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Form 1040 For 2011 Tax Year

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Form 1040 For 2011 Tax Year

Form 1040 for 2011 tax year Publication 583 - Main Content Table of Contents What New Business Owners Need To Know Forms of BusinessMore information. Form 1040 for 2011 tax year More information. Form 1040 for 2011 tax year Exception—Community Income. Form 1040 for 2011 tax year Exception—Qualified joint venture. Form 1040 for 2011 tax year More information. Form 1040 for 2011 tax year More information. Form 1040 for 2011 tax year Identification NumbersEmployer Identification Number (EIN) Payee's Identification Number Tax Year Accounting Method Business TaxesIncome Tax Self-Employment Tax Employment Taxes Excise Taxes Depositing Taxes Information Returns PenaltiesWaiver of penalty. Form 1040 for 2011 tax year Business ExpensesBusiness Start-Up Costs Depreciation Business Use of Your Home Car and Truck Expenses RecordkeepingWhy Keep Records? Kinds of Records To Keep How Long To Keep Records Sample Record System How to Get More InformationInternal Revenue Service Small Business Administration Other Federal Agencies What New Business Owners Need To Know As a new business owner, you need to know your federal tax responsibilities. Form 1040 for 2011 tax year Table 1 can help you learn what those responsibilities are. Form 1040 for 2011 tax year Ask yourself each question listed in the table, then see the related discussion to find the answer. Form 1040 for 2011 tax year In addition to knowing about federal taxes, you need to make some basic business decisions. Form 1040 for 2011 tax year Ask yourself: What are my financial resources? What products and services will I sell? How will I market my products and services? How will I develop a strategic business plan? How will I manage my business on a day-to-day basis? How will I recruit employees? The Small Business Administration (SBA) is a federal agency that can help you answer these types of questions. Form 1040 for 2011 tax year For information on how to contact the SBA, see How to Get More Information, later. Form 1040 for 2011 tax year Forms of Business The most common forms of business are the sole proprietorship, partnership, and corporation. Form 1040 for 2011 tax year When beginning a business, you must decide which form of business to use. Form 1040 for 2011 tax year Legal and tax considerations enter into this decision. Form 1040 for 2011 tax year Only tax considerations are discussed in this publication. Form 1040 for 2011 tax year Your form of business determines which income tax return form you have to file. Form 1040 for 2011 tax year See Table 2 to find out which form you have to file. Form 1040 for 2011 tax year Sole proprietorships. Form 1040 for 2011 tax year   A sole proprietorship is an unincorporated business that is owned by one individual. Form 1040 for 2011 tax year It is the simplest form of business organization to start and maintain. Form 1040 for 2011 tax year The business has no existence apart from you, the owner. Form 1040 for 2011 tax year Its liabilities are your personal liabilities. Form 1040 for 2011 tax year You undertake the risks of the business for all assets owned, whether or not used in the business. Form 1040 for 2011 tax year You include the income and expenses of the business on your personal tax return. Form 1040 for 2011 tax year More information. Form 1040 for 2011 tax year   For more information on sole proprietorships, see Publication 334, Tax Guide for Small Business. Form 1040 for 2011 tax year If you are a farmer, see Publication 225, Farmer's Tax Guide. Form 1040 for 2011 tax year Partnerships. Form 1040 for 2011 tax year   A partnership is the relationship existing between two or more persons who join to carry on a trade or business. Form 1040 for 2011 tax year Each person contributes money, property, labor, or skill, and expects to share in the profits and losses of the business. Form 1040 for 2011 tax year   A partnership must file an annual information return to report the income, deductions, gains, losses, etc. Form 1040 for 2011 tax year , from its operations, but it does not pay income tax. Form 1040 for 2011 tax year Instead, it “passes through” any profits or losses to its partners. Form 1040 for 2011 tax year Each partner includes his or her share of the partnership's items on his or her tax return. Form 1040 for 2011 tax year More information. Form 1040 for 2011 tax year   For more information on partnerships, see Publication 541, Partnerships. Form 1040 for 2011 tax year Husband and wife business. Form 1040 for 2011 tax year   If you and your spouse jointly own and operate an unincorporated business and share in the profits and losses, you are partners in a partnership, whether or not you have a formal partnership agreement. Form 1040 for 2011 tax year Do not use Schedule C or C-EZ. Form 1040 for 2011 tax year Instead, file Form 1065, U. Form 1040 for 2011 tax year S. Form 1040 for 2011 tax year Return of Partnership Income. Form 1040 for 2011 tax year For more information, see Publication 541, Partnerships. Form 1040 for 2011 tax year Exception—Community Income. Form 1040 for 2011 tax year   If you and your spouse wholly own an unincorporated business as community property under the community property laws of a state, foreign country, or U. Form 1040 for 2011 tax year S. Form 1040 for 2011 tax year possession, you can treat the business either as a sole proprietorship or a partnership. Form 1040 for 2011 tax year The only states with community property laws are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Form 1040 for 2011 tax year A change in your reporting position will be treated as a conversion of the entity. Form 1040 for 2011 tax year Exception—Qualified joint venture. Form 1040 for 2011 tax year   If you and your spouse each materially participate as the only members of a jointly owned and operated business, and you file a joint return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership for the tax year. Form 1040 for 2011 tax year Making this election will allow you to avoid the complexity of Form 1065 but still give each spouse credit for social security earnings on which retirement benefits are based. Form 1040 for 2011 tax year For an explanation of "material participation," see the Instructions for Schedule C, line G. Form 1040 for 2011 tax year   To make this election, you must divide all items of income, gain, loss, deduction, and credit attributable to the business between you and your spouse in accordance with your respective interests in the venture. Form 1040 for 2011 tax year Each of you must file a separate Schedule C or C-EZ and a separate Schedule SE. Form 1040 for 2011 tax year For more information, see Qualified Joint Venture in the Instructions for Schedule SE. Form 1040 for 2011 tax year Corporations. Form 1040 for 2011 tax year   In forming a corporation, prospective shareholders exchange money, property, or both, for the corporation's capital stock. Form 1040 for 2011 tax year A corporation generally takes the same deductions as a sole proprietorship to figure its taxable income. Form 1040 for 2011 tax year A corporation can also take special deductions. Form 1040 for 2011 tax year   The profit of a corporation is taxed to the corporation when earned, and then is taxed to the shareholders when distributed as dividends. Form 1040 for 2011 tax year However, shareholders cannot deduct any loss of the corporation. Form 1040 for 2011 tax year More information. Form 1040 for 2011 tax year   For more information on corporations, see Publication 542, Corporations. Form 1040 for 2011 tax year S corporations. Form 1040 for 2011 tax year   An eligible domestic corporation can avoid double taxation (once to the corporation and again to the shareholders) by electing to be treated as an S corporation. Form 1040 for 2011 tax year Generally, an S corporation is exempt from federal income tax other than tax on certain capital gains and passive income. Form 1040 for 2011 tax year On their tax returns, the S corporation's shareholders include their share of the corporation's separately stated items of income, deduction, loss, and credit, and their share of nonseparately stated income or loss. Form 1040 for 2011 tax year More information. Form 1040 for 2011 tax year   For more information on S corporations, see the instructions for Form 2553, Election by a Small Business Corporation, and Form 1120S, U. Form 1040 for 2011 tax year S. Form 1040 for 2011 tax year Income Tax Return for an S Corporation. Form 1040 for 2011 tax year Limited liability company. Form 1040 for 2011 tax year   A limited liability company (LLC) is an entity formed under state law by filing articles of organization as an LLC. Form 1040 for 2011 tax year The members of an LLC are not personally liable for its debts. Form 1040 for 2011 tax year An LLC may be classified for federal income tax purposes as either a partnership, a corporation, or an entity disregarded as an entity separate from its owner by applying the rules in regulations section 301. Form 1040 for 2011 tax year 7701-3. Form 1040 for 2011 tax year For more information, see the instructions for Form 8832, Entity Classification Election. Form 1040 for 2011 tax year Identification Numbers You must have a taxpayer identification number so the IRS can process your returns. Form 1040 for 2011 tax year The two most common kinds of taxpayer identification numbers are the social security number (SSN) and the employer identification number (EIN). Form 1040 for 2011 tax year An SSN is issued to individuals by the Social Security Administration (SSA) and is in the following format: 000–00–0000. Form 1040 for 2011 tax year An EIN is issued to individuals (sole proprietors), partnerships, corporations, and other entities by the IRS and is in the following format: 00–0000000. Form 1040 for 2011 tax year You must include your taxpayer identification number (SSN or EIN) on all returns and other documents you send to the IRS. Form 1040 for 2011 tax year You must also furnish your number to other persons who use your identification number on any returns or documents they send to the IRS. Form 1040 for 2011 tax year This includes returns or documents filed to report the following information. Form 1040 for 2011 tax year Interest, dividends, royalties, etc. Form 1040 for 2011 tax year , paid to you. Form 1040 for 2011 tax year Any amount paid to you as a dependent care provider. Form 1040 for 2011 tax year Certain other amounts paid to you that total $600 or more for the year. Form 1040 for 2011 tax year If you do not furnish your identification number as required, you may be subject to penalties. Form 1040 for 2011 tax year See Penalties, later. Form 1040 for 2011 tax year Employer Identification Number (EIN) EINs are used to identify the tax accounts of employers, certain sole proprietors, corporations, partnerships, estates, trusts, and other entities. Form 1040 for 2011 tax year If you don't already have an EIN, you need to get one if you: Have employees, Have a qualified retirement plan, Operate your business as a corporation or partnership, or File returns for: Employment taxes, or Excise taxes. Form 1040 for 2011 tax year Applying for an EIN. Form 1040 for 2011 tax year   You may apply for an EIN: Online—Click on the EIN link at www. Form 1040 for 2011 tax year irs. Form 1040 for 2011 tax year gov/businesses/small. Form 1040 for 2011 tax year The EIN is issued immediately once the application information is validated. Form 1040 for 2011 tax year By telephone at 1-800-829-4933. Form 1040 for 2011 tax year By mailing or faxing Form SS-4, Application for Employer Identification Number. Form 1040 for 2011 tax year When to apply. Form 1040 for 2011 tax year   You should apply for an EIN early enough to receive the number by the time you must file a return or statement or make a tax deposit. Form 1040 for 2011 tax year If you apply by mail, file Form SS-4 at least 4 weeks before you need an EIN. Form 1040 for 2011 tax year If you apply by telephone or through the IRS website, you can get an EIN immediately. Form 1040 for 2011 tax year If you apply by fax, you can get an EIN within 4 business days. Form 1040 for 2011 tax year   If you do not receive your EIN by the time a return is due, file your return anyway. Form 1040 for 2011 tax year Write “Applied for” and the date you applied for the number in the space for the EIN. Form 1040 for 2011 tax year Do not use your social security number as a substitute for an EIN on your tax returns. Form 1040 for 2011 tax year More than one EIN. Form 1040 for 2011 tax year   You should have only one EIN. Form 1040 for 2011 tax year If you have more than one EIN and are not sure which to use, contact the Internal Revenue Service Center where you file your return. Form 1040 for 2011 tax year Give the numbers you have, the name and address to which each was assigned, and the address of your main place of business. Form 1040 for 2011 tax year The IRS will tell you which number to use. Form 1040 for 2011 tax year More information. Form 1040 for 2011 tax year   For more information about EINs, see Publication 1635, Understanding Your EIN. Form 1040 for 2011 tax year Payee's Identification Number In the operation of a business, you will probably make certain payments you must report on information returns (discussed later under Information Returns). Form 1040 for 2011 tax year The forms used to report these payments must include the payee's identification number. Form 1040 for 2011 tax year Employee. Form 1040 for 2011 tax year   If you have employees, you must get an SSN from each of them. Form 1040 for 2011 tax year Record the name and SSN of each employee exactly as they are shown on the employee's social security card. Form 1040 for 2011 tax year If the employee's name is not correct as shown on the card, the employee should request a new card from the SSA. Form 1040 for 2011 tax year This may occur, for example, if the employee's name has changed due to marriage or divorce. Form 1040 for 2011 tax year   If your employee does not have an SSN, he or she should file Form SS-5, Application for a Social Security Card, with the SSA. Form 1040 for 2011 tax year This form is available at SSA offices or by calling 1-800-772-1213. Form 1040 for 2011 tax year It is also available from the SSA website at www. Form 1040 for 2011 tax year ssa. Form 1040 for 2011 tax year gov. Form 1040 for 2011 tax year Other payee. Form 1040 for 2011 tax year   If you make payments to someone who is not your employee and you must report the payments on an information return, get that person's SSN. Form 1040 for 2011 tax year If you make reportable payments to an organization, such as a corporation or partnership, you must get its EIN. Form 1040 for 2011 tax year   To get the payee's SSN or EIN, use Form W-9, Request for Taxpayer Identification Number and Certification. Form 1040 for 2011 tax year This form is available from IRS offices or by calling 1-800-829-3676. Form 1040 for 2011 tax year It is also available from the IRS website at IRS. Form 1040 for 2011 tax year gov. Form 1040 for 2011 tax year    If the payee does not provide you with an identification number, you may have to withhold part of the payments as backup withholding. Form 1040 for 2011 tax year For information on backup withholding, see the Form W-9 instructions and the General Instructions for Certain Information Returns. Form 1040 for 2011 tax year Tax Year You must figure your taxable income and file an income tax return based on an annual accounting period called a tax year. Form 1040 for 2011 tax year A tax year is usually 12 consecutive months. Form 1040 for 2011 tax year There are two kinds of tax years. Form 1040 for 2011 tax year Calendar tax year. Form 1040 for 2011 tax year A calendar tax year is 12 consecutive months beginning January 1 and ending December 31. Form 1040 for 2011 tax year Fiscal tax year. Form 1040 for 2011 tax year A fiscal tax year is 12 consecutive months ending on the last day of any month except December. Form 1040 for 2011 tax year A 52-53-week tax year is a fiscal tax year that varies from 52 to 53 weeks but does not have to end on the last day of a month. Form 1040 for 2011 tax year If you file your first tax return using the calendar tax year and you later begin business as a sole proprietor, become a partner in a partnership, or become a shareholder in an S corporation, you must continue to use the calendar year unless you get IRS approval to change it or are otherwise allowed to change it without IRS approval. Form 1040 for 2011 tax year You must use a calendar tax year if: You keep no books. Form 1040 for 2011 tax year You have no annual accounting period. Form 1040 for 2011 tax year Your present tax year does not qualify as a fiscal year. Form 1040 for 2011 tax year You are required to use a calendar year by a provision of the Internal Revenue Code or the Income Tax Regulations. Form 1040 for 2011 tax year For more information, see Publication 538, Accounting Periods and Methods. Form 1040 for 2011 tax year First-time filer. Form 1040 for 2011 tax year   If you have never filed an income tax return, you can adopt either a calendar tax year or a fiscal tax year. Form 1040 for 2011 tax year You adopt a tax year by filing your first income tax return using that tax year. Form 1040 for 2011 tax year You have not adopted a tax year if you merely did any of the following. Form 1040 for 2011 tax year Filed an application for an extension of time to file an income tax return. Form 1040 for 2011 tax year Filed an application for an employer identification number. Form 1040 for 2011 tax year Paid estimated taxes for that tax year. Form 1040 for 2011 tax year Changing your tax year. Form 1040 for 2011 tax year   Once you have adopted your tax year, you may have to get IRS approval to change it. Form 1040 for 2011 tax year To get approval, you must file Form 1128, Application To Adopt, Change, or Retain a Tax Year. Form 1040 for 2011 tax year You may have to pay a fee. Form 1040 for 2011 tax year For more information, see Publication 538. Form 1040 for 2011 tax year Accounting Method An accounting method is a set of rules used to determine when and how income and expenses are reported. Form 1040 for 2011 tax year You choose an accounting method for your business when you file your first income tax return. Form 1040 for 2011 tax year There are two basic accounting methods. Form 1040 for 2011 tax year Cash method. Form 1040 for 2011 tax year Under the cash method, you report income in the tax year you receive it. Form 1040 for 2011 tax year You usually deduct or capitalize expenses in the tax year you pay them. Form 1040 for 2011 tax year Accrual method. Form 1040 for 2011 tax year Under an accrual method, you generally report income in the tax year you earn it, even though you may receive payment in a later year. Form 1040 for 2011 tax year You deduct or capitalize expenses in the tax year you incur them, whether or not you pay them that year. Form 1040 for 2011 tax year For other methods, see Publication 538. Form 1040 for 2011 tax year If you need inventories to show income correctly, you must generally use an accrual method of accounting for purchases and sales. Form 1040 for 2011 tax year Inventories include goods held for sale in the normal course of business. Form 1040 for 2011 tax year They also include raw materials and supplies that will physically become a part of merchandise intended for sale. Form 1040 for 2011 tax year Inventories are explained in Publication 538. Form 1040 for 2011 tax year Certain small business taxpayers can use the cash method of accounting and can also account for inventoriable items as materials and supplies that are not incidental. Form 1040 for 2011 tax year For more information, see Publication 538. Form 1040 for 2011 tax year You must use the same accounting method to figure your taxable income and to keep your books. Form 1040 for 2011 tax year Also, you must use an accounting method that clearly shows your income. Form 1040 for 2011 tax year In general, any accounting method that consistently uses accounting principles suitable for your trade or business clearly shows income. Form 1040 for 2011 tax year An accounting method clearly shows income only if it treats all items of gross income and expense the same from year to year. Form 1040 for 2011 tax year More than one business. Form 1040 for 2011 tax year   When you own more than one business, you can use a different accounting method for each business if the method you use for each clearly shows your income. Form 1040 for 2011 tax year You must keep a complete and separate set of books and records for each business. Form 1040 for 2011 tax year Changing your method of accounting. Form 1040 for 2011 tax year   Once you have set up your accounting method, you must generally get IRS approval before you can change to another method. Form 1040 for 2011 tax year A change in accounting method not only includes a change in your overall system of accounting, but also a change in the treatment of any material item. Form 1040 for 2011 tax year For examples of changes that require approval and information on how to get approval for the change, see Publication 538. Form 1040 for 2011 tax year Business Taxes The form of business you operate determines what taxes you must pay and how you pay them. Form 1040 for 2011 tax year The following are the four general kinds of business taxes. Form 1040 for 2011 tax year Income tax. Form 1040 for 2011 tax year Self-employment tax. Form 1040 for 2011 tax year Employment taxes. Form 1040 for 2011 tax year Excise taxes. Form 1040 for 2011 tax year See Table 2 for the forms you file to report these taxes. Form 1040 for 2011 tax year You may want to get Publication 509. Form 1040 for 2011 tax year It has tax calendars that tell you when to file returns and make tax payments. Form 1040 for 2011 tax year Income Tax All businesses except partnerships must file an annual income tax return. Form 1040 for 2011 tax year Partnerships file an information return. Form 1040 for 2011 tax year Which form you use depends on how your business is organized. Form 1040 for 2011 tax year See Table 2 to find out which return you have to file. Form 1040 for 2011 tax year The federal income tax is a pay-as-you-go tax. Form 1040 for 2011 tax year You must pay the tax as you earn or receive income during the year. Form 1040 for 2011 tax year An employee usually has income tax withheld from his or her pay. Form 1040 for 2011 tax year If you do not pay your tax through withholding, or do not pay enough tax that way, you might have to pay estimated tax. Form 1040 for 2011 tax year If you are not required to make estimated tax payments, you may pay any tax due when you file your return. Form 1040 for 2011 tax year Table 2. Form 1040 for 2011 tax year Which Forms Must I File? IF you are a. Form 1040 for 2011 tax year . Form 1040 for 2011 tax year . Form 1040 for 2011 tax year   THEN you may be liable for. Form 1040 for 2011 tax year . Form 1040 for 2011 tax year . Form 1040 for 2011 tax year   Use Form. Form 1040 for 2011 tax year . Form 1040 for 2011 tax year . Form 1040 for 2011 tax year Sole proprietor   Income tax   1040 and Schedule C 1 or C-EZ (Schedule F 1 for farm business)     Self-employment tax   1040 and Schedule SE     Estimated tax   1040-ES     Employment taxes:         • Social security and Medicare   taxes and income tax   withholding   941 or 944 (943 for farm employees)     • Federal unemployment (FUTA)   tax   940     Excise taxes   See Excise Taxes Partnership   Annual return of income   1065     Employment taxes   Same as sole proprietor     Excise taxes   See Excise Taxes Partner in a partnership (individual)   Income tax   1040 and Schedule E 2     Self-employment tax   1040 and Schedule SE     Estimated tax   1040-ES Corporation or S corporation   Income tax   1120 (corporation) 2  1120S (S corporation) 2     Estimated tax   1120-W (corporation only)     Employment taxes   Same as sole proprietor     Excise taxes   See Excise Taxes S corporation shareholder   Income tax   1040 and Schedule E 2     Estimated tax   1040-ES 1 File a separate schedule for each business. Form 1040 for 2011 tax year 2 Various other schedules may be needed. Form 1040 for 2011 tax year Estimated tax. Form 1040 for 2011 tax year   Generally, you must pay taxes on income, including self-employment tax (discussed next), by making regular payments of estimated tax during the year. Form 1040 for 2011 tax year Sole proprietors, partners, and S corporation shareholders. Form 1040 for 2011 tax year   You generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return. Form 1040 for 2011 tax year Use Form 1040-ES, Estimated Tax for Individuals, to figure and pay your estimated tax. Form 1040 for 2011 tax year For more information, see Publication 505, Tax Withholding and Estimated Tax. Form 1040 for 2011 tax year Corporations. Form 1040 for 2011 tax year   You generally have to make estimated tax payments for your corporation if you expect it to owe tax of $500 or more when you file its return. Form 1040 for 2011 tax year Use Form 1120-W, Estimated Tax for Corporations, to figure the estimated tax. Form 1040 for 2011 tax year You must deposit the payments as explained later under Depositing Taxes. Form 1040 for 2011 tax year For more information, see Publication 542. Form 1040 for 2011 tax year Self-Employment Tax Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. Form 1040 for 2011 tax year Your payments of SE tax contribute to your coverage under the social security system. Form 1040 for 2011 tax year Social security coverage provides you with retirement benefits, disability benefits, survivor benefits, and hospital insurance (Medicare) benefits. Form 1040 for 2011 tax year You must pay SE tax and file Schedule SE (Form 1040) if either of the following applies. Form 1040 for 2011 tax year Your net earnings from self-employment were $400 or more. Form 1040 for 2011 tax year You had church employee income of $108. Form 1040 for 2011 tax year 28 or more. Form 1040 for 2011 tax year Use Schedule SE (Form 1040) to figure your SE tax. Form 1040 for 2011 tax year For more information, see Publication 334, Tax Guide for Small Business. Form 1040 for 2011 tax year You can deduct a portion of your SE tax as an adjustment to income on your Form 1040. Form 1040 for 2011 tax year The Social Security Administration (SSA) time limit for posting self-employment income. Form 1040 for 2011 tax year   Generally, the SSA will give you credit only for self-employment income reported on a tax return filed within 3 years, 3 months, and 15 days after the tax year you earned the income. Form 1040 for 2011 tax year If you file your tax return or report a change in your self-employment income after this time limit, the SSA may change its records, but only to remove or reduce the amount. Form 1040 for 2011 tax year The SSA will not change its records to increase your self-employment income. Form 1040 for 2011 tax year Employment Taxes This section briefly discusses the employment taxes you must pay, the forms you must file to report them, and other forms that must be filed when you have employees. Form 1040 for 2011 tax year Employment taxes include the following. Form 1040 for 2011 tax year Social security and Medicare taxes. Form 1040 for 2011 tax year Federal income tax withholding. Form 1040 for 2011 tax year Federal unemployment (FUTA) tax. Form 1040 for 2011 tax year If you have employees, you will need to get Publication 15, Circular E, Employer's Tax Guide. Form 1040 for 2011 tax year If you have agricultural employees, get Publication 51, Circular A, Agricultural Employer's Tax Guide. Form 1040 for 2011 tax year These publications explain your tax responsibilities as an employer. Form 1040 for 2011 tax year If you are not sure whether the people working for you are your employees, see Publication 15-A, Employer's Supplemental Tax Guide. Form 1040 for 2011 tax year That publication has information to help you determine whether an individual is an employee or an independent contractor. Form 1040 for 2011 tax year If you classify an employee as an independent contractor, you can be held liable for employment taxes for that worker plus a penalty. Form 1040 for 2011 tax year An independent contractor is someone who is self-employed. Form 1040 for 2011 tax year Generally, you do not have to withhold or pay any taxes on payments to an independent contractor. Form 1040 for 2011 tax year Federal Income, Social Security, and Medicare Taxes You generally must withhold federal income tax from your employee's wages. Form 1040 for 2011 tax year To figure how much federal income tax to withhold from each wage payment, use the employee's Form W-4 (discussed later under Hiring Employees) and the methods described in Publication 15. Form 1040 for 2011 tax year Social security and Medicare taxes pay for benefits that workers and their families receive under the Federal Insurance Contributions Act (FICA). Form 1040 for 2011 tax year Social security tax pays for benefits under the old-age, survivors, and disability insurance part of FICA. Form 1040 for 2011 tax year Medicare tax pays for benefits under the hospital insurance part of FICA. Form 1040 for 2011 tax year You withhold part of these taxes from your employee's wages and you pay a part yourself. Form 1040 for 2011 tax year To find out how much social security and Medicare tax to withhold and to pay, see Publication 15. Form 1040 for 2011 tax year Which form do I file?   Report these taxes on Form 941, Employer's QUARTERLY Federal Tax Return, or Form 944, Employer's ANNUAL Federal Tax Return. Form 1040 for 2011 tax year (Farm employers use Form 943, Employer's Annual Federal Tax Return for Agricultural Employees. Form 1040 for 2011 tax year ) Federal Unemployment (FUTA) Tax The federal unemployment tax is part of the federal and state program under the Federal Unemployment Tax Act (FUTA) that pays unemployment compensation to workers who lose their jobs. Form 1040 for 2011 tax year You report and pay FUTA tax separately from social security and Medicare taxes and withheld income tax. Form 1040 for 2011 tax year You pay FUTA tax only from your own funds. Form 1040 for 2011 tax year Employees do not pay this tax or have it withheld from their pay. Form 1040 for 2011 tax year Which form do I file?   Report federal unemployment tax on Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return. Form 1040 for 2011 tax year See Publication 15 to find out if you can use this form. Form 1040 for 2011 tax year Hiring Employees Have the employees you hire fill out Form I-9 and Form W-4. Form 1040 for 2011 tax year Form I-9. Form 1040 for 2011 tax year   You must verify that each new employee is legally eligible to work in the United States. Form 1040 for 2011 tax year Both you and the employee must complete the U. Form 1040 for 2011 tax year S. Form 1040 for 2011 tax year Citizenship and Immigration Services (USCIS) Form I-9, Employment Eligibility Verification. Form 1040 for 2011 tax year You can get the form from USCIS offices or from the USCIS website at www. Form 1040 for 2011 tax year uscis. Form 1040 for 2011 tax year gov. Form 1040 for 2011 tax year Call the USCIS at 1-800-375-5283 for more information about your responsibilities. Form 1040 for 2011 tax year Form W-4. Form 1040 for 2011 tax year   Each employee must fill out Form W-4, Employee's Withholding Allowance Certificate. Form 1040 for 2011 tax year You will use the filing status and withholding allowances shown on this form to figure the amount of income tax to withhold from your employee's wages. Form 1040 for 2011 tax year For more information, see Publication 15. Form 1040 for 2011 tax year Employees claiming more than 10 withholding allowances. Form 1040 for 2011 tax year   An employer of an employee who claims more than 10 withholding allowances for wages paid can use several methods of withholding. Form 1040 for 2011 tax year See section 16 of Publication 15. Form 1040 for 2011 tax year Form W-2 Wage Reporting After the calendar year is over, you must furnish copies of Form W-2, Wage and Tax Statement, to each employee to whom you paid wages during the year. Form 1040 for 2011 tax year You must also send copies to the Social Security Administration. Form 1040 for 2011 tax year See Information Returns, later, for more information on Form W-2. Form 1040 for 2011 tax year Excise Taxes This section describes the excise taxes you may have to pay and the forms you have to file if you do any of the following. Form 1040 for 2011 tax year Manufacture or sell certain products. Form 1040 for 2011 tax year Operate certain kinds of businesses. Form 1040 for 2011 tax year Use various kinds of equipment, facilities, or products. Form 1040 for 2011 tax year Receive payment for certain services. Form 1040 for 2011 tax year For more information on excise taxes, see Publication 510, Excise Taxes. Form 1040 for 2011 tax year Form 720. Form 1040 for 2011 tax year   The federal excise taxes reported on Form 720, Quarterly Federal Excise Tax Return, consist of several broad categories of taxes, including the following. Form 1040 for 2011 tax year Environmental taxes. Form 1040 for 2011 tax year Communications and air transportation taxes. Form 1040 for 2011 tax year Fuel taxes. Form 1040 for 2011 tax year Tax on the first retail sale of heavy trucks, trailers, and tractors. Form 1040 for 2011 tax year Manufacturers taxes on the sale or use of a variety of different articles. Form 1040 for 2011 tax year Form 2290. Form 1040 for 2011 tax year   There is a federal excise tax on certain trucks, truck tractors, and buses used on public highways. Form 1040 for 2011 tax year The tax applies to vehicles having a taxable gross weight of 55,000 pounds or more. Form 1040 for 2011 tax year Report the tax on Form 2290, Heavy Highway Vehicle Use Tax Return. Form 1040 for 2011 tax year For more information, see the instructions for Form 2290. Form 1040 for 2011 tax year Form 730. Form 1040 for 2011 tax year   If you are in the business of accepting wagers or conducting a wagering pool or lottery, you may be liable for the federal excise tax on wagering. Form 1040 for 2011 tax year Use Form 730, Monthly Tax Return for Wagers, to figure the tax on the wagers you receive. Form 1040 for 2011 tax year Form 11-C. Form 1040 for 2011 tax year   Use Form 11-C, Occupational Tax and Registration Return for Wagering, to register for any wagering activity and to pay the federal occupational tax on wagering. Form 1040 for 2011 tax year Depositing Taxes You generally have to deposit employment taxes, certain excise taxes, corporate income tax, and S corporation taxes before you file your return. Form 1040 for 2011 tax year Generally, taxpayers are required to deposit taxes through the Electronic Federal Tax Payment System (EFTPS). Form 1040 for 2011 tax year Any business that has a federal tax obligation and requests a new EIN will automatically be enrolled in EFTPS. Form 1040 for 2011 tax year Through the mail, the business will receive an EFTPS PIN package that contains instructions for activating its EFTPS enrollment. Form 1040 for 2011 tax year Information Returns If you make or receive payments in your business, you may have to report them to the IRS on information returns. Form 1040 for 2011 tax year The IRS compares the payments shown on the information returns with each person's income tax return to see if the payments were included in income. Form 1040 for 2011 tax year You must give a copy of each information return you are required to file to the recipient or payer. Form 1040 for 2011 tax year In addition to the forms described below, you may have to use other returns to report certain kinds of payments or transactions. Form 1040 for 2011 tax year For more details on information returns and when you have to file them, see the General Instructions for Certain Information Returns. Form 1040 for 2011 tax year Form 1099-MISC. Form 1040 for 2011 tax year   Use Form 1099-MISC, Miscellaneous Income, to report certain payments you make in your trade or business. Form 1040 for 2011 tax year These payments include the following items. Form 1040 for 2011 tax year Payments of $600 or more for services performed for your business by people not treated as your employees, such as subcontractors, attorneys, accountants, or directors. Form 1040 for 2011 tax year Rent payments of $600 or more, other than rents paid to real estate agents. Form 1040 for 2011 tax year Prizes and awards of $600 or more that are not for services, such as winnings on TV or radio shows. Form 1040 for 2011 tax year Royalty payments of $10 or more. Form 1040 for 2011 tax year Payments to certain crew members by operators of fishing boats. Form 1040 for 2011 tax year You also use Form 1099-MISC to report your sales of $5,000 or more of consumer goods to a person for resale anywhere other than in a permanent retail establishment. Form 1040 for 2011 tax year Form W-2. Form 1040 for 2011 tax year   You must file Form W-2, Wage and Tax Statement, to report payments to your employees, such as wages, tips, and other compensation, withheld income, social security, and Medicare taxes. Form 1040 for 2011 tax year For more information on what to report on Form W-2, see the Instructions for Forms W-2 and W-3. Form 1040 for 2011 tax year Form 8300. Form 1040 for 2011 tax year   You must file Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, if you receive more than $10,000 in cash in one transaction or two or more related business transactions. Form 1040 for 2011 tax year Cash includes U. Form 1040 for 2011 tax year S. Form 1040 for 2011 tax year and foreign coin and currency. Form 1040 for 2011 tax year It also includes certain monetary instruments such as cashier's and traveler's checks and money orders. Form 1040 for 2011 tax year For more information, see Publication 1544, Reporting Cash Payments of Over $10,000 (Received in a Trade or Business). Form 1040 for 2011 tax year Penalties The law provides penalties for not filing returns or paying taxes as required. Form 1040 for 2011 tax year Criminal penalties may be imposed for willful failure to file, tax evasion, or making a false statement. Form 1040 for 2011 tax year Failure to file tax returns. Form 1040 for 2011 tax year   If you do not file your tax return by the due date, you may have to pay a penalty. Form 1040 for 2011 tax year The penalty is based on the tax not paid by the due date. Form 1040 for 2011 tax year See your tax return instructions for more information about this penalty. Form 1040 for 2011 tax year Failure to pay tax. Form 1040 for 2011 tax year   If you do not pay your taxes by the due date, you will have to pay a penalty for each month, or part of a month, that your taxes are not paid. Form 1040 for 2011 tax year For more information, see your tax return instructions. Form 1040 for 2011 tax year Failure to withhold, deposit, or pay taxes. Form 1040 for 2011 tax year   If you do not withhold income, social security, or Medicare taxes from employees, or if you withhold taxes but do not deposit them or pay them to the IRS, you may be subject to a penalty of the unpaid tax, plus interest. Form 1040 for 2011 tax year You may also be subject to penalties if you deposit the taxes late. Form 1040 for 2011 tax year For more information, see Publication 15. Form 1040 for 2011 tax year Failure to follow information reporting requirements. Form 1040 for 2011 tax year   The following penalties apply if you are required to file information returns. Form 1040 for 2011 tax year For more information, see the General Instructions for Certain Information Returns. Form 1040 for 2011 tax year Failure to file information returns. Form 1040 for 2011 tax year A penalty applies if you do not file information returns by the due date, if you do not include all required information, or if you report incorrect information. Form 1040 for 2011 tax year Failure to furnish correct payee statements. Form 1040 for 2011 tax year A penalty applies if you do not furnish a required statement to a payee by the due date, if you do not include all required information, or if you report incorrect information. Form 1040 for 2011 tax year Waiver of penalty. Form 1040 for 2011 tax year   These penalties will not apply if you can show that the failures were due to reasonable cause and not willful neglect. Form 1040 for 2011 tax year   In addition, there is no penalty for failure to include all the required information, or for including incorrect information, on a de minimis number of information returns if you correct the errors by August 1 of the year the returns are due. Form 1040 for 2011 tax year (To be considered de minimis, the number of returns cannot exceed the greater of 10 or ½ of 1% of the total number of returns you are required to file for the year. Form 1040 for 2011 tax year ) Failure to supply taxpayer identification number. Form 1040 for 2011 tax year   If you do not include your taxpayer identification number (SSN or EIN) or the taxpayer identification number of another person where required on a return, statement, or other document, you may be subject to a penalty of $50 for each failure. Form 1040 for 2011 tax year You may also be subject to the $50 penalty if you do not give your taxpayer identification number to another person when it is required on a return, statement, or other document. Form 1040 for 2011 tax year Business Expenses You can deduct business expenses on your income tax return. Form 1040 for 2011 tax year These are the current operating costs of running your business. Form 1040 for 2011 tax year To be deductible, a business expense must be both ordinary and necessary. Form 1040 for 2011 tax year An ordinary expense is one that is common and accepted in your field of business, trade, or profession. Form 1040 for 2011 tax year A necessary expense is one that is helpful and appropriate for your business, trade, or profession. Form 1040 for 2011 tax year An expense does not have to be indispensable to be considered necessary. Form 1040 for 2011 tax year The following are brief explanations of some expenses that are of interest to people starting a business. Form 1040 for 2011 tax year There are many other expenses that you may be able to deduct. Form 1040 for 2011 tax year See your form instructions and Publication 535, Business Expenses. Form 1040 for 2011 tax year Business Start-Up Costs Business start-up costs are the expenses you incur before you actually begin business operations. Form 1040 for 2011 tax year Your business start-up costs will depend on the type of business you are starting. Form 1040 for 2011 tax year They may include costs for advertising, travel, surveys, and training. Form 1040 for 2011 tax year These costs are generally capital expenses. Form 1040 for 2011 tax year You usually recover costs for a particular asset (such as machinery or office equipment) through depreciation (discussed next). Form 1040 for 2011 tax year You can elect to deduct up to $5,000 of business start-up costs and $5,000 of organizational costs paid or incurred after October 22, 2004. Form 1040 for 2011 tax year The $5,000 deduction is reduced by the amount your total start-up or organizational costs exceed $50,000. Form 1040 for 2011 tax year Any remaining cost must be amortized. Form 1040 for 2011 tax year For more information about amortizing start-up and organizational costs, see chapter 7 in Publication 535. Form 1040 for 2011 tax year Depreciation If property you acquire to use in your business has a useful life that extends substantially beyond the year it is placed in service, you generally cannot deduct the entire cost as a business expense in the year you acquire it. Form 1040 for 2011 tax year You must spread the cost over more than one tax year and deduct part of it each year. Form 1040 for 2011 tax year This method of deducting the cost of business property is called depreciation. Form 1040 for 2011 tax year Business property you must depreciate includes the following items. Form 1040 for 2011 tax year Office furniture. Form 1040 for 2011 tax year Buildings. Form 1040 for 2011 tax year Machinery and equipment. Form 1040 for 2011 tax year You can choose to deduct a limited amount of the cost of certain depreciable property in the year you place the property in service. Form 1040 for 2011 tax year This deduction is known as the “section 179 deduction. Form 1040 for 2011 tax year ” For more information about depreciation and the section 179 deduction, see Publication 946, How To Depreciate Property. Form 1040 for 2011 tax year Depreciation must be taken in the year it is allowable. Form 1040 for 2011 tax year Allowable depreciation not taken in a prior year cannot be taken in the current year. Form 1040 for 2011 tax year If you do not deduct the correct depreciation, you may be able to make a correction by filing Form 1040X, Amended U. Form 1040 for 2011 tax year S. Form 1040 for 2011 tax year Individual Income Tax Return, or by changing your accounting method. Form 1040 for 2011 tax year For more information on how to correct depreciation deductions, see chapter 1 in Publication 946. Form 1040 for 2011 tax year Business Use of Your Home To deduct expenses related to the business use of part of your home, you must meet specific requirements. Form 1040 for 2011 tax year Even then, your deduction may be limited. Form 1040 for 2011 tax year To qualify to claim expenses for business use of your home, you must meet both the following tests. Form 1040 for 2011 tax year Your use of the business part of your home must be: Exclusive (however, see Exceptions to exclusive use, later), Regular, For your trade or business, AND The business part of your home must be one of the following: Your principal place of business (defined later), A place where you meet or deal with patients, clients, or customers in the normal course of your trade or business, or A separate structure (not attached to your home) you use in connection with your trade or business. Form 1040 for 2011 tax year Exclusive use. Form 1040 for 2011 tax year   To qualify under the exclusive use test, you must use a specific area of your home only for your trade or business. Form 1040 for 2011 tax year The area used for business can be a room or other separately identifiable space. Form 1040 for 2011 tax year The space does not need to be marked off by a permanent partition. Form 1040 for 2011 tax year   You do not meet the requirements of the exclusive use test if you use the area in question both for business and for personal purposes. Form 1040 for 2011 tax year Exceptions to exclusive use. Form 1040 for 2011 tax year   You do not have to meet the exclusive use test if either of the following applies. Form 1040 for 2011 tax year You use part of your home for the storage of inventory or product samples. Form 1040 for 2011 tax year You use part of your home as a daycare facility. Form 1040 for 2011 tax year For an explanation of these exceptions, see Publication 587, Business Use of Your Home (Including Use by Daycare Providers). Form 1040 for 2011 tax year Principal place of business. Form 1040 for 2011 tax year   Your home office will qualify as your principal place of business for deducting expenses for its use if you meet the following requirements. Form 1040 for 2011 tax year You use it exclusively and regularly for administrative or management activities of your trade or business. Form 1040 for 2011 tax year You have no other fixed location where you conduct substantial administrative or management activities of your trade or business. Form 1040 for 2011 tax year   Alternatively, if you use your home exclusively and regularly for your business, but your home office does not qualify as your principal place of business based on the previous rules, you determine your principal place of business based on the following factors. Form 1040 for 2011 tax year The relative importance of the activities performed at each location. Form 1040 for 2011 tax year If the relative importance factor does not determine your principal place of business, the time spent at each location. Form 1040 for 2011 tax year    If, after considering your business locations, your home cannot be identified as your principal place of business, you cannot deduct home office expenses. Form 1040 for 2011 tax year However, for other ways to qualify to deduct home office expenses, see Publication 587. Form 1040 for 2011 tax year Which form do I file?   If you file Schedule C (Form 1040), use Form 8829, Expenses for Business Use of Your Home, to figure your deduction. Form 1040 for 2011 tax year If you file Schedule F (Form 1040) or you are a partner, you can use the worksheet in Publication 587. Form 1040 for 2011 tax year More information. Form 1040 for 2011 tax year   For more information about business use of your home, see Publication 587. Form 1040 for 2011 tax year Car and Truck Expenses If you use your car or truck in your business, you can deduct the costs of operating and maintaining it. Form 1040 for 2011 tax year You generally can deduct either your actual expenses or the standard mileage rate. Form 1040 for 2011 tax year Actual expenses. Form 1040 for 2011 tax year   If you deduct actual expenses, you can deduct the cost of the following items: Depreciation Lease payments Registration Garage rent Licenses Repairs Gas Oil Tires Insurance Parking fees Tolls   If you use your vehicle for both business and personal purposes, you must divide your expenses between business and personal use. Form 1040 for 2011 tax year You can divide your expenses based on the miles driven for each purpose. Form 1040 for 2011 tax year Example. Form 1040 for 2011 tax year You are the sole proprietor of a flower shop. Form 1040 for 2011 tax year You drove your van 20,000 miles during the year. Form 1040 for 2011 tax year 16,000 miles were for delivering flowers to customers and 4,000 miles were for personal use. Form 1040 for 2011 tax year You can claim only 80% (16,000 ÷ 20,000) of the cost of operating your van as a business expense. Form 1040 for 2011 tax year Standard mileage rate. Form 1040 for 2011 tax year   Instead of figuring actual expenses, you may be able to use the standard mileage rate to figure the deductible costs of operating your car, van, pickup, or panel truck for business purposes. Form 1040 for 2011 tax year You can use the standard mileage rate for a vehicle you own or lease. Form 1040 for 2011 tax year The standard mileage rate is a specified amount of money you can deduct for each business mile you drive. Form 1040 for 2011 tax year It is announced annually by the IRS. Form 1040 for 2011 tax year To figure your deduction, multiply your business miles by the standard mileage rate for the year. Form 1040 for 2011 tax year    Generally, if you use the standard mileage rate, you cannot deduct your actual expenses. Form 1040 for 2011 tax year However, you may be able to deduct business-related parking fees, tolls, interest on your car loan, and certain state and local taxes. Form 1040 for 2011 tax year Choosing the standard mileage rate. Form 1040 for 2011 tax year   If you want to use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. Form 1040 for 2011 tax year In later years, you can choose to use either the standard mileage rate or actual expenses. Form 1040 for 2011 tax year   If you use the standard mileage rate for a car you lease, you must choose to use it for the entire lease period (including renewals). Form 1040 for 2011 tax year Additional information. Form 1040 for 2011 tax year   For more information about the rules for claiming car and truck expenses, see Publication 463, Travel, Entertainment, Gift, and Car Expenses. Form 1040 for 2011 tax year Recordkeeping This part explains why you must keep records, what kinds of records you must keep, and how to keep them. Form 1040 for 2011 tax year It also explains how long you must keep your records for federal tax purposes. Form 1040 for 2011 tax year A sample recordkeeping system is illustrated at the end of this part. Form 1040 for 2011 tax year Why Keep Records? Everyone in business must keep records. Form 1040 for 2011 tax year Good records will help you do the following. Form 1040 for 2011 tax year Monitor the progress of your business. Form 1040 for 2011 tax year   You need good records to monitor the progress of your business. Form 1040 for 2011 tax year Records can show whether your business is improving, which items are selling, or what changes you need to make. Form 1040 for 2011 tax year Good records can increase the likelihood of business success. Form 1040 for 2011 tax year Prepare your financial statements. Form 1040 for 2011 tax year   You need good records to prepare accurate financial statements. Form 1040 for 2011 tax year These include income (profit and loss) statements and balance sheets. Form 1040 for 2011 tax year These statements can help you in dealing with your bank or creditors and help you manage your business. Form 1040 for 2011 tax year An income statement shows the income and expenses of the business for a given period of time. Form 1040 for 2011 tax year A balance sheet shows the assets, liabilities, and your equity in the business on a given date. Form 1040 for 2011 tax year Identify source of receipts. Form 1040 for 2011 tax year   You will receive money or property from many sources. Form 1040 for 2011 tax year Your records can identify the source of your receipts. Form 1040 for 2011 tax year You need this information to separate business from nonbusiness receipts and taxable from nontaxable income. Form 1040 for 2011 tax year Keep track of deductible expenses. Form 1040 for 2011 tax year   You may forget expenses when you prepare your tax return unless you record them when they occur. Form 1040 for 2011 tax year Prepare your tax returns. Form 1040 for 2011 tax year   You need good records to prepare your tax returns. Form 1040 for 2011 tax year These records must support the income, expenses, and credits you report. Form 1040 for 2011 tax year Generally, these are the same records you use to monitor your business and prepare your financial statements. Form 1040 for 2011 tax year Support items reported on tax returns. Form 1040 for 2011 tax year   You must keep your business records available at all times for inspection by the IRS. Form 1040 for 2011 tax year If the IRS examines any of your tax returns, you may be asked to explain the items reported. Form 1040 for 2011 tax year A complete set of records will speed up the examination. Form 1040 for 2011 tax year Kinds of Records To Keep Except in a few cases, the law does not require any specific kind of records. Form 1040 for 2011 tax year You can choose any recordkeeping system suited to your business that clearly shows your income and expenses. Form 1040 for 2011 tax year The business you are in affects the type of records you need to keep for federal tax purposes. Form 1040 for 2011 tax year You should set up your recordkeeping system using an accounting method that clearly shows your income for your tax year. Form 1040 for 2011 tax year See Accounting Method, earlier. Form 1040 for 2011 tax year If you are in more than one business, you should keep a complete and separate set of records for each business. Form 1040 for 2011 tax year A corporation should keep minutes of board of directors' meetings. Form 1040 for 2011 tax year Your recordkeeping system should include a summary of your business transactions. Form 1040 for 2011 tax year This summary is ordinarily made in your books (for example, accounting journals and ledgers). Form 1040 for 2011 tax year Your books must show your gross income, as well as your deductions and credits. Form 1040 for 2011 tax year For most small businesses, the business checkbook (discussed later) is the main source for entries in the business books. Form 1040 for 2011 tax year In addition, you must keep supporting documents, explained later. Form 1040 for 2011 tax year Electronic records. Form 1040 for 2011 tax year   All requirements that apply to hard copy books and records also apply to electronic storage systems that maintain tax books and records. Form 1040 for 2011 tax year When you replace hard copy books and records, you must maintain the electronic storage systems for as long as they are material to the administration of tax law. Form 1040 for 2011 tax year An electronic storage system is any system for preparing or keeping your records either by electronic imaging or by transfer to an electronic storage media. Form 1040 for 2011 tax year The electronic storage system must index, store, preserve, retrieve and reproduce the electronically stored books and records in legible format. Form 1040 for 2011 tax year All electronic storage systems must provide a complete and accurate record of your data that is accessible to the IRS. Form 1040 for 2011 tax year Electronic storage systems are also subject to the same controls and retention guidelines as those imposed on your original hard copy books and records. Form 1040 for 2011 tax year   The original hard copy books and records may be destroyed provided that the electronic storage system has been tested to establish that the hard copy books and records are being reproduced in compliance with IRS requirements for an electronic storage system and procedures are established to ensure continued compliance with all applicable rules and regulations. Form 1040 for 2011 tax year You still have the responsibility of retaining any other books and records that are required to be retained. Form 1040 for 2011 tax year   The IRS may test your electronic storage system, including the equipment used, indexing methodology, software and retrieval capabilities. Form 1040 for 2011 tax year This test is not considered an examination and the results must be shared with you. Form 1040 for 2011 tax year If your electronic storage system meets the requirements mentioned earlier, you will be in compliance. Form 1040 for 2011 tax year If not, you may be subject to penalties for non-compliance, unless you continue to maintain your original hard copy books and records in a manner that allows you and the IRS to determine your correct tax. Form 1040 for 2011 tax year For details on electronic storage system requirements, see Revenue Procedure 97-22, available in Internal Revenue Bulletin 1997-13. Form 1040 for 2011 tax year Supporting Documents Purchases, sales, payroll, and other transactions you have in your business generate supporting documents. Form 1040 for 2011 tax year Supporting documents include sales slips, paid bills, invoices, receipts, deposit slips, and canceled checks. Form 1040 for 2011 tax year These documents contain information you need to record in your books. Form 1040 for 2011 tax year It is important to keep these documents because they support the entries in your books and on your tax return. Form 1040 for 2011 tax year Keep them in an orderly fashion and in a safe place. Form 1040 for 2011 tax year For instance, organize them by year and type of income or expense. Form 1040 for 2011 tax year Gross receipts. Form 1040 for 2011 tax year   Gross receipts are the income you receive from your business. Form 1040 for 2011 tax year You should keep supporting documents that show the amounts and sources of your gross receipts. Form 1040 for 2011 tax year Documents that show gross receipts include the following. Form 1040 for 2011 tax year Cash register tapes. Form 1040 for 2011 tax year Bank deposit slips. Form 1040 for 2011 tax year Receipt books. Form 1040 for 2011 tax year Invoices. Form 1040 for 2011 tax year Credit card charge slips. Form 1040 for 2011 tax year Forms 1099-MISC. Form 1040 for 2011 tax year Purchases. Form 1040 for 2011 tax year   Purchases are the items you buy and resell to customers. Form 1040 for 2011 tax year If you are a manufacturer or producer, this includes the cost of all raw materials or parts purchased for manufacture into finished products. Form 1040 for 2011 tax year Your supporting documents should show the amount paid and that the amount was for purchases. Form 1040 for 2011 tax year Documents for purchases include the following. Form 1040 for 2011 tax year Canceled checks. Form 1040 for 2011 tax year Cash register tape receipts. Form 1040 for 2011 tax year Credit card sales slips. Form 1040 for 2011 tax year Invoices. Form 1040 for 2011 tax year These records will help you determine the value of your inventory at the end of the year. Form 1040 for 2011 tax year See Publication 538 for information on methods for valuing inventory. Form 1040 for 2011 tax year Expenses. Form 1040 for 2011 tax year   Expenses are the costs you incur (other than purchases) to carry on your business. Form 1040 for 2011 tax year Your supporting documents should show the amount paid and that the amount was for a business expense. Form 1040 for 2011 tax year Documents for expenses include the following. Form 1040 for 2011 tax year Canceled checks. Form 1040 for 2011 tax year Cash register tapes. Form 1040 for 2011 tax year Account statements. Form 1040 for 2011 tax year Credit card sales slips. Form 1040 for 2011 tax year Invoices. Form 1040 for 2011 tax year Petty cash slips for small cash payments. Form 1040 for 2011 tax year    A petty cash fund allows you to make small payments without having to write checks for small amounts. Form 1040 for 2011 tax year Each time you make a payment from this fund, you should make out a petty cash slip and attach it to your receipt as proof of payment. Form 1040 for 2011 tax year Travel, transportation, entertainment, and gift expenses. Form 1040 for 2011 tax year   Specific recordkeeping rules apply to these expenses. Form 1040 for 2011 tax year For more information, see Publication 463. Form 1040 for 2011 tax year Employment taxes. Form 1040 for 2011 tax year   There are specific employment tax records you must keep. Form 1040 for 2011 tax year For a list, see Publication 15. Form 1040 for 2011 tax year Assets. Form 1040 for 2011 tax year   Assets are the property, such as machinery and furniture you own and use in your business. Form 1040 for 2011 tax year You must keep records to verify certain information about your business assets. Form 1040 for 2011 tax year You need records to figure the annual depreciation and the gain or loss when you sell the assets. Form 1040 for 2011 tax year Your records should show the following information. Form 1040 for 2011 tax year When and how you acquired the asset. Form 1040 for 2011 tax year Purchase price. Form 1040 for 2011 tax year Cost of any improvements. Form 1040 for 2011 tax year Section 179 deduction taken. Form 1040 for 2011 tax year Deductions taken for depreciation. Form 1040 for 2011 tax year Deductions taken for casualty losses, such as losses resulting from fires or storms. Form 1040 for 2011 tax year How you used the asset. Form 1040 for 2011 tax year When and how you disposed of the asset. Form 1040 for 2011 tax year Selling price. Form 1040 for 2011 tax year Expenses of sale. Form 1040 for 2011 tax year   The following documents may show this information. Form 1040 for 2011 tax year Purchase and sales invoices. Form 1040 for 2011 tax year Real estate closing statements. Form 1040 for 2011 tax year Canceled checks. Form 1040 for 2011 tax year What if I don't have a canceled check?   If you do not have a canceled check, you may be able to prove payment with certain financial account statements prepared by financial institutions. Form 1040 for 2011 tax year These include account statements prepared for the financial institution by a third party. Form 1040 for 2011 tax year These account statements must be highly legible. Form 1040 for 2011 tax year The following table lists acceptable account statements. Form 1040 for 2011 tax year  IF payment is by. Form 1040 for 2011 tax year . Form 1040 for 2011 tax year . Form 1040 for 2011 tax year THEN the statement must show the. Form 1040 for 2011 tax year . Form 1040 for 2011 tax year . Form 1040 for 2011 tax year Check Check number. Form 1040 for 2011 tax year Amount. Form 1040 for 2011 tax year Payee's name. Form 1040 for 2011 tax year Date the check amount was posted to the account by the financial institution. Form 1040 for 2011 tax year Electronic funds transfer Amount transferred. Form 1040 for 2011 tax year Payee's name. Form 1040 for 2011 tax year Date the transfer was posted to the account by the financial institution. Form 1040 for 2011 tax year Credit card Amount charged. Form 1040 for 2011 tax year Payee's name. Form 1040 for 2011 tax year Transaction date. Form 1040 for 2011 tax year    Proof of payment of an amount, by itself, does not establish you are entitled to a tax deduction. Form 1040 for 2011 tax year You should also keep other documents, such as credit card sales slips and invoices, to show that you also incurred the cost. Form 1040 for 2011 tax year Recording Business Transactions A good recordkeeping system includes a summary of your business transactions. Form 1040 for 2011 tax year (Your business transactions are shown on the supporting documents just discussed. Form 1040 for 2011 tax year ) Business transactions are ordinarily summarized in books called journals and ledgers. Form 1040 for 2011 tax year You can buy them at your local stationery or office supply store. Form 1040 for 2011 tax year A journal is a book where you record each business transaction shown on your supporting documents. Form 1040 for 2011 tax year You may have to keep separate journals for transactions that occur frequently. Form 1040 for 2011 tax year A ledger is a book that contains the totals from all of your journals. Form 1040 for 2011 tax year It is organized into different accounts. Form 1040 for 2011 tax year Whether you keep journals and ledgers and how you keep them depends on the type of business you are in. Form 1040 for 2011 tax year For example, a recordkeeping system for a small business might include the following items. Form 1040 for 2011 tax year Business checkbook. Form 1040 for 2011 tax year Daily summary of cash receipts. Form 1040 for 2011 tax year Monthly summary of cash receipts. Form 1040 for 2011 tax year Check disbursements journal. Form 1040 for 2011 tax year Depreciation worksheet. Form 1040 for 2011 tax year Employee compensation record. Form 1040 for 2011 tax year The business checkbook is explained next. Form 1040 for 2011 tax year The other items are illustrated later under Sample Record System. Form 1040 for 2011 tax year The system you use to record business transactions will be more effective if you follow good recordkeeping practices. Form 1040 for 2011 tax year For example, record expenses when they occur, and identify the source of recorded receipts. Form 1040 for 2011 tax year Generally, it is best to record transactions on a daily basis. Form 1040 for 2011 tax year Business checkbook. Form 1040 for 2011 tax year   One of the first things you should do when you start a business is open a business checking account. Form 1040 for 2011 tax year You should keep your business account separate from your personal checking account. Form 1040 for 2011 tax year   The business checkbook is your basic source of information for recording your business expenses. Form 1040 for 2011 tax year You should deposit all daily receipts in your business checking account. Form 1040 for 2011 tax year You should check your account for errors by reconciling it. Form 1040 for 2011 tax year See Reconciling the checking account, later. Form 1040 for 2011 tax year   Consider using a checkbook that allows enough space to identify the source of deposits as business income, personal funds, or loans. Form 1040 for 2011 tax year You should also note on the deposit slip the source of the deposit and keep copies of all slips. Form 1040 for 2011 tax year   You should make all payments by check to document business expenses. Form 1040 for 2011 tax year Write checks payable to yourself only when making withdrawals from your business for personal use. Form 1040 for 2011 tax year Avoid writing checks payable to cash. Form 1040 for 2011 tax year If you must write a check for cash to pay a business expense, include the receipt for the cash payment in your records. Form 1040 for 2011 tax year If you cannot get a receipt for a cash payment, you should make an adequate explanation in your records at the time of payment. Form 1040 for 2011 tax year    Use the business account for business purposes only. Form 1040 for 2011 tax year Indicate the source of deposits and the type of expense in the checkbook. Form 1040 for 2011 tax year Reconciling the checking account. Form 1040 for 2011 tax year   When you receive your bank statement, make sure the statement, your checkbook, and your books agree. Form 1040 for 2011 tax year The statement balance may not agree with the balance in your checkbook and books if the statement: Includes bank charges you did not enter in your books and subtract from your checkbook balance, or Does not include deposits made after the statement date or checks that did not clear your account before the statement date. Form 1040 for 2011 tax year   By reconciling your checking account, you will: Verify how much money you have in the account, Make sure that your checkbook and books reflect all bank charges and the correct balance in the checking account, and Correct any errors in your bank statement, checkbook, and books. Form 1040 for 2011 tax year    You should reconcile your checking account each month. Form 1040 for 2011 tax year     Before you reconcile your monthly bank statement, check your own figures. Form 1040 for 2011 tax year Begin with the balance shown in your checkbook at the end of the previous month. Form 1040 for 2011 tax year To this balance, add the total cash deposited during the month and subtract the total cash disbursements. Form 1040 for 2011 tax year   After checking your figures, the result should agree with your checkbook balance at the end of the month. Form 1040 for 2011 tax year If the result does not agree, you may have made an error in recording a check or deposit. Form 1040 for 2011 tax year You can find the error by doing the following. Form 1040 for 2011 tax year Adding the amounts on your check stubs and comparing that total with the total in the “amount of check” column in your check disbursements journal. Form 1040 for 2011 tax year If the totals do not agree, check the individual amounts to see if an error was made in your check stub record or in the related entry in your check disbursements journal. Form 1040 for 2011 tax year Adding the deposit amounts in your checkbook. Form 1040 for 2011 tax year Compare that total with the monthly total in your cash receipt book, if you have one. Form 1040 for 2011 tax year If the totals do not agree, check the individual amounts to find any errors. Form 1040 for 2011 tax year   If your checkbook and journal entries still disagree, then refigure the running balance in your checkbook to make sure additions and subtractions are correct. Form 1040 for 2011 tax year   When your checkbook balance agrees with the balance figured from the journal entries, you may begin reconciling your checkbook with the bank statement. Form 1040 for 2011 tax year Many banks print a reconciliation worksheet on the back of the statement. Form 1040 for 2011 tax year   To reconcile your account, follow these steps. Form 1040 for 2011 tax year Compare the deposits listed on the bank statement with the deposits shown in your checkbook. Form 1040 for 2011 tax year Note all differences in the dollar amounts. Form 1040 for 2011 tax year Compare each canceled check, including both check number and dollar amount, with the entry in your checkbook. Form 1040 for 2011 tax year Note all differences in the dollar amounts. Form 1040 for 2011 tax year Mark the check number in the checkbook as having cleared the bank. Form 1040 for 2011 tax year After accounting for all checks returned by the bank, those not marked in your checkbook are your outstanding checks. Form 1040 for 2011 tax year Prepare a bank reconciliation. Form 1040 for 2011 tax year One is illustrated later under Sample Record System. Form 1040 for 2011 tax year Update your checkbook and journals for items shown on the reconciliation as not recorded (such as service charges) or recorded incorrectly. Form 1040 for 2011 tax year At this point, the adjusted bank statement balance should equal your adjusted checkbook balance. Form 1040 for 2011 tax year If you still have differences, check the previous steps to find the errors. Form 1040 for 2011 tax year   Table 3. Form 1040 for 2011 tax year Period of Limitations IF you. Form 1040 for 2011 tax year . Form 1040 for 2011 tax year . Form 1040 for 2011 tax year   THEN the period is. Form 1040 for 2011 tax year . Form 1040 for 2011 tax year . Form 1040 for 2011 tax year 1. Form 1040 for 2011 tax year Owe additional tax and situations (2), (3), and (4), below, do not apply to you   3 years 2. Form 1040 for 2011 tax year Do not report income that you should report and it is more than 25% of the gross income shown on the return   6 years 3. Form 1040 for 2011 tax year File a fraudulent return   Not limited 4. Form 1040 for 2011 tax year Do not file a return   Not limited 5. Form 1040 for 2011 tax year File a claim for credit or refund after you filed your return   Later of: 3 years or  2 years after tax   was paid 6. Form 1040 for 2011 tax year File a claim for a loss from worthless securities or a bad debt deduction   7 years Bookkeeping System You must decide whether to use a single-entry or a double-entry bookkeeping system. Form 1040 for 2011 tax year The single-entry system of bookkeeping is the simplest to maintain, but it may not be suitable for everyone. Form 1040 for 2011 tax year You may find the double-entry system better because it has built-in checks and balances to assure accuracy and control. Form 1040 for 2011 tax year Single-entry. Form 1040 for 2011 tax year   A single-entry system is based on the income statement (profit or loss statement). Form 1040 for 2011 tax year It can be a simple and practical system if you are starting a small business. Form 1040 for 2011 tax year The system records the flow of income and expenses through the use of: A daily summary of cash receipts, and Monthly summaries of cash receipts and disbursements. Form 1040 for 2011 tax year Double-entry. Form 1040 for 2011 tax year   A double-entry bookkeeping system uses journals and ledgers. Form 1040 for 2011 tax year Transactions are first entered in a journal and then posted to ledger accounts. Form 1040 for 2011 tax year These accounts show income, expenses, assets (property a business owns), liabilities (debts of a business), and net worth (excess of assets over liabilities). Form 1040 for 2011 tax year You close income and expense accounts at the end of each tax year. Form 1040 for 2011 tax year You keep asset, liability, and net worth accounts open on a permanent basis. Form 1040 for 2011 tax year   In the double-entry system, each account has a left side for debits and a right side for credits. Form 1040 for 2011 tax year It is self-balancing because you record every transaction as a debit entry in one account and as a credit entry in another. Form 1040 for 2011 tax year   Under this system, the total debits must equal the total credits after you post the journal entries to the ledger accounts. Form 1040 for 2011 tax year If the amounts do not balance, you have made an error and you must find and correct it. Form 1040 for 2011 tax year   An example of a journal entry exhibiting a payment of rent in October is shown next. Form 1040 for 2011 tax year General Journal Date Description of Entry Debit  Credit Oct. Form 1040 for 2011 tax year 5 Rent expense 780. Form 1040 for 2011 tax year 00     Cash   780. Form 1040 for 2011 tax year 00                 Computerized System There are computer software packages you can use for recordkeeping. Form 1040 for 2011 tax year They can be purchased in many retail stores. Form 1040 for 2011 tax year These packages are very helpful and relatively easy to use; they require very little knowledge of bookkeeping and accounting. Form 1040 for 2011 tax year If you use a computerized system, you must be able to produce sufficient legible records to support and verify entries made on your return and determine your correct tax liability. Form 1040 for 2011 tax year To meet this qualification, the machine-sensible records must reconcile with your books and return. Form 1040 for 2011 tax year These records must provide enough detail to identify the underlying source documents. Form 1040 for 2011 tax year You must also keep all machine-sensible records and a complete description of the computerized portion of your recordkeeping system. Form 1040 for 2011 tax year This documentation must be sufficiently detailed to show all of the following items. Form 1040 for 2011 tax year Functions being performed as the data flows through the system. Form 1040 for 2011 tax year Controls used to ensure accurate and reliable processing. Form 1040 for 2011 tax year Controls used to prevent the unauthorized addition, alteration, or deletion of retained records. Form 1040 for 2011 tax year Charts of accounts and detailed account descriptions. Form 1040 for 2011 tax year See Revenue Procedure 98-25 in Cumulative Bulletin 1998-1 for more information. Form 1040 for 2011 tax year How Long To Keep Records You must keep your records as long as they may be needed for the administration of any provision of the Internal Revenue Code. Form 1040 for 2011 tax year Generally, this means you must keep records that support an item of income or deduction on a return until the period of limitations for that return runs out. Form 1040 for 2011 tax year The period of limitations is the period of time in which you can amend your return to claim a credit or refund, or the IRS can assess additional tax. Form 1040 for 2011 tax year Table 3 contains the periods of limitations that apply to income tax returns. Form 1040 for 2011 tax year Unless otherwise stated, the years refer to the period after the return was filed. Form 1040 for 2011 tax year Returns filed before the due date are treated as filed on the due date. Form 1040 for 2011 tax year Keep copies of your filed tax returns. Form 1040 for 2011 tax year They help in preparing future tax returns and making computations if you file an amended return. Form 1040 for 2011 tax year Employment taxes. Form 1040 for 2011 tax year   If you have employees, you must keep all employment tax records for at least 4 years after the date the tax becomes due or is paid, whichever is later. Form 1040 for 2011 tax year For more information about recordkeeping for employment taxes, see Publication 15. Form 1040 for 2011 tax year Assets. Form 1040 for 2011 tax year   Keep records relating to property until the period of limitations expires for the year in which you dispose of the property in a taxable disposition. Form 1040 for 2011 tax year You must keep these records to figure any depreciation, amortization, or depletion deduction, and to figure your basis for computing gain or loss when you sell or otherwise dispose of the property. Form 1040 for 2011 tax year   Generally, if you received property in a nontaxable exchange, your basis in that property is the same as the basis of the property you gave up, increased by any money you paid. Form 1040 for 2011 tax year You must keep the records on the old property, as well as on the new property, until the period of limitations expires for the year in which you dispose of the new property in a taxable disposition. Form 1040 for 2011 tax year Records for nontax purposes. Form 1040 for 2011 tax year   When your records are no longer needed for tax purposes, do not discard them until you check to see if you have to keep them longer for other purposes. Form 1040 for 2011 tax year For example, your insurance company or creditors may require you to keep them longer than the IRS does. Form 1040 for 2011 tax year Sample Record System This example illustrates a single-entry system used by Henry Brown, who is the sole proprietor of a small automobile body shop. Form 1040 for 2011 tax year Henry uses part-time help, has no inventory of items held for sale, and uses the cash method of accounting. Form 1040 for 2011 tax year These sample records should not be viewed as a recommendation of how to keep your records. Form 1040 for 2011 tax year They are intended only to show how one business keeps its records. Form 1040 for 2011 tax year 1. Form 1040 for 2011 tax year Daily Summary of Cash Receipts This summary is a record of cash sales for the day. Form 1040 for 2011 tax year It accounts for cash at the end of the day over the amount in the Change and Petty Cash Fund at the beginning of the day. Form 1040 for 2011 tax year Henry takes the cash sales entry from his cash register tape. Form 1040 for 2011 tax year If he had no cash register, he would simply total his cash sale slips and any other cash received that day. Form 1040 for 2011 tax year He carries the total receipts shown in this summary for January 3 ($267. Form 1040 for 2011 tax year 80), including cash sales ($263. Form 1040 for 2011 tax year 60) and sales tax ($4. Form 1040 for 2011 tax year 20), to the Monthly Summary of Cash Receipts. Form 1040 for 2011 tax year Petty cash fund. Form 1040 for 2011 tax year   Henry uses a petty cash fund to make small payments without having to write checks for small amounts. Form 1040 for 2011 tax year Each time he makes a payment from this fund, he makes out a petty cash slip and attaches it to his receipt as proof of payment. Form 1040 for 2011 tax year He sets up a fixed amount ($50) in his petty cash fund. Form 1040 for 2011 tax year The total of the unspent petty cash and the amounts on the petty cash slips should equal the fixed amount of the fund. Form 1040 for 2011 tax year When the totals on the petty cash slips approach the fixed amount, he brings the cash in the fund back to the fixed amount by writing a check to “Petty Cash” for the total of the outstanding slips. Form 1040 for 2011 tax year (See the Check Disbursements Journal entry for check number 92. Form 1040 for 2011 tax year ) This restores the fund to its fixed amount of $50. Form 1040 for 2011 tax year He then summarizes the slips and enters them in the proper columns in the monthly check disbursements journal. Form 1040 for 2011 tax year 2. Form 1040 for 2011 tax year Monthly Summary of Cash Receipts This shows the income activity for the month. Form 1040 for 2011 tax year Henry carries the total monthly net sales shown in this summary for January ($4,865. Form 1040 for 2011 tax year 05) to his Annual Summary. Form 1040 for 2011 tax year To figure total monthly net sales, Henry reduces the total monthly receipts by the sales tax imposed on his customers and turned over to the state. Form 1040 for 2011 tax year He cannot take a deduction for sales tax turned over to the state because he only collected the tax. Form 1040 for 2011 tax year He does not include the tax in his income. Form 1040 for 2011 tax year 3. Form 1040 for 2011 tax year Check Disbursements Journal Henry enters checks drawn on the business checking account in the Check Disbursements Journal each day. Form 1040 for 2011 tax year All checks are prenumbered and each check number is listed and accounted for in the column provided in the journal. Form 1040 for 2011 tax year Frequent expenses have their own headings across the sheet. Form 1040 for 2011 tax year He enters in a separate column expenses that require comparatively numerous or large payments each month, such as materials, gross payroll, and rent. Form 1040 for 2011 tax year Under the General Accounts column, he enters small expenses that normally have only one or two monthly payments, such as licenses and postage. Form 1040 for 2011 tax year Henry does not pay personal or nonbusiness expenses by checks drawn on the business account. Form 1040 for 2011 tax year If he did, he would record them in the journal, even though he could not deduct them as business expenses. Form 1040 for 2011 tax year Henry carries the January total of expenses for materials ($1,083. Form 1040 for 2011 tax year 50) to the Annual Summary. Form 1040 for 2011 tax year Similarly, he enters the monthly total of expenses for telephone, truck/auto, etc. Form 1040 for 2011 tax year , in the appropriate columns of that summary. Form 1040 for 2011 tax year 4. Form 1040 for 2011 tax year Employee Compensation Record This record shows the following information. Form 1040 for 2011 tax year The number of hours Henry's employee worked in a pay period. Form 1040 for 2011 tax year The employee's total pay for the period. Form 1040 for 2011 tax year The deductions Henry withheld in figuring the employee's net pay. Form 1040 for 2011 tax year The monthly gross payroll. Form 1040 for 2011 tax year Henry carries the January gross payroll ($520) to the Annual Summary. Form 1040 for 2011 tax year 5. Form 1040 for 2011 tax year Annual Summary This annual summary of monthly cash receipts and expense totals provides the final amounts to enter on Henry's tax return. Form 1040 for 2011 tax year He figures the cash receipts total from the total of monthly cash receipts shown in the Monthly Summary of Cash Receipts. Form 1040 for 2011 tax year He figures the expense totals from the totals of monthly expense items shown in the Check Disbursements Journal. Form 1040 for 2011 tax year As in the journal, he keeps each major expense in a separate column. Form 1040 for 2011 tax year Henry carries the cash receipts total shown in the annual summary ($47,440. Form 1040 for 2011 tax year 9
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The Form 1040 For 2011 Tax Year

Form 1040 for 2011 tax year Index A Adjusted basis for installment sale, Adjusted basis for installment sale purposes. Form 1040 for 2011 tax year Assistance (see Tax help) B Basis Adjusted, Adjusted basis. Form 1040 for 2011 tax year Assumed mortgage, Buyer Assumes Mortgage Installment obligation, Basis. Form 1040 for 2011 tax year , Basis in installment obligation. Form 1040 for 2011 tax year , Basis in installment obligation. Form 1040 for 2011 tax year Installment sale, Adjusted basis for installment sale purposes. Form 1040 for 2011 tax year Repossessed property, Basis in repossessed property. Form 1040 for 2011 tax year , Basis. Form 1040 for 2011 tax year Bond, Bond. Form 1040 for 2011 tax year Buyer's note, Buyer's note. Form 1040 for 2011 tax year C Contingent payment sale, Contingent Payment Sale Contract price, Contract price. Form 1040 for 2011 tax year D Dealer sales, special rule, Dealer sales. Form 1040 for 2011 tax year Depreciation recapture income, Depreciation Recapture Income Disposition of installment obligation, Disposition of an Installment Obligation E Electing out, Electing Out of the Installment Method Escrow account, Escrow Account F Fair market value, Fair market value (FMV). Form 1040 for 2011 tax year , Fair market value (FMV). Form 1040 for 2011 tax year Figuring installment sale income, Figuring Installment Sale Income Form 4797, Form 4797, Form 4797. Form 1040 for 2011 tax year 6252, Form 6252, Reporting an Installment Sale 8594, Reporting requirement. Form 1040 for 2011 tax year Schedule D (Form 1040), Schedule D (Form 1040), Other forms. Form 1040 for 2011 tax year , Schedule D (Form 1040). Form 1040 for 2011 tax year Free tax services, Free help with your tax return. Form 1040 for 2011 tax year G Gross profit percentage, Gross profit percentage. Form 1040 for 2011 tax year Gross profit, defined, Gross profit. Form 1040 for 2011 tax year Guarantee, Debt not payable on demand. Form 1040 for 2011 tax year H Help (see Tax help) I Installment obligation Defined, Installment obligation. Form 1040 for 2011 tax year Disposition, Disposition of an Installment Obligation Used as security, Installment Obligation Used as Security (Pledge Rule) Installment Sale, What Is an Installment Sale? Interest Escrow account, Escrow Account Income, Interest Income Reporting, Seller-financed mortgage. Form 1040 for 2011 tax year Unstated, Installment income after 2013. Form 1040 for 2011 tax year Interest on deferred tax, Interest on Deferred Tax Exceptions, Exceptions. Form 1040 for 2011 tax year L Like-kind exchange, Like-Kind Exchange N Note Buyer's, Buyer's note. Form 1040 for 2011 tax year Third-party, Third-party note. Form 1040 for 2011 tax year O Original issue discount, Installment income after 2013. Form 1040 for 2011 tax year P Payments considered received, Payments Received or Considered Received Buyer assumes debts, Buyer Assumes Other Debts Buyer pays seller's expenses, Buyer Pays Seller's Expenses Mortgage assumed, Buyer Assumes Mortgage Pledge rule, Installment Obligation Used as Security (Pledge Rule) Payments received, Payments Received or Considered Received Pledge rule, Installment Obligation Used as Security (Pledge Rule) Publications (see Tax help) R Related person Land sale, Land transfers between related persons. Form 1040 for 2011 tax year Reporting sale to, Related person. Form 1040 for 2011 tax year Sale to, Sale to a Related Person Reporting installment sale, Reporting Installment Sale Income, Reporting an Installment Sale Repossession, Repossession Holding period for resale, Holding period for resales. Form 1040 for 2011 tax year Personal property, Personal Property Real property, Real Property S Sale at a loss, Sale at a loss. Form 1040 for 2011 tax year Sale of Business, Sale of a Business Home, Sale of Your Home Land between related persons, Land transfers between related persons. Form 1040 for 2011 tax year Partnership interest, Sale of Partnership Interest Several assets, Single Sale of Several Assets, Several assets. Form 1040 for 2011 tax year Stock or securities, Stock or securities. Form 1040 for 2011 tax year Sales by dealers, Dealer sales. Form 1040 for 2011 tax year Section 1274, Section 1274 Exceptions, Exceptions to Sections 1274 and 483 Section 483, Section 483 Exceptions, Exceptions to Sections 1274 and 483 Selling expenses, Selling expenses. Form 1040 for 2011 tax year Selling price Defined, Selling price. Form 1040 for 2011 tax year Reduced, Selling Price Reduced Single sale of several assets, Single Sale of Several Assets, Several assets. Form 1040 for 2011 tax year T Tax help, How To Get Tax Help Third-party note, Third-party note. Form 1040 for 2011 tax year TTY/TDD information, How To Get Tax Help U Unstated interest, Installment income after 2013. Form 1040 for 2011 tax year Prev  Up     Home   More Online Publications