apartment to business use. File 2009 taxes online late This is considered to be the same as the corporation's adjusted basis minus straight line depreciation, unless this value is unrealistic. File 2009 taxes online late The corporation's adjusted basis in the property on that date. File 2009 taxes online late Do not subtract depreciation when figuring the corporation's adjusted basis. File 2009 taxes online late   If you bought the stock after its first offering, the corporation's adjusted basis in the property is the amount figured in (1), above. File 2009 taxes online late The fair market value of the property is considered to be the same as the corporation's adjusted basis figured in this way minus straight line depreciation, unless the value is unrealistic. File 2009 taxes online late   For a discussion of fair market value and adjusted basis, see Publication 551. File 2009 taxes online late Property Used in Your Business or Income-Producing Activity To claim depreciation on property, you must use it in your business or income-producing activity. File 2009 taxes online late If you use property to produce income (investment use), the income must be taxable. File 2009 taxes online late You cannot depreciate property that you use solely for personal activities. File 2009 taxes online late Partial business or investment use. File 2009 taxes online late   If you use property for business or investment purposes and for personal purposes, you can deduct depreciation based only on the business or investment use. File 2009 taxes online late For example, you cannot deduct depreciation on a car used only for commuting, personal shopping trips, family vacations, driving children to and from school, or similar activities. File 2009 taxes online late    You must keep records showing the business, investment, and personal use of your property. File 2009 taxes online late For more information on the records you must keep for listed property, such as a car, see What Records Must Be Kept in chapter 5. File 2009 taxes online late    Although you can combine business and investment use of property when figuring depreciation deductions, do not treat investment use as qualified business use when determining whether the business-use requirement for listed property is met. File 2009 taxes online late For information about qualified business use of listed property, see What Is the Business-Use Requirement in chapter 5. File 2009 taxes online late Office in the home. File 2009 taxes online late   If you use part of your home as an office, you may be able to deduct depreciation on that part based on its business use. File 2009 taxes online late For information about depreciating your home office, see Publication 587. File 2009 taxes online late Inventory. File 2009 taxes online late   You cannot depreciate inventory because it is not held for use in your business. File 2009 taxes online late Inventory is any property you hold primarily for sale to customers in the ordinary course of your business. File 2009 taxes online late   If you are a rent-to-own dealer, you may be able to treat certain property held in your business as depreciable property rather than as inventory. File 2009 taxes online late See Rent-to-own dealer under Which Property Class Applies Under GDS in chapter 4. File 2009 taxes online late   In some cases, it is not clear whether property is held for sale (inventory) or for use in your business. File 2009 taxes online late If it is unclear, examine carefully all the facts in the operation of the particular business. File 2009 taxes online late The following example shows how a careful examination of the facts in two similar situations results in different conclusions. File 2009 taxes online late Example. File 2009 taxes online late Maple Corporation is in the business of leasing cars. File 2009 taxes online late At the end of their useful lives, when the cars are no longer profitable to lease, Maple sells them. File 2009 taxes online late Maple does not have a showroom, used car lot, or individuals to sell the cars. File 2009 taxes online late Instead, it sells them through wholesalers or by similar arrangements in which a dealer's profit is not intended or considered. File 2009 taxes online late Maple can depreciate the leased cars because the cars are not held primarily for sale to customers in the ordinary course of business, but are leased. File 2009 taxes online late If Maple buys cars at wholesale prices, leases them for a short time, and then sells them at retail prices or in sales in which a dealer's profit is intended, the cars are treated as inventory and are not depreciable property. File 2009 taxes online late In this situation, the cars are held primarily for sale to customers in the ordinary course of business. File 2009 taxes online late Containers. File 2009 taxes online late   Generally, containers for the products you sell are part of inventory and you cannot depreciate them. File 2009 taxes online late However, you can depreciate containers used to ship your products if they have a life longer than one year and meet the following requirements. File 2009 taxes online late They qualify as property used in your business. File 2009 taxes online late Title to the containers does not pass to the buyer. File 2009 taxes online late   To determine if these requirements are met, consider the following questions. File 2009 taxes online late Does your sales contract, sales invoice, or other type of order acknowledgment indicate whether you have retained title? Does your invoice treat the containers as separate items? Do any of your records state your basis in the containers? Property Having a Determinable Useful Life To be depreciable, your property must have a determinable useful life. File 2009 taxes online late This means that it must be something that wears out, decays, gets used up, becomes obsolete, or loses its value from natural causes. File 2009 taxes online late Property Lasting More Than One Year To be depreciable, property must have a useful life that extends substantially beyond the year you place it in service. File 2009 taxes online late Example. File 2009 taxes online late You maintain a library for use in your profession. File 2009 taxes online late You can depreciate it. File 2009 taxes online late However, if you buy technical books, journals, or information services for use in your business that have a useful life of one year or less, you cannot depreciate them. File 2009 taxes online late Instead, you deduct their cost as a business expense. File 2009 taxes online late What Property Cannot Be Depreciated? Certain property cannot be depreciated. File 2009 taxes online late This includes land and certain excepted property. File 2009 taxes online late Land You cannot depreciate the cost of land because land does not wear out, become obsolete, or get used up. File 2009 taxes online late The cost of land generally includes the cost of clearing, grading, planting, and landscaping. File 2009 taxes online late Although you cannot depreciate land, you can depreciate certain land preparation costs, such as landscaping costs, incurred in preparing land for business use. File 2009 taxes online late These costs must be so closely associated with other depreciable property that you can determine a life for them along with the life of the associated property. File 2009 taxes online late Example. File 2009 taxes online late You constructed a new building for use in your business and paid for grading, clearing, seeding, and planting bushes and trees. File 2009 taxes online late Some of the bushes and trees were planted right next to the building, while others were planted around the outer border of the lot. File 2009 taxes online late If you replace the building, you would have to destroy the bushes and trees right next to it. File 2009 taxes online late These bushes and trees are closely associated with the building, so they have a determinable useful life. File 2009 taxes online late Therefore, you can depreciate them. File 2009 taxes online late Add your other land preparation costs to the basis of your land because they have no determinable life and you cannot depreciate them. File 2009 taxes online late Excepted Property Even if the requirements explained in the preceding discussions are met, you cannot depreciate the following property. File 2009 taxes online late Property placed in service and disposed of in the same year. File 2009 taxes online late Determining when property is placed in service is explained later. File 2009 taxes online late Equipment used to build capital improvements. File 2009 taxes online late You must add otherwise allowable depreciation on the equipment during the period of construction to the basis of your improvements. File 2009 taxes online late See Uniform Capitalization Rules in Publication 551. File 2009 taxes online late Section 197 intangibles. File 2009 taxes online late You must amortize these costs. File 2009 taxes online late Section 197 intangibles are discussed in detail in Chapter 8 of Publication 535. File 2009 taxes online late Intangible property, such as certain computer software, that is not section 197 intangible property, can be depreciated if it meets certain requirements. File 2009 taxes online late See Intangible Property , later. File 2009 taxes online late Certain term interests. File 2009 taxes online late Certain term interests in property. File 2009 taxes online late   You cannot depreciate a term interest in property created or acquired after July 27, 1989, for any period during which the remainder interest is held, directly or indirectly, by a person related to you. File 2009 taxes online late A term interest in property means a life interest in property, an interest in property for a term of years, or an income interest in a trust. File 2009 taxes online late Related persons. File 2009 taxes online late   For a description of related persons, see Related Persons, later. File 2009 taxes online late For this purpose, however, treat as related persons only the relationships listed in items (1) through (10) of that discussion and substitute “50%” for “10%” each place it appears. File 2009 taxes online late Basis adjustments. File 2009 taxes online late   If you would be allowed a depreciation deduction for a term interest in property except that the holder of the remainder interest is related to you, you generally must reduce your basis in the term interest by any depreciation or amortization not allowed. File 2009 taxes online late   If you hold the remainder interest, you generally must increase your basis in that interest by the depreciation not allowed to the term interest holder. File 2009 taxes online late However, do not increase your basis for depreciation not allowed for periods during which either of the following situations applies. File 2009 taxes online late The term interest is held by an organization exempt from tax. File 2009 taxes online late The term interest is held by a nonresident alien individual or foreign corporation, and the income from the term interest is not effectively connected with the conduct of a trade or business in the United States. File 2009 taxes online late Exceptions. File 2009 taxes online late   The above rules do not apply to the holder of a term interest in property acquired by gift, bequest, or inheritance. File 2009 taxes online late They also do not apply to the holder of dividend rights that were separated from any stripped preferred stock if the rights were purchased after April 30, 1993, or to a person whose basis in the stock is determined by reference to the basis in the hands of the purchaser. File 2009 taxes online late When Does Depreciation Begin and End? You begin to depreciate your property when you place it in service for use in your trade or business or for the production of income. File 2009 taxes online late You stop depreciating property either when you have fully recovered your cost or other basis or when you retire it from service, whichever happens first. File 2009 taxes online late Placed in Service You place property in service when it is ready and available for a specific use, whether in a business activity, an income-producing activity, a tax-exempt activity, or a personal activity. File 2009 taxes online late Even if you are not using the property, it is in service when it is ready and available for its specific use. File 2009 taxes online late Example 1. File 2009 taxes online late Donald Steep bought a machine for his business. File 2009 taxes online late The machine was delivered last year. File 2009 taxes online late However, it was not installed and operational until this year. File 2009 taxes online late It is considered placed in service this year. File 2009 taxes online late If the machine had been ready and available for use when it was delivered, it would be considered placed in service last year even if it was not actually used until this year. File 2009 taxes online late Example 2. File 2009 taxes online late On April 6, Sue Thorn bought a house to use as residential rental property. File 2009 taxes online late She made several repairs and had it ready for rent on July 5. File 2009 taxes online late At that time, she began to advertise it for rent in the local newspaper. File 2009 taxes online late The house is considered placed in service in July when it was ready and available for rent. File 2009 taxes online late She can begin to depreciate it in July. File 2009 taxes online late Example 3. File 2009 taxes online late James Elm is a building contractor who specializes in constructing office buildings. File 2009 taxes online late He bought a truck last year that had to be modified to lift materials to second-story levels. File 2009 taxes online late The installation of the lifting equipment was completed and James accepted delivery of the modified truck on January 10 of this year. File 2009 taxes online late The truck was placed in service on January 10, the date it was ready and available to perform the function for which it was bought. File 2009 taxes online late Conversion to business use. File 2009 taxes online late   If you place property in service in a personal activity, you cannot claim depreciation. File 2009 taxes online late However, if you change the property's use to use in a business or income-producing activity, then you can begin to depreciate it at the time of the change. File 2009 taxes online late You place the property in service in the business or income-producing activity on the date of the change. File 2009 taxes online late Example. File 2009 taxes online late You bought a home and used it as your personal home several years before you converted it to rental property. File 2009 taxes online late Although its specific use was personal and no depreciation was allowable, you placed the home in service when you began using it as your home. File 2009 taxes online late You can begin to claim depreciation in the year you converted it to rental property because its use changed to an income-producing use at that time. File 2009 taxes online late Idle Property Continue to claim a deduction for depreciation on property used in your business or for the production of income even if it is temporarily idle (not in use). File 2009 taxes online late For example, if you stop using a machine because there is a temporary lack of a market for a product made with that machine, continue to deduct depreciation on the machine. File 2009 taxes online late Cost or Other Basis Fully Recovered You stop depreciating property when you have fully recovered your cost or other basis. File 2009 taxes online late You recover your basis when your section 179 and allowed or allowable depreciation deductions equal your cost or investment in the property. File 2009 taxes online late See What Is the Basis of Your Depreciable Property , later. File 2009 taxes online late Retired From Service You stop depreciating property when you retire it from service, even if you have not fully recovered its cost or other basis. File 2009 taxes online late You retire property from service when you permanently withdraw it from use in a trade or business or from use in the production of income because of any of the following events. File 2009 taxes online late You sell or exchange the property. File 2009 taxes online late You convert the property to personal use. File 2009 taxes online late You abandon the property. File 2009 taxes online late You transfer the property to a supplies or scrap account. File 2009 taxes online late The property is destroyed. File 2009 taxes online late If you included the property in a general asset account, see How Do You Use General Asset Accounts in chapter 4 for the rules that apply when you dispose of that property. File 2009 taxes online late What Method Can You Use To Depreciate Your Property? You must use the Modified Accelerated Cost Recovery System (MACRS) to depreciate most property. File 2009 taxes online late MACRS is discussed in chapter 4. File 2009 taxes online late You cannot use MACRS to depreciate the following property. File 2009 taxes online late Property you placed in service before 1987. File 2009 taxes online late Certain property owned or used in 1986. File 2009 taxes online late Intangible property. File 2009 taxes online late Films, video tapes, and recordings. File 2009 taxes online late Certain corporate or partnership property acquired in a nontaxable transfer. File 2009 taxes online late Property you elected to exclude from MACRS. File 2009 taxes online late The following discussions describe the property listed above and explain what depreciation method should be used. File 2009 taxes online late Property You Placed in Service Before 1987 You cannot use MACRS for property you placed in service before 1987 (except property you placed in service after July 31, 1986, if MACRS was elected). File 2009 taxes online late Property placed in service before 1987 must be depreciated under the methods discussed in Publication 534. File 2009 taxes online late For a discussion of when property is placed in service, see When Does Depreciation Begin and End , earlier. File 2009 taxes online late Use of real property changed. File 2009 taxes online late   You generally must use MACRS to depreciate real property that you acquired for personal use before 1987 and changed to business or income-producing use after 1986. File 2009 taxes online late Improvements made after 1986. File 2009 taxes online late   You must treat an improvement made after 1986 to property you placed in service before 1987 as separate depreciable property. File 2009 taxes online late Therefore, you can depreciate that improvement as separate property under MACRS if it is the type of property that otherwise qualifies for MACRS depreciation. File 2009 taxes online late For more information about improvements, see How Do You Treat Repairs and Improvements , later and Additions and Improvements under Which Recovery Period Applies in chapter 4. File 2009 taxes online late Property Owned or Used in 1986 You may not be able to use MACRS for property you acquired and placed in service after 1986 if any of the situations described below apply. File 2009 taxes online late If you cannot use MACRS, the property must be depreciated under the methods discussed in Publication 534. File 2009 taxes online late For the following discussions, do not treat property as owned before you placed it in service. File 2009 taxes online late If you owned property in 1986 but did not place it in service until 1987, you do not treat it as owned in 1986. File 2009 taxes online late Personal property. File 2009 taxes online late   You cannot use MACRS for personal property (section 1245 property) in any of the following situations. File 2009 taxes online late You or someone related to you owned or used the property in 1986. File 2009 taxes online late You acquired the property from a person who owned it in 1986 and as part of the transaction the user of the property did not change. File 2009 taxes online late You lease the property to a person (or someone related to this person) who owned or used the property in 1986. File 2009 taxes online late You acquired the property in a transaction in which: The user of the property did not change, and The property was not MACRS property in the hands of the person from whom you acquired it because of (2) or (3) above. File 2009 taxes online late Real property. File 2009 taxes online late   You generally cannot use MACRS for real property (section 1250 property) in any of the following situations. File 2009 taxes online late You or someone related to you owned the property in 1986. File 2009 taxes online late You lease the property to a person who owned the property in 1986 (or someone related to that person). File 2009 taxes online late You acquired the property in a like-kind exchange, involuntary conversion, or repossession of property you or someone related to you owned in 1986. File 2009 taxes online late MACRS applies only to that part of your basis in the acquired property that represents cash paid or unlike property given up. File 2009 taxes online late It does not apply to the carried-over part of the basis. File 2009 taxes online late Exceptions. File 2009 taxes online late   The rules above do not apply to the following. File 2009 taxes online late Residential rental property or nonresidential real property. File 2009 taxes online late Any property if, in the first tax year it is placed in service, the deduction under the Accelerated Cost Recovery System (ACRS) is more than the deduction under MACRS using the half-year convention. File 2009 taxes online late For information on how to figure depreciation under ACRS, see Publication 534. File 2009 taxes online late Property that was MACRS property in the hands of the person from whom you acquired it because of (2) above. File 2009 taxes online late Related persons. File 2009 taxes online late   For this purpose, the following are related persons. File 2009 taxes online late An individual and a member of his or her family, including only a spouse, child, parent, brother, sister, half-brother, half-sister, ancestor, and lineal descendant. File 2009 taxes online late A corporation and an individual who directly or indirectly owns more than 10% of the value of the outstanding stock of that corporation. File 2009 taxes online late Two corporations that are members of the same controlled group. File 2009 taxes online late A trust fiduciary and a corporation if more than 10% of the value of the outstanding stock is directly or indirectly owned by or for the trust or grantor of the trust. File 2009 taxes online late The grantor and fiduciary, and the fiduciary and beneficiary, of any trust. File 2009 taxes online late The fiduciaries of two different trusts, and the fiduciaries and beneficiaries of two different trusts, if the same person is the grantor of both trusts. File 2009 taxes online late A tax-exempt educational or charitable organization and any person (or, if that person is an individual, a member of that person's family) who directly or indirectly controls the organization. File 2009 taxes online late Two S corporations, and an S corporation and a regular corporation, if the same persons own more than 10% of the value of the outstanding stock of each corporation. File 2009 taxes online late A corporation and a partnership if the same persons own both of the following. File 2009 taxes online late More than 10% of the value of the outstanding stock of the corporation. File 2009 taxes online late More than 10% of the capital or profits interest in the partnership. File 2009 taxes online late The executor and beneficiary of any estate. File 2009 taxes online late A partnership and a person who directly or indirectly owns more than 10% of the capital or profits interest in the partnership. File 2009 taxes online late Two partnerships, if the same persons directly or indirectly own more than 10% of the capital or profits interest in each. File 2009 taxes online late The related person and a person who is engaged in trades or businesses under common control. File 2009 taxes online late See section 52(a) and 52(b) of the Internal Revenue Code. File 2009 taxes online late When to determine relationship. File 2009 taxes online late   You must determine whether you are related to another person at the time you acquire the property. File 2009 taxes online late   A partnership acquiring property from a terminating partnership must determine whether it is related to the terminating partnership immediately before the event causing the termination. File 2009 taxes online late For this rule, a terminating partnership is one that sells or exchanges, within 12 months, 50% or more of its total interest in partnership capital or profits. File 2009 taxes online late Constructive ownership of stock or partnership interest. File 2009 taxes online late   To determine whether a person directly or indirectly owns any of the outstanding stock of a corporation or an interest in a partnership, apply the following rules. File 2009 taxes online late Stock or a partnership interest directly or indirectly owned by or for a corporation, partnership, estate, or trust is considered owned proportionately by or for its shareholders, partners, or beneficiaries. File 2009 taxes online late However, for a partnership interest owned by or for a C corporation, this applies only to shareholders who directly or indirectly own 5% or more of the value of the stock of the corporation. File 2009 taxes online late An individual is considered to own the stock or partnership interest directly or indirectly owned by or for the individual's family. File 2009 taxes online late An individual who owns, except by applying rule (2), any stock in a corporation is considered to own the stock directly or indirectly owned by or for the individual's partner. File 2009 taxes online late For purposes of rules (1), (2), or (3), stock or a partnership interest considered to be owned by a person under rule (1) is treated as actually owned by that person. File 2009 taxes online late However, stock or a partnership interest considered to be owned by an individual under rule (2) or (3) is not treated as owned by that individual for reapplying either rule (2) or (3) to make another person considered to be the owner of the same stock or partnership interest. File 2009 taxes online late Intangible Property Generally, if you can depreciate intangible property, you usually use the straight line method of depreciation. File 2009 taxes online late However, you can choose to depreciate certain intangible property under the income forecast method (discussed later). File 2009 taxes online late You cannot depreciate intangible property that is a section 197 intangible or that otherwise does not meet all the requirements discussed earlier under What Property Can Be Depreciated. File 2009 taxes online late Straight Line Method This method lets you deduct the same amount of depreciation each year over the useful life of the property. File 2009 taxes online late To figure your deduction, first determine the adjusted basis, salvage value, and estimated useful life of your property. File 2009 taxes online late Subtract the salvage value, if any, from the adjusted basis. File 2009 taxes online late The balance is the total depreciation you can take over the useful life of the property. File 2009 taxes online late Divide the balance by the number of years in the useful life. File 2009 taxes online late This gives you your yearly depreciation deduction. File 2009 taxes online late Unless there is a big change in adjusted basis or useful life, this amount will stay the same throughout the time you depreciate the property. File 2009 taxes online late If, in the first year, you use the property for less than a full year, you must prorate your depreciation deduction for the number of months in use. File 2009 taxes online late Example. File 2009 taxes online late In April, Frank bought a patent for $5,100 that is not a section 197 intangible. File 2009 taxes online late He depreciates the patent under the straight line method, using a 17-year useful life and no salvage value. File 2009 taxes online late He divides the $5,100 basis by 17 years to get his $300 yearly depreciation deduction. File 2009 taxes online late He only used the patent for 9 months during the first year, so he multiplies $300 by 9/12 to get his deduction of $225 for the first year. File 2009 taxes online late Next year, Frank can deduct $300 for the full year. File 2009 taxes online late Patents and copyrights. File 2009 taxes online late   If you can depreciate the cost of a patent or copyright, use the straight line method over the useful life. File 2009 taxes online late The useful life of a patent or copyright is the lesser of the life granted to it by the government or the remaining life when you acquire it. File 2009 taxes online late However, if the patent or copyright becomes valueless before the end of its useful life, you can deduct in that year any of its remaining cost or other basis. File 2009 taxes online late Computer software. File 2009 taxes online late   Computer software is generally a section 197 intangible and cannot be depreciated if you acquired it in connection with the acquisition of assets constituting a business or a substantial part of a business. File 2009 taxes online late   However, computer software is not a section 197 intangible and can be depreciated, even if acquired in connection with the acquisition of a business, if it meets all of the following tests. File 2009 taxes online late It is readily available for purchase by the general public. File 2009 taxes online late It is subject to a nonexclusive license. File 2009 taxes online late It has not been substantially modified. File 2009 taxes online late   If the software meets the tests above, it may also qualify for the section 179 deduction and the special depreciation allowance, discussed later. File 2009 taxes online late If you can depreciate the cost of computer software, use the straight line method over a useful life of 36 months. File 2009 taxes online late    Tax-exempt use property subject to a lease. File 2009 taxes online late   The useful life of computer software leased under a lease agreement entered into after March 12, 2004, to a tax-exempt organization, governmental unit, or foreign person or entity (other than a partnership), cannot be less than 125% of the lease term. File 2009 taxes online late Certain created intangibles. File 2009 taxes online late   You can amortize certain intangibles created on or after December 31, 2003, over a 15-year period using the straight line method and no salvage value, even though they have a useful life that cannot be estimated with reasonable accuracy. File 2009 taxes online late For example, amounts paid to acquire memberships or privileges of indefinite duration, such as a trade association membership, are eligible costs. File 2009 taxes online late   The following are not eligible. File 2009 taxes online late Any intangible asset acquired from another person. File 2009 taxes online late Created financial interests. File 2009 taxes online late Any intangible asset that has a useful life that can be estimated with reasonable accuracy. File 2009 taxes online late Any intangible asset that has an amortization period or limited useful life that is specifically prescribed or prohibited by the Code, regulations, or other published IRS guidance. File 2009 taxes online late Any amount paid to facilitate an acquisition of a trade or business, a change in the capital structure of a business entity, and certain other transactions. File 2009 taxes online late   You must also increase the 15-year safe harbor amortization period to a 25-year period for certain intangibles related to benefits arising from the provision, production, or improvement of real property. File 2009 taxes online late For this purpose, real property includes property that will remain attached to the real property for an indefinite period of time, such as roads, bridges, tunnels, pavements, and pollution control facilities. File 2009 taxes online late Income Forecast Method You can choose to use the income forecast method instead of the straight line method to depreciate the following depreciable intangibles. File 2009 taxes online late Motion picture films or video tapes. File 2009 taxes online late Sound recordings. File 2009 taxes online late Copyrights. File 2009 taxes online late Books. File 2009 taxes online late Patents. File 2009 taxes online late Under the income forecast method, each year's depreciation deduction is equal to the cost of the property, multiplied by a fraction. File 2009 taxes online late The numerator of the fraction is the current year's net income from the property, and the denominator is the total income anticipated from the property through the end of the 10th taxable year following the taxable year the property is placed in service. File 2009 taxes online late For more information, see section 167(g) of the Internal Revenue Code. File 2009 taxes online late Films, video tapes, and recordings. File 2009 taxes online late   You cannot use MACRS for motion picture films, video tapes, and sound recordings. File 2009 taxes online late For this purpose, sound recordings are discs, tapes, or other phonorecordings resulting from the fixation of a series of sounds. File 2009 taxes online late You can depreciate this property using either the straight line method or the income forecast method. File 2009 taxes online late Participations and residuals. File 2009 taxes online late   You can include participations and residuals in the adjusted basis of the property for purposes of computing your depreciation deduction under the income forecast method. File 2009 taxes online late The participations and residuals must relate to income to be derived from the property before the end of the 10th taxable year after the property is placed in service. File 2009 taxes online late For this purpose, participations and residuals are defined as costs which by contract vary with the amount of income earned in connection with the property. File 2009 taxes online late   Instead of including these amounts in the adjusted basis of the property, you can deduct the costs in the taxable year that they are paid. File 2009 taxes online late Videocassettes. File 2009 taxes online late   If you are in the business of renting videocassettes, you can depreciate only those videocassettes bought for rental. File 2009 taxes online late If the videocassette has a useful life of one year or less, you can currently deduct the cost as a business expense. File 2009 taxes online late Corporate or Partnership Property Acquired in a Nontaxable Transfer MACRS does not apply to property used before 1987 and transferred after 1986 to a corporation or partnership (except property the transferor placed in service after July 31, 1986, if MACRS was elected) to the extent its basis is carried over from the property's adjusted basis in the transferor's hands. File 2009 taxes online late You must continue to use the same depreciation method as the transferor and figure depreciation as if the transfer had not occurred. File 2009 taxes online late However, if MACRS would otherwise apply, you can use it to depreciate the part of the property's basis that exceeds the carried-over basis. File 2009 taxes online late The nontaxable transfers covered by this rule include the following. File 2009 taxes online late A distribution in complete liquidation of a subsidiary. File 2009 taxes online late A transfer to a corporation controlled by the transferor. File 2009 taxes online late An exchange of property solely for corporate stock or securities in a reorganization. File 2009 taxes online late A contribution of property to a partnership in exchange for a partnership interest. File 2009 taxes online late A partnership distribution of property to a partner. File 2009 taxes online late Election To Exclude Property From MACRS If you can properly depreciate any property under a method not based on a term of years, such as the unit-of-production method, you can elect to exclude that property from MACRS. File 2009 taxes online late You make the election by reporting your depreciation for the property on line 15 in Part II of Form 4562 and attaching a statement as described in the instructions for Form 4562. File 2009 taxes online late You must make this election by the return due date (including extensions) for the tax year you place your property in service. File 2009 taxes online late However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within six months of the due date of the return (excluding extensions). File 2009 taxes online late Attach the election to the amended return and write “Filed pursuant to section 301. File 2009 taxes online late 9100-2” on the election statement. File 2009 taxes online late File the amended return at the same address you filed the original return. File 2009 taxes online late Use of standard mileage rate. File 2009 taxes online late   If you use the standard mileage rate to figure your tax deduction for your business automobile, you are treated as having made an election to exclude the automobile from MACRS. File 2009 taxes online late See Publication 463 for a discussion of the standard mileage rate. File 2009 taxes online late What Is the Basis of Your Depreciable Property? To figure your depreciation deduction, you must determine the basis of your property. File 2009 taxes online late To determine basis, you need to know the cost or other basis of your property. File 2009 taxes online late Cost as Basis The basis of property you buy is its cost plus amounts you paid for items such as sales tax (see Exception , below), freight charges, and installation and testing fees. File 2009 taxes online late The cost includes the amount you pay in cash, debt obligations, other property, or services. File 2009 taxes online late Exception. File 2009 taxes online late   You can elect to deduct state and local general sales taxes instead of state and local income taxes as an itemized deduction on Schedule A (Form 1040). File 2009 taxes online late If you make that choice, you cannot include those sales taxes as part of your cost basis. File 2009 taxes online late Assumed debt. File 2009 taxes online late   If you buy property and assume (or buy subject to) an existing mortgage or other debt on the property, your basis includes the amount you pay for the property plus the amount of the assumed debt. File 2009 taxes online late Example. File 2009 taxes online late You make a $20,000 down payment on property and assume the seller's mortgage of $120,000. File 2009 taxes online late Your total cost is $140,000, the cash you paid plus the mortgage you assumed. File 2009 taxes online late Settlement costs. File 2009 taxes online late   The basis of real property also includes certain fees and charges you pay in addition to the purchase price. File 2009 taxes online late These generally are shown on your settlement statement and include the following. File 2009 taxes online late Legal and recording fees. File 2009 taxes online late Abstract fees. File 2009 taxes online late Survey charges. File 2009 taxes online late Owner's title insurance. File 2009 taxes online late 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. File 2009 taxes online late   For fees and charges you cannot include in the basis of property, see Real Property in Publication 551. File 2009 taxes online late Property you construct or build. File 2009 taxes online late   If you construct, build, or otherwise produce property for use in your business, you may have to use the uniform capitalization rules to determine the basis of your property. File 2009 taxes online late For information about the uniform capitalization rules, see Publication 551 and the regulations under section 263A of the Internal Revenue Code. File 2009 taxes online late Other Basis Other basis usually refers to basis that is determined by the way you received the property. File 2009 taxes online late For example, your basis is other than cost if you acquired the property in exchange for other property, as payment for services you performed, as a gift, or as an inheritance. File 2009 taxes online late If you acquired property in this or some other way, see Publication 551 to determine your basis. File 2009 taxes online late Property changed from personal use. File 2009 taxes online late   If you held property for personal use and later use it in your business or income-producing activity, your depreciable basis is the lesser of the following. File 2009 taxes online late The fair market value (FMV) of the property on the date of the change in use. File 2009 taxes online late Your original cost or other basis adjusted as follows. File 2009 taxes online late Increased by the cost of any permanent improvements or additions and other costs that must be added to basis. File 2009 taxes online late Decreased by any deductions you claimed for casualty and theft losses and other items that reduced your basis. File 2009 taxes online late Example. File 2009 taxes online late Several years ago, Nia paid $160,000 to have her home built on a lot that cost her $25,000. File 2009 taxes online late Before changing the property to rental use last year, she paid $20,000 for permanent improvements to the house and claimed a $2,000 casualty loss deduction for damage to the house. File 2009 taxes online late Land is not depreciable, so she includes only the cost of the house when figuring the basis for depreciation. File 2009 taxes online late Nia's adjusted basis in the house when she changed its use was $178,000 ($160,000 + $20,000 − $2,000). File 2009 taxes online late On the same date, her property had an FMV of $180,000, of which $15,000 was for the land and $165,000 was for the house. File 2009 taxes online late The basis for depreciation on the house is the FMV on the date of change ($165,000), because it is less than her adjusted basis ($178,000). File 2009 taxes online late Property acquired in a nontaxable transaction. File 2009 taxes online late   Generally, if you receive property in a nontaxable exchange, the basis of the property you receive is the same as the adjusted basis of the property you gave up. File 2009 taxes online late Special rules apply in determining the basis and figuring the MACRS depreciation deduction and special depreciation allowance for property acquired in a like-kind exchange or involuntary conversion. File 2009 taxes online late See Like-kind exchanges and involuntary conversions. File 2009 taxes online late under How Much Can You Deduct? in chapter 3 and Figuring the Deduction for Property Acquired in a Nontaxable Exchange in chapter 4. File 2009 taxes online late   There are also special rules for determining the basis of MACRS property involved in a like-kind exchange or involuntary conversion when the property is contained in a general asset account. File 2009 taxes online late See How Do You Use General Asset Accounts in chapter 4. File 2009 taxes online late Adjusted Basis To find your property's basis for depreciation, you may have to make certain adjustments (increases and decreases) to the basis of the property for events occurring between the time you acquired the property and the time you placed it in service. File 2009 taxes online late These events could include the following. File 2009 taxes online late Installing utility lines. File 2009 taxes online late Paying legal fees for perfecting the title. File 2009 taxes online late Settling zoning issues. File 2009 taxes online late Receiving rebates. File 2009 taxes online late Incurring a casualty or theft loss. File 2009 taxes online late For a discussion of adjustments to the basis of your property, see Adjusted Basis in Publication 551. File 2009 taxes online late If you depreciate your property under MACRS, you also may have to reduce your basis by certain deductions and credits with respect to the property. File 2009 taxes online late For more information, see What Is the Basis for Depreciation in chapter 4. File 2009 taxes online late . File 2009 taxes online late Basis adjustment for depreciation allowed or allowable. File 2009 taxes online late   You must reduce the basis of property by the depreciation allowed or allowable, whichever is greater. File 2009 taxes online late Depreciation allowed is depreciation you actually deducted (from which you received a tax benefit). File 2009 taxes online late Depreciation allowable is depreciation you are entitled to deduct. File 2009 taxes online late   If you do not claim depreciation you are entitled to deduct, you must still reduce the basis of the property by the full amount of depreciation allowable. File 2009 taxes online late   If you deduct more depreciation than you should, you must reduce your basis by any amount deducted from which you received a tax benefit (the depreciation allowed). File 2009 taxes online late How Do You Treat Repairs and Improvements? If you improve depreciable property, you must treat the improvement as separate depreciable property. File 2009 taxes online late Improvement means an addition to or partial replacement of property that adds to its value, appreciably lengthens the time you can use it, or adapts it to a different use. File 2009 taxes online late You generally deduct the cost of repairing business property in the same way as any other business expense. File 2009 taxes online late However, if a repair or replacement increases the value of your property, makes it more useful, or lengthens its life, you must treat it as an improvement and depreciate it. File 2009 taxes online late Example. File 2009 taxes online late You repair a small section on one corner of the roof of a rental house. File 2009 taxes online late You deduct the cost of the repair as a rental expense. File 2009 taxes online late However, if you completely replace the roof, the new roof is an improvement because it increases the value and lengthens the life of the property. File 2009 taxes online late You depreciate the cost of the new roof. File 2009 taxes online late Improvements to rented property. File 2009 taxes online late   You can depreciate permanent improvements you make to business property you rent from someone else. File 2009 taxes online late Do You Have To File Form 4562? Use Form 4562 to figure your deduction for depreciation and amortization. File 2009 taxes online late Attach Form 4562 to your tax return for the current tax year if you are claiming any of the following items. File 2009 taxes online late A section 179 deduction for the current year or a section 179 carryover from a prior year. File 2009 taxes online late See chapter 2 for information on the section 179 deduction. File 2009 taxes online late Depreciation for property placed in service during the current year. File 2009 taxes online late Depreciation on any vehicle or other listed property, regardless of when it was placed in service. File 2009 taxes online late See chapter 5 for information on listed property. File 2009 taxes online late A deduction for any vehicle if the deduction is reported on a form other than Schedule C (Form 1040) or Schedule C-EZ (Form 1040). File 2009 taxes online late Amortization of costs if the current year is the first year of the amortization period. File 2009 taxes online late Depreciation or amortization on any asset on a corporate income tax return (other than Form 1120S, U. File 2009 taxes online late S. File 2009 taxes online late Income Tax Return for an S Corporation) regardless of when it was placed in service. File 2009 taxes online late You must submit a separate Form 4562 for each business or activity on your return for which a Form 4562 is required. File 2009 taxes online late Table 1-1 presents an overview of the purpose of the various parts of Form 4562. File 2009 taxes online late Employee. File 2009 taxes online late   Do not use Form 4562 if you are an employee and you deduct job-related vehicle expenses using either actual expenses (including depreciation) or the standard mileage rate. File 2009 taxes online late Instead, use either Form 2106 or Form 2106-EZ. File 2009 taxes online late Use Form 2106-EZ if you are claiming the standard mileage rate and you are not reimbursed by your employer for any expenses. File 2009 taxes online late How Do You Correct Depreciation Deductions? If you deducted an incorrect amount of depreciation in any year, you may be able to make a correction by filing an amended return for that year. File 2009 taxes online late See Filing an Amended Return , next. File 2009 taxes online late If you are not allowed to make the correction on an amended return, you may be able to change your accounting method to claim the correct amount of depreciation. File 2009 taxes online late See Changing Your Accounting Method , later. File 2009 taxes online late Filing an Amended Return You can file an amended return to correct the amount of depreciation claimed for any property in any of the following situations. File 2009 taxes online late You claimed the incorrect amount because of a mathematical error made in any year. File 2009 taxes online late You claimed the incorrect amount because of a posting error made in any year. File 2009 taxes online late You have not adopted a method of accounting for property placed in service by you in tax years ending after December 29, 2003. File 2009 taxes online late You claimed the incorrect amount on property placed in service by you in tax years ending before December 30, 2003. File 2009 taxes online late Adoption of accounting method defined. File 2009 taxes online late   Generally, you adopt a method of accounting for depreciation by using a permissible method of determining depreciation when you file your first tax return, or by using the same impermissible method of determining depreciation in two or more consecutively filed tax returns. File 2009 taxes online late   For an exception to this 2-year rule, see Revenue Procedure 2011-14 on page 330 of the Internal Revenue Bulletin 2011-4, available at www. File 2009 taxes online late irs. File 2009 taxes online late gov/pub/irs-irbs/irb11-04. File 2009 taxes online late pdf. File 2009 taxes online late (Note. File 2009 taxes online late Revenue Procedure 2011-14 is clarified and modified by Revenue Procedure 2012-20. File 2009 taxes online late For more information, see Revenue Procedure 2012-20 on page 700 of the Internal Revenue Bulletin 2012-14, available at www. File 2009 taxes online late irs. File 2009 taxes online late gov/pub/irs-irbs/irb12-14. File 2009 taxes online late pdf. File 2009 taxes online late )   For a safe harbor method of accounting to treat rotable spare parts as depreciable assets and procedures to obtain automatic consent to change to the safe harbor method of accounting, see Revenue Procedure 2007-48 on page 110 of Internal Revenue Bulletin 2007-29, available at www. File 2009 taxes online late irs. File 2009 taxes online late gov/pub/irs-irbs/irb07-29. File 2009 taxes online late pdf. File 2009 taxes online late When to file. File 2009 taxes online late   If an amended return is allowed, you must file it by the later of the following. File 2009 taxes online late 3 years from the date you filed your original return for the year in which you did not deduct the correct amount. File 2009 taxes online late A return filed before an unextended due date is considered filed on that due date. File 2009 taxes online late 2 years from the time you paid your tax for that year. File 2009 taxes online late Changing Your Accounting Method Generally, you must get IRS approval to change your method of accounting. File 2009 taxes online late You generally must file Form 3115, Application for Change in Accounting Method, to request a change in your method of accounting for depreciation. File 2009 taxes online late The following are examples of a change in method of accounting for depreciation. File 2009 taxes online late A change from an impermissible method of determining depreciation for depreciable property, if the impermissible method was used in two or more consecutively filed tax returns. File 2009 taxes online late A change in the treatment of an asset from nondepreciable to depreciable or vice versa. File 2009 taxes online late A change in the depreciation method, period of recovery, or convention of a depreciable asset. File 2009 taxes online late A change from not claiming to claiming the special depreciation allowance if you did not make the election to not claim any special allowance. File 2009 taxes online late A change from claiming a 50% special depreciation allowance to claiming a 30% special depreciation allowance for qualified property (including property that is included in a class of property for which you elected a 30% special allowance instead of a 50% special allowance). File 2009 taxes online late Changes in depreciation that are not a change in method of accounting (and may only be made on an amended return) include the following. File 2009 taxes online late An adjustment in the useful life of a depreciable asset for which depreciation is determined under section 167. File 2009 taxes online late A change in use of an asset in the hands of the same taxpayer. File 2009 taxes online late Making a late depreciation election or revoking a timely valid depreciation election (including the election not to deduct the special depreciation allowance). File 2009 taxes online late If you elected not to claim any special allowance, a change from not claiming to claiming the special allowance is a revocation of the election and is not an accounting method change. File 2009 taxes online late Generally, you must get IRS approval to make a late depreciation election or revoke a depreciation election. File 2009 taxes online late You must submit a request for a letter ruling to make a late election or revoke an election. File 2009 taxes online late Any change in the placed in service date of a depreciable asset. File 2009 taxes online late See section 1. File 2009 taxes online late 446-1(e)(2)(ii)(d) of the regulations for more information and examples. File 2009 taxes online late IRS approval. File 2009 taxes online late   In some instances, you may be able to get approval from the IRS to change your method of accounting for depreciation under the automatic change request procedures generally covered in Revenue Procedure 2011-14. File 2009 taxes online late If you do not qualify to use the automatic procedures to get approval, you must use the advance consent request procedures generally covered in Revenue Procedure 97-27, 1997-1 C. File 2009 taxes online late B. File 2009 taxes online late 680. File 2009 taxes online late Also see the Instructions for Form 3115 for more information on getting approval, including lists of scope limitations and automatic accounting method changes. File 2009 taxes online late Additional guidance. File 2009 taxes online late    For additional guidance and special procedures for changing your accounting method, automatic change procedures, amending your return, and filing Form 3115, see Revenue Procedure 2011-14 on page 330 of the Internal Revenue Bulletin 2011-4, available at www. File 2009 taxes online late irs. File 2009 taxes online late gov/pub/irs-irbs/irb11-04. File 2009 taxes online late pdf. File 2009 taxes online late (Note. File 2009 taxes online late Revenue Procedure 2011-14 is clarified and modified by Revenue Procedure 2012-20. File 2009 taxes online late For more information, see Revenue Procedure 2012-20 on page 700 of the Internal Revenue Bulletin 2012-14, available at www. File 2009 taxes online late irs. File 2009 taxes online late gov/pub/irs-irbs/irb12-14. File 2009 taxes online late pdf. File 2009 taxes online late )   For a safe harbor method of accounting to treat rotable spare parts as depreciable assets, see Revenue Procedure 2007-48 on page 110 of Internal Revenue Bulletin 2007-29, available at www. File 2009 taxes online late irs. File 2009 taxes online late gov/pub/irs-irbs/irb07-29. File 2009 taxes online late pdf. File 2009 taxes online late Table 1-1. File 2009 taxes online late Purpose of Form 4562 This table describes the purpose of the various parts of Form 4562. File 2009 taxes online late For more information, see Form 4562 and its instructions. File 2009 taxes online late Part Purpose I • Electing the section 179 deduction • Figuring the maximum section 179 deduction for the current year • Figuring any section 179 deduction carryover to the next year II • Reporting the special depreciation allowance for property (other than listed property) placed in service during the tax year • Reporting depreciation deductions on property being depreciated under any method other than Modified Accelerated Cost Recovery System (MACRS) III • Reporting MACRS depreciation deductions for property placed in service before this year • Reporting MACRS depreciation deductions for property (other than listed property) placed in service during the current year IV • Summarizing other parts V • Reporting the special depreciation allowance for automobiles and other listed property • Reporting MACRS depreciation on automobiles and other listed property • Reporting the section 179 cost elected for automobiles and other listed property • Reporting information on the use of automobiles and other transportation vehicles VI • Reporting amortization deductions Section 481(a) adjustment. File 2009 taxes online late   If you file Form 3115 and change from an impermissible method to a permissible method of accounting for depreciation, you can make a section 481(a) adjustment for any unclaimed or excess amount of allowable depreciation. File 2009 taxes online late The adjustment is the difference between the total depreciation actually deducted for the property and the total amount allowable prior to the year of change. File 2009 taxes online late If no depreciation was deducted, the adjustment is the total depreciation allowable prior to the year of change. File 2009 taxes online late A negative section 481(a) adjustment results in a decrease in taxable income. File 2009 taxes online late It is taken into account in the year of change and is reported on your business tax returns as “other expenses. File 2009 taxes online late ” A positive section 481(a) adjustment results in an increase in taxable income. File 2009 taxes online late It is generally taken into account over 4 tax years and is reported on your business tax returns as “other income. File 2009 taxes online late ” However, you can elect to use a one-year adjustment period and report the adjustment in the year of change if the total adjustment is less than $25,000. File 2009 taxes online late Make the election by completing the appropriate line on Form 3115. File 2009 taxes online late   If you file a Form 3115 and change from one permissible method to another permissible method, the section 481(a) adjustment is zero. File 2009 taxes online late Prev  Up  Next   Home   More Online Publications