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Filing State Income Tax Return

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Filing State Income Tax Return

Filing state income tax return Publication 1544 - Introductory Material Table of Contents What's New Introduction What's New Future developments. Filing state income tax return  For the latest information about developments related to Publication 1544, such as legislation enacted after it was published, go to www. Filing state income tax return irs. Filing state income tax return gov/pub1544. Filing state income tax return Amending a report. Filing state income tax return  You can amend a prior report by checking box 1a at the top of Form 8300. Filing state income tax return See Amending a report, later. Filing state income tax return Introduction If, in a 12-month period, you receive more than $10,000 in cash from one buyer as a result of a transaction in your trade or business, you must report it to the Internal Revenue Service (IRS) and the Financial Crimes Enforcement Network (FinCEN) on Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business. Filing state income tax return This publication explains why, when, and where to report these cash payments. Filing state income tax return It also discusses the substantial penalties for not reporting them. Filing state income tax return Some organizations do not have to file Form 8300, including financial institutions who must file FinCEN Form 104 (formerly Form 4789), Currency Transaction Report, and casinos who must file FinCEN Form 103 (formerly Form 8362), Currency Transaction Report by Casinos. Filing state income tax return They are not discussed in this publication. Filing state income tax return This publication explains key issues and terms related to Form 8300. Filing state income tax return You should also read the instructions attached to the form. Filing state income tax return They explain what to enter on each line. Filing state income tax return Prev  Up  Next   Home   More Online Publications
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Commissioner John Koskinen

John Koskinen is the 48th IRS Commissioner. As Commissioner, he presides over the nation’s tax system, which collects approximately $2.4 trillion in tax revenue each year. This revenue funds most government operations and public services. Mr. Koskinen manages an agency of about 90,000 employees and a budget of approximately $11 billion.

In his role leading the IRS, Mr. Koskinen is working to ensure that the agency maintains an appropriate balance between taxpayer service and tax enforcement and administers the tax code with fairness and integrity.

Prior to his appointment, Mr. Koskinen served as the non-executive chairman of Freddie Mac from 2008 to 2012 and its acting chief executive officer in 2009. Previously, Mr. Koskinen served as President of the U.S. Soccer Foundation, Deputy Mayor and City Administrator of Washington D.C., Assistant to the President and Chair of the President's Council on Year 2000 Conversion and Deputy Director for Management at the Office of Management and Budget. Mr. Koskinen also spent 21 years in the private sector in various leadership positions with the Palmieri Company, including President and Chief Executive Officer, helping to turn around large, troubled organizations. He began his career clerking for Chief Judge David L. Bazelon of the DC Circuit Court of Appeals in 1965, practiced law with the firm of Gibson, Dunn and Crutcher and served as Assistant to the Deputy Executive Director of the National Advisory Commission on Civil Disorders, also known as the Kerner Commission. Mr. Koskinen also served as Legislative Assistant to New York Mayor John Lindsay and Administrative Assistant to Sen. Abraham Ribicoff of Connecticut.

Mr. Koskinen holds a Law Degree from Yale University School of Law and a Bachelor’s Degree from Duke University. He also studied International Law for one year in Cambridge, England. He and his wife Patricia have two grown children and live in Washington, DC.

 

Page Last Reviewed or Updated: 14-Feb-2014

The Filing State Income Tax Return

Filing state income tax return Depreciation Table of Contents Introduction Special Depreciation AllowanceQualified Property Election Not To Claim the Allowance Rules for Returns Filed Before June 1, 2002 Passenger Automobiles New York Liberty Zone BenefitsSpecial Liberty Zone Depreciation Allowance Increased Section 179 Deduction Liberty Zone Leasehold Improvement Property If you depreciate business property that you acquired and placed in service after September 10, 2001, new law contains provisions that may affect your depreciation deduction for that property. Filing state income tax return Publication 946, How To Depreciate Property, contains information on depreciation. Filing state income tax return However, Publication 946 does not contain the new provisions because it was printed before the law was enacted. Filing state income tax return The new provisions are in the Supplement to Publication 946, which is reprinted below. Filing state income tax return Supplement to Publication 946 How To Depreciate Property   Introduction After Publication 946 was printed, the Job Creation and Worker Assistance Act of 2002 was signed into law by the President. Filing state income tax return The new law made several changes in the tax rules explained in the publication. Filing state income tax return Some of the changes apply to property placed in service during 2001. Filing state income tax return This supplemental publication describes those changes and explains what you should do if you are affected by them. Filing state income tax return The situations and examples in Publication 946 do not reflect any of the changes made by the Job Creation and Worker Assistance Act of 2002. Filing state income tax return The new law contains the following provisions. Filing state income tax return 30% depreciation deductions (special depreciation allowance and special New York Liberty Zone (Liberty Zone) depreciation allowance) for the year qualified property is placed in service after September 10, 2001. Filing state income tax return An increased dollar limit on the section 179 deduction for qualified Liberty Zone property purchased after September 10, 2001. Filing state income tax return A shorter recovery period for qualified Liberty Zone leasehold improvement property placed in service after September 10, 2001. Filing state income tax return An increase in the maximum depreciation deduction for 2001 for a qualified passenger automobile placed in service after September 10, 2001. Filing state income tax return If you believe you qualify for an increased deduction under any of these new rules, you must file the revised 2001 Form 4562 (dated March 2002) for 2001 calendar or fiscal years and 2000 fiscal years ending after September 10, 2001. Filing state income tax return If you have already filed a tax return, this supplemental publication explains how to claim these benefits and how to elect not to claim the special depreciation allowance or special Liberty Zone depreciation allowance. Filing state income tax return See Table 2 at the end of the supplement for an overview of the rules that apply if you filed your return before June 1, 2002. Filing state income tax return Special Depreciation Allowance You can take a special depreciation allowance for qualified property you place in service after September 10, 2001. Filing state income tax return The allowance is an additional deduction of 30% of the property's depreciable basis. Filing state income tax return To figure the depreciable basis, you must first multiply the property's cost or other basis by the percentage of business/investment use and then reduce that amount by any section 179 deduction and certain other deductions and credits for the property. Filing state income tax return See What Is the Basis for Depreciation? on page 23 in Publication 946 for more information on figuring depreciable basis. Filing state income tax return The allowance is deductible for both regular tax and alternative minimum tax (AMT) purposes. Filing state income tax return There is no AMT adjustment required for any depreciation figured on the remaining basis of the property. Filing state income tax return In the year you claim the allowance (generally the year you place the property in service), you must reduce the depreciable basis of the property by the allowance before figuring your regular depreciation deduction. Filing state income tax return Example 1. Filing state income tax return On November 1, 2001, you bought and placed in service in your business qualified property that cost $100,000. Filing state income tax return You did not elect to claim a section 179 deduction. Filing state income tax return You can deduct 30% of the cost ($30,000) as a special depreciation allowance for 2001. Filing state income tax return You use the remaining $70,000 of cost to figure your regular depreciation deduction for 2001 and later years. Filing state income tax return Example 2. Filing state income tax return The facts are the same as in Example 1, except that you choose to deduct $24,000 of the property's cost as a section 179 deduction. Filing state income tax return You use the remaining $76,000 of cost to figure your special depreciation allowance of $22,800 ($76,000 × 30%). Filing state income tax return You use the remaining $53,200 of cost to figure your regular depreciation deduction for 2001 and later years. Filing state income tax return Qualified Property To qualify for the special depreciation allowance, your property must meet the following requirements. Filing state income tax return It is new property of one of the following types. Filing state income tax return Property depreciated under the modified accelerated cost recovery system (MACRS) with a recovery period of 20 years or less. Filing state income tax return See Can You Use MACRS To Depreciate Your Property and Which Recovery Period Applies? on pages 7 and 23, respectively, in Publication 946. Filing state income tax return Water utility property. Filing state income tax return See 25-year property on page 22 in Publication 946. Filing state income tax return Computer software that is not a section 197 intangible as described in Computer software on page 5 in Publication 946. Filing state income tax return (The cost of some computer software is treated as part of the cost of hardware and is depreciated under MACRS. Filing state income tax return ) Qualified leasehold improvement property (defined later). Filing state income tax return It meets the following tests (explained later under Tests To Be Met). Filing state income tax return Acquisition date test. Filing state income tax return Placed in service date test. Filing state income tax return Original use test. Filing state income tax return It is not excepted property (explained later under Excepted Property). Filing state income tax return Qualified leasehold improvement property. Filing state income tax return    Generally, this is any improvement to an interior part of a building that is nonresidential real property, provided all of the following requirements are met. Filing state income tax return The improvement is made under or pursuant to a lease by the lessee (or any sublessee) or the lessor of that part of the building. Filing state income tax return That part of the building is to be occupied exclusively by the lessee (or any sublessee) of that part. Filing state income tax return The improvement is placed in service more than 3 years after the date the building was first placed in service. Filing state income tax return   However, a qualified leasehold improvement does not include any improvement for which the expenditure is attributable to any of the following. Filing state income tax return The enlargement of the building. Filing state income tax return Any elevator or escalator. Filing state income tax return Any structural component benefiting a common area. Filing state income tax return The internal structural framework of the building. Filing state income tax return   Generally, a binding commitment to enter into a lease is treated as a lease and the parties to the commitment are treated as the lessor and lessee. Filing state income tax return However, a binding commitment between related persons is not treated as a lease. Filing state income tax return Related persons. Filing state income tax return   For this purpose, the following are related persons. Filing state income tax return Members of an affiliated group. Filing state income tax return The persons listed in items (1) through (9) under Related persons on page 8 of Publication 946 (except that “80% or more” should be substituted for “more than 10%” each place it appears). Filing state income tax return An executor and a beneficiary of the same estate. Filing state income tax return Tests To Be Met To qualify for the special depreciation allowance, the property must meet all of the following tests. Filing state income tax return Acquisition date test. Filing state income tax return    Generally, you must have acquired the property either: After September 10, 2001, and before September 11, 2004, but only if no written binding contract for the acquisition was in effect before September 11, 2001, or Pursuant to a written binding contract entered into after September 10, 2001, and before September 11, 2004. Filing state income tax return   Property you manufacture, construct, or produce for your own use meets this test if you began the manufacture, construction, or production of the property after September 10, 2001, and before September 11, 2004. Filing state income tax return Placed in service date test. Filing state income tax return   Generally, the property must be placed in service for use in your trade or business or for the production of income after September 10, 2001, and before January 1, 2005. Filing state income tax return   If you sold property you placed in service after September 10, 2001, and you leased it back within 3 months after the property was originally placed in service, the property is treated as placed in service no earlier than the date it is used under the leaseback. Filing state income tax return Original use test. Filing state income tax return   The original use of the property must have begun with you after September 10, 2001. Filing state income tax return “Original use” means the first use to which the property is put, whether or not by you. Filing state income tax return Additional capital expenditures you incurred after September 10, 2001, to recondition or rebuild your property meet the original use test. Filing state income tax return Excepted Property The following property does not qualify for the special depreciation allowance. Filing state income tax return Property used by any person before September 11, 2001. Filing state income tax return Property required to be depreciated using ADS. Filing state income tax return This includes listed property used 50% or less in a qualified business use. Filing state income tax return Qualified New York Liberty Zone leasehold improvement property (defined next). Filing state income tax return Qualified New York Liberty Zone leasehold improvement property. Filing state income tax return   This is any qualified leasehold improvement property (as defined earlier) if all of the following requirements are met. Filing state income tax return The improvement is to a building located in the New York Liberty Zone (defined later under New York Liberty Zone Benefits). Filing state income tax return The improvement is placed in service after September 10, 2001, and before January 1, 2007. Filing state income tax return No written binding contract for the improvement was in effect before September 11, 2001. Filing state income tax return Election Not To Claim the Allowance You can elect not to claim the special depreciation allowance for qualified property. Filing state income tax return If you make this election for any property, it applies to all property in the same property class placed in service during the year. Filing state income tax return To make this election, attach a statement to your return indicating you elect not to claim the allowance and the class of property for which you are making the election. Filing state income tax return When to make election. Filing state income tax return   Generally, you must make the election on a timely filed tax return (including extensions) for the year in which you place the property in service. Filing state income tax return   However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the original return (not including extensions). Filing state income tax return Attach the election statement to the amended return. Filing state income tax return At the top of the election statement, write “Filed pursuant to section 301. Filing state income tax return 9100–2. Filing state income tax return ” Revoking an election. Filing state income tax return   Once you elect not to deduct the special depreciation allowance for a class of property, you cannot revoke the election without IRS consent. Filing state income tax return A request to revoke the election is subject to a user fee. Filing state income tax return Rules for Returns Filed Before June 1, 2002 The following rules apply if you placed qualified property in service after September 10, 2001, and filed your return before June 1, 2002. Filing state income tax return The rules apply to returns for the following years. Filing state income tax return 2000 fiscal years that end after September 10, 2001. Filing state income tax return 2001 calendar and fiscal years. Filing state income tax return Claiming the allowance. Filing state income tax return   If you did not claim the allowance on your return and did not make the election not to claim the allowance, you can do either of the following to claim the allowance. Filing state income tax return File an amended return by the due date (not including extensions) of your return for the year following the year the property was placed in service. Filing state income tax return Write “Filed Pursuant to Rev. Filing state income tax return Proc. Filing state income tax return 2002–33” at the top of the amended return. Filing state income tax return File Form 3115, Application for Change in Accounting Method, with your return for the year following the year the property was placed in service. Filing state income tax return Your return must be filed by the due date (including extensions). Filing state income tax return Write “Automatic Change Filed Under Rev. Filing state income tax return Proc. Filing state income tax return 2002–33” on the appropriate line of Form 3115. Filing state income tax return You must also file a copy (with signature) of the completed Form 3115 with the IRS National Office no later than when you file the original with your return. Filing state income tax return For more information about filing Form 3115, including the address to send it to, see Revenue Procedure 2002–9, Revenue Procedure 2002–19, and Revenue Procedure 2002–33. Filing state income tax return Example 1. Filing state income tax return You are an individual and you use the calendar year. Filing state income tax return You placed qualified property in service for your business in December 2001. Filing state income tax return You filed your 2001 income tax return before April 15, 2002. Filing state income tax return You did not claim the special depreciation allowance for the property and did not make the election not to claim the allowance. Filing state income tax return You can claim the special allowance by filing an amended 2001 return by April 15, 2003, with “Filed Pursuant to Rev. Filing state income tax return Proc. Filing state income tax return 2002–33” at the top of the amended return. Filing state income tax return You must file an amended return by April 15, 2003, even if you get an extension of time to file your 2002 tax return. Filing state income tax return Example 2. Filing state income tax return The facts concerning your 2001 return are the same as in Example 1. Filing state income tax return In addition, you got an automatic 4-month extension of time (to August 15, 2003) to file your 2002 return. Filing state income tax return You can claim the special allowance by filing a Form 3115 (with “Filed Pursuant to Rev. Filing state income tax return Proc. Filing state income tax return 2002–33” on the appropriate line) with your 2002 return by August 15, 2003. Filing state income tax return You must also file a copy of this Form 3115 with the IRS National Office no later than when you file your 2002 return. Filing state income tax return Electing not to claim the allowance. Filing state income tax return   Generally, you have elected not to claim the special depreciation allowance for a class of property if you: Filed your return timely (including extensions) for the year you placed qualified property in service and indicated on a statement with the return that you are not claiming the allowance, or Filed your return timely and filed an amended return within 6 months of the due date of the original return (not including extensions) and indicated on a statement with the amended return that you are not claiming the allowance. Filing state income tax return The statement must indicate that you are not deducting the special depreciation allowance and the class of property to which the election applies. Filing state income tax return The statement can be either attached to or written on the return. Filing state income tax return You can, for example, write “not deducting 30%” on Form 4562. Filing state income tax return Deemed election. Filing state income tax return   If you have not followed either of the procedures described above to elect not to claim the allowance, you may still be treated as making the election. Filing state income tax return You will be treated as making the election if you meet both of the following conditions. Filing state income tax return You filed your return for the year you placed the property in service and claimed depreciation, but not the special allowance, for any class of property. Filing state income tax return You do not file an amended return or a Form 3115 within the time prescribed for claiming the special allowance. Filing state income tax return See Claiming the allowance, earlier. Filing state income tax return Passenger Automobiles The limit on your depreciation deduction (including any section 179 deduction) for any passenger automobile that is qualified property (defined earlier) placed in service after September 10, 2001, and for which you claim the special depreciation allowance is increased. Filing state income tax return Generally, the limit is increased from $3,060 to $7,660. Filing state income tax return However, if the automobile is a qualified electric car, the limit is increased from $9,280 to $23,080 ($22,980 if placed in service in 2002). Filing state income tax return Table 1 shows the maximum deduction amounts for 2001. Filing state income tax return Table 1. Filing state income tax return Maximum Deduction for 2001 Qualified Vehicle Placed in Service Before Sept. Filing state income tax return 11 Placed in Service After Sept. Filing state income tax return 10 Passenger automobile $3,060 $7,660 Electric car 9,280 23,080 1 1$22,980 if you place an electric car in service in 2002. Filing state income tax return Election not to claim the allowance. Filing state income tax return   The increased maximum depreciation deduction does not apply if you elected not to claim the special depreciation allowance as explained earlier under Election Not To Claim the Allowance and Rules for Returns Filed Before June 1, 2002. Filing state income tax return New York Liberty Zone Benefits Several benefits are available for property you place in service in the New York Liberty Zone (Liberty Zone). Filing state income tax return They include a special depreciation allowance for the year you place the property in service, an increased section 179 deduction, and the classification of certain leasehold improvement property as 5-year property. Filing state income tax return Area defined. Filing state income tax return   The New York Liberty Zone is the area located on or south of Canal Street, East Broadway (east of its intersection with Canal Street), or Grand Street (east of its intersection with East Broadway) in the Borough of Manhattan in the City of New York, New York. Filing state income tax return Special Liberty Zone Depreciation Allowance You can take a special depreciation allowance for qualified Liberty Zone property you place in service after September 10, 2001. Filing state income tax return The allowance is an additional deduction of 30% of the property's depreciable basis. Filing state income tax return To figure the depreciable basis, you must first multiply the property's cost or other basis by the percentage of business/investment use and then reduce that amount by any section 179 deduction and certain other deductions and credits for the property. Filing state income tax return See What Is the Basis for Depreciation? on page 23 in Publication 946 for more information on figuring depreciable basis. Filing state income tax return The allowance is deductible for both regular tax and alternative minimum tax (AMT) purposes. Filing state income tax return There is no AMT adjustment required for any depreciation figured on the remaining basis of the property. Filing state income tax return In the year you claim the allowance (generally the year you place the property in service), you must reduce the depreciable basis of the property by the allowance before figuring your regular depreciation deduction. Filing state income tax return You cannot claim the special Liberty Zone depreciation allowance for property eligible for the special depreciation allowance explained earlier in Qualified Property under Special Depreciation Allowance. Filing state income tax return Qualified property is eligible for only one special depreciation allowance. Filing state income tax return Example 1. Filing state income tax return On November 1, 2001, you bought and placed in service in your business, which is in the Liberty Zone, qualified Liberty Zone property that cost $200,000. Filing state income tax return You did not elect to claim a section 179 deduction. Filing state income tax return You can deduct 30% of the cost ($60,000) as a special Liberty Zone depreciation allowance for 2001. Filing state income tax return You use the remaining $140,000 of cost to figure your regular depreciation deduction for 2001 and later years. Filing state income tax return Example 2. Filing state income tax return The facts are the same as in Example 1, except that you choose to deduct $59,000 of the property's cost as a section 179 deduction. Filing state income tax return (See Increased Section 179 Deduction, later, for information concerning how this section 179 deduction amount is figured). Filing state income tax return You use the remaining $141,000 of cost to figure your special Liberty Zone depreciation allowance of $42,300 ($141,000 × 30%). Filing state income tax return You use the remaining $98,700 of cost to figure your regular depreciation deduction for 2001 and later years. Filing state income tax return Qualified Liberty Zone Property For a 2001 calendar or fiscal year and a 2000 fiscal year that ends after September 10, 2001, property qualifies for the special Liberty Zone depreciation allowance if it meets the following requirements. Filing state income tax return It is one of the following types of property. Filing state income tax return Used property depreciated under MACRS with a recovery period of 20 years or less. Filing state income tax return See Can You Use MACRS To Depreciate Your Property and Which Recovery Period Applies? on pages 7 and 23, respectively, in Publication 946. Filing state income tax return Used water utility property. Filing state income tax return See 25-year property on page 22 in Publication 946. Filing state income tax return Used computer software that is not a section 197 intangible as described in Computer software on page 5 in Publication 946. Filing state income tax return (The cost of some computer software is treated as part of the cost of hardware and is depreciated under MACRS. Filing state income tax return ) Certain nonresidential real property and residential rental property (defined later). Filing state income tax return It meets the following tests (explained later under Tests to be met). Filing state income tax return Acquisition date test. Filing state income tax return Placed in service date test. Filing state income tax return Substantial use test. Filing state income tax return Original use test. Filing state income tax return It is not excepted property (explained later under Excepted property). Filing state income tax return Nonresidential real property and residential rental property. Filing state income tax return   This property is qualifying property only to the extent it rehabilitates real property damaged, or replaces real property destroyed or condemned, as a result of the terrorist attack of September 11, 2001. Filing state income tax return Property is treated as replacing destroyed or condemned property if, as part of an integrated plan, such property replaces real property included in a continuous area that includes real property destroyed or condemned. Filing state income tax return   For these purposes, real property is considered destroyed (or condemned) only if an entire building or structure was destroyed (or condemned) as a result of the terrorist attack. Filing state income tax return Otherwise, the property is considered damaged real property. Filing state income tax return For example, if certain structural components of a building (such as walls, floors, or plumbing fixtures) are damaged or destroyed as a result of the terrorist attack, but the building is not destroyed (or condemned), then only costs related to replacing the damaged or destroyed structural components qualify for the special Liberty Zone depreciation allowance. Filing state income tax return Tests to be met. Filing state income tax return   To qualify for the special Liberty Zone depreciation allowance, your property must meet all of the following tests. Filing state income tax return Acquisition date test. Filing state income tax return   You must have acquired the property by purchase after September 10, 2001, and there must not have been a binding written contract for the acquisition in effect before September 11, 2001. Filing state income tax return   For information on the acquisition of property by purchase, see Property Acquired by Purchase on page 15 of Publication 946. Filing state income tax return   Property you manufacture, construct, or produce for your own use meets this test if you began the manufacture, construction, or production of the property after September 10, 2001. Filing state income tax return Placed in service date test. Filing state income tax return   Generally, the property must be placed in service for use in your trade or business or for the production of income before January 1, 2007 (January 1, 2010, in the case of qualifying nonresidential real property and residential rental property). Filing state income tax return   If you sold property you placed in service after September 10, 2001, and you leased it back within 3 months after the property was originally placed in service, the property is treated as placed in service no earlier than the date it is used under the leaseback. Filing state income tax return Substantial use test. Filing state income tax return   Substantially all use of the property must be in the Liberty Zone and in the active conduct of your trade or business in the Liberty Zone. Filing state income tax return Original use test. Filing state income tax return   The original use of the property in the Liberty Zone must have begun with you after September 10, 2001. Filing state income tax return   Used property can be qualified Liberty Zone property if it has not previously been used within the Liberty Zone. Filing state income tax return Also, additional capital expenditures you incurred after September 10, 2001, to recondition or rebuild your property meet the original use test if the original use of the property in the Liberty Zone began with you. Filing state income tax return Excepted property. Filing state income tax return   The following property does not qualify for the special Liberty Zone depreciation allowance. Filing state income tax return Property eligible for the special depreciation allowance explained earlier in Qualified Property under Special Depreciation Allowance. Filing state income tax return Property required to be depreciated using ADS. Filing state income tax return This includes listed property used 50% or less in a qualified business use. Filing state income tax return Qualified New York Liberty Zone leasehold improvement property (defined earlier in Excepted Property under Special Depreciation Allowance). Filing state income tax return Example. Filing state income tax return In December 2001, you bought and placed in service in your business in the Liberty Zone the following property. Filing state income tax return New office furniture with a MACRS recovery period of 7 years. Filing state income tax return A used computer with a MACRS recovery period of 5 years. Filing state income tax return The computer had not previously been used within the Liberty Zone. Filing state income tax return Because the office furniture is new property, it qualifies for the special depreciation allowance, but not the special Liberty Zone depreciation allowance. Filing state income tax return Because the computer is used property that had not previously been used in the Liberty Zone, it qualifies for the special Liberty Zone depreciation allowance, but not the special depreciation allowance. Filing state income tax return Election Not To Claim the Liberty Zone Allowance You can elect not to claim the special Liberty Zone depreciation allowance for qualified property. Filing state income tax return If you make this election for any property, it applies to all property in the same property class placed in service during the year. Filing state income tax return To make this election, attach a statement to your return indicating you elect not to claim the allowance and the class of property for which you are making the election. Filing state income tax return When to make the election. Filing state income tax return   Generally, you must make the election on a timely filed tax return (including extensions) for the year in which you place the property in service. Filing state income tax return   However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the original return (not including extensions). Filing state income tax return Attach the election statement to the amended return. Filing state income tax return At the top of the election statement, write “Filed pursuant to section 301. Filing state income tax return 9100–2. Filing state income tax return ” Revoking an election. Filing state income tax return   Once you elect not to deduct the special Liberty Zone depreciation allowance for a class of property, you cannot revoke the election without IRS consent. Filing state income tax return A request to revoke the election is subject to a user fee. Filing state income tax return Returns filed before June 1, 2002. Filing state income tax return   The rules that apply to the special depreciation allowance discussed earlier in Rules for Returns Filed Before June 1, 2002 under Special Depreciation Allowance also apply to the special Liberty Zone depreciation allowance. Filing state income tax return Increased Section 179 Deduction Under section 179 of the Internal Revenue Code, you can choose to recover all or part of the cost of certain qualifying property, up to a limit, by deducting it in the year you place the property in service. Filing state income tax return For tax years beginning in 2000, that limit was $20,000. Filing state income tax return For tax years beginning in 2001 and 2002, that limit is generally $24,000. Filing state income tax return If the cost of qualifying section 179 property placed in service in a year is over $200,000, you must reduce the dollar limit (but not below zero) by the amount of the cost over $200,000. Filing state income tax return Increased Dollar Limit The dollar limit on the section 179 deduction is increased for certain property placed in service in the Liberty Zone. Filing state income tax return The increase is the smaller of the following amounts. Filing state income tax return $35,000. Filing state income tax return The cost of section 179 property that is qualified Liberty Zone property placed in service during the year. Filing state income tax return If you use the revised 2001 Form 4562 (dated March 2002) for a tax year beginning in 2000, you must reduce the section 179 dollar limit to $20,000 before adding the additional amount for qualified property. Filing state income tax return Qualified property. Filing state income tax return   To qualify for the increased section 179 deduction, your property must be section 179 property that is either: Qualified Liberty Zone property, or Property that would be qualified Liberty Zone property except that it is eligible for the special depreciation allowance. Filing state income tax return Qualified Liberty Zone property is explained earlier in Qualified Liberty Zone Property under Special Liberty Zone Depreciation Allowance. Filing state income tax return Property eligible for the special depreciation allowance is explained earlier in Qualified Property under Special Depreciation Allowance. Filing state income tax return For information on the requirements that must be met for property to qualify for the section 179 deduction, see What Property Qualifies? on page 14 of Publication 946. Filing state income tax return Example 1. Filing state income tax return In 2002, you place in service in your business, which is in the Liberty Zone, qualified property (defined earlier) costing $25,000. Filing state income tax return Because this cost is less than $35,000, the dollar limit on the section 179 deduction is increased by $25,000 to $49,000 ($24,000 + $25,000). Filing state income tax return Example 2. Filing state income tax return In 2002, you place in service in your business, which is in the Liberty Zone, qualified property (defined earlier) costing $75,000. Filing state income tax return Because $35,000 is less than the cost of the property you place in service, the dollar limit on the section 179 deduction you can claim is increased by $35,000 to $59,000 ($24,000 + $35,000). Filing state income tax return Reduced Dollar Limit Generally, you must reduce the dollar limit for a year by the cost of qualifying section 179 property placed in service in the year that is more than $200,000. Filing state income tax return However, if the cost of your Liberty Zone property exceeds $200,000, you take into account only 50% (instead of 100%) of the cost of qualified property placed in service in a year. Filing state income tax return Example. Filing state income tax return In 2002, you place in service in your business, which is in the Liberty Zone, qualified property costing $460,000. Filing state income tax return Your increased dollar limit is $59,000 ($35,000 + $24,000). Filing state income tax return Because 50% of the cost of the property you place in service ($230,000) is $30,000 more than $200,000, you must reduce your $59,000 dollar limit to $29,000 ($59,000 - $30,000). Filing state income tax return Recapture Rules Rules similar to those explained on page 20 of Publication 946 under When Must You Recapture the Deduction? apply with respect to any qualified property you stop using in the Liberty Zone. Filing state income tax return Returns Filed Before June 1, 2002 If you filed a return before June 1, 2002, and did not deduct the increased section 179 amount for qualified property placed in service after September 10, 2001, you can deduct the increased amount by filing an amended return by the due date (not including extensions) of the return for the year after the year the property was placed in service. Filing state income tax return This rule applies to returns for the following years. Filing state income tax return 2000 fiscal years that end after September 10, 2001. Filing state income tax return 2001 calendar and fiscal years. Filing state income tax return On the amended return, write “Filed Pursuant to Rev. Filing state income tax return Proc. Filing state income tax return 2002–33. Filing state income tax return ” Liberty Zone Leasehold Improvement Property Qualified Liberty Zone leasehold improvement property (described earlier in Qualified Property under Special Depreciation Allowance) is 5-year property. Filing state income tax return This means that it is depreciated over a recovery period of 5 years. Filing state income tax return For information about recovery periods, see Which Recovery Period Applies? on page 23 of Publication 946. Filing state income tax return The straight-line method must be used with respect to qualified Liberty Zone leasehold improvement property. Filing state income tax return Under ADS, the recovery period for qualified Liberty Zone leasehold improvement property is 9 years. Filing state income tax return Returns Filed Before June 1, 2002 If you filed either of the following returns before June 1, 2002, and did not depreciate qualified Liberty Zone leasehold improvement property placed in service during the tax year as 5-year property using the straight line method, you should file an amended return before you file your return for the year after the year the property was placed in service. Filing state income tax return Your 2000 fiscal year return (for a 2000 fiscal year that ends after September 10, 2001). Filing state income tax return Your 2001 calendar or fiscal year return. Filing state income tax return On the amended return, write “Filed Pursuant to Rev. Filing state income tax return Proc. Filing state income tax return 2002–33. Filing state income tax return ” Table 2. Filing state income tax return Rules for Returns Filed Before June 1, 2002 Note:This chart highlights the rules for returns affected by the Job Creation and Worker Assistance Act of 2002 that were filed before June 1, 2002, without accounting for any of the new benefits under the law. Filing state income tax return See the text for definitions and examples. Filing state income tax return Do not rely on this chart alone. Filing state income tax return IF you want to. Filing state income tax return . Filing state income tax return . Filing state income tax return THEN you. Filing state income tax return . Filing state income tax return . Filing state income tax return BY. Filing state income tax return . Filing state income tax return . Filing state income tax return claim the special depreciation allowance or special Liberty Zone depreciation allowance • must file an amended return • the due date (not including extensions) of your return for the year after the year the property was placed in service, or • must file Form 3115, Application for Change in Accounting Method, with your return for the year after the year the property was placed in service • the due date (including extensions) of your return for the year after the year the property was placed in service, and • must file a copy of your completed Form 3115 with the IRS National Office • the date you file the original Form 3115 with your return for the year after the year the property was placed in service. Filing state income tax return elect not to claim the special depreciation allowance or the special Liberty Zone depreciation allowance 1 • must have filed your return timely for the year the property was placed in service, and   • must file an amended return stating you are not claiming the allowance • the date that is 6 months after the due date of the original return (not including extensions). Filing state income tax return deduct the increased section 179 amount • must file an amended return • the due date (not including extensions) of your return for the year after the year the property was placed in service. Filing state income tax return use a 5-year recovery period for depreciating qualified Liberty Zone leasehold improvement property • should file an amended return • the date you file your return for the year after the year the property was placed in service. Filing state income tax return 1See also Deemed election under Rules for Returns Filed Before June 1, 2002, earlier. 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