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Free fillable forms 8. Free fillable forms   Amortization Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: How To Deduct Amortization Starting a BusinessBusiness Start-Up Costs Costs of Organizing a Corporation Costs of Organizing a Partnership How To Amortize Getting a Lease Section 197 IntangiblesSection 197 Intangibles Defined Assets That Are Not Section 197 Intangibles Safe Harbor for Creative Property Costs Anti-Churning Rules Incorrect Amount of Amortization Deducted Disposition of Section 197 Intangibles Reforestation Costs Geological and Geophysical Costs Pollution Control FacilitiesNew identifiable treatment facility. Free fillable forms Research and Experimental Costs Optional Write-off of Certain Tax Preferences Introduction Amortization is a method of recovering (deducting) certain capital costs over a fixed period of time. Free fillable forms It is similar to the straight line method of depreciation. Free fillable forms The various amortizable costs covered in this chapter are included in the list below. Free fillable forms However, this chapter does not discuss amortization of bond premium. Free fillable forms For information on that topic, see chapter 3 of Publication 550, Investment Income and Expenses. Free fillable forms Topics - This chapter discusses: Deducting amortization Amortizing costs of starting a business Amortizing costs of getting a lease Amortizing costs of section 197 intangibles Amortizing reforestation costs Amortizing costs of geological and geophysical costs Amortizing costs of pollution control facilities Amortizing costs of research and experimentation Amortizing costs of certain tax preferences Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets 550 Investment Income and Expenses 946 How To Depreciate Property Form (and Instructions) 4562 Depreciation and Amortization 4626 Alternative Minimum Tax—Corporations 6251 Alternative Minimum Tax—Individuals See chapter 12 for information about getting publications and forms. Free fillable forms How To Deduct Amortization To deduct amortization that begins during the current tax year, complete Part VI of Form 4562 and attach it to your income tax return. Free fillable forms To report amortization from previous years, in addition to amortization that begins in the current year, list on Form 4562 each item separately. Free fillable forms For example, in 2012, you began to amortize a lease. Free fillable forms In 2013, you began to amortize a second lease. Free fillable forms Report amortization from the new lease on line 42 of your 2013 Form 4562. Free fillable forms Report amortization from the 2012 lease on line 43 of your 2013 Form 4562. Free fillable forms If you do not have any new amortizable expenses for the current year, you are not required to complete Form 4562 (unless you are claiming depreciation). Free fillable forms Report the current year's deduction for amortization that began in a prior year directly on the “Other deduction” or “Other expense line” of your return. Free fillable forms Starting a Business When you start a business, treat all eligible costs you incur before you begin operating the business as capital expenditures which are part of your basis in the business. Free fillable forms Generally, you recover costs for particular assets through depreciation deductions. Free fillable forms However, you generally cannot recover other costs until you sell the business or otherwise go out of business. Free fillable forms For a discussion on how to treat these costs, see If your attempt to go into business is unsuccessful under Capital Expenses in chapter 1. Free fillable forms For costs paid or incurred after September 8, 2008, you can deduct a limited amount of start-up and organizational costs. Free fillable forms The costs that are not deducted currently can be amortized ratably over a 180-month period. Free fillable forms The amortization period starts with the month you begin operating your active trade or business. Free fillable forms You are not required to attach a statement to make this election. Free fillable forms You can choose to forgo this election by affirmatively electing to capitalize your start-up costs on your income tax return filed by the due date (including extensions) for the tax year in which the active trade or business begins. Free fillable forms Once made, the election to either amortize or capitalize start-up costs is irrevocable and applies to all start-up costs that are related to your trade or business. Free fillable forms See Regulations sections 1. Free fillable forms 195-1, 1. Free fillable forms 248-1, and 1. Free fillable forms 709-1. Free fillable forms For costs paid or incurred after October 22, 2004, and before September 9, 2008, you can elect to deduct a limited amount of business start-up and organizational costs in the year your active trade or business begins. Free fillable forms Any costs not deducted can be amortized ratably over a 180-month period, beginning with the month you begin business. Free fillable forms If the election is made, you must attach any statement required by Regulations sections 1. Free fillable forms 195-1(b), 1. Free fillable forms 248-1(c), and 1. Free fillable forms 709-1(c), as in effect before September 9, 2008. Free fillable forms Note. Free fillable forms You can apply the provisions of Regulations sections 1. Free fillable forms 195-1, 1. Free fillable forms 248-1, and 1. Free fillable forms 709-1 to all business start-up and organizational costs paid or incurred after October 22, 2004, provided the period of limitations on assessment has not expired for the year of the election. Free fillable forms Otherwise, the provisions under Regulations sections 1. Free fillable forms 195-1(b), 1. Free fillable forms 248-1(c), and 1. Free fillable forms 709-1(c), as in effect before September 9, 2008, will apply. Free fillable forms For costs paid or incurred before October 23, 2004, you can elect to amortize business start-up and organization costs over an amortization period of 60 months or more. Free fillable forms See How To Make the Election , later. Free fillable forms The cost must qualify as one of the following. Free fillable forms A business start-up cost. Free fillable forms An organizational cost for a corporation. Free fillable forms An organizational cost for a partnership. Free fillable forms Business Start-Up Costs Start-up costs are amounts paid or incurred for: (a) creating an active trade or business; or (b) investigating the creation or acquisition of an active trade or business. Free fillable forms Start-up costs include amounts paid or incurred in connection with an existing activity engaged in for profit; and for the production of income in anticipation of the activity becoming an active trade or business. Free fillable forms Qualifying costs. Free fillable forms   A start-up cost is amortizable if it meets both of the following tests. Free fillable forms It is a cost you could deduct if you paid or incurred it to operate an existing active trade or business (in the same field as the one you entered into). Free fillable forms It is a cost you pay or incur before the day your active trade or business begins. Free fillable forms   Start-up costs include amounts paid for the following: An analysis or survey of potential markets, products, labor supply, transportation facilities, etc. Free fillable forms Advertisements for the opening of the business. Free fillable forms Salaries and wages for employees who are being trained and their instructors. Free fillable forms Travel and other necessary costs for securing prospective distributors, suppliers, or customers. Free fillable forms Salaries and fees for executives and consultants, or for similar professional services. Free fillable forms Nonqualifying costs. Free fillable forms   Start-up costs do not include deductible interest, taxes, or research and experimental costs. Free fillable forms See Research and Experimental Costs , later. Free fillable forms Purchasing an active trade or business. Free fillable forms   Amortizable start-up costs for purchasing an active trade or business include only investigative costs incurred in the course of a general search for or preliminary investigation of the business. Free fillable forms These are costs that help you decide whether to purchase a business. Free fillable forms Costs you incur in an attempt to purchase a specific business are capital expenses that you cannot amortize. Free fillable forms Example. Free fillable forms On June 1st, you hired an accounting firm and a law firm to assist you in the potential purchase of XYZ, Inc. Free fillable forms They researched XYZ's industry and analyzed the financial projections of XYZ, Inc. Free fillable forms In September, the law firm prepared and submitted a letter of intent to XYZ, Inc. Free fillable forms The letter stated that a binding commitment would result only after a purchase agreement was signed. Free fillable forms The law firm and accounting firm continued to provide services including a review of XYZ's books and records and the preparation of a purchase agreement. Free fillable forms On October 22nd, you signed a purchase agreement with XYZ, Inc. Free fillable forms All amounts paid or incurred to investigate the business before October 22nd are amortizable investigative costs. Free fillable forms Amounts paid on or after that date relate to the attempt to purchase the business and therefore must be capitalized. Free fillable forms Disposition of business. Free fillable forms   If you completely dispose of your business before the end of the amortization period, you can deduct any remaining deferred start-up costs. Free fillable forms However, you can deduct these deferred start-up costs only to the extent they qualify as a loss from a business. Free fillable forms Costs of Organizing a Corporation Amounts paid to organize a corporation are the direct costs of creating the corporation. Free fillable forms Qualifying costs. Free fillable forms   To qualify as an organizational cost, it must be: For the creation of the corporation, Chargeable to a capital account (see chapter 1), Amortized over the life of the corporation if the corporation had a fixed life, and Incurred before the end of the first tax year in which the corporation is in business. Free fillable forms   A corporation using the cash method of accounting can amortize organizational costs incurred within the first tax year, even if it does not pay them in that year. Free fillable forms   Examples of organizational costs include: The cost of temporary directors. Free fillable forms The cost of organizational meetings. Free fillable forms State incorporation fees. Free fillable forms The cost of legal services. Free fillable forms Nonqualifying costs. Free fillable forms   The following items are capital expenses that cannot be amortized: Costs for issuing and selling stock or securities, such as commissions, professional fees, and printing costs. Free fillable forms Costs associated with the transfer of assets to the corporation. Free fillable forms Costs of Organizing a Partnership The costs to organize a partnership are the direct costs of creating the partnership. Free fillable forms Qualifying costs. Free fillable forms   A partnership can amortize an organizational cost only if it meets all the following tests. Free fillable forms It is for the creation of the partnership and not for starting or operating the partnership trade or business. Free fillable forms It is chargeable to a capital account (see chapter 1). Free fillable forms It could be amortized over the life of the partnership if the partnership had a fixed life. Free fillable forms It is incurred by the due date of the partnership return (excluding extensions) for the first tax year in which the partnership is in business. Free fillable forms However, if the partnership uses the cash method of accounting and pays the cost after the end of its first tax year, see Cash method partnership under How To Amortize, later. Free fillable forms It is for a type of item normally expected to benefit the partnership throughout its entire life. Free fillable forms   Organizational costs include the following fees. Free fillable forms Legal fees for services incident to the organization of the partnership, such as negotiation and preparation of the partnership agreement. Free fillable forms Accounting fees for services incident to the organization of the partnership. Free fillable forms Filing fees. Free fillable forms Nonqualifying costs. Free fillable forms   The following costs cannot be amortized. Free fillable forms The cost of acquiring assets for the partnership or transferring assets to the partnership. Free fillable forms The cost of admitting or removing partners, other than at the time the partnership is first organized. Free fillable forms The cost of making a contract concerning the operation of the partnership trade or business including a contract between a partner and the partnership. Free fillable forms The costs for issuing and marketing interests in the partnership such as brokerage, registration, and legal fees and printing costs. Free fillable forms These “syndication fees” are capital expenses that cannot be depreciated or amortized. Free fillable forms Liquidation of partnership. Free fillable forms   If a partnership is liquidated before the end of the amortization period, the unamortized amount of qualifying organizational costs can be deducted in the partnership's final tax year. Free fillable forms However, these costs can be deducted only to the extent they qualify as a loss from a business. Free fillable forms How To Amortize Deduct start-up and organizational costs in equal amounts over the applicable amortization period (discussed earlier). Free fillable forms You can choose an amortization period for start-up costs that is different from the period you choose for organizational costs, as long as both are not less than the applicable amortization period. Free fillable forms Once you choose an amortization period, you cannot change it. Free fillable forms To figure your deduction, divide your total start-up or organizational costs by the months in the amortization period. Free fillable forms The result is the amount you can deduct for each month. Free fillable forms Cash method partnership. Free fillable forms   A partnership using the cash method of accounting can deduct an organizational cost only if it has been paid by the end of the tax year. Free fillable forms However, any cost the partnership could have deducted as an organizational cost in an earlier tax year (if it had been paid that year) can be deducted in the tax year of payment. Free fillable forms How To Make the Election To elect to amortize start-up or organizational costs, you must complete and attach Form 4562 to your return for the first tax year you are in business. Free fillable forms You may also be required to attach an accompanying statement (described later) to your return. Free fillable forms For start-up or organizational costs paid or incurred after September 8, 2008, an accompanying statement is not required. Free fillable forms Generally, for start-up or organizational costs paid or incurred before September 9, 2008, and after October 22, 2004, unless you choose to apply Regulations sections 1. Free fillable forms 195-1, 1. Free fillable forms 248-1, and 1. Free fillable forms 709-1, you must also attach an accompanying statement to elect to amortize the costs. Free fillable forms If you have both start-up and organizational costs, attach a separate statement (if required) to your return for each type of cost. Free fillable forms See Starting a Business , earlier, for more information. Free fillable forms Generally, you must file the return by the due date (including any extensions). Free fillable forms 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 return (excluding extensions). Free fillable forms For more information, see the instructions for Part VI of Form 4562. Free fillable forms You can choose to forgo the election to amortize by affirmatively electing to capitalize your start-up or organizational costs on your income tax return filed by the due date (including extensions) for the tax year in which the active trade or business begins. Free fillable forms Note. Free fillable forms The election to either amortize or capitalize start-up or organizational costs is irrevocable and applies to all start-up and organizational costs that are related to the trade or business. Free fillable forms If your business is organized as a corporation or partnership, only the corporation or partnership can elect to amortize its start-up or organizational costs. Free fillable forms A shareholder or partner cannot make this election. Free fillable forms You, as a shareholder or partner, cannot amortize any costs you incur in setting up your corporation or partnership. Free fillable forms Only the corporation or partnership can amortize these costs. Free fillable forms However, you, as an individual, can elect to amortize costs you incur to investigate an interest in an existing partnership. Free fillable forms These costs qualify as business start-up costs if you acquire the partnership interest. Free fillable forms Start-up costs election statement. Free fillable forms   If you elect to amortize your start-up costs, attach a separate statement (if required) that contains the following information. Free fillable forms A description of the business to which the start-up costs relate. Free fillable forms A description of each start-up cost incurred. Free fillable forms The month your active business began (or was acquired). Free fillable forms The number of months in your amortization period (which is generally 180 months). Free fillable forms Filing the statement early. Free fillable forms   You can elect to amortize your start-up costs by filing the statement with a return for any tax year before the year your active business begins. Free fillable forms If you file the statement early, the election becomes effective in the month of the tax year your active business begins. Free fillable forms Revised statement. Free fillable forms   You can file a revised statement to include any start-up costs not included in your original statement. Free fillable forms However, you cannot include on the revised statement any cost you previously treated on your return as a cost other than a start-up cost. Free fillable forms You can file the revised statement with a return filed after the return on which you elected to amortize your start-up costs. Free fillable forms Organizational costs election statement. Free fillable forms   If you elect to amortize your corporation's or partnership's organizational costs, attach a separate statement (if required) that contains the following information. Free fillable forms A description of each cost. Free fillable forms The amount of each cost. Free fillable forms The date each cost was incurred. Free fillable forms The month your corporation or partnership began active business (or acquired the business). Free fillable forms The number of months in your amortization period (which is generally 180 months). Free fillable forms Partnerships. Free fillable forms   The statement prepared for a cash basis partnership must also indicate the amount paid before the end of the year for each cost. Free fillable forms   You do not need to separately list any partnership organizational cost that is less than $10. Free fillable forms Instead, you can list the total amount of these costs with the dates the first and last costs were incurred. Free fillable forms   After a partnership makes the election to amortize organizational costs, it can later file an amended return to include additional organizational costs not included in the partnership's original return and statement. Free fillable forms Getting a Lease If you get a lease for business property, you may recover the cost of acquiring the lease by amortizing it over the term of the lease. Free fillable forms The term of the lease for amortization purposes generally includes all renewal options (and any other period for which you and the lessor reasonably expect the lease to be renewed). Free fillable forms However, renewal periods are not included if 75% or more of the cost of acquiring the lease is for the term of the lease remaining on the acquisition date (not including any period for which you may choose to renew, extend, or continue the lease). Free fillable forms For more information on the costs of getting a lease, see Cost of Getting a Lease in  chapter 3. Free fillable forms How to amortize. Free fillable forms   Enter your deduction in Part VI of Form 4562 if you are deducting amortization that begins during the current year, or on the appropriate line of your tax return if you are not otherwise required to file Form 4562. Free fillable forms Section 197 Intangibles Generally, you may amortize the capitalized costs of “section 197 intangibles” (defined later) ratably over a 15-year period. Free fillable forms You must amortize these costs if you hold the section 197 intangibles in connection with your trade or business or in an activity engaged in for the production of income. Free fillable forms You may not be able to amortize section 197 intangibles acquired in a transaction that did not result in a significant change in ownership or use. Free fillable forms See Anti-Churning Rules, later. Free fillable forms Your amortization deduction each year is the applicable part of the intangible's adjusted basis (for purposes of determining gain), figured by amortizing it ratably over 15 years (180 months). Free fillable forms The 15-year period begins with the later of: The month the intangible is acquired, or The month the trade or business or activity engaged in for the production of income begins. Free fillable forms You cannot deduct amortization for the month you dispose of the intangible. Free fillable forms If you pay or incur an amount that increases the basis of an amortizable section 197 intangible after the 15-year period begins, amortize it over the remainder of the 15-year period beginning with the month the basis increase occurs. Free fillable forms You are not allowed any other depreciation or amortization deduction for an amortizable section 197 intangible. Free fillable forms Tax-exempt use property subject to a lease. Free fillable forms   The amortization period for any section 197 intangible leased under a lease agreement entered into after March 12, 2004, to a tax-exempt organization, governmental unit, or foreign person or entity (other than a partnership), shall not be less than 125 percent of the lease term. Free fillable forms Cost attributable to other property. Free fillable forms   The rules for section 197 intangibles do not apply to any amount that is included in determining the cost of property that is not a section 197 intangible. Free fillable forms For example, if the cost of computer software is not separately stated from the cost of hardware or other tangible property and you consistently treat it as part of the cost of the hardware or other tangible property, these rules do not apply. Free fillable forms Similarly, none of the cost of acquiring real property held for the production of rental income is considered the cost of goodwill, going concern value, or any other section 197 intangible. Free fillable forms Section 197 Intangibles Defined The following assets are section 197 intangibles and must be amortized over 180 months: Goodwill; Going concern value; Workforce in place; Business books and records, operating systems, or any other information base, including lists or other information concerning current or prospective customers; A patent, copyright, formula, process, design, pattern, know-how, format, or similar item; A customer-based intangible; A supplier-based intangible; Any item similar to items (3) through (7); A license, permit, or other right granted by a governmental unit or agency (including issuances and renewals); A covenant not to compete entered into in connection with the acquisition of an interest in a trade or business; Any franchise, trademark, or trade name; and A contract for the use of, or a term interest in, any item in this list. Free fillable forms You cannot amortize any of the intangibles listed in items (1) through (8) that you created rather than acquired unless you created them in acquiring assets that make up a trade or business or a substantial part of a trade or business. Free fillable forms Goodwill. Free fillable forms   This is the value of a trade or business based on expected continued customer patronage due to its name, reputation, or any other factor. Free fillable forms Going concern value. Free fillable forms   This is the additional value of a trade or business that attaches to property because the property is an integral part of an ongoing business activity. Free fillable forms It includes value based on the ability of a business to continue to function and generate income even though there is a change in ownership (but does not include any other section 197 intangible). Free fillable forms It also includes value based on the immediate use or availability of an acquired trade or business, such as the use of earnings during any period in which the business would not otherwise be available or operational. Free fillable forms Workforce in place, etc. Free fillable forms   This includes the composition of a workforce (for example, its experience, education, or training). Free fillable forms It also includes the terms and conditions of employment, whether contractual or otherwise, and any other value placed on employees or any of their attributes. Free fillable forms   For example, you must amortize the part of the purchase price of a business that is for the existence of a highly skilled workforce. Free fillable forms Also, you must amortize the cost of acquiring an existing employment contract or relationship with employees or consultants. Free fillable forms Business books and records, etc. Free fillable forms   This includes the intangible value of technical manuals, training manuals or programs, data files, and accounting or inventory control systems. Free fillable forms It also includes the cost of customer lists, subscription lists, insurance expirations, patient or client files, and lists of newspaper, magazine, radio, and television advertisers. Free fillable forms Patents, copyrights, etc. Free fillable forms   This includes package design, computer software, and any interest in a film, sound recording, videotape, book, or other similar property, except as discussed later under Assets That Are Not Section 197 Intangibles . Free fillable forms Customer-based intangible. Free fillable forms   This is the composition of market, market share, and any other value resulting from the future provision of goods or services because of relationships with customers in the ordinary course of business. Free fillable forms For example, you must amortize the part of the purchase price of a business that is for the existence of the following intangibles. Free fillable forms A customer base. Free fillable forms A circulation base. Free fillable forms An undeveloped market or market growth. Free fillable forms Insurance in force. Free fillable forms A mortgage servicing contract. Free fillable forms An investment management contract. Free fillable forms Any other relationship with customers involving the future provision of goods or services. Free fillable forms   Accounts receivable or other similar rights to income for goods or services provided to customers before the acquisition of a trade or business are not section 197 intangibles. Free fillable forms Supplier-based intangible. Free fillable forms   A supplier-based intangible is the value resulting from the future acquisitions, (through contract or other relationships with suppliers in the ordinary course of business) of goods or services that you will sell or use. Free fillable forms The amount you pay or incur for supplier-based intangibles includes, for example, any portion of the purchase price of an acquired trade or business that is attributable to the existence of a favorable relationship with persons providing distribution services (such as a favorable shelf or display space or a retail outlet), or the existence of favorable supply contracts. Free fillable forms Do not include any amount required to be paid for the goods or services to honor the terms of the agreement or other relationship. Free fillable forms Also, see Assets That Are Not Section 197 Intangibles below. Free fillable forms Government-granted license, permit, etc. Free fillable forms   This is any right granted by a governmental unit or an agency or instrumentality of a governmental unit. Free fillable forms For example, you must amortize the capitalized costs of acquiring (including issuing or renewing) a liquor license, a taxicab medallion or license, or a television or radio broadcasting license. Free fillable forms Covenant not to compete. Free fillable forms   Section 197 intangibles include a covenant not to compete (or similar arrangement) entered into in connection with the acquisition of an interest in a trade or business, or a substantial portion of a trade or business. Free fillable forms An interest in a trade or business includes an interest in a partnership or a corporation engaged in a trade or business. Free fillable forms   An arrangement that requires the former owner to perform services (or to provide property or the use of property) is not similar to a covenant not to compete to the extent the amount paid under the arrangement represents reasonable compensation for those services or for that property or its use. Free fillable forms Franchise, trademark, or trade name. Free fillable forms   A franchise, trademark, or trade name is a section 197 intangible. Free fillable forms You must amortize its purchase or renewal costs, other than certain contingent payments that you can deduct currently. Free fillable forms For information on currently deductible contingent payments, see chapter 11. Free fillable forms Professional sports franchise. Free fillable forms   A franchise engaged in professional sports and any intangible assets acquired in connection with acquiring the franchise (including player contracts) is a section 197 intangible amortizable over a 15-year period. Free fillable forms Contract for the use of, or a term interest in, a section 197 intangible. Free fillable forms   Section 197 intangibles include any right under a license, contract, or other arrangement providing for the use of any section 197 intangible. Free fillable forms It also includes any term interest in any section 197 intangible, whether the interest is outright or in trust. Free fillable forms Assets That Are Not Section 197 Intangibles The following assets are not section 197 intangibles. Free fillable forms Any interest in a corporation, partnership, trust, or estate. Free fillable forms Any interest under an existing futures contract, foreign currency contract, notional principal contract, interest rate swap, or similar financial contract. Free fillable forms Any interest in land. Free fillable forms Most computer software. Free fillable forms (See Computer software , later. Free fillable forms ) Any of the following assets not acquired in connection with the acquisition of a trade or business or a substantial part of a trade or business. Free fillable forms An interest in a film, sound recording, video tape, book, or similar property. Free fillable forms A right to receive tangible property or services under a contract or from a governmental agency. Free fillable forms An interest in a patent or copyright. Free fillable forms Certain rights that have a fixed duration or amount. Free fillable forms (See Rights of fixed duration or amount , later. Free fillable forms ) An interest under either of the following. Free fillable forms An existing lease or sublease of tangible property. Free fillable forms A debt that was in existence when the interest was acquired. Free fillable forms A right to service residential mortgages unless the right is acquired in connection with the acquisition of a trade or business or a substantial part of a trade or business. Free fillable forms Certain transaction costs incurred by parties to a corporate organization or reorganization in which any part of a gain or loss is not recognized. Free fillable forms Intangible property that is not amortizable under the rules for section 197 intangibles can be depreciated if it meets certain requirements. Free fillable forms You generally must use the straight line method over its useful life. Free fillable forms For certain intangibles, the depreciation period is specified in the law and regulations. Free fillable forms For example, the depreciation period for computer software that is not a section 197 intangible is generally 36 months. Free fillable forms For more information on depreciating intangible property, see Intangible Property under What Method Can You Use To Depreciate Your Property? in chapter 1 of Publication 946. Free fillable forms Computer software. Free fillable forms   Section 197 intangibles do not include the following types of computer software. Free fillable forms Software that meets all the following requirements. Free fillable forms It is, or has been, readily available for purchase by the general public. Free fillable forms It is subject to a nonexclusive license. Free fillable forms It has not been substantially modified. Free fillable forms This requirement is considered met if the cost of all modifications is not more than the greater of 25% of the price of the publicly available unmodified software or $2,000. Free fillable forms Software that is not acquired in connection with the acquisition of a trade or business or a substantial part of a trade or business. Free fillable forms Computer software defined. Free fillable forms   Computer software includes all programs designed to cause a computer to perform a desired function. Free fillable forms It also includes any database or similar item that is in the public domain and is incidental to the operation of qualifying software. Free fillable forms Rights of fixed duration or amount. Free fillable forms   Section 197 intangibles do not include any right under a contract or from a governmental agency if the right is acquired in the ordinary course of a trade or business (or in an activity engaged in for the production of income) but not as part of a purchase of a trade or business and either: Has a fixed life of less than 15 years, or Is of a fixed amount that, except for the rules for section 197 intangibles, would be recovered under a method similar to the unit-of-production method of cost recovery. Free fillable forms However, this does not apply to the following intangibles. Free fillable forms Goodwill. Free fillable forms Going concern value. Free fillable forms A covenant not to compete. Free fillable forms A franchise, trademark, or trade name. Free fillable forms A customer-related information base, customer-based intangible, or similar item. Free fillable forms Safe Harbor for Creative Property Costs If you are engaged in the trade or business of film production, you may be able to amortize the creative property costs for properties not set for production within 3 years of the first capitalized transaction. Free fillable forms You may amortize these costs ratably over a 15-year period beginning on the first day of the second half of the tax year in which you properly write off the costs for financial accounting purposes. Free fillable forms If, during the 15-year period, you dispose of the creative property rights, you must continue to amortize the costs over the remainder of the 15-year period. Free fillable forms Creative property costs include costs paid or incurred to acquire and develop screenplays, scripts, story outlines, motion picture production rights to books and plays, and other similar properties for purposes of potential future film development, production, and exploitation. Free fillable forms Amortize these costs using the rules of Revenue Procedure 2004-36. Free fillable forms For more information, see Revenue Procedure 2004-36, 2004-24 I. Free fillable forms R. Free fillable forms B. Free fillable forms 1063, available at  www. Free fillable forms irs. Free fillable forms gov/irb/2004-24_IRB/ar16. Free fillable forms html. Free fillable forms A change in the treatment of creative property costs is a change in method of accounting. Free fillable forms Anti-Churning Rules Anti-churning rules prevent you from amortizing most section 197 intangibles if the transaction in which you acquired them did not result in a significant change in ownership or use. Free fillable forms These rules apply to goodwill and going concern value, and to any other section 197 intangible that is not otherwise depreciable or amortizable. Free fillable forms Under the anti-churning rules, you cannot use 15-year amortization for the intangible if any of the following conditions apply. Free fillable forms You or a related person (defined later) held or used the intangible at any time from July 25, 1991, through August 10, 1993. Free fillable forms You acquired the intangible from a person who held it at any time during the period in (1) and, as part of the transaction, the user did not change. Free fillable forms You granted the right to use the intangible to a person (or a person related to that person) who held or used it at any time during the period in (1). Free fillable forms This applies only if the transaction in which you granted the right and the transaction in which you acquired the intangible are part of a series of related transactions. Free fillable forms See Related person , later, for more information. Free fillable forms Exceptions. Free fillable forms   The anti-churning rules do not apply in the following situations. Free fillable forms You acquired the intangible from a decedent and its basis was stepped up to its fair market value. Free fillable forms The intangible was amortizable as a section 197 intangible by the seller or transferor you acquired it from. Free fillable forms This exception does not apply if the transaction in which you acquired the intangible and the transaction in which the seller or transferor acquired it are part of a series of related transactions. Free fillable forms The gain-recognition exception, discussed later, applies. Free fillable forms Related person. Free fillable forms   For purposes of the anti-churning rules, the following are related persons. Free fillable forms An individual and his or her brothers, sisters, half-brothers, half-sisters, spouse, ancestors (parents, grandparents, etc. Free fillable forms ), and lineal descendants (children, grandchildren, etc. Free fillable forms ). Free fillable forms A corporation and an individual who owns, directly or indirectly, more than 20% of the value of the corporation's outstanding stock. Free fillable forms Two corporations that are members of the same controlled group as defined in section 1563(a) of the Internal Revenue Code, except that “more than 20%” is substituted for “at least 80%” in that definition and the determination is made without regard to subsections (a)(4) and (e)(3)(C) of section 1563. Free fillable forms (For an exception, see section 1. Free fillable forms 197-2(h)(6)(iv) of the regulations. Free fillable forms ) A trust fiduciary and a corporation if more than 20% of the value of the corporation's outstanding stock is owned, directly or indirectly, by or for the trust or grantor of the trust. Free fillable forms The grantor and fiduciary, and the fiduciary and beneficiary, of any trust. Free fillable forms The fiduciaries of two different trusts, and the fiduciaries and beneficiaries of two different trusts, if the same person is the grantor of both trusts. Free fillable forms The executor and beneficiary of an estate. Free fillable forms A tax-exempt educational or charitable organization and a person who directly or indirectly controls the organization (or whose family members control it). Free fillable forms A corporation and a partnership if the same persons own more than 20% of the value of the outstanding stock of the corporation and more than 20% of the capital or profits interest in the partnership. Free fillable forms Two S corporations, and an S corporation and a regular corporation, if the same persons own more than 20% of the value of the outstanding stock of each corporation. Free fillable forms Two partnerships if the same persons own, directly or indirectly, more than 20% of the capital or profits interests in both partnerships. Free fillable forms A partnership and a person who owns, directly or indirectly, more than 20% of the capital or profits interests in the partnership. Free fillable forms Two persons who are engaged in trades or businesses under common control (as described in section 41(f)(1) of the Internal Revenue Code). Free fillable forms When to determine relationship. Free fillable forms   Persons are treated as related if the relationship existed at the following time. Free fillable forms In the case of a single transaction, immediately before or immediately after the transaction in which the intangible was acquired. Free fillable forms In the case of a series of related transactions (or a series of transactions that comprise a qualified stock purchase under section 338(d)(3) of the Internal Revenue Code), immediately before the earliest transaction or immediately after the last transaction. Free fillable forms Ownership of stock. Free fillable forms   In determining whether an individual directly or indirectly owns any of the outstanding stock of a corporation, the following rules apply. Free fillable forms Rule 1. Free fillable forms   Stock directly or indirectly owned by or for a corporation, partnership, estate, or trust is considered owned proportionately by or for its shareholders, partners, or beneficiaries. Free fillable forms Rule 2. Free fillable forms   An individual is considered to own the stock directly or indirectly owned by or for his or her family. Free fillable forms Family includes only brothers and sisters, half-brothers and half-sisters, spouse, ancestors, and lineal descendants. Free fillable forms Rule 3. Free fillable forms   An individual owning (other than by applying Rule 2) any stock in a corporation is considered to own the stock directly or indirectly owned by or for his or her partner. Free fillable forms Rule 4. Free fillable forms   For purposes of applying Rule 1, 2, or 3, treat stock constructively owned by a person under Rule 1 as actually owned by that person. Free fillable forms Do not treat stock constructively owned by an individual under Rule 2 or 3 as owned by the individual for reapplying Rule 2 or 3 to make another person the constructive owner of the stock. Free fillable forms Gain-recognition exception. Free fillable forms   This exception to the anti-churning rules applies if the person you acquired the intangible from (the transferor) meets both of the following requirements. Free fillable forms That person would not be related to you (as described under Related person , earlier) if the 20% test for ownership of stock and partnership interests were replaced by a 50% test. Free fillable forms That person chose to recognize gain on the disposition of the intangible and pay income tax on the gain at the highest tax rate. Free fillable forms See chapter 2 in Publication 544 for information on making this choice. Free fillable forms   If this exception applies, the anti-churning rules apply only to the amount of your adjusted basis in the intangible that is more than the gain recognized by the transferor. Free fillable forms Notification. Free fillable forms   If the person you acquired the intangible from chooses to recognize gain under the rules for this exception, that person must notify you in writing by the due date of the return on which the choice is made. Free fillable forms Anti-abuse rule. Free fillable forms   You cannot amortize any section 197 intangible acquired in a transaction for which the principal purpose was either of the following. Free fillable forms To avoid the requirement that the intangible be acquired after August 10, 1993. Free fillable forms To avoid any of the anti-churning rules. Free fillable forms More information. Free fillable forms   For more information about the anti-churning rules, including additional rules for partnerships, see Regulations section 1. Free fillable forms 197-2(h). Free fillable forms Incorrect Amount of Amortization Deducted If you later discover that you deducted an incorrect amount for amortization for a section 197 intangible in any year, you may be able to make a correction for that year by filing an amended return. Free fillable forms See Amended Return , next. Free fillable forms If you are not allowed to make the correction on an amended return, you can change your accounting method to claim the correct amortization. Free fillable forms See Changing Your Accounting Method , later. Free fillable forms Amended Return If you deducted an incorrect amount for amortization, you can file an amended return to correct the following. Free fillable forms A mathematical error made in any year. Free fillable forms A posting error made in any year. Free fillable forms An amortization deduction for a section 197 intangible for which you have not adopted a method of accounting. Free fillable forms When to file. Free fillable forms   If an amended return is allowed, you must file it by the later of the following dates. Free fillable forms 3 years from the date you filed your original return for the year in which you did not deduct the correct amount. Free fillable forms (A return filed early is considered filed on the due date. Free fillable forms ) 2 years from the time you paid your tax for that year. Free fillable forms Changing Your Accounting Method Generally, you must get IRS approval to change your method of accounting. Free fillable forms File Form 3115, Application for Change in Accounting Method, to request a change to a permissible method of accounting for amortization. Free fillable forms The following are examples of a change in method of accounting for amortization. Free fillable forms A change in the amortization method, period of recovery, or convention of an amortizable asset. Free fillable forms A change in the accounting for amortizable assets from a single asset account to a multiple asset account (pooling), or vice versa. Free fillable forms A change in the accounting for amortizable assets from one type of multiple asset account to a different type of multiple asset account. Free fillable forms Changes in amortization that are not a change in method of accounting include the following: A change in computing amortization in the tax year in which your use of the asset changes. Free fillable forms An adjustment in the useful life of an amortizable asset. Free fillable forms Generally, the making of a late amortization election or the revocation of a timely valid amortization election. Free fillable forms Any change in the placed-in-service date of an amortizable asset. Free fillable forms See Regulations section 1. Free fillable forms 446-1(e)(2)(ii)(a) for more information and examples. Free fillable forms Automatic approval. Free fillable forms   In some instances, you may be able to get automatic approval from the IRS to change your method of accounting for amortization. Free fillable forms For a list of automatic accounting method changes, see the Instructions for Form 3115. Free fillable forms Also see the Instructions for Form 3115 for more information on getting approval, automatic approval procedures, and a list of exceptions to the automatic approval process. Free fillable forms For more information, see Revenue Procedure 2006-12, as modified by Revenue Procedure 2006-37, and Revenue Procedure 2008-52, as amplified, clarified, and modified by Revenue Procedure 2009-39, as clarified and modified by Revenue Procedure 2011-14, as modified and amplified by Revenue Procedure 2011-22, as modified by Revenue Procedure 2012-39, or any successor. Free fillable forms See Revenue Procedure 2006-12, 2006-3 I. Free fillable forms R. Free fillable forms B. Free fillable forms 310, available at  www. Free fillable forms irs. Free fillable forms gov/irb/2006-03_IRB/ar14. Free fillable forms html. Free fillable forms  See Revenue Procedure 2006-37, 2006-38 I. Free fillable forms R. Free fillable forms B. Free fillable forms 499, available at  www. Free fillable forms irs. Free fillable forms gov/irb/2006-38_IRB/ar10. Free fillable forms html. Free fillable forms  See Revenue Procedure 2008-52, 2008-36 I. Free fillable forms R. Free fillable forms B. Free fillable forms 587, available at www. Free fillable forms irs. Free fillable forms gov/irb/2008-36_IRB/ar09. Free fillable forms html. Free fillable forms  See Revenue Procedure 2009-39, 2009-38 I. Free fillable forms R. Free fillable forms B. Free fillable forms 371, available at  www. Free fillable forms irs. Free fillable forms gov/irb/2009-38_IRB/ar08. Free fillable forms html. Free fillable forms  See Revenue Procedure 2011-14, 2011-4 I. Free fillable forms R. Free fillable forms B. Free fillable forms 330, available at  www. Free fillable forms irs. Free fillable forms gov/irb/2011-04_IRB/ar08. Free fillable forms html. Free fillable forms  See Revenue Procedure 2011-22, 2011-18 I. Free fillable forms R. Free fillable forms B. Free fillable forms 737, available at  www. Free fillable forms irs. Free fillable forms gov/irb/2011-18_IRB/ar08. Free fillable forms html. Free fillable forms Also, see Revenue Procedure 2012-39, 2012-41 I. Free fillable forms R. Free fillable forms B. Free fillable forms 470 available at www. Free fillable forms irs. Free fillable forms gov/irb/2012-41_IRB/index. Free fillable forms html. Free fillable forms Disposition of Section 197 Intangibles A section 197 intangible is treated as depreciable property used in your trade or business. Free fillable forms If you held the intangible for more than 1 year, any gain on its disposition, up to the amount of allowable amortization, is ordinary income (section 1245 gain). Free fillable forms If multiple section 197 intangibles are disposed of in a single transaction or a series of related transactions, treat all of the section 197 intangibles as if they were a single asset for purposes of determining the amount of gain that is ordinary income. Free fillable forms Any remaining gain, or any loss, is a section 1231 gain or loss. Free fillable forms If you held the intangible 1 year or less, any gain or loss on its disposition is an ordinary gain or loss. Free fillable forms For more information on ordinary or capital gain or loss on business property, see chapter 3 in Publication 544. Free fillable forms Nondeductible loss. Free fillable forms   You cannot deduct any loss on the disposition or worthlessness of a section 197 intangible that you acquired in the same transaction (or series of related transactions) as other section 197 intangibles you still have. Free fillable forms Instead, increase the adjusted basis of each remaining amortizable section 197 intangible by a proportionate part of the nondeductible loss. Free fillable forms Figure the increase by multiplying the nondeductible loss on the disposition of the intangible by the following fraction. Free fillable forms The numerator is the adjusted basis of each remaining intangible on the date of the disposition. Free fillable forms The denominator is the total adjusted bases of all remaining amortizable section 197 intangibles on the date of the disposition. Free fillable forms Covenant not to compete. Free fillable forms   A covenant not to compete, or similar arrangement, is not considered disposed of or worthless before you dispose of your entire interest in the trade or business for which you entered into the covenant. Free fillable forms Nonrecognition transfers. Free fillable forms   If you acquire a section 197 intangible in a nonrecognition transfer, you are treated as the transferor with respect to the part of your adjusted basis in the intangible that is not more than the transferor's adjusted basis. Free fillable forms You amortize this part of the adjusted basis over the intangible's remaining amortization period in the hands of the transferor. Free fillable forms Nonrecognition transfers include transfers to a corporation, partnership contributions and distributions, like-kind exchanges, and involuntary conversions. Free fillable forms   In a like-kind exchange or involuntary conversion of a section 197 intangible, you must continue to amortize the part of your adjusted basis in the acquired intangible that is not more than your adjusted basis in the exchanged or converted intangible over the remaining amortization period of the exchanged or converted intangible. Free fillable forms Amortize over a new 15-year period the part of your adjusted basis in the acquired intangible that is more than your adjusted basis in the exchanged or converted intangible. Free fillable forms Example. Free fillable forms You own a section 197 intangible you have amortized for 4 full years. Free fillable forms It has a remaining unamortized basis of $30,000. Free fillable forms You exchange the asset plus $10,000 for a like-kind section 197 intangible. Free fillable forms The nonrecognition provisions of like-kind exchanges apply. Free fillable forms You amortize $30,000 of the $40,000 adjusted basis of the acquired intangible over the 11 years remaining in the original 15-year amortization period for the transferred asset. Free fillable forms You amortize the other $10,000 of adjusted basis over a new 15-year period. Free fillable forms For more information, see Regulations section 1. Free fillable forms 197-2(g). Free fillable forms Reforestation Costs You can elect to deduct a limited amount of reforestation costs paid or incurred during the tax year. Free fillable forms See Reforestation Costs in chapter 7. Free fillable forms You can elect to amortize the qualifying costs that are not deducted currently over an 84-month period. Free fillable forms There is no limit on the amount of your amortization deduction for reforestation costs paid or incurred during the tax year. Free fillable forms The election to amortize reforestation costs incurred by a partnership, S corporation, or estate must be made by the partnership, corporation, or estate. Free fillable forms A partner, shareholder, or beneficiary cannot make that election. Free fillable forms A partner's or shareholder's share of amortizable costs is figured under the general rules for allocating items of income, loss, deduction, etc. Free fillable forms , of a partnership or S corporation. Free fillable forms The amortizable costs of an estate are divided between the estate and the income beneficiary based on the income of the estate allocable to each. Free fillable forms Qualifying costs. Free fillable forms   Reforestation costs are the direct costs of planting or seeding for forestation or reforestation. Free fillable forms Qualifying costs include only those costs you must capitalize and include in the adjusted basis of the property. Free fillable forms They include costs for the following items. Free fillable forms Site preparation. Free fillable forms Seeds or seedlings. Free fillable forms Labor. Free fillable forms Tools. Free fillable forms Depreciation on equipment used in planting and seeding. Free fillable forms Qualifying costs do not include costs for which the government reimburses you under a cost-sharing program, unless you include the reimbursement in your income. Free fillable forms Qualified timber property. Free fillable forms   Qualified timber property is property that contains trees in significant commercial quantities. Free fillable forms It can be a woodlot or other site that you own or lease. Free fillable forms The property qualifies only if it meets all of the following requirements. Free fillable forms It is located in the United States. Free fillable forms It is held for the growing and cutting of timber you will either use in, or sell for use in, the commercial production of timber products. Free fillable forms It consists of at least one acre planted with tree seedlings in the manner normally used in forestation or reforestation. Free fillable forms Qualified timber property does not include property on which you have planted shelter belts or ornamental trees, such as Christmas trees. Free fillable forms Amortization period. Free fillable forms   The 84-month amortization period starts on the first day of the first month of the second half of the tax year you incur the costs (July 1 for a calendar year taxpayer), regardless of the month you actually incur the costs. Free fillable forms You can claim amortization deductions for no more than 6 months of the first and last (eighth) tax years of the period. Free fillable forms Life tenant and remainderman. Free fillable forms   If one person holds the property for life with the remainder going to another person, the life tenant is entitled to the full amortization for qualifying reforestation costs incurred by the life tenant. Free fillable forms Any remainder interest in the property is ignored for amortization purposes. Free fillable forms Recapture. Free fillable forms   If you dispose of qualified timber property within 10 years after the tax year you incur qualifying reforestation expenses, report any gain as ordinary income up to the amortization you took. Free fillable forms See chapter 3 of Publication 544 for more information. Free fillable forms How to make the election. Free fillable forms   To elect to amortize qualifying reforestation costs, complete Part VI of Form 4562 and attach a statement that contains the following information. Free fillable forms A description of the costs and the dates you incurred them. Free fillable forms A description of the type of timber being grown and the purpose for which it is grown. Free fillable forms Attach a separate statement for each property for which you amortize reforestation costs. Free fillable forms   Generally, you must make the election on a timely filed return (including extensions) for the tax year in which you incurred the costs. Free fillable forms 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 return (excluding extensions). Free fillable forms Attach Form 4562 and the statement to the amended return and write “Filed pursuant to section 301. Free fillable forms 9100-2” on Form 4562. Free fillable forms File the amended return at the same address you filed the original return. Free fillable forms Revoking the election. Free fillable forms   You must get IRS approval to revoke your election to amortize qualifying reforestation costs. Free fillable forms Your application to revoke the election must include your name, address, the years for which your election was in effect, and your reason for revoking it. Free fillable forms Please provide your daytime telephone number (optional), in case we need to contact you. Free fillable forms You, or your duly authorized representative, must sign the application and file it at least 90 days before the due date (without extensions) for filing your income tax return for the first tax year for which your election is to end. Free fillable forms    Send the application to: Internal Revenue Service Associate Chief Counsel Passthroughs and Special Industries CC:PSI:6 1111 Constitution Ave. Free fillable forms NW, IR-5300 Washington, DC 20224 Geological and Geophysical Costs You can amortize the cost of geological and geophysical expenses paid or incurred in connection with oil and gas exploration or development within the United States. Free fillable forms These costs can be amortized ratably over a 24-month period beginning on the mid-point of the tax year in which the expenses were paid or incurred. Free fillable forms For major integrated oil companies (as defined in section 167(h)(5)), these costs must be amortized ratably over a 5-year period for costs paid or incurred after May 17, 2006 (a 7-year period for costs paid or incurred after December 19, 2007). Free fillable forms If you retire or abandon the property during the amortization period, no amortization deduction is allowed in the year of retirement or abandonment. Free fillable forms Pollution Control Facilities You can elect to amortize the cost of a certified pollution control facility over 60 months. Free fillable forms However, see Atmospheric pollution control facilities for an exception. Free fillable forms The cost of a pollution control facility that is not eligible for amortization can be depreciated under the regular rules for depreciation. Free fillable forms Also, you can claim a special depreciation allowance on a certified pollution control facility that is qualified property even if you elect to amortize its cost. Free fillable forms You must reduce its cost (amortizable basis) by the amount of any special allowance you claim. Free fillable forms See chapter 3 of Publication 946. Free fillable forms A certified pollution control facility is a new identifiable treatment facility used in connection with a plant or other property in operation before 1976, to reduce or control water or atmospheric pollution or contamination. Free fillable forms The facility must do so by removing, changing, disposing, storing, or preventing the creation or emission of pollutants, contaminants, wastes, or heat. Free fillable forms The facility must be certified by state and federal certifying authorities. Free fillable forms The facility must not significantly increase the output or capacity, extend the useful life, or reduce the total operating costs of the plant or other property. Free fillable forms Also, it must not significantly change the nature of the manufacturing or production process or facility. Free fillable forms The federal certifying authority will not certify your property to the extent it appears you will recover (over the property's useful life) all or part of its cost from the profit based on its operation (such as through sales of recovered wastes). Free fillable forms The federal certifying authority will describe the nature of the potential cost recovery. Free fillable forms You must then reduce the amortizable basis of the facility by this potential recovery. Free fillable forms New identifiable treatment facility. Free fillable forms   A new identifiable treatment facility is tangible depreciable property that is identifiable as a treatment facility. Free fillable forms It does not include a building and its structural components unless the building is exclusively a treatment facility. Free fillable forms Atmospheric pollution control facilities. Free fillable forms   Certain atmospheric pollution control facilities can be amortized over 84 months. Free fillable forms To qualify, the following must apply. Free fillable forms The facility must be acquired and placed in service after April 11, 2005. Free fillable forms If acquired, the original use must begin with you after April 11, 2005. Free fillable forms The facility must be used in connection with an electric generation plant or other property placed in operation after December 31, 1975, that is primarily coal fired. Free fillable forms If you construct, reconstruct, or erect the facility, only the basis attributable to the construction, reconstruction, or erection completed after April 11, 2005, qualifies. Free fillable forms Basis reduction for corporations. Free fillable forms   A corporation must reduce the amortizable basis of a pollution control facility by 20% before figuring the amortization deduction. Free fillable forms More information. Free fillable forms   For more information on the amortization of pollution control facilities, see Code sections 169 and 291(c) and the related regulations. Free fillable forms Research and Experimental Costs You can elect to amortize your research and experimental costs, deduct them as current business expenses, or write them off over a 10-year period (see Optional write-off method below). Free fillable forms If you elect to amortize these costs, deduct them in equal amounts over 60 months or more. Free fillable forms The amortization period begins the month you first receive an economic benefit from the costs. Free fillable forms For a definition of “research and experimental costs” and information on deducting them as current business expenses, see chapter 7. Free fillable forms Optional write-off method. Free fillable forms   Rather than amortize these costs or deduct them as a current expense, you have the option of deducting (writing off) research and experimental costs ratably over a 10-year period beginning with the tax year in which you incurred the costs. Free fillable forms For more information, see Optional Write-off of Certain Tax Preferences , later, and section 59(e) of the Internal Revenue Code. Free fillable forms Costs you can amortize. Free fillable forms   You can amortize costs chargeable to a capital account (see chapter 1) if you meet both of the following requirements. Free fillable forms You paid or incurred the costs in your trade or business. Free fillable forms You are not deducting the costs currently. Free fillable forms How to make the election. Free fillable forms   To elect to amortize research and experimental costs, complete Part VI of Form 4562 and attach it to your income tax return. Free fillable forms Generally, you must file the return by the due date (including extensions). Free fillable forms 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 return (excluding extensions). Free fillable forms Attach Form 4562 to the amended return and write “Filed pursuant to section 301. Free fillable forms 9100-2” on Form 4562. Free fillable forms File the amended return at the same address you filed the original return. Free fillable forms   Your election is binding for the year it is made and for all later years unless you obtain approval from the IRS to change to a different method. Free fillable forms Optional Write-off of Certain Tax Preferences You can elect to amortize certain tax preference items over an optional period beginning in the tax year in which you incurred the costs. Free fillable forms If you make this election, there is no AMT adjustment. Free fillable forms The applicable costs and the optional recovery periods are as follows: Circulation costs — 3 years, Intangible drilling and development costs — 60 months, Mining exploration and development costs — 10 years, and Research and experimental costs — 10 years. Free fillable forms How to make the election. Free fillable forms   To elect to amortize qualifying costs over the optional recovery period, complete Part VI of Form 4562 and attach a statement containing the following information to your return for the tax year in which the election begins: Your name, address, and taxpayer identification number; and The type of cost and the specific amount of the cost for which you are making the election. Free fillable forms   Generally, the election must be made on a timely filed return (including extensions) for the tax year in which you incurred the costs. Free fillable forms 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 return (excluding extensions). Free fillable forms Attach Form 4562 to the amended return and write “Filed pursuant to section 301. Free fillable forms 9100-2” on Form 4562. Free fillable forms File the amended return at the same address you filed the original return. Free fillable forms Revoking the election. Free fillable forms   You must obtain consent from the IRS to revoke your election. Free fillable forms Your request to revoke the election must be submitted to the IRS in the form of a letter ruling before the end of the tax year in which the optional recovery period ends. Free fillable forms The request must contain all of the information necessary to demonstrate the rare and unusual circumstances that would justify granting revocation. Free fillable forms If the request for revocation is approved, any unamortized costs are deductible in the year the revocation is effective. Free fillable forms Prev  Up  Next   Home   More Online Publications
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Start Saving Now

If you think it’s too late to start saving for retirement, think again. By setting some realistic goals and creating a plan, even for a few years, you can create a nest egg that can help you live a more comfortable retirement.

"Time is money" may be a trite expression, but when it comes to saving, it’s still very true. Just remember the compound interest lesson calculations you learned in math class. That lesson still applies. In a few years, you can make a significant contribution to your nest egg with a disciplined savings strategy.

Put every possible dollar into tax-advantageous retirement savings plans, a skilled financial planner can help you get the most for your money. If your employer offers to match your contribution to a 401(k), take advantage of that important retirement savings vehicle. Don’t leave money on the table! Look for other tax deductible savings plans if you still have a little extra to save. Your employer may offer additional pre-tax saving plans or you could open your own IRA. In addition, special provisions in federal retirement savings law allow employees 50 and older to save even more due to special catch-up provisions.

Cost-Cutting Strategies

Remember, a little cost-cutting now will help ensure that you enjoy a more comfortable retirement later. If you were planning to treat yourself to a new car, consider making due with your current vehicle for a few more years. Reallocate the money you’d use for a down payment toward your savings strategy. Also, take a look at your auto insurance coverage. If you’re paying for collision coverage for an older vehicle, consider dropping it. Take a look at your deductible, too. If you have a low deductible, perhaps $250, consider raising it to at least $500 or even $1,000. These two strategies could significantly reduce your auto insurance premium.

If you were considering taking an out-of-town vacation, vacation at home. You might be surprised by the interesting activities you have in town or a short drive away. Downsizing into a smaller home, hopefully with a smaller mortgage or none at all, may be an option. Even small changes like skipping the daily $4.00 cup of boutique coffee or packing your own lunch for work it can save you hundreds of dollars each year.

Redefine Retirement

Consider working longer. Postponing retirement by just a year or two can help you save thousands toward your goal and also allow more time for investment strategies to pay off, it can also increase your Social Security benefit. Also give thought to what your definition of retirement is. Many people who fully retire find themselves looking for a part-time job because they’re bored. Instead of leaving your employer entirely, consider a phased retirement and continue to working part time for several years.

The Free Fillable Forms

Free fillable forms Publication 970 - Additional Material Table of Contents AppendicesAppendix A. Free fillable forms Illustrated Example of Education Credits Glossary Appendices The following appendices are provided to help you claim the education benefits that will give you the lowest tax. Free fillable forms Appendix A—An illustrated example of education credits, including a filled-in Form 8863 showing how to claim both the American opportunity credit and lifetime learning credit for 2013. Free fillable forms Appendix B—A chart summarizing some of the major differences between the education tax benefits discussed in this publication. Free fillable forms It is intended only as a guide. Free fillable forms Look in this publication for more complete information. Free fillable forms   Appendix A. Free fillable forms Illustrated Example of Education Credits Dave and Valerie Jones are married and on their 2013 joint tax return they claim exemptions for their two dependent children, Sean (age 21, social security number: 000-00-0001) and Carey (age 18, social security number: 000–00–0002). Free fillable forms Their modified adjusted gross income (MAGI) on Form 1040, line 38 is $110,000. Free fillable forms Because Dave and Valerie have unusually high itemized deductions, their taxable income is $10,000 and their tax before credits is $1,000. Free fillable forms Sean enrolled as a full-time graduate student in August 2013 at California State College. Free fillable forms He graduated with his bachelor's degree in 2012 and did not attend school from January 2013 through July 2013. Free fillable forms His parents claimed the Hope Scholarship Credit for Sean for 2008 and the American opportunity credit for Sean for 2010, 2011, and 2012. Free fillable forms Carey enrolled full time as a freshman at the same college in January 2013 to begin working on her bachelor's degree. Free fillable forms In 2013, Dave and Valerie paid $7,000 in tuition for Sean and $8,500 in tuition for Carey. Free fillable forms California State College issued two Forms 1098-T, one for Sean and one for Carey, and sent them to the Joneses' residence. Free fillable forms California State College reports amounts billed in 2013 instead of amounts paid during 2013. Free fillable forms In completing Form 8863, the Joneses use the amounts they paid. Free fillable forms Neither Sean nor Carey has been convicted of a felony for possession or distribution of a controlled substance before the end of 2013. Free fillable forms Dave and Valerie figure their education credits by completing Form 8863. Free fillable forms They begin Form 8863 on page 2 before completing Part I on page 1. Free fillable forms Because the Joneses have two eligible students, they will complete page 2 twice, once for their son, Sean, and once for their daughter, Carey. Free fillable forms The Joneses decide to complete Part III for Carey first, as shown later. Free fillable forms They carry over the amount of $2,500 entered on Part III, line 30, to Part I, line 1. Free fillable forms The Joneses complete a separate Part III for their son Sean. Free fillable forms They check the “Yes” box on line 23, determine that Sean is not eligible for the American opportunity credit, and go to line 31 as instructed. Free fillable forms They figure their line 31 adjusted qualified education expenses for Sean to be $7,000. Free fillable forms Once they have completed Part III for each student, they figure their credits. Free fillable forms The Joneses figure their refundable American opportunity credit of $1,000 by completing Form 8863, Part I, lines 1 through 8. Free fillable forms They enter the amount from line 8, $1,000, on line 66 of their Form 1040. Free fillable forms The Joneses enter $7,000 on Part II, line 10, of Form 8863 and figure their tentative lifetime learning credit for 2013 to be $1,400 (line 12). Free fillable forms They cannot claim the full amount because their MAGI of $110,000 is greater than $107,000. Free fillable forms They enter the reduced amount of $1,190 (figured on Part II, line 18) on the Credit Limit Worksheet, line 1. Free fillable forms The $1,190 is added to their nonrefundable American opportunity credit ($1,500 on line 2 of the Credit Limit Worksheet) for a total nonrefundable credit of $2,690. Free fillable forms The Joneses enter $1,000 on line 7 of the Credit Limit Worksheet, which is the smaller of their tax from line 46 of their Form 1040 (which is $1,000) or the $2,690 on line 3 of the Credit Limit Worksheet. Free fillable forms They enter $1,000 on line 19, Part II of Form 8863 and on line 49 of Form 1040. Free fillable forms This image is too large to be displayed in the current screen. Free fillable forms Please click the link to view the image. Free fillable forms Form 1098-T Adjusted Qualified Education Expenses Worksheet (Form 8863 instructions) 1. Free fillable forms Total qualified education expenses paid for or on behalf of the student in 2013 for the academic period 8,500 2. Free fillable forms Less adjustments:     a. Free fillable forms Tax-free educational assistance received in 2013 allocable to the academic period   0     b. Free fillable forms Tax-free educational assistance received in 2014 (and before you file your 2013 tax return) allocable to the academic period   0     c. Free fillable forms Refunds of qualified education expenses paid in 2013 if the refund is received in 2013 or in 2014 before you file your 2013 tax return   0   3. Free fillable forms Total adjustments (add lines 2a, 2b, and 2c) 0 4. Free fillable forms Adjusted qualified education expenses. Free fillable forms Subtract line 3 from line 1. Free fillable forms If zero or less, enter -0- 8,500 This image is too large to be displayed in the current screen. Free fillable forms Please click the link to view the image. Free fillable forms Form 1098-T Adjusted Qualified Education Expenses Worksheet (Form 8863 instructions) 1. Free fillable forms Total qualified education expenses paid for or on behalf of the student in 2013 for the academic period 7,000 2. Free fillable forms Less adjustments:     a. Free fillable forms Tax-free educational assistance received in 2013 allocable to the academic period   0     b. Free fillable forms Tax-free educational assistance received in 2014 (and before you file your 2013 tax return) allocable to the academic period   0     c. Free fillable forms Refunds of qualified education expenses paid in 2013 if the refund is received in 2013 or in 2014 before you file your 2013 tax return   0   3. Free fillable forms Total adjustments (add lines 2a, 2b, and 2c) 0 4. Free fillable forms Adjusted qualified education expenses. Free fillable forms Subtract line 3 from line 1. Free fillable forms If zero or less, enter -0- 7,000 Credit Limit Worksheet (Form 8863 instructions) Nonrefundable Credit Worksheet 1. Free fillable forms Enter the amount from Form 8863, line 18 1. Free fillable forms 1,190 2. Free fillable forms Enter the amount from Form 8863, line 9 2. Free fillable forms 1,500 3. Free fillable forms Add lines 1 and 2 3. Free fillable forms 2,690 4. Free fillable forms Enter the amount from: Form 1040, line 46; or Form 1040A, line 28 4. Free fillable forms 1,000 5. Free fillable forms Enter the amount from either: Form 1040, lines 47 and 48, and the amount from Schedule R included on Form 1040, line 53; or Form 1040A, lines 29 and 30 5. Free fillable forms 0 6. Free fillable forms Subtract line 5 from line 4 6. Free fillable forms 1,000 7. Free fillable forms   Enter the smaller of line 3 or line 6 here and on Form 8863, line 19 7. Free fillable forms 1,000 This image is too large to be displayed in the current screen. Free fillable forms Please click the link to view the image. Free fillable forms Form 8863 for Dave and Valerie Jones This image is too large to be displayed in the current screen. Free fillable forms Please click the link to view the image. Free fillable forms Carey Jones page 2 This image is too large to be displayed in the current screen. Free fillable forms Please click the link to view the image. Free fillable forms Filled-in Form 8863 Jones page 2 Appendix B. Free fillable forms Highlights of Education Tax Benefits for Tax Year 2013 This chart highlights some differences among the benefits discussed in this publication. Free fillable forms See the text for definitions and details. Free fillable forms Do not rely on this chart alone. Free fillable forms    Caution:You generally cannot claim more than one benefit for the same education expense. Free fillable forms   Scholarships,  Fellowships, Grants, and  Tuition  Reductions American Opportunity Credit Lifetime Learning Credit Student Loan Interest Deduction Tuition and Fees Deduction Coverdell ESA† Qualified Tuition Program (QTP)† Education Exception to Additional Tax on Early IRA Distributions† Education Savings Bond Program† Employer- Provided Educational Assistance† Business Deduction for Work-Related Education What is your  benefit? Amounts received may not be taxable   Credits can reduce the amount of tax you have to pay. Free fillable forms    40% of the credit may be refundable (limited to $1,000 per student). Free fillable forms Credits can reduce amount of tax you must pay Can deduct interest paid Can deduct expenses Earnings not  taxed Earnings not taxed No 10%  additional tax on early distribution Interest not taxed Employer benefits not taxed Can deduct expenses What is the annual limit? None $2,500 credit per student $2,000 credit per tax return     $2,500 deduction $4,000 deduction $2,000 contribution per beneficiary None Amount of qualified  education expenses Amount of qualified  education expenses $5,250 exclusion Amount of qualifying work-related education expenses What expenses  qualify besides  tuition and required enrollment fees? Course-related expenses such as fees, books, supplies, and equipment Course-related books, supplies, and equipment Amounts paid for required books, etc. Free fillable forms , that must be paid to the educational institution, etc. Free fillable forms , are required fees Books Supplies Equipment  Room & board  Transportation  Other necessary expenses  None Books Supplies Equipment  Expenses for special needs services  Payments to QTP  Higher education: Room & board if  at least half-time  student  Elem/sec (K–12) education: Tutoring Room & board Uniforms Transportation Computer  access Supplementary expenses Books Supplies Equipment  Room & board if  at least half-time student  Expenses for special needs services Books Supplies Equipment  Room & board if  at least half-time student  Expenses for special needs services Payments to Coverdell ESA  Payments to QTP Books Supplies Equipment Transportation  Travel  Other necessary expenses   Scholarships,  Fellowships, Grants, and  Tuition  Reductions American Opportunity Credit Lifetime Learning Credit Student Loan Interest Deduction Tuition and Fees Deduction Coverdell ESA† Qualified Tuition Program (QTP)† Education Exception to Additional Tax on Early IRA Distributions† Education Savings Bond Program† Employer- Provided Educational Assistance† Business Deduction for Work-Related Education What education qualifies? Undergraduate & graduate  K–12 Undergraduate & graduate Undergraduate & graduate  Courses to acquire or improve job skills    Undergraduate & graduate Undergraduate & graduate Undergraduate & graduate  K–12 Undergraduate & graduate Undergraduate & graduate Undergraduate & graduate Undergraduate & graduate Required by employer or law to keep present job, salary, status  Maintain or improve job skills What are some of the other  conditions that  apply? Must be in degree or vocational program  Payment of tuition and required fees must be allowed under the grant Can be claimed for only 4 tax years (which includes years Hope Scholarship Credit claimed)  Must be enrolled at least half-time in degree program  No felony drug conviction(s)  Must not have completed first 4 years of postsecondary education before end of preceding tax year. Free fillable forms   No other conditions Must have been at least half-time  student in degree program Cannot claim both deduction & education credit for same student in same year Assets must be distributed at age 30 unless special  needs beneficiary No other conditions No other conditions Applies only to qualified series  EE bonds issued after 1989 or series I bonds No other conditions Cannot be to  meet minimum educational requirements of present trade/business  Cannot qualify  you for new trade/business   In what income  range do benefits  phase out? No phaseout $80,000 – $90,000  $160,000 – $180,000 for joint returns $53,000 – $63,000  $107,000 – $127,000 for joint returns $60,000 – $75,000  $125,000 –  $155,000 for  joint returns  $60,000 – $80,000  $130,000 –  $160,000 for  joint returns  $95,000 – $110,000  $190,000 – $220,000 for  joint returns No phaseout No phaseout   No phaseout No phaseout † Any nontaxable distribution is limited to the amount that does not exceed qualified education expenses. Free fillable forms Glossary The education benefits included in this publication were enacted over many years, leading to a number of common terms being defined differently from one benefit to the next. Free fillable forms For example, an eligible educational institution means one thing when determining if earnings from a Coverdell education savings account are not taxable and something else when determining if a scholarship or fellowship is not taxable. Free fillable forms For each term listed below that has more than one definition, the definition for each education benefit is listed. Free fillable forms Academic period:   A semester, trimester, quarter, or other period of study (such as a summer school session) as reasonably determined by an educational institution. Free fillable forms If an educational institution uses credit hours or clock hours and does not have academic terms, each payment period can be treated as an academic period. Free fillable forms Adjusted qualified education expenses (AQEE):    Qualified education expenses (defined later) reduced by any tax-free educational assistance, such as a tax-free scholarship or employer-provided educational assistance. Free fillable forms They must also be reduced by any qualified education expenses deducted elsewhere on your return, used to determine an education credit or other benefit, or used to determine a tax-free distribution. Free fillable forms For information on a specific benefit, see the appropriate chapter in this publication. Free fillable forms Candidate for a degree:   A student who meets either of the following requirements. Free fillable forms Attends a primary or secondary school or pursues a degree at a college or university, or Attends an accredited educational institution that is authorized to provide: A program that is acceptable for full credit toward a bachelor's or higher degree, or A program of training to prepare students for gainful employment in a recognized occupation. Free fillable forms Designated beneficiary:   The individual named in the document creating the account/plan who is to receive the benefit of the funds in the account/plan. Free fillable forms Eligible educational institution:    American opportunity credit. Free fillable forms Any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the Department of Education. Free fillable forms It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Free fillable forms Coverdell education savings account (ESA). Free fillable forms Any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the Department of Education. Free fillable forms It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Free fillable forms Also included is any public, private, or religious school that provides elementary or secondary education (kindergarten through grade 12), as determined under state law. Free fillable forms Education savings bond program. Free fillable forms Same as American opportunity credit in this category. Free fillable forms IRA, early distributions from. Free fillable forms Same as American opportunity credit in this category. Free fillable forms Lifetime learning credit. Free fillable forms Same as American opportunity credit in this category. Free fillable forms Qualified tuition program (QTP). Free fillable forms Same as American opportunity credit in this category. Free fillable forms Scholarships and fellowships. Free fillable forms An institution that maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities. Free fillable forms Student loan, cancellation of. Free fillable forms Same as Scholarships and fellowships in this category. Free fillable forms Student loan interest deduction. Free fillable forms Any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the Department of Education. Free fillable forms It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Free fillable forms Also included is an institution that conducts an internship or residency program leading to a degree or certificate from an institution of higher education, a hospital, or a health care facility that offers postgraduate training. Free fillable forms Tuition and fees deduction. Free fillable forms Same as American opportunity credit in this category. Free fillable forms Eligible student:    American opportunity credit. Free fillable forms A student who meets all of the following requirements for the tax year for which the credit is being determined. Free fillable forms Did not have expenses that were used to figure an American opportunity or Hope Scholarship Credit in any 4 earlier tax years. Free fillable forms Had not completed the first 4 years of postsecondary education (generally the freshman through senior years). Free fillable forms For at least one academic period beginning in the tax year, was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential at an eligible educational institution. Free fillable forms Was free of any federal or state felony conviction for possessing or distributing a controlled substance as of the end of the tax year. Free fillable forms Lifetime learning credit. Free fillable forms A student who is enrolled in one or more courses at an eligible educational institution. Free fillable forms Student loan interest deduction. Free fillable forms A student who was enrolled at least half-time in a program leading to a postsecondary degree, certificate, or other recognized educational credential at an eligible educational institution. Free fillable forms Tuition and fees deduction. Free fillable forms A student who is enrolled in one or more courses at an eligible educational institution. Free fillable forms Half-time student:   A student who is enrolled for at least half the full-time academic work load for the course of study the student is pursuing, as determined under the standards of the school where the student is enrolled. Free fillable forms Modified adjusted gross income (MAGI):    American opportunity credit. Free fillable forms Adjusted gross income (AGI) as figured on the federal income tax return, modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, and Exclusion of income by bona fide residents of Puerto Rico. Free fillable forms Coverdell education savings account (ESA). Free fillable forms Same as American opportunity credit in this category. Free fillable forms Education savings bond program. Free fillable forms Adjusted gross income (AGI) as figured on the federal income tax return without taking into account any savings bond interest exclusion and modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, Exclusion of income by bona fide residents of Puerto Rico, Exclusion for adoption benefits received under an employer's adoption assistance program, Deduction for student loan interest, Deduction for tuition and fees, and Deduction for domestic production activities. Free fillable forms Lifetime learning credit. Free fillable forms Same as American opportunity credit in this category. Free fillable forms Student loan interest deduction. Free fillable forms Adjusted gross income (AGI) as figured on the federal income tax return without taking into account any student loan interest deduction, tuition and fees deduction, or domestic production activities deduction, and modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, and Exclusion of income by bona fide residents of Puerto Rico. Free fillable forms Tuition and fees deduction. Free fillable forms Adjusted gross income (AGI) as figured on the federal income tax return without taking into account any tuition and fees deduction, or domestic production activities deduction, and modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, and Exclusion of income by bona fide residents of Puerto Rico. Free fillable forms Phaseout:   The amount of credit or deduction allowed is reduced when modified adjusted gross income (MAGI) is greater than a specified amount of income. Free fillable forms Qualified education expenses:   See pertinent chapter for specific items. Free fillable forms    American opportunity credit. Free fillable forms Tuition and certain related expenses (including student activity fees) required for enrollment or attendance at an eligible educational institution. Free fillable forms Books, supplies, and equipment needed for a course of study are included even if not purchased from the educational institution. Free fillable forms Does not include expenses for room and board. Free fillable forms Does not include expenses for courses involving sports, games, or hobbies (including noncredit courses) that are not part of the student's postsecondary degree program. Free fillable forms Coverdell education savings account (ESA). Free fillable forms Expenses related to or required for enrollment or attendance of the designated beneficiary at an eligible elementary, secondary, or postsecondary school. Free fillable forms Many specialized expenses included for K–12. Free fillable forms Also includes expenses for special needs services and contribution to qualified tuition program (QTP). Free fillable forms Education savings bond program. Free fillable forms Tuition and fees required to enroll at or attend an eligible educational institution. Free fillable forms Also includes contributions to a qualified tuition program (QTP) or Coverdell education savings account (ESA). Free fillable forms Does not include expenses for room and board. Free fillable forms Does not include expenses for courses involving sports, games, or hobbies that are not part of a degree or certificate granting program. Free fillable forms IRA, early distributions from. Free fillable forms Tuition, fees, books, supplies, and equipment required for enrollment or attendance at an eligible educational institution, plus certain limited costs of room and board for students who are enrolled at least half-time. Free fillable forms Also includes expenses for special needs services incurred by or for special needs students in connection with their enrollment or attendance. Free fillable forms Lifetime learning credit. Free fillable forms Tuition and certain related expenses required for enrollment or attendance at an eligible educational institution. Free fillable forms Student-activity fees and expenses for course-related books, supplies, and equipment are included only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance. Free fillable forms Does not include expenses for room and board. Free fillable forms Does not include expenses for courses involving sports, games, or hobbies (including noncredit courses) that are not part of the student's postsecondary degree program, unless taken by the student to acquire or improve job skills. Free fillable forms Qualified tuition program (QTP). Free fillable forms Tuition, fees, books, supplies, and equipment required for enrollment or attendance at an eligible educational institution, plus certain limited costs of room and board for students who are enrolled at least half-time. Free fillable forms Includes expenses for special needs services and computer access. Free fillable forms Scholarships and fellowships. Free fillable forms Expenses for tuition and fees required to enroll at or attend an eligible educational institution, and course-related expenses, such as fees, books, supplies, and equipment that are required for the courses at the eligible educational institution. Free fillable forms Course-related items must be required of all students in the course of instruction. Free fillable forms Student loan interest deduction. Free fillable forms Total costs of attending an eligible educational institution, including graduate school (however, limitations may apply to the cost of room and board allowed). Free fillable forms Tuition and fees deduction. Free fillable forms Tuition and certain related expenses required for enrollment or attendance at an eligible educational institution. Free fillable forms Student-activity fees and expenses for course-related books, supplies, and equipment are included only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance. Free fillable forms Recapture:   To include as income on your current year's return an amount allowed as a deduction in a prior year. Free fillable forms To include as tax on your current year's return an amount allowed as a credit in a prior year. Free fillable forms Rollover:   A tax-free distribution to you of cash or other assets from a tax-favored plan that you contribute to another tax-favored plan. Free fillable forms Transfer:   A movement of funds in a tax-favored plan from one trustee directly to another, either at your request or at the trustee's request. Free fillable forms Prev  Up  Next   Home   More Online Publications