Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

File 2011 Taxes Free

Irs GovAmend Tax Return Already FiledHrblock Free FileCan I Efile My 2011 Tax Return1040 Form 20112012 Irs Tax Forms 1040aHow To Fill Out An Amended Tax FormFree File State And Federal TaxesMa Taxes Ng Army Mil2012 1040 EzFree 1040x FormExample Of Form 1040x Amended Tax ReturnState Income Tax HelpHow Do I File My 2011 Taxes LateHow To File Taxes Self Employed1040ez Tax InstructionsVita Tax PreparationFree Online 2012 Tax Return1040ez Irs GovEitc2010 Income Tax FormsFree File 2012 TaxesFile Your State Taxes For FreeState Tax PrepTurbotax Deluxe Federal E File State 20121099xFiling 1040ez OnlineFree Turbo Tax FilingFree E File 20112012 Turbotax FreeHow To Fill Out 1040x FormStandard Deduction For Form 1040Where To File 2012 Federal Tax ReturnWww.irs.gov/form1040xAmending 2010 Tax ReturnI Need To File My 2011 Taxes For Free OnlineFree Income Tax PreparationFile State Return OnlyWww Freefillableforms ComFiling 2010 Taxes Online

File 2011 Taxes Free

File 2011 taxes free 3. File 2011 taxes free   Farm Income Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Schedule F (Form 1040) Sales of Farm ProductsSchedule F. File 2011 taxes free Form 4797. File 2011 taxes free Sales Caused by Weather-Related Conditions Rents (Including Crop Shares)Crop Shares Agricultural Program PaymentsCommodity Credit Corporation (CCC) Loans Conservation Reserve Program (CRP) Crop Insurance and Crop Disaster Payments Feed Assistance and Payments Cost-Sharing Exclusion (Improvements) Payments Under the Farm Security and Rural Investment Act of 2002 and Under the Food, Conservation, and Energy Act of 2008 Tobacco Quota Buyout Program Payments Other Payments Payment to More Than One Person Income From CooperativesPatronage Dividends Per-Unit Retain Certificates Cancellation of DebtGeneral Rule Exceptions Exclusions Income From Other SourcesSod. File 2011 taxes free Granting the right to remove deposits. File 2011 taxes free Income Averaging for FarmersElected Farm Income (EFI) How To Figure the Tax Effect on Other Tax Determinations Tax for Certain Children Who Have Unearned Income Alternative Minimum Tax (AMT) Schedule J Introduction You may receive income from many sources. File 2011 taxes free You must report the income from all the different sources on your tax return, unless it is excluded by law. File 2011 taxes free Where you report the income on your tax return depends on its source. File 2011 taxes free This chapter discusses farm income you report on Schedule F (Form 1040), Profit or Loss From Farming. File 2011 taxes free For information on where to report other income, see the Instructions for Form 1040, U. File 2011 taxes free S. File 2011 taxes free Individual Income Tax Return. File 2011 taxes free Accounting method. File 2011 taxes free   The rules discussed in this chapter assume you use the cash method of accounting. File 2011 taxes free Under the cash method, you generally include an item of income in gross income in the year you receive it. File 2011 taxes free See Cash Method in chapter 2. File 2011 taxes free   If you use an accrual method of accounting, different rules may apply to your situation. File 2011 taxes free See Accrual Method in chapter 2. File 2011 taxes free Topics - This chapter discusses: Schedule F Sales of farm products Rents (including crop shares) Agricultural program payments Income from cooperatives Cancellation of debt Income from other sources Income averaging for farmers Useful Items - You may want to see: Publication 525 Taxable and Nontaxable Income 550 Investment Income and Expenses 908 Bankruptcy Tax Guide 925 Passive Activity and At-Risk Rules 4681 Canceled Debts, Foreclosures, Repossessions, and Abandonments Form (and Instructions) 982 Reduction of Tax Attributes Due to Discharge of Indebtedness Sch E (Form 1040) Supplemental Income and Loss Sch J (Form 1040) Income Averaging for Farmers and Fishermen 1099-G Certain Government Payments 1099-PATR Taxable Distributions Received From Cooperatives 4797 Sales of Business Property 4835 Farm Rental Income and Expenses See chapter 16 for information about getting publications and forms. File 2011 taxes free Schedule F (Form 1040) Individuals, trusts, and partnerships report farm income on Schedule F (Form 1040), Profit or Loss From Farming. File 2011 taxes free Use this schedule to figure the net profit or loss from regular farming operations. File 2011 taxes free Income from farming reported on Schedule F includes amounts you receive from cultivating, operating, or managing a farm for gain or profit, either as owner or tenant. File 2011 taxes free This includes income from operating a stock, dairy, poultry, fish, fruit, or truck farm and income from operating a plantation, ranch, range, or orchard. File 2011 taxes free It also includes income from the sale of crop shares if you materially participate in producing the crop. File 2011 taxes free See Rents (Including Crop Shares) , later. File 2011 taxes free Income received from operating a nursery, which specializes in growing ornamental plants, is considered to be income from farming. File 2011 taxes free Income reported on Schedule F does not include gains or losses from sales or other dispositions of the following farm assets. File 2011 taxes free Land. File 2011 taxes free Depreciable farm equipment. File 2011 taxes free Buildings and structures. File 2011 taxes free Livestock held for draft, breeding, sport, or dairy purposes. File 2011 taxes free Gains and losses from most dispositions of farm assets are discussed in chapters 8 and 9. File 2011 taxes free Gains and losses from casualties, thefts, and condemnations are discussed in chapter 11. File 2011 taxes free Sales of Farm Products Where to report. File 2011 taxes free    Table 3-1 shows where to report the sale of farm products on your tax return. File 2011 taxes free Schedule F. File 2011 taxes free   Amounts received from the sales of products you raised on your farm for sale (or bought for resale), such as livestock, produce, or grains, are reported on Schedule F. File 2011 taxes free This includes money and the fair market value of any property or services you receive. File 2011 taxes free When you sell farm products bought for resale, your profit or loss is the difference between your selling price (money plus the fair market value of any property) and your basis in the item (usually the cost). File 2011 taxes free See chapter 6 for information on the basis of assets. File 2011 taxes free You generally report these amounts on Schedule F for the year you receive payment. File 2011 taxes free Example. File 2011 taxes free In 2012, you bought 20 feeder calves for $11,000 for resale. File 2011 taxes free You sold them in 2013 for $21,000. File 2011 taxes free You report the $21,000 sales price on Schedule F, line 1b, subtract your $11,000 basis on line 1d, and report the resulting $10,000 profit on line 1e. File 2011 taxes free Form 4797. File 2011 taxes free   Sales of livestock held for draft, breeding, sport, or dairy purposes may result in ordinary or capital gains or losses, depending on the circumstances. File 2011 taxes free In either case, you should always report these sales on Form 4797 instead of Schedule F. File 2011 taxes free See Livestock under Ordinary or Capital Gain or Loss in chapter 8. File 2011 taxes free Animals you do not hold primarily for sale are considered business assets of your farm. File 2011 taxes free Table 3-1. File 2011 taxes free Where To Report Sales of Farm Products Item Sold Schedule F Form 4797 Farm products raised for sale X   Farm products bought for resale X   Farm assets not held primarily for sale, such as livestock held for draft, breeding, sport, or dairy purposes (bought or raised)   X Sale by agent. File 2011 taxes free   If your agent sells your farm products, you have constructive receipt of the income when your agent receives payment and you must include the net proceeds from the sale in gross income for the year the agent receives payment. File 2011 taxes free This applies even if your agent pays you in a later year. File 2011 taxes free For a discussion on constructive receipt of income, see Cash Method under Accounting Methods in chapter 2. File 2011 taxes free Sales Caused by Weather-Related Conditions If you sell or exchange more livestock, including poultry, than you normally would in a year because of a drought, flood, or other weather-related condition, you may be able to postpone reporting the gain from the additional animals until the next year. File 2011 taxes free You must meet all the following conditions to qualify. File 2011 taxes free Your principal trade or business is farming. File 2011 taxes free You use the cash method of accounting. File 2011 taxes free You can show that, under your usual business practices, you would not have sold or exchanged the additional animals this year except for the weather-related condition. File 2011 taxes free The weather-related condition caused an area to be designated as eligible for assistance by the federal government. File 2011 taxes free Sales or exchanges made before an area became eligible for federal assistance qualify if the weather-related condition that caused the sale or exchange also caused the area to be designated as eligible for federal assistance. File 2011 taxes free The designation can be made by the President, the Department of Agriculture (or any of its agencies), or by other federal departments or agencies. File 2011 taxes free A weather-related sale or exchange of livestock (other than poultry) held for draft, breeding, or dairy purposes may be an involuntary conversion. File 2011 taxes free See Other Involuntary Conversions in chapter 11. File 2011 taxes free Usual business practice. File 2011 taxes free   You must determine the number of animals you would have sold had you followed your usual business practice in the absence of the weather-related condition. File 2011 taxes free Do this by considering all the facts and circumstances, but do not take into account your sales in any earlier year for which you postponed the gain. File 2011 taxes free If you have not yet established a usual business practice, rely on the usual business practices of similarly situated farmers in your general region. File 2011 taxes free Connection with affected area. File 2011 taxes free   The livestock does not have to be raised or sold in an area affected by a weather-related condition for the postponement to apply. File 2011 taxes free However, the sale must occur solely because of a weather-related condition that affected the water, grazing, or other requirements of the livestock. File 2011 taxes free This requirement generally will not be met if the costs of feed, water, or other requirements of the livestock affected by the weather-related condition are not substantial in relation to the total costs of holding the livestock. File 2011 taxes free Classes of livestock. File 2011 taxes free   You must figure the amount to be postponed separately for each generic class of animals—for example, hogs, sheep, and cattle. File 2011 taxes free Do not separate animals into classes based on age, sex, or breed. File 2011 taxes free Amount to be postponed. File 2011 taxes free   Follow these steps to figure the amount of gain to be postponed for each class of animals. File 2011 taxes free Divide the total income realized from the sale of all livestock in the class during the tax year by the total number of such livestock sold. File 2011 taxes free For this purpose, do not treat any postponed gain from the previous year as income received from the sale of livestock. File 2011 taxes free Multiply the result in (1) by the excess number of such livestock sold solely because of weather-related conditions. File 2011 taxes free Example. File 2011 taxes free You are a calendar year taxpayer and you normally sell 100 head of beef cattle a year. File 2011 taxes free As a result of drought, you sold 135 head during 2012. File 2011 taxes free You realized $70,200 from the sale. File 2011 taxes free On August 9, 2012, as a result of drought, the affected area was declared a disaster area eligible for federal assistance. File 2011 taxes free The income you can postpone until 2013 is $18,200 [($70,200 ÷ 135) × 35]. File 2011 taxes free How to postpone gain. File 2011 taxes free   To postpone gain, attach a statement to your tax return for the year of the sale. File 2011 taxes free The statement must include your name and address and give the following information for each class of livestock for which you are postponing gain. File 2011 taxes free A statement that you are postponing gain under Internal Revenue Code (IRC) section 451(e). File 2011 taxes free Evidence of the weather-related conditions that forced the early sale or exchange of the livestock and the date, if known, on which an area was designated as eligible for assistance by the federal government because of weather-related conditions. File 2011 taxes free A statement explaining the relationship of the area affected by the weather-related condition to your early sale or exchange of the livestock. File 2011 taxes free The number of animals sold in each of the 3 preceding years. File 2011 taxes free The number of animals you would have sold in the tax year had you followed your normal business practice in the absence of weather-related conditions. File 2011 taxes free The total number of animals sold and the number sold because of weather-related conditions during the tax year. File 2011 taxes free A computation, as described above, of the income to be postponed for each class of livestock. File 2011 taxes free   Generally, you must file the statement and the return by the due date of the return, including extensions. File 2011 taxes free However, for sales or exchanges treated as an involuntary conversion from weather-related sales of livestock in an area eligible for federal assistance (discussed in chapter 11), you can file this statement at any time during the replacement period. File 2011 taxes free For other sales or exchanges, if you timely filed your return for the year without postponing gain, you can still postpone gain by filing an amended return within 6 months of the due date of the return (excluding extensions). File 2011 taxes free Attach the statement to the amended return and write “Filed pursuant to section 301. File 2011 taxes free 9100-2” at the top of the amended return. File 2011 taxes free File the amended return at the same address you filed the original return. File 2011 taxes free Once you have filed the statement, you can cancel your postponement of gain only with the approval of the IRS. File 2011 taxes free Rents (Including Crop Shares) The rent you receive for the use of your farmland is generally rental income, not farm income. File 2011 taxes free However, if you materially participate in farming operations on the land, the rent is farm income. File 2011 taxes free See Landlord Participation in Farming in chapter 12. File 2011 taxes free Pasture income and rental. File 2011 taxes free   If you pasture someone else's livestock and take care of them for a fee, the income is from your farming business. File 2011 taxes free You must enter it as Other income on Schedule F. File 2011 taxes free If you simply rent your pasture for a flat cash amount without providing services, report the income as rent on Part I of Schedule E (Form 1040), Supplemental Income and Loss. File 2011 taxes free Crop Shares You must include rent you receive in the form of crop shares in income in the year you convert the shares to money or the equivalent of money. File 2011 taxes free It does not matter whether you use the cash method of accounting or an accrual method of accounting. File 2011 taxes free If you materially participate in operating a farm from which you receive rent in the form of crop shares or livestock, the rental income is included in self-employment income. File 2011 taxes free See Landlord Participation in Farming in chapter 12. File 2011 taxes free Report the rental income on Schedule F. File 2011 taxes free If you do not materially participate in operating the farm, report this income on Form 4835 and carry the net income or loss to Schedule E (Form 1040). File 2011 taxes free The income is not included in self-employment income. File 2011 taxes free Crop shares you use to feed livestock. File 2011 taxes free   Crop shares you receive as a landlord and feed to your livestock are considered converted to money when fed to the livestock. File 2011 taxes free You must include the fair market value of the crop shares in income at that time. File 2011 taxes free You are entitled to a business expense deduction for the livestock feed in the same amount and at the same time you include the fair market value of the crop share as rental income. File 2011 taxes free Although these two transactions cancel each other for figuring adjusted gross income on Form 1040, they may be necessary to figure your self-employment tax. File 2011 taxes free See  chapter 12. File 2011 taxes free Crop shares you give to others (gift). File 2011 taxes free   Crop shares you receive as a landlord and give to others are considered converted to money when you make the gift. File 2011 taxes free You must report the fair market value of the crop share as income, even though someone else receives payment for the crop share. File 2011 taxes free Example. File 2011 taxes free A tenant farmed part of your land under a crop-share arrangement. File 2011 taxes free The tenant harvested and delivered the crop in your name to an elevator company. File 2011 taxes free Before selling any of the crop, you instructed the elevator company to cancel your warehouse receipt and make out new warehouse receipts in equal amounts of the crop in the names of your children. File 2011 taxes free They sell their crop shares in the following year and the elevator company makes payments directly to your children. File 2011 taxes free In this situation, you are considered to have received rental income and then made a gift of that income. File 2011 taxes free You must include the fair market value of the crop shares in your income for the tax year you gave the crop shares to your children. File 2011 taxes free Crop share loss. File 2011 taxes free   If you are involved in a rental or crop-share lease arrangement, any loss from these activities may be subject to the limits under the passive loss rules. File 2011 taxes free See Publication 925 for information on these rules. File 2011 taxes free Agricultural Program Payments You must include in income most government payments, such as those for approved conservation practices, direct payments, and counter-cyclical payments, whether you receive them in cash, materials, services, or commodity certificates. File 2011 taxes free However, you can exclude from income some payments you receive under certain cost-sharing conservation programs. File 2011 taxes free See Cost-Sharing Exclusion (Improvements) , later. File 2011 taxes free Report the agricultural program payment on the appropriate line of Schedule F, Part I. File 2011 taxes free Report the full amount even if you return a government check for cancellation, refund any of the payment you receive, or the government collects all or part of the payment from you by reducing the amount of some other payment or Commodity Credit Corporation (CCC) loan. File 2011 taxes free However, you can deduct the amount you refund or return or that reduces some other payment or loan to you. File 2011 taxes free Claim the deduction on Schedule F for the year of repayment or reduction. File 2011 taxes free Commodity Credit Corporation (CCC) Loans Generally, you do not report loans you receive as income. File 2011 taxes free However, if you pledge part or all of your production to secure a CCC loan, you can treat the loan as if it were a sale of the crop and report the loan proceeds as income in the year you receive them. File 2011 taxes free You do not need approval from the IRS to adopt this method of reporting CCC loans. File 2011 taxes free Once you report a CCC loan as income for the year received, you generally must report all CCC loans in that year and later years in the same way. File 2011 taxes free However, you can obtain for your tax year an automatic consent to change your method of accounting for loans received from the CCC, from including the loan amount in gross income for the tax year in which the loan is received to treating the loan amount as a loan. File 2011 taxes free For more information, see Part I of the Instructions for Form 3115 and Revenue Procedure 2008-52. File 2011 taxes free Revenue Procedure 2008-52, 2008-36 I. File 2011 taxes free R. File 2011 taxes free B. File 2011 taxes free 587, is available at  www. File 2011 taxes free irs. File 2011 taxes free gov/irb/2008-36_IRB/ar09. File 2011 taxes free html. File 2011 taxes free You can request income tax withholding from CCC loan payments you receive. File 2011 taxes free Use Form W-4V, Voluntary Withholding Request. File 2011 taxes free See chapter 16 for information about ordering the form. File 2011 taxes free To elect to report a CCC loan as income, include the loan proceeds as income on Schedule F, line 7a, for the year you receive it. File 2011 taxes free Attach a statement to your return showing the details of the loan. File 2011 taxes free You must file the statement and the return by the due date of the return, including extensions. File 2011 taxes free If you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). File 2011 taxes free Attach the statement to the amended return and write “Filed pursuant to section 301. File 2011 taxes free 9100-2” at the top of the return. File 2011 taxes free File the amended return at the same address you filed the original return. File 2011 taxes free When you make this election, the amount you report as income becomes your basis in the commodity. File 2011 taxes free See chapter 6 for information on the basis of assets. File 2011 taxes free If you later repay the loan, redeem the pledged commodity, and sell it, you report as income at the time of sale the sale proceeds minus your basis in the commodity. File 2011 taxes free If the sale proceeds are less than your basis in the commodity, you can report the difference as a loss on Schedule F. File 2011 taxes free If you forfeit the pledged crops to the CCC in full payment of the loan, the forfeiture is treated for tax purposes as a sale of the crops. File 2011 taxes free If you did not report the loan proceeds as income for the year you received them, you must include them in your income for the year of the forfeiture. File 2011 taxes free Form 1099-A. File 2011 taxes free   If you forfeit pledged crops to the CCC in full payment of a loan, you may receive a Form 1099-A, Acquisition or Abandonment of Secured Property. File 2011 taxes free “CCC” should be shown in box 6. File 2011 taxes free The amount of any CCC loan outstanding when you forfeited your commodity should also be indicated on the form. File 2011 taxes free Market Gain Under the CCC nonrecourse marketing assistance loan program, your repayment amount for a loan secured by your pledge of an eligible commodity is generally based on the lower of the loan rate or the prevailing world market price for the commodity on the date of repayment. File 2011 taxes free If you repay the loan when the world price is lower, the difference between that repayment amount and the original loan amount is market gain. File 2011 taxes free Whether you use cash or CCC certificates to repay the loan, you will receive a Form 1099-G showing the market gain you realized. File 2011 taxes free Market gain should be reported as follows. File 2011 taxes free If you elected to include the CCC loan in income in the year you received it, do not include the market gain in income. File 2011 taxes free However, adjust the basis of the commodity for the amount of the market gain. File 2011 taxes free If you did not include the CCC loan in income in the year received, include the market gain in your income. File 2011 taxes free The following examples show how to report market gain. File 2011 taxes free Example 1. File 2011 taxes free Mike Green is a cotton farmer. File 2011 taxes free He uses the cash method of accounting and files his tax return on a calendar year basis. File 2011 taxes free He has deducted all expenses incurred in producing the cotton and has a zero basis in the commodity. File 2011 taxes free In 2012, Mike pledged 1,000 pounds of cotton as collateral for a CCC loan of $2,000 (a loan rate of $2. File 2011 taxes free 00 per pound). File 2011 taxes free In 2013, he repaid the loan and redeemed the cotton for $1,500 when the world price was $1. File 2011 taxes free 50 per pound (lower than the loan amount). File 2011 taxes free Later in 2013, he sold the cotton for $2,500. File 2011 taxes free The market gain on the redemption was $. File 2011 taxes free 50 ($2. File 2011 taxes free 00 – $1. File 2011 taxes free 50) per pound. File 2011 taxes free Mike realized total market gain of $500 ($. File 2011 taxes free 50 x 1,000 pounds). File 2011 taxes free How he reports this market gain and figures his gain or loss from the sale of the cotton depends on whether he included CCC loans in income in 2012. File 2011 taxes free Included CCC loan. File 2011 taxes free   Mike reported the $2,000 CCC loan as income for 2012 on Schedule F, line 1b, so he is treated as if he sold the cotton for $2,000 when he pledged it and repurchased the cotton for $1,500 when he redeemed it. File 2011 taxes free The $500 market gain is not recognized on the redemption. File 2011 taxes free He reports it for 2013 as an agricultural program payment on Schedule F, line 4a, but does not include it as a taxable amount on line 4b. File 2011 taxes free   Mike's basis in the cotton after he redeemed it was $1,500, which is the redemption (repurchase) price paid for the cotton. File 2011 taxes free His gain from the sale is $1,000 ($2,500 – $1,500). File 2011 taxes free He reports the $1,000 gain as income for 2013 on Schedule F, line 1b. File 2011 taxes free Excluded CCC loan. File 2011 taxes free   Mike has income of $500 from market gain in 2013. File 2011 taxes free He reports it on Schedule F, lines 4a and 4b. File 2011 taxes free His basis in the cotton is zero, so his gain from its sale is $2,500. File 2011 taxes free He reports the $2,500 gain as income for 2013 on Schedule F, line 1b. File 2011 taxes free Example 2. File 2011 taxes free The facts are the same as in Example 1 except that, instead of selling the cotton for $2,500 after redeeming it, Mike entered into an option-to-purchase contract with a cotton buyer before redeeming the cotton. File 2011 taxes free Under that contract, Mike authorized the cotton buyer to pay the CCC loan on Mike's behalf. File 2011 taxes free In 2013, the cotton buyer repaid the loan for $1,500 and immediately exercised his option, buying the cotton for $1,500. File 2011 taxes free How Mike reports the $500 market gain on the redemption of the cotton and figures his gain or loss from its sale depends on whether he included CCC loans in income in 2012. File 2011 taxes free Included CCC loan. File 2011 taxes free   As in Example 1, Mike is treated as though he sold the cotton for $2,000 when he pledged it and repurchased the cotton for $1,500 when the cotton buyer redeemed it for him. File 2011 taxes free The $500 market gain is not recognized on the redemption. File 2011 taxes free Mike reports it for 2013 as an agricultural program payment on Schedule F, line 4a, but does not include it as a taxable amount on line 4b. File 2011 taxes free   Also, as in Example 1, Mike's basis in the cotton when the cotton buyer redeemed it for him was $1,500. File 2011 taxes free Mike has no gain or loss on its sale to the cotton buyer for that amount. File 2011 taxes free Excluded CCC loan. File 2011 taxes free   As in Example 1, Mike has income of $500 from market gain in 2013. File 2011 taxes free He reports it on Schedule F, lines 4a and 4b. File 2011 taxes free His basis in the cotton is zero, so his gain from its sale is $1,500. File 2011 taxes free He reports the $1,500 gain as income for 2013 on Schedule F, line 1b. File 2011 taxes free Conservation Reserve Program (CRP) Under the Conservation Reserve Program (CRP), if you own or operate highly erodible or other specified cropland, you may enter into a long-term contract with the USDA, agreeing to convert to a less intensive use of that cropland. File 2011 taxes free You must include the annual rental payments and any one-time incentive payment you receive under the program on Schedule F, lines 4a and 4b. File 2011 taxes free Cost-share payments you receive may qualify for the cost-sharing exclusion. File 2011 taxes free See Cost-Sharing Exclusion (Improvements) , later. File 2011 taxes free CRP payments are reported to you on Form 1099-G. File 2011 taxes free Individuals who are receiving Social Security retirement or disability benefits may exclude CRP payments when calculating self-employment tax. File 2011 taxes free See the instructions for Schedule SE (Form 1040). File 2011 taxes free Crop Insurance and Crop Disaster Payments You must include in income any crop insurance proceeds you receive as the result of physical crop damage or reduction of crop revenue, or both. File 2011 taxes free You generally include them in the year you receive them. File 2011 taxes free Treat as crop insurance proceeds the crop disaster payments you receive from the federal government as the result of destruction or damage to crops, or the inability to plant crops, because of drought, flood, or any other natural disaster. File 2011 taxes free You can request income tax withholding from crop disaster payments you receive from the federal government. File 2011 taxes free Use Form W-4V, Voluntary Withholding Request. File 2011 taxes free See chapter 16 for information about ordering the form. File 2011 taxes free Election to postpone reporting until the following year. File 2011 taxes free   You can postpone reporting some or all crop insurance proceeds as income until the year following the year the physical damage occurred if you meet all the following conditions. File 2011 taxes free You use the cash method of accounting. File 2011 taxes free You receive the crop insurance proceeds in the same tax year the crops are damaged. File 2011 taxes free You can show that under your normal business practice you would have included income from the damaged crops in any tax year following the year the damage occurred. File 2011 taxes free   Deferral is not permitted for proceeds received from revenue insurance policies. File 2011 taxes free   To postpone reporting some or all crop insurance proceeds received in 2013, report the amount you received on Schedule F, line 6a, but do not include it as a taxable amount on line 6b. File 2011 taxes free Check the box on line 8c and attach a statement to your tax return. File 2011 taxes free The statement must include your name and address and contain the following information. File 2011 taxes free A statement that you are making an election under IRC section 451(d) and Regulations section 1. File 2011 taxes free 451-6. File 2011 taxes free The specific crop or crops physically destroyed or damaged. File 2011 taxes free A statement that under your normal business practice you would have included income from some or all of the destroyed or damaged crops in gross income for a tax year following the year the crops were destroyed or damaged. File 2011 taxes free The cause of the physical destruction or damage and the date or dates it occurred. File 2011 taxes free The total payments you received from insurance carriers, itemized for each specific crop, and the date you received each payment. File 2011 taxes free The name of each insurance carrier from whom you received payments. File 2011 taxes free   One election covers all crops representing a single trade or business. File 2011 taxes free If you have more than one farming business, make a separate election for each one. File 2011 taxes free For example, if you operate two separate farms on which you grow different crops and you keep separate books for each farm, you should make two separate elections to postpone reporting insurance proceeds you receive for crops grown on each of your farms. File 2011 taxes free   An election is binding for the year unless the IRS approves your request to change it. File 2011 taxes free To request IRS approval to change your election, write to the IRS at the following address giving your name, address, identification number, the year you made the election, and your reasons for wanting to change it. File 2011 taxes free Ogden Submission Processing Center P. File 2011 taxes free O. File 2011 taxes free Box 9941 Ogden, UT 84409 Feed Assistance and Payments The Disaster Assistance Act of 1988 authorizes programs to provide feed assistance, reimbursement payments, and other benefits to qualifying livestock producers if the Secretary of Agriculture determines that, because of a natural disaster, a livestock emergency exists. File 2011 taxes free These programs include partial reimbursement for the cost of purchased feed and for certain transportation expenses. File 2011 taxes free They also include the donation or sale at a below-market price of feed owned by the Commodity Credit Corporation. File 2011 taxes free Include in income: The market value of donated feed, The difference between the market value and the price you paid for feed you buy at below-market prices, and Any cost reimbursement you receive. File 2011 taxes free You must include these benefits in income in the year you receive them. File 2011 taxes free You cannot postpone reporting them under the rules explained earlier for weather-related sales of livestock or crop insurance proceeds. File 2011 taxes free Report the benefits on Schedule F, Part I, as agricultural program payments. File 2011 taxes free You can usually take a current deduction for the same amount as a feed expense. File 2011 taxes free Cost-Sharing Exclusion (Improvements) You can exclude from your income part or all of a payment you receive under certain federal or state cost-sharing conservation, reclamation, and restoration programs. File 2011 taxes free A payment is any economic benefit you get as a result of an improvement. File 2011 taxes free However, this exclusion applies only to that part of a payment that meets all three of the following tests. File 2011 taxes free It was for a capital expense. File 2011 taxes free You cannot exclude any part of a payment for an expense you can deduct in the year you pay or incur it. File 2011 taxes free You must include the payment for a deductible expense in income, and you can take any offsetting deduction. File 2011 taxes free See chapter 5 for information on deducting soil and water conservation expenses. File 2011 taxes free It does not substantially increase your annual income from the property for which it is made. File 2011 taxes free An increase in annual income is substantial if it is more than the greater of the following amounts. File 2011 taxes free 10% of the average annual income derived from the affected property before receiving the improvement. File 2011 taxes free $2. File 2011 taxes free 50 times the number of affected acres. File 2011 taxes free The Secretary of Agriculture certified that the payment was primarily made for conserving soil and water resources, protecting or restoring the environment, improving forests, or providing a habitat for wildlife. File 2011 taxes free Qualifying programs. File 2011 taxes free   If the three tests listed above are met, you can exclude part or all of the payments from the following programs. File 2011 taxes free The rural clean water program authorized by the Federal Water Pollution Control Act. File 2011 taxes free The rural abandoned mine program authorized by the Surface Mining Control and Reclamation Act of 1977. File 2011 taxes free The water bank program authorized by the Water Bank Act. File 2011 taxes free The emergency conservation measures program authorized by title IV of the Agricultural Credit Act of 1978. File 2011 taxes free The agricultural conservation program authorized by the Soil Conservation and Domestic Allotment Act. File 2011 taxes free The great plains conservation program authorized by the Soil Conservation and Domestic Policy Act. File 2011 taxes free The resource conservation and development program authorized by the Bankhead-Jones Farm Tenant Act and by the Soil Conservation and Domestic Allotment Act. File 2011 taxes free Certain small watershed programs, listed later. File 2011 taxes free Any program of a state, possession of the United States, a political subdivision of any of these, or of the District of Columbia under which payments are made to individuals primarily for conserving soil, protecting or restoring the environment, improving forests, or providing a habitat for wildlife. File 2011 taxes free Several state programs have been approved. File 2011 taxes free For information about the status of those programs, contact the state offices of the Farm Service Agency (FSA) and the Natural Resources and Conservation Service (NRCS). File 2011 taxes free Small watershed programs. File 2011 taxes free   If the three tests listed earlier are met, you can exclude part or all of the payments you receive under the following programs for improvements made in connection with a watershed. File 2011 taxes free The programs under the Watershed Protection and Flood Prevention Act. File 2011 taxes free The flood prevention projects under the Flood Control Act of 1944. File 2011 taxes free The Emergency Watershed Protection Program under the Flood Control Act of 1950. File 2011 taxes free Certain programs under the Colorado River Basin Salinity Control Act. File 2011 taxes free The Wetlands Reserve Program authorized by the Food Security Act of 1985, the Federal Agriculture Improvement and Reform Act of 1996 and the Farm Security and Rural Investment Act of 2002. File 2011 taxes free The Environmental Quality Incentives Program (EQIP) authorized by the Federal Agriculture Improvement and Reform Act of 1996. File 2011 taxes free The Wildlife Habitat Incentives Program (WHIP) authorized by the Federal Agriculture Improvement and Reform Act of 1996. File 2011 taxes free The Soil and Water Conservation Assistance Program authorized by the Agricultural Risk Protection Act of 2000. File 2011 taxes free The Agricultural Management Assistance Program authorized by the Agricultural Risk Protection Act of 2000. File 2011 taxes free The Conservation Reserve Program authorized by the Food Security Act of 1985 and the Federal Agriculture Improvement and Reform Act of 1996. File 2011 taxes free The Forest Land Enhancement Program authorized under the Farm Security and Rural Investment Act of 2002. File 2011 taxes free The Conservation Security Program authorized by the Food Security Act of 1985. File 2011 taxes free The Forest Health Protection Program (FHPP) authorized by the Cooperative Forestry Assistance Act of 1978. File 2011 taxes free Income realized. File 2011 taxes free   The gross income you realize upon getting an improvement under these cost-sharing programs is the value of the improvement reduced by the sum of the excludable portion and your share of the cost of the improvement (if any). File 2011 taxes free Value of the improvement. File 2011 taxes free   You determine the value of the improvement by multiplying its fair market value (defined in chapter 6) by a fraction. File 2011 taxes free The numerator of the fraction is the total cost of the improvement (all amounts paid either by you or by the government for the improvement) reduced by the sum of the following items. File 2011 taxes free Any government payments under a program not listed earlier. File 2011 taxes free Any part of a government payment under a program listed earlier that the Secretary of Agriculture has not certified as primarily for conservation. File 2011 taxes free Any government payment to you for rent or for your services. File 2011 taxes free The denominator of the fraction is the total cost of the improvement. File 2011 taxes free Excludable portion. File 2011 taxes free   The excludable portion is the present fair market value of the right to receive annual income from the affected acreage of the greater of the following amounts. File 2011 taxes free 10% of the prior average annual income from the affected acreage. File 2011 taxes free The prior average annual income is the average of the gross receipts from the affected acreage for the last 3 tax years before the tax year in which you started to install the improvement. File 2011 taxes free $2. File 2011 taxes free 50 times the number of affected acres. File 2011 taxes free The calculation of present fair market value of the right to receive annual income is too complex to discuss in this publication. File 2011 taxes free You may need to consult your tax advisor for assistance. File 2011 taxes free Example. File 2011 taxes free One hundred acres of your land was reclaimed under a rural abandoned mine program contract with the Natural Resources Conservation Service of the USDA. File 2011 taxes free The total cost of the improvement was $500,000. File 2011 taxes free The USDA paid $490,000. File 2011 taxes free You paid $10,000. File 2011 taxes free The value of the cost-sharing improvement is $15,000. File 2011 taxes free The present fair market value of the right to receive the annual income described in (1) above is $1,380, and the present fair market value of the right to receive the annual income described in (2) is $1,550. File 2011 taxes free The excludable portion is the greater amount, $1,550. File 2011 taxes free You figure the amount to include in gross income as follows: Value of cost-sharing improvement $15,000 Minus: Your share $10,000     Excludable portion 1,550 11,550 Amount included in income $ 3,450 Effects of the exclusion. File 2011 taxes free   When you figure the basis of property you acquire or improve using cost-sharing payments excluded from income, subtract the excluded payments from your capital costs. File 2011 taxes free Any payment excluded from income is not part of your basis. File 2011 taxes free In the example above, the increase in basis is $500,000 – $490,000 + $3,450 = $13,450. File 2011 taxes free   In addition, you cannot take depreciation, amortization, or depletion deductions for the part of the cost of the property for which you receive cost-sharing payments you exclude from income. File 2011 taxes free How to report the exclusion. File 2011 taxes free   Attach a statement to your tax return (or amended return) for the tax year you receive the last government payment for the improvement. File 2011 taxes free The statement must include the following information. File 2011 taxes free The dollar amount of the cost funded by the government payment. File 2011 taxes free The value of the improvement. File 2011 taxes free The amount you are excluding. File 2011 taxes free   Report the total cost-sharing payments you receive on Schedule F, line 4a, and the taxable amount on line 4b. File 2011 taxes free Recapture. File 2011 taxes free   If you dispose of the property within 20 years after you received the excluded payments, you must treat as ordinary income part or all of the cost-sharing payments you excluded. File 2011 taxes free In the above example, if the 100 acres were sold within 20 years of the exclusion for a gain of $2,000, $1,550 of that amount would be included in ordinary income. File 2011 taxes free You must report the recapture on Form 4797. File 2011 taxes free See Section 1255 property under Other Gains in chapter 9. File 2011 taxes free Electing not to exclude payments. File 2011 taxes free   You can elect not to exclude all or part of any payments you receive under these programs. File 2011 taxes free If you make this election for all of these payments, none of the above restrictions and rules apply. File 2011 taxes free You must make this election by the due date, including extensions, for filing your return. File 2011 taxes free In the example above, an election not to exclude payments results in $5,000 included in income and a $15,000 increase in basis. File 2011 taxes free If you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). File 2011 taxes free Write “Filed pursuant to section 301. File 2011 taxes free 9100-2” at the top of the amended return and file it at the same address you filed the original return. File 2011 taxes free Payments Under the Farm Security and Rural Investment Act of 2002 and Under the Food, Conservation, and Energy Act of 2008 The Farm Security and Rural Investment Act of 2002 created two new types of payments—direct and counter-cyclical payments. File 2011 taxes free You must include these payments on Schedule F, lines 4a and 4b. File 2011 taxes free The Food, Conservation, and Energy Act of 2008 provides for direct and counter-cyclical payments (DCP) as well as Average Crop Revenue Election (ACRE) payments. File 2011 taxes free You must include these payments on Schedule F, lines 6a and 6b. File 2011 taxes free The American Taxpayer Relief Act of 2012, enacted on January 2, 2013, amends the Food, Conservation, and Energy Act of 2008 and provided a one-year extension for these payments. File 2011 taxes free Tobacco Quota Buyout Program Payments The Fair and Equitable Tobacco Reform Act of 2004, title VI of the American Jobs Creation Act of 2004, terminated the tobacco marketing quota program and the tobacco price support program. File 2011 taxes free As a result, the USDA offered to enter into contracts with eligible tobacco quota holders and growers to provide compensation for the lost value of the quotas and related price support. File 2011 taxes free If you are an eligible tobacco quota holder, your contract entitles you to receive total payments of $7 per pound of quota in 10 equal annual payments in fiscal years 2005 through 2014. File 2011 taxes free If you are an eligible tobacco grower, your contract entitles you to receive total payments of up to $3 per pound of quota in 10 equal annual payments in fiscal years 2005 through 2014. File 2011 taxes free Tobacco Quota Holders Contract payments you receive are considered proceeds from a sale of your tobacco quota as of the date on which you and the USDA enter into the contract. File 2011 taxes free Your taxable gain or loss is the total amount received for your quota reduced by any amount treated as interest (discussed below), over your adjusted basis. File 2011 taxes free The gain or loss is capital or ordinary depending on how you used the quota. File 2011 taxes free See Capital or ordinary gain or loss , later. File 2011 taxes free Report the entire gain on your income tax return for the tax year that includes the date you entered into the contract if you elect not to use the installment method. File 2011 taxes free Adjusted basis. File 2011 taxes free   The adjusted basis of your quota is determined differently depending on how you obtained the quota. File 2011 taxes free The basis of a quota derived from an original grant by the federal government is zero. File 2011 taxes free The basis of a purchased quota is the purchase price. File 2011 taxes free The basis of a quota received as a gift is generally the same as the donor's basis. File 2011 taxes free However, under certain circumstances, the basis is increased by the amount of gift taxes paid. File 2011 taxes free If the basis is greater than the fair market value of the quota at the time of the gift, the basis for determining loss is the fair market value. File 2011 taxes free The basis of an inherited quota is generally the fair market value of the quota at the time of the decedent's death. File 2011 taxes free Reduction of basis. File 2011 taxes free   You are required to reduce the basis of your tobacco quota by the following amounts. File 2011 taxes free Deductions you took for amortization, depletion, or depreciation. File 2011 taxes free Amounts you previously deducted as a loss because of a reduction in the number of pounds of tobacco allowable under the quota. File 2011 taxes free The entire cost of a purchased quota you deducted in an earlier year (which reduces your basis to zero). File 2011 taxes free Amount treated as interest. File 2011 taxes free   You must reduce your tobacco quota buyout program payment by the amount treated as interest. File 2011 taxes free The interest is reportable as ordinary income. File 2011 taxes free If payments total $3,000 or less, your total quota buyout program payment does not include any amount treated as interest and you are not required to reduce the total payment you receive. File 2011 taxes free   In all other cases, a portion of each payment may be treated as interest for federal tax purposes. File 2011 taxes free You may be required to reduce your total quota buyout program payment before you calculate your gain or loss. File 2011 taxes free For more information, see Notice 2005-57, 2005-32 I. File 2011 taxes free R. File 2011 taxes free B. File 2011 taxes free 267, available at www. File 2011 taxes free irs. File 2011 taxes free gov/irb/2005-32_IRB/ar13. File 2011 taxes free html. File 2011 taxes free Installment method. File 2011 taxes free   You may use the installment method to report a gain if you receive at least one payment after the close of your tax year. File 2011 taxes free Under the installment method, a portion of the gain is taken into account in each year in which a payment is received. File 2011 taxes free See chapter 10 for more information. File 2011 taxes free Capital or ordinary gain or loss. File 2011 taxes free   Whether your gain or loss is ordinary or capital depends on how you used the quota. File 2011 taxes free Quota used in the trade or business of farming. File 2011 taxes free   If you used the quota in the trade or business of farming and you held it for more than one year, you report the transaction as a section 1231 transaction on Form 4797. File 2011 taxes free See Section 1231 transactions in the Instructions for Form 4797 for detailed information on reporting section 1231 transactions. File 2011 taxes free Quota held for investment. File 2011 taxes free   If you held the quota for investment purposes, any gain or loss is capital gain or loss. File 2011 taxes free The same result also applies if you held the quota for the production of income, though not connected with a trade or business. File 2011 taxes free Gain treated as ordinary income. File 2011 taxes free   If you previously deducted any of the following items, some or all of the capital gain must be recharacterized and reported as ordinary income. File 2011 taxes free Any resulting capital gain is taxed as ordinary income up to the amount previously deducted. File 2011 taxes free The cost of acquiring a quota. File 2011 taxes free Amounts for amortization, depletion, or depreciation. File 2011 taxes free Amounts to reflect a reduction in the quota pounds. File 2011 taxes free   You should include the ordinary income on your return for the tax year even if you use the installment method to report the remainder of the gain. File 2011 taxes free Self-employment income. File 2011 taxes free   The tobacco quota buyout payments are not self-employment income. File 2011 taxes free Income averaging for farmers. File 2011 taxes free   The gain or loss resulting from the quota payments does not qualify for income averaging. File 2011 taxes free A tobacco quota is considered an interest in land. File 2011 taxes free Income averaging is not available for gain or loss arising from the sale or other disposition of land. File 2011 taxes free Involuntary conversion. File 2011 taxes free   The buyout of the tobacco quota is not an involuntary conversion. File 2011 taxes free Form 1099-S. File 2011 taxes free   A tobacco quota is considered an interest in land, so the USDA will generally report the total amount you receive under a contract on Form 1099-S, Proceeds From Real Estate Transactions, if the amount is $600 or more. File 2011 taxes free The USDA will generally report any portion of a payment treated as interest of $600 or more to you on Form 1099-INT, Interest Income, for the year in which the payment is made. File 2011 taxes free Like-kind exchange of quota. File 2011 taxes free   You may postpone reporting the gain or loss from tobacco quota buyout payments by entering into a like-kind exchange if you comply with the requirements of section 1031 and the regulations thereunder. File 2011 taxes free See Notice 2005-57 for more information. File 2011 taxes free Tobacco Growers Contract payments you receive are determined by reference to the amount of quota under which you produced (or planted) quota tobacco during the 2002, 2003, and 2004 tobacco marketing years and are prorated based on the number of years that you produced (or planted) quota tobacco during those years. File 2011 taxes free Taxation of payments to tobacco growers. File 2011 taxes free   Payments to growers replace ordinary income that would have been earned had the tobacco marketing quota and price support programs continued. File 2011 taxes free Individuals will generally report the payments as an Agricultural program payment on Schedule F. File 2011 taxes free If you are a landowner who does not materially participate in the operation or management of the farm and are receiving the grower payment because your farm rental income is based on the tobacco grown by a tenant, the grower payment should be reported on Form 4835. File 2011 taxes free Self-employment income. File 2011 taxes free   Payments to growers generally represent self-employment income. File 2011 taxes free If the grower is an individual carrying on a trade or business and deriving income (other than farm rental income properly reported on Form 4835) from that trade or business, the payments are net earnings from self-employment. File 2011 taxes free Income averaging for farmers. File 2011 taxes free   Payments to growers who are individuals qualify for farm income averaging. File 2011 taxes free Form 1099-G. File 2011 taxes free   If the amount received in a taxable year is $600 or more, the amount will generally be reported by the USDA on a Form 1099-G. File 2011 taxes free Other Payments You must include most other government program payments in income. File 2011 taxes free Fertilizer and Lime Include in income the value of fertilizer or lime you receive under a government program. File 2011 taxes free How to claim the offsetting deduction is explained under Fertilizer and Lime in chapter 4. File 2011 taxes free Improvements If government payments are based on improvements, such as a pollution control facility, you must include them in income. File 2011 taxes free You must also capitalize the full cost of the improvement. File 2011 taxes free Since you have included the payments in income, they do not reduce your basis. File 2011 taxes free However, see Cost-Sharing Exclusion (Improvements) , earlier, for additional information. File 2011 taxes free National Tobacco Growers' Settlement Trust Fund Payments If you are a producer, landowner, or tobacco quota owner who receives money from the National Tobacco Growers' Settlement Trust Fund, you must report those payments as income. File 2011 taxes free You should receive a Form 1099-MISC, Miscellaneous Income, that shows the payment amount. File 2011 taxes free If you produce a tobacco crop, report the payments as income from farming on your Schedule F. File 2011 taxes free If you are a landowner or tobacco quota owner who leases tobacco-related property but you do not produce the crop, report the payments as farm rental income on Form 4835. File 2011 taxes free Payment to More Than One Person The USDA reports program payments to the IRS. File 2011 taxes free It reports a program payment intended for more than one person as having been paid to the person whose identification number is on record for that payment (payee of record). File 2011 taxes free If you, as the payee of record, receive a program payment belonging to someone else, such as your landlord, the amount belonging to the other person is a nominee distribution. File 2011 taxes free You should file Form 1099-G to report the identity of the actual recipient to the IRS. File 2011 taxes free You should also give this information to the recipient. File 2011 taxes free You can avoid the inconvenience of unnecessary inquiries about the identity of the recipient if you file this form. File 2011 taxes free Report the total amount reported to you as the payee of record on Schedule F, line 4a or 6a. File 2011 taxes free However, do not report as a taxable amount on line 4b or 6b any amount belonging to someone else. File 2011 taxes free See chapter 16 for information about ordering Form 1099-G. File 2011 taxes free Income From Cooperatives If you buy farm supplies through a cooperative, you may receive income from the cooperative in the form of patronage dividends (refunds). File 2011 taxes free If you sell your farm products through a cooperative, you may receive either patronage dividends or a per-unit retain certificate, explained later, from the cooperative. File 2011 taxes free Form 1099-PATR. File 2011 taxes free   The cooperative will report the income to you on Form 1099-PATR or a similar form and send a copy to the IRS. File 2011 taxes free Form 1099-PATR may also show an alternative minimum tax adjustment that you must include on Form 6251, Alternative Minimum Tax—Individuals, if you are required to file the form. File 2011 taxes free For information on the alternative minimum tax, see the Instructions for Form 6251. File 2011 taxes free Patronage Dividends You generally report patronage dividends as income on Schedule F, lines 3a and 3b, for the tax year you receive them. File 2011 taxes free They include the following items. File 2011 taxes free Money paid as a patronage dividend, including cash advances received (for example, from a marketing cooperative). File 2011 taxes free The stated dollar value of qualified written notices of allocation. File 2011 taxes free The fair market value of other property. File 2011 taxes free Do not report as income on line 3b any patronage dividends you receive from expenditures that were not deductible, such as buying personal or family items, capital assets, or depreciable property. File 2011 taxes free You must reduce the cost or other basis of these items by the amount of such patronage dividends received. File 2011 taxes free Personal items include fuel purchased for personal use, basic local telephone service, and personal long distance calls. File 2011 taxes free If you cannot determine what the dividend is for, report it as income on lines 3a and 3b. File 2011 taxes free Qualified written notice of allocation. File 2011 taxes free   If you receive a qualified written notice of allocation as part of a patronage dividend, you must generally include its stated dollar value in your income on Schedule F, lines 3a and 3b, in the year you receive it. File 2011 taxes free A written notice of allocation is qualified if at least 20% of the patronage dividend is paid in money or by qualified check and either of the following conditions is met. File 2011 taxes free The notice must be redeemable in cash for at least 90 days after it is issued, and you must have received a written notice of your right of redemption at the same time as the written notice of allocation. File 2011 taxes free You must have agreed to include the stated dollar value in income in the year you receive the notice by doing one of the following. File 2011 taxes free Signing and giving a written agreement to the cooperative. File 2011 taxes free Getting or keeping membership in the cooperative after it adopted a bylaw providing that membership constitutes agreement. File 2011 taxes free The cooperative must notify you in writing of this bylaw and give you a copy. File 2011 taxes free Endorsing and cashing a qualified check paid as part of the same patronage dividend. File 2011 taxes free You must cash the check by the 90th day after the close of the payment period for the cooperative's tax year for which the patronage dividend was paid. File 2011 taxes free Qualified check. File 2011 taxes free   A qualified check is any instrument that is redeemable in money and meets both of the following requirements. File 2011 taxes free It is part of a patronage dividend that also includes a qualified written notice of allocation for which you met condition 2(c), above. File 2011 taxes free It is imprinted with a statement that endorsing and cashing it constitutes the payee's consent to include in income the stated dollar value of any written notices of allocation paid as part of the same patronage dividend. File 2011 taxes free Loss on redemption. File 2011 taxes free   You can deduct on Schedule F, Part II, any loss incurred on the redemption of a qualified written notice of allocation you received in the ordinary course of your farming business. File 2011 taxes free The loss is the difference between the stated dollar amount of the qualified written notice you included in income and the amount you received when you redeemed it. File 2011 taxes free Nonqualified notice of allocation. File 2011 taxes free   Do not include the stated dollar value of any nonqualified notice of allocation in income when you receive it. File 2011 taxes free Your basis in the notice is zero. File 2011 taxes free You must include in income for the tax year of disposition any amount you receive from its sale, redemption, or other disposition. File 2011 taxes free Report that amount, up to the stated dollar value of the notice, on Schedule F, lines 3a and 3b. File 2011 taxes free However, do not include that amount in your income if the notice resulted from buying or selling capital assets or depreciable property or from buying personal items, as explained in the following discussions. File 2011 taxes free   If the amount you receive is more than the stated dollar value of the notice, report the excess as the type of income it represents. File 2011 taxes free For example, if it represents interest income, report it on your return as interest. File 2011 taxes free Buying or selling capital assets or depreciable property. File 2011 taxes free   Do not include in income patronage dividends from buying capital assets or depreciable property used in your business. File 2011 taxes free You must, however, reduce the basis of these assets by the dividends. File 2011 taxes free This reduction is taken into account as of the first day of the tax year in which the dividends are received. File 2011 taxes free If the dividends are more than your unrecovered basis, reduce the unrecovered basis to zero and include the difference on Schedule F, line 3a, for the tax year you receive them. File 2011 taxes free   This rule and the exceptions explained below also apply to amounts you receive from the sale, redemption, or other disposition of a nonqualified notice of allocation that resulted from buying or selling capital assets or depreciable property. File 2011 taxes free Example. File 2011 taxes free On July 1, 2012, Mr. File 2011 taxes free Brown, a patron of a cooperative association, bought a machine for his dairy farm business from the association for $2,900. File 2011 taxes free The machine has a life of 7 years under MACRS (as provided in the Table of Class Lives and Recovery Periods in Appendix B of Publication 946, Depreciation and Amortization). File 2011 taxes free Mr. File 2011 taxes free Brown files his return on a calendar year basis. File 2011 taxes free For 2012, he claimed a depreciation deduction of $311, using the 10. File 2011 taxes free 71% depreciation rate from the 150% declining balance, half-year convention table (shown in Table A-14 in Appendix A of Publication 946). File 2011 taxes free On July 2, 2013, the cooperative association paid Mr. File 2011 taxes free Brown a $300 cash patronage dividend for buying the machine. File 2011 taxes free Mr. File 2011 taxes free Brown adjusts the basis of the machine and figures his depreciation deduction for 2013 (and later years) as follows. File 2011 taxes free Cost of machine on July 1, 2012 $2,900 Minus: 2012 depreciation $311     2013 cash dividend 300 611 Adjusted basis for  depreciation for 2013: $2,289 Depreciation rate: 1 ÷ 6½ (remaining recovery period as of 1/1/2012) = 15. File 2011 taxes free 38% × 1. File 2011 taxes free 5 = 23. File 2011 taxes free 07% Depreciation deduction for 2013 ($2,289 × 23. File 2011 taxes free 07%) $528 Exceptions. File 2011 taxes free   If the dividends are for buying or selling capital assets or depreciable property you did not own at any time during the year you received the dividends, you must include them on Schedule F, lines 3a and 3b, unless one of the following rules applies. File 2011 taxes free If the dividends relate to a capital asset you held for more than 1 year for which a loss was or would have been deductible, treat them as gain from the sale or exchange of a capital asset held for more than 1 year. File 2011 taxes free If the dividends relate to a capital asset for which a loss was not or would not have been deductible, do not report them as income (ordinary or capital gain). File 2011 taxes free   If the dividends are for selling capital assets or depreciable property during the year you received the dividends, treat them as an additional amount received on the sale. File 2011 taxes free Personal purchases. File 2011 taxes free   Because you cannot deduct the cost of personal, living, or family items, such as supplies, equipment, or services not related to the production of farm income, you can omit from the taxable amount of patronage dividends on Schedule F, line 3b, any dividends from buying those items (and you must reduce the cost or other basis of those items by the amount of the dividends). File 2011 taxes free This rule also applies to amounts you receive from the sale, redemption, or other disposition of a nonqualified written notice of allocation resulting from these purchases. File 2011 taxes free Per-Unit Retain Certificates A per-unit retain certificate is any written notice that shows the stated dollar amount of a per-unit retain allocation made to you by the cooperative. File 2011 taxes free A per-unit retain allocation is an amount paid to patrons for products sold for them that is fixed without regard to the net earnings of the cooperative. File 2011 taxes free These allocations can be paid in money, other property, or qualified certificates. File 2011 taxes free Per-unit retain certificates issued by a cooperative generally receive the same tax treatment as patronage dividends, discussed earlier. File 2011 taxes free Qualified certificates. File 2011 taxes free   Qualified per-unit retain certificates are those issued to patrons who have agreed to include the stated dollar amount of these certificates in income in the year of receipt. File 2011 taxes free The agreement may be made in writing or by getting or keeping membership in a cooperative whose bylaws or charter states that membership constitutes agreement. File 2011 taxes free If you receive qualified per-unit retain certificates, include the stated dollar amount of the certificates in income on Schedule F, lines 3a and 3b, for the tax year you receive them. File 2011 taxes free Nonqualified certificates. File 2011 taxes free   Do not include the stated dollar value of a nonqualified per-unit retain certificate in income when you receive it. File 2011 taxes free Your basis in the certificate is zero. File 2011 taxes free You must include in income any amount you receive from its sale, redemption, or other disposition. File 2011 taxes free Report the amount you receive from the disposition as ordinary income on Schedule F, lines 3a and 3b, for the tax year of disposition. File 2011 taxes free Cancellation of Debt This section explains the general rule for including canceled debt in income and the exceptions to the general rule. File 2011 taxes free For more information on canceled debt, see Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments. File 2011 taxes free General Rule Generally, if your debt is canceled or forgiven, other than as a gift or bequest to you, you must include the canceled amount in gross income for tax purposes. File 2011 taxes free Discharge of qualified farm indebtedness (defined below) is one of the exceptions to the general rule. File 2011 taxes free It is excluded from taxable income (see Exclusions , later). File 2011 taxes free Report the canceled amount on Schedule F, line 8, if you incurred the debt in your farming business. File 2011 taxes free If the debt is a nonbusiness debt, report the canceled amount as other income on Form 1040, line 21. File 2011 taxes free Election to defer income from discharge of indebtedness. File 2011 taxes free   You can elect to defer income from a discharge of business indebtedness that occurred after 2008 and before 2011. File 2011 taxes free Generally, if the election is made, the deferred income is included in gross income ratably over a 5-year period beginning in 2014 (for calendar year taxpayers) and the exclusions listed below do not apply. File 2011 taxes free See IRC section 108(i) and Publication 4681 for details. File 2011 taxes free Form 1099-C. File 2011 taxes free   If a federal agency, financial institution, credit union, finance company, or credit card company cancels or forgives your debt of $600 or more, you will receive a Form 1099-C, Cancellation of Debt. File 2011 taxes free The amount of debt canceled is shown in box 2. File 2011 taxes free Exceptions The following discussion covers some exceptions to the general rule for canceled debt. File 2011 taxes free These exceptions apply before the exclusions discussed below. File 2011 taxes free Price reduced after purchase. File 2011 taxes free   If your purchase of property was financed by the seller and the seller reduces the amount of the debt at a time when you are not insolvent and the reduction does not occur in a chapter 11 bankruptcy case, the amount of the debt reduction will be treated as a reduction in the purchase price of the property. File 2011 taxes free Reduce your basis in the property by the amount of the reduction in the debt. File 2011 taxes free The rules that apply to bankruptcy and insolvency are explained below under Exclusions . File 2011 taxes free Deductible debt. File 2011 taxes free   You do not realize income from a canceled debt to the extent the payment of the debt would have been a deductible expense. File 2011 taxes free This exception applies before the price reduction exception discussed above and the bankruptcy and insolvency exclusions discussed next. File 2011 taxes free Example. File 2011 taxes free You get accounting services for your farm on credit. File 2011 taxes free Later, you have trouble paying your farm debts, but you are not bankrupt or insolvent. File 2011 taxes free Your accountant forgives part of the amount you owe for the accounting services. File 2011 taxes free How you treat the canceled debt depends on your method of accounting. File 2011 taxes free Cash method — You do not include the canceled debt in income because payment of the debt would have been deductible as a business expense. File 2011 taxes free Accrual method — You include the canceled debt in income because the expense was deductible when you incurred the debt. File 2011 taxes free Exclusions Do not include canceled debt in income in the following situations. File 2011 taxes free The cancellation takes place in a bankruptcy case under title 11 of the U. File 2011 taxes free S. File 2011 taxes free Code. File 2011 taxes free The cancellation takes place when you are insolvent. File 2011 taxes free The canceled debt is a qualified farm debt. File 2011 taxes free The canceled debt is a qualified real property business debt (in the case of a taxpayer other than a C corporation). File 2011 taxes free See Publication 334, Tax Guide for Small Business, chapter 5. File 2011 taxes free The canceled debt is qualified principal residence indebtedness which is discharged after 2006 and before 2014. File 2011 taxes free The exclusions do not apply in the following situations: If a canceled debt is excluded from income because it takes place in a bankruptcy case, the exclusions in situations (2), (3), (4), and (5) do not apply. File 2011 taxes free If a canceled debt is excluded from income because it takes place when you are insolvent, the exclusions in situations (3) and (4) do not apply to the extent you are insolvent. File 2011 taxes free If a canceled debt is excluded from income because it is qualified principal residence indebtedness, the exclusion in situation (2) does not apply unless you elect to apply situation (2) instead of the exclusion for qualified principal residence indebtedness. File 2011 taxes free See Form 982 , later, for information on how to claim an exclusion for a canceled debt. File 2011 taxes free Debt. File 2011 taxes free   For this discussion, debt includes any debt for which you are liable or that attaches to property you hold. File 2011 taxes free Bankruptcy and Insolvency You can exclude a canceled debt from income if you are bankrupt or to the extent you are insolvent. File 2011 taxes free Bankruptcy. File 2011 taxes free   A bankruptcy case is a case under title 11 of the U. File 2011 taxes free S. File 2011 taxes free Code if you are under the jurisdiction of the court and the cancellation of the debt is granted by the court or is the result of a plan approved by the court. File 2011 taxes free   Do not include debt canceled in a bankruptcy case in your income in the year it is canceled. File 2011 taxes free Instead, you must use the amount canceled to reduce your tax attributes, explained below under Reduction of tax attributes . File 2011 taxes free Insolvency. File 2011 taxes free   You are insolvent to the extent your liabilities are more than the fair market value of your assets immediately before the cancellation of debt. File 2011 taxes free   You can exclude canceled debt from gross income up to the amount by which you are insolvent. File 2011 taxes free If the canceled debt is more than this amount and the debt qualifies, you can apply the rules for qualified farm debt or qualified real property business debt to the difference. File 2011 taxes free Otherwise, you include the difference in gross income. File 2011 taxes free Use the amount excluded because of insolvency to reduce any tax attributes, as explained below under Reduction of tax attributes . File 2011 taxes free You must reduce the tax attributes under the insolvency rules before applying the rules for qualified farm debt or for qualified real property business debt. File 2011 taxes free Example. File 2011 taxes free You had a $15,000 debt that was not qualified principal residence debt canceled outside of bankruptcy. File 2011 taxes free Immediately before the cancellation, your liabilities totaled $80,000 and your assets totaled $75,000. File 2011 taxes free Since your liabilities were more than your assets, you were insolvent to the extent of $5,000 ($80,000 − $75,000). File 2011 taxes free You can exclude this amount from income. File 2011 taxes free The remaining canceled debt ($10,000) may be subject to the qualified farm debt or qualified real property business debt rules. File 2011 taxes free If not, you must include it in income. File 2011 taxes free Reduction of tax attributes. File 2011 taxes free   If you exclude canceled debt from income in a bankruptcy case or during insolvency, you must use the excluded debt to reduce certain tax attributes. File 2011 taxes free Order of reduction. File 2011 taxes free   You must use the excluded canceled debt to reduce the following tax attributes in the order listed unless you elect to reduce the basis of depreciable property first, as explained later. File 2011 taxes free Net operating loss (NOL). File 2011 taxes free Reduce any NOL for the tax year of the debt cancellation, and then any NOL carryover to that year. File 2011 taxes free Reduce the NOL or NOL carryover one dollar for each dollar of excluded canceled debt. File 2011 taxes free General business credit carryover. File 2011 taxes free Reduce the credit carryover to or from the tax year of the debt cancellation. File 2011 taxes free Reduce the carryover 331/3 cents for each dollar of excluded canceled debt. File 2011 taxes free Minimum tax credit. File 2011 taxes free Reduce the minimum tax credit available at the beginning of the tax year following the tax year of the debt cancellation. File 2011 taxes free Reduce the credit 331/3 cents for each dollar of excluded canceled debt. File 2011 taxes free Capital loss. File 2011 taxes free Reduce any net capital loss for the tax year of the debt cancellation, and then any capital loss carryover to that year. File 2011 taxes free Reduce the capital loss or loss carryover one dollar for each dollar of excluded canceled debt. File 2011 taxes free Basis. File 2011 taxes free Reduce the basis of the property you hold at the beginning of the tax year following the tax year of the debt cancellation in the following order. File 2011 taxes free Real property (except inventory) used in your trade or business or held for investment that secured the canceled debt. File 2011 taxes free Personal property (except inventory and accounts and notes receivable) used in your trade or business or held for investment that secured the canceled debt. File 2011 taxes free Other property (except inventory and accounts and notes receivable) used in your trade or business or held for investment. File 2011 taxes free Inventory and accounts and notes receivable. File 2011 taxes free Other property. File 2011 taxes free Reduce the basis one dollar for each dollar of excluded canceled debt. File 2011 taxes free However, the reduction cannot be more than the total basis of property and the amount of money you hold immediately after the debt cancellation minus your total liabilities immediately after the cancellation. File 2011 taxes free For allocation rules that apply to basis reductions for multiple canceled debts, see Regulations section 1. File 2011 taxes free 1017-1(b)(2). File 2011 taxes free Also see Electing to reduce the basis of depreciable property
Español

Volunteering and Contributing to the Election Process

Information on volunteering and contributing to the election process.

The File 2011 Taxes Free

File 2011 taxes free Internal Revenue Bulletin:  2011-12  March 21, 2011  Rev. File 2011 taxes free Proc. File 2011 taxes free 2011-21 Table of Contents SECTION 1. File 2011 taxes free PURPOSE SECTION 2. File 2011 taxes free BACKGROUND SECTION 3. File 2011 taxes free SCOPE SECTION 4. File 2011 taxes free APPLICATION SECTION 5. File 2011 taxes free EFFECTIVE DATE SECTION 6. File 2011 taxes free EFFECT ON OTHER DOCUMENTS SECTION 7. File 2011 taxes free DRAFTING INFORMATION SECTION 1. File 2011 taxes free PURPOSE This revenue procedure provides: (1) limitations on depreciation deductions for owners of passenger automobiles first placed in service by the taxpayer during calendar year 2011, including separate tables of limitations on depreciation deductions for trucks and vans; (2) the amounts that must be included in income by lessees of passenger automobiles first leased by the taxpayer during calendar year 2011, including a separate table of inclusion amounts for lessees of trucks and vans; and (3) revised tables of depreciation limitations and lessee inclusion amounts for passenger automobiles that were first placed in service or first leased by the taxpayer, respectively, during 2010 and to which the 50 percent additional first year depreciation deduction under § 168(k)(1)(A) of the Internal Revenue Code or the 100 percent additional first year depreciation deduction under § 168(k)(5) applies. File 2011 taxes free The tables detailing these depreciation limitations and lessee inclusion amounts reflect the automobile price inflation adjustments required by § 280F(d)(7). File 2011 taxes free SECTION 2. File 2011 taxes free BACKGROUND . File 2011 taxes free 01 For owners of passenger automobiles, § 280F(a) imposes dollar limitations on the depreciation deduction for the year the taxpayer places the passenger automobile in service and for each succeeding year. File 2011 taxes free For passenger automobiles placed in service after 1988, § 280F(d)(7) requires the Internal Revenue Service to increase the amounts allowable as depreciation deductions by a price inflation adjustment amount. File 2011 taxes free The method of calculating this price inflation amount for trucks and vans placed in service in or after calendar year 2003 uses a different CPI “automobile component” (the “new trucks” component) than that used in the price inflation amount calculation for other passenger automobiles (the “new cars” component), resulting in somewhat higher depreciation deductions for trucks and vans. File 2011 taxes free This change reflects the higher rate of price inflation for trucks and vans since 1988. File 2011 taxes free . File 2011 taxes free 02 Section 2022(a) of the Small Business Jobs Act of 2010, Pub. File 2011 taxes free L. File 2011 taxes free No. File 2011 taxes free 111-240, 124 Stat. File 2011 taxes free 2504 (September 27, 2010), extended the 50 percent additional first year depreciation deduction under § 168(k) to qualified property (as defined in § 168(k)(2)) acquired by the taxpayer after December 31, 2007, and before January 1, 2011, if no written binding contract for the acquisition of the property existed before January 1, 2008, and if the taxpayer places the property in service generally before January 1, 2011. File 2011 taxes free Section 401(a) of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, Pub. File 2011 taxes free L. File 2011 taxes free No. File 2011 taxes free 111-312, 124 Stat. File 2011 taxes free 3296 (Dec. File 2011 taxes free 17, 2010) (the “Act”) further extended the 50 percent additional first year depreciation deduction under § 168(k) to qualified property acquired by the taxpayer after December 31, 2007, and before January 1, 2013, if no written binding contract for the acquisition of the property existed before January 1, 2008, and if the taxpayer places the property in service generally before January 1, 2013. File 2011 taxes free Section 401(b) of the Act further amended § 168(k) by adding § 168(k)(5). File 2011 taxes free It allows a 100 percent additional first year depreciation deduction for qualified property acquired by a taxpayer after September 8, 2010, and before January 1, 2012, if the taxpayer places the property in service generally before January 1, 2012. File 2011 taxes free Section 168(k)(2)(F)(i) increases the first year depreciation allowed under § 280F(a)(1)(A)(i) by $8,000 for passenger automobiles to which the additional first year depreciation deduction under § 168(k) (hereinafter, referred to as “§ 168(k) additional first year depreciation deduction”) applies. File 2011 taxes free . File 2011 taxes free 03 Section 168(k)(2)(D)(i) provides that the § 168(k) additional first year depreciation deduction does not apply to any property required to be depreciated under the alternative depreciation system of § 168(g), including property described in § 280F(b)(1). File 2011 taxes free Section 168(k)(2)(D)(iii) permits a taxpayer to elect out of the § 168(k) additional first year depreciation deduction for any class of property. File 2011 taxes free Section 168(k)(4), as amended by the Act, permits a corporation to elect to increase the alternative minimum tax (“AMT”) credit limitation under § 53(c), instead of claiming the § 168(k) additional first year depreciation deduction for all eligible qualified property placed in service after December 31, 2010, that is round 2 extension property (as defined in § 168(k)(4)(I)(iv). File 2011 taxes free Accordingly, this revenue procedure provides tables for passenger automobiles for which the § 168(k) additional first year depreciation deduction applies. File 2011 taxes free This revenue procedure also provides tables for passenger automobiles for which the § 168(k) additional first year depreciation deduction does not apply, either because taxpayer (1) purchased the passenger automobile used; (2) did not use the passenger automobile during 2011 more than 50 percent for business purposes; (3) elected out of the § 168(k) additional first year depreciation deduction pursuant to § 168(k)(2)(D)(iii); or (4) elected to increase the § 53 AMT credit limitation in lieu of claiming § 168(k) additional first year depreciation. File 2011 taxes free . File 2011 taxes free 04 Section 280F(c) requires a reduction in the deduction allowed to the lessee of a leased passenger automobile. File 2011 taxes free The reduction must be substantially equivalent to the limitations on the depreciation deductions imposed on owners of passenger automobiles. File 2011 taxes free Under § 1. File 2011 taxes free 280F-7(a) of the Income Tax Regulations, this reduction requires a lessee to include in gross income an amount determined by applying a formula to the amount obtained from a table. File 2011 taxes free One table applies to lessees of trucks and vans and another table applies to all other passenger automobiles. File 2011 taxes free Each table shows inclusion amounts for a range of fair market values for each taxable year after the passenger automobile is first leased. File 2011 taxes free SECTION 3. File 2011 taxes free SCOPE . File 2011 taxes free 01 The limitations on depreciation deductions in section 4. File 2011 taxes free 01(2) of this revenue procedure apply to passenger automobiles (other than leased passenger automobiles) that are placed in service by the taxpayer in calendar year 2011, and continue to apply for each taxable year that the passenger automobile remains in service. File 2011 taxes free . File 2011 taxes free 02 The tables in section 4. File 2011 taxes free 02 of this revenue procedure apply to leased passenger automobiles for which the lease term begins during calendar year 2011. File 2011 taxes free Lessees of these passenger automobiles must use these tables to determine the inclusion amount for each taxable year during which the passenger automobile is leased. File 2011 taxes free See Rev. File 2011 taxes free Proc. File 2011 taxes free 2006-18, 2006-1 C. File 2011 taxes free B. File 2011 taxes free 645, for passenger automobiles first leased during calendar year 2006; Rev. File 2011 taxes free Proc. File 2011 taxes free 2007-30, 2007-1 C. File 2011 taxes free B. File 2011 taxes free 1104, for passenger automobiles first leased during calendar year 2007; Rev. File 2011 taxes free Proc. File 2011 taxes free 2008-22, 2008-1 C. File 2011 taxes free B. File 2011 taxes free 658, for passenger automobiles first leased during calendar year 2008; Rev. File 2011 taxes free Proc. File 2011 taxes free 2009-24, 2009-1 C. File 2011 taxes free B. File 2011 taxes free 885, for passenger automobiles first leased during calendar year 2009; and Rev. File 2011 taxes free Proc. File 2011 taxes free 2010-18, 2010-1 C. File 2011 taxes free B. File 2011 taxes free 427, as amplified and modified by section 4. File 2011 taxes free 03 of this revenue procedure, for passenger automobiles first leased during calendar year 2010. File 2011 taxes free SECTION 4. File 2011 taxes free APPLICATION . File 2011 taxes free 01 Limitations on Depreciation Deductions for Certain Automobiles. File 2011 taxes free (1) Amount of the inflation adjustment. File 2011 taxes free (a) Passenger automobiles (other than trucks or vans). File 2011 taxes free Under § 280F(d)(7)(B)(i), the automobile price inflation adjustment for any calendar year is the percentage (if any) by which the CPI automobile component for October of the preceding calendar year exceeds the CPI automobile component for October 1987. File 2011 taxes free Section 280F(d)(7)(B)(ii) defines the term “CPI automobile component” as the automobile component of the Consumer Price Index for all Urban Consumers published by the Department of Labor. File 2011 taxes free The new car component of the CPI was 115. File 2011 taxes free 2 for October 1987 and 137. File 2011 taxes free 880 for October 2010. File 2011 taxes free The October 2010 index exceeded the October 1987 index by 22. File 2011 taxes free 680. File 2011 taxes free Therefore, the automobile price inflation adjustment for 2011 for passenger automobiles (other than trucks and vans) is 19. File 2011 taxes free 69 percent (22. File 2011 taxes free 680/115. File 2011 taxes free 2 x 100%). File 2011 taxes free The dollar limitations in § 280F(a) are multiplied by a factor of 0. File 2011 taxes free 1969, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations applicable to passenger automobiles (other than trucks and vans) for calendar year 2011. File 2011 taxes free This adjustment applies to all passenger automobiles (other than trucks and vans) that are first placed in service in calendar year 2011. File 2011 taxes free (b) Trucks and vans. File 2011 taxes free To determine the dollar limitations for trucks and vans first placed in service during calendar year 2011, the Service uses the new truck component of the CPI instead of the new car component. File 2011 taxes free The new truck component of the CPI was 112. File 2011 taxes free 4 for October 1987 and 142. File 2011 taxes free 556 for October 2010. File 2011 taxes free The October 2010 index exceeded the October 1987 index by 30. File 2011 taxes free 156. File 2011 taxes free Therefore, the automobile price inflation adjustment for 2011 for trucks and vans is 26. File 2011 taxes free 83 percent (30. File 2011 taxes free 156/112. File 2011 taxes free 4 x 100%). File 2011 taxes free The dollar limitations in § 280F(a) are multiplied by a factor of 0. File 2011 taxes free 2683, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations for trucks and vans. File 2011 taxes free This adjustment applies to all trucks and vans that are first placed in service in calendar year 2011. File 2011 taxes free (2) Amount of the limitation. File 2011 taxes free Tables 1 through 4 contain the dollar amount of the depreciation limitation for each taxable year for passenger automobiles a taxpayer places in service in calendar year 2011. File 2011 taxes free Use Table 1 for a passenger automobile (other than a truck or van), and Table 2 for a truck or van, placed in service in calendar year 2011 for which the § 168(k) additional first year depreciation deduction applies. File 2011 taxes free Use Table 3 for a passenger automobile (other than a truck or van), and Table 4 for a truck or van, placed in service in calendar year 2011 for which the § 168(k) additional first year depreciation deduction does not apply. File 2011 taxes free The Service intends to issue additional guidance addressing the interaction between the 100 percent additional first year depreciation deduction and § 280F(a) for the taxable years subsequent to the first taxable year. File 2011 taxes free REV. File 2011 taxes free PROC. File 2011 taxes free 2011-21 TABLE 1 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2011 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,060 2nd Tax Year $4,900 3rd Tax Year $2,950 Each Succeeding Year $1,775 REV. File 2011 taxes free PROC. File 2011 taxes free 2011-21 TABLE 2 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2011 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,260 2nd Tax Year $5,200 3rd Tax Year $3,150 Each Succeeding Year $1,875 REV. File 2011 taxes free PROC. File 2011 taxes free 2011-21 TABLE 3 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2011 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $3,060 2nd Tax Year $4,900 3rd Tax Year $2,950 Each Succeeding Year $1,775 REV. File 2011 taxes free PROC. File 2011 taxes free 2011-21 TABLE 4 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2011 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $3,260 2nd Tax Year $5,200 3rd Tax Year $3,150 Each Succeeding Year $1,875 . File 2011 taxes free 02 Inclusions in Income of Lessees of Passenger Automobiles. File 2011 taxes free A taxpayer must follow the procedures in § 1. File 2011 taxes free 280F-7(a) for determining the inclusion amounts for passenger automobiles first leased in calendar year 2011. File 2011 taxes free In applying these procedures, lessees of passenger automobiles other than trucks and vans should use Table 5 of this revenue procedure, while lessees of trucks and vans should use Table 6 of this revenue procedure. File 2011 taxes free REV. File 2011 taxes free PROC. File 2011 taxes free 2011-21 TABLE 5 DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2011 Fair Market Value of Passenger Automobile Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & later $18,500 $19,000 3 8 11 13 16 19,000 19,500 4 9 13 15 18 19,500 20,000 4 10 15 17 20 20,000 20,500 5 11 16 19 23 20,500 21,000 5 12 18 21 25 21,000 21,500 6 13 19 24 26 21,500 22,000 6 14 21 26 29 22,000 23,000 7 16 23 29 32 23,000 24,000 8 18 27 32 37 24,000 25,000 9 20 30 36 42 25,000 26,000 10 23 33 40 46 26,000 27,000 11 25 36 44 51 27,000 28,000 12 27 40 48 55 28,000 29,000 13 29 43 52 60 29,000 30,000 14 31 47 55 65 30,000 31,000 15 34 49 60 69 31,000 32,000 16 36 53 63 73 32,000 33,000 17 38 56 68 77 33,000 34,000 18 40 60 71 82 34,000 35,000 19 42 63 75 87 35,000 36,000 20 45 66 79 91 36,000 37,000 21 47 69 83 96 37,000 38,000 22 49 73 87 100 38,000 39,000 23 51 76 91 105 39,000 40,000 24 53 80 94 110 40,000 41,000 25 56 82 99 114 41,000 42,000 26 58 86 102 119 42,000 43,000 27 60 89 107 123 43,000 44,000 28 62 93 110 128 44,000 45,000 29 64 96 114 133 45,000 46,000 30 67 98 119 137 46,000 47,000 31 69 102 122 141 47,000 48,000 32 71 105 127 145 48,000 49,000 33 73 109 130 150 49,000 50,000 34 76 111 134 155 50,000 51,000 35 78 115 138 159 51,000 52,000 36 80 118 142 164 52,000 53,000 37 82 122 146 168 53,000 54,000 38 84 125 150 173 54,000 55,000 39 87 128 153 178 55,000 56,000 40 89 131 158 182 56,000 57,000 41 91 135 161 187 57,000 58,000 42 93 138 166 191 58,000 59,000 43 95 142 169 196 59,000 60,000 44 98 144 174 200 60,000 62,000 46 101 149 179 207 62,000 64,000 48 105 156 187 216 64,000 66,000 50 109 163 195 225 66,000 68,000 52 114 169 203 234 68,000 70,000 54 118 176 211 243 70,000 72,000 56 123 182 218 253 72,000 74,000 58 127 189 226 262 74,000 76,000 60 132 195 234 270 76,000 78,000 62 136 202 242 279 78,000 80,000 64 140 209 250 288 80,000 85,000 67 148 220 264 304 85,000 90,000 72 159 237 283 327 90,000 95,000 77 170 253 303 350 95,000 100,000 82 181 269 323 372 100,000 110,000 90 198 293 352 406 110,000 120,000 100 220 326 391 452 120,000 130,000 110 242 359 430 497 130,000 140,000 120 264 392 469 543 140,000 150,000 130 286 424 509 588 150,000 160,000 140 308 457 548 633 160,000 170,000 150 330 490 587 679 170,000 180,000 160 352 523 626 724 180,000 190,000 170 374 555 666 769 190,000 200,000 180 396 588 705 815 200,000 210,000 190 418 621 744 860 210,000 220,000 200 440 654 784 904 220,000 230,000 210 462 687 823 950 230,000 240,000 220 484 719 863 995 240,000 And up 230 506 752 902 1,040 REV. File 2011 taxes free PROC. File 2011 taxes free 2011-21 TABLE 6 DOLLAR AMOUNTS FOR TRUCKS AND VANS WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2011 Fair Market Value of Truck or Van Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & later $19,000 $19,500 3 7 9 12 13 19,500 20,000 3 8 11 14 15 20,000 20,500 4 9 13 15 18 20,500 21,000 4 10 15 17 20 21,000 21,500 5 11 16 20 22 21,500 22,000 5 12 18 22 24 22,000 23,000 6 14 20 24 29 23,000 24,000 7 16 24 28 32 24,000 25,000 8 18 27 32 37 25,000 26,000 9 20 31 36 41 26,000 27,000 10 23 33 40 46 27,000 28,000 11 25 37 43 51 28,000 29,000 12 27 40 48 55 29,000 30,000 13 29 43 52 60 30,000 31,000 14 31 47 56 64 31,000 32,000 15 34 49 60 69 32,000 33,000 16 36 53 63 74 33,000 34,000 17 38 56 68 78 34,000 35,000 18 40 60 71 83 35,000 36,000 19 43 62 76 87 36,000 37,000 20 45 66 79 92 37,000 38,000 21 47 69 83 97 38,000 39,000 22 49 73 87 101 39,000 40,000 23 51 76 91 105 40,000 41,000 24 54 79 95 109 41,000 42,000 25 56 82 99 114 42,000 43,000 26 58 86 103 118 43,000 44,000 27 60 89 107 123 44,000 45,000 28 62 93 110 128 45,000 46,000 29 65 95 115 132 46,000 47,000 30 67 99 118 137 47,000 48,000 31 69 102 123 141 48,000 49,000 32 71 106 126 146 49,000 50,000 33 73 109 130 151 50,000 51,000 34 76 112 134 155 51,000 52,000 35 78 115 138 160 52,000 53,000 36 80 118 143 164 53,000 54,000 37 82 122 146 169 54,000 55,000 38 84 125 150 173 55,000 56,000 39 87 128 154 177 56,000 57,000 40 89 131 158 182 57,000 58,000 41 91 135 162 186 58,000 59,000 42 93 138 166 191 59,000 60,000 43 95 142 169 196 60,000 62,000 45 99 146 175 203 62,000 64,000 47 103 153 183 212 64,000 66,000 49 107 160 191 221 66,000 68,000 51 112 166 199 229 68,000 70,000 53 116 173 206 239 70,000 72,000 55 121 179 214 248 72,000 74,000 57 125 186 222 257 74,000 76,000 59 129 192 231 266 76,000 78,000 61 134 198 239 275 78,000 80,000 63 138 205 246 285 80,000 85,000 66 146 217 260 300 85,000 90,000 71 157 233 280 322 90,000 95,000 76 168 250 299 345 95,000 100,000 81 179 266 319 368 100,000 110,000 89 196 290 348 402 110,000 120,000 99 218 323 387 447 120,000 130,000 109 240 355 427 493 130,000 140,000 119 262 388 466 538 140,000 150,000 129 284 421 505 583 150,000 160,000 139 306 454 544 629 160,000 170,000 149 328 487 583 674 170,000 180,000 159 350 519 623 719 180,000 190,000 169 372 552 662 765 190,000 200,000 179 394 585 701 810 200,000 210,000 189 416 618 740 856 210,000 220,000 199 438 651 779 901 220,000 230,000 209 460 683 819 946 230,000 240,000 219 482 716 858 992 240,000 And up 229 504 749 897 1,037 . File 2011 taxes free 03 Revised Amounts for Passenger Automobiles Placed in Service During 2010. File 2011 taxes free (1) Calculation of the Revised Amount. File 2011 taxes free The revised depreciation limits provided in this section 4. File 2011 taxes free 03 were calculated by increasing the existing limitations on the first year allowance in Rev. File 2011 taxes free Proc. File 2011 taxes free 2010-18 by $8,000 as provided in § 168(k)(2)(F)(i). File 2011 taxes free (2) Amount of the Revised Limitation. File 2011 taxes free For passenger automobiles (that are not trucks or vans) placed in service by the taxpayer in calendar year 2010 for which the § 168(k) additional first year depreciation deduction applies, Table 7 of this revenue procedure contains the revised dollar amount of the depreciation limitations for each taxable year. File 2011 taxes free For trucks or vans placed in service by the taxpayer in calendar year 2010 for which the § 168(k) additional first year depreciation deduction applies, Table 8 of this revenue procedure contains the revised dollar amount of the depreciation limitations for each taxable year. File 2011 taxes free If the § 168(k) additional first year depreciation deduction does not apply to a passenger automobile placed in service by the taxpayer in calendar year 2010, the depreciation limitations for each taxable year in Tables 1 and 2 of Rev. File 2011 taxes free Proc. File 2011 taxes free 2010-18 apply. File 2011 taxes free REV. File 2011 taxes free PROC. File 2011 taxes free 2011-21 TABLE 7 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2010 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,060 2nd Tax Year $4,900 3rd Tax Year $2,950 Each Succeeding Year $1,775 REV. File 2011 taxes free PROC. File 2011 taxes free 2011-21 TABLE 8 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2010 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,160 2nd Tax Year $5,100 3rd Tax Year $3,050 Each Succeeding Year $1,875 (3) Modification to lease inclusion amounts for 2010. File 2011 taxes free The lease inclusion amounts in Tables 3 and 4 of Rev. File 2011 taxes free Proc. File 2011 taxes free 2010-18 are modified by striking the first four lines of the inclusion amounts in each table. File 2011 taxes free Consequently, Table 3 of Rev. File 2011 taxes free Proc. File 2011 taxes free 2010-18 applies to passenger automobiles (other than trucks and vans) that are first leased by the taxpayer in calendar year 2010 with a fair market value over $18,500, and Table 4 of Rev. File 2011 taxes free Proc. File 2011 taxes free 2010-18 applies to trucks and vans that are first leased by the taxpayer in calendar year 2010 with a fair market value over $19,000. File 2011 taxes free SECTION 5. File 2011 taxes free EFFECTIVE DATE This revenue procedure, with the exception of section 4. File 2011 taxes free 03, applies to passenger automobiles that a taxpayer first places in service or first leases during calendar year 2011. File 2011 taxes free Section 4. File 2011 taxes free 03 of this revenue procedure applies to passenger automobiles that a taxpayer first places in service or first leases during calendar year 2010. File 2011 taxes free SECTION 6. File 2011 taxes free EFFECT ON OTHER DOCUMENTS Rev. File 2011 taxes free Proc. File 2011 taxes free 2010-18 is amplified and modified. File 2011 taxes free SECTION 7. File 2011 taxes free DRAFTING INFORMATION The principal author of this revenue procedure is Bernard P. File 2011 taxes free Harvey of the Office of Associate Chief Counsel (Income Tax & Accounting). File 2011 taxes free For further information regarding this revenue procedure, contact Mr. File 2011 taxes free Harvey at (202) 622-4930 (not a toll-free call). File 2011 taxes free Prev  Up  Next   Home   More Internal Revenue Bulletins