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How To File 2010 Taxes Late

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How To File 2010 Taxes Late

How to file 2010 taxes late 6. How to file 2010 taxes late   Retail Tax on Heavy Trucks, Trailers, and Tractors Table of Contents Highway vehicle. How to file 2010 taxes late Vehicles not considered highway vehicles. How to file 2010 taxes late Idling reduction device. How to file 2010 taxes late Separate purchase. How to file 2010 taxes late Leases. How to file 2010 taxes late Exported vehicle. How to file 2010 taxes late Tax on resale of tax-paid trailers and semitrailers. How to file 2010 taxes late Use treated as sale. How to file 2010 taxes late Sale. How to file 2010 taxes late Long-term lease. How to file 2010 taxes late Short-term lease. How to file 2010 taxes late Related person. How to file 2010 taxes late Exclusions from tax base. How to file 2010 taxes late Sales not at arm's length. How to file 2010 taxes late Installment sales. How to file 2010 taxes late Repairs and modifications. How to file 2010 taxes late Further manufacture. How to file 2010 taxes late Rail trailers and rail vans. How to file 2010 taxes late Parts and accessories. How to file 2010 taxes late Trash containers. How to file 2010 taxes late House trailers. How to file 2010 taxes late Camper coaches or bodies for self-propelled mobile homes. How to file 2010 taxes late Farm feed, seed, and fertilizer equipment. How to file 2010 taxes late Ambulances and hearses. How to file 2010 taxes late Truck-tractors. How to file 2010 taxes late Concrete mixers. How to file 2010 taxes late Registration requirement. How to file 2010 taxes late Further manufacture. How to file 2010 taxes late A tax of 12% of the sales price is imposed on the first retail sale of the following articles, including related parts and accessories sold on or in connection with, or with the sale of, the articles. How to file 2010 taxes late Truck chassis and bodies. How to file 2010 taxes late Truck trailer and semitrailer chassis and bodies. How to file 2010 taxes late Tractors of the kind chiefly used for highway transportation in combination with a trailer or semitrailer. How to file 2010 taxes late A truck is a highway vehicle primarily designed to transport its load on the same chassis as the engine, even if it is equipped to tow a vehicle, such as a trailer or semitrailer. How to file 2010 taxes late A tractor is a highway vehicle designed to tow a vehicle, such as a trailer or semitrailer. How to file 2010 taxes late A tractor may carry incidental items of cargo when towing or limited amounts of cargo when not towing. How to file 2010 taxes late A sale of a truck, truck trailer, or semitrailer is considered a sale of a chassis and a body. How to file 2010 taxes late The seller is liable for the tax. How to file 2010 taxes late Chassis or body. How to file 2010 taxes late   A chassis or body is taxable only if you sell it for use as a component part of a highway vehicle that is a truck, truck trailer or semitrailer, or a tractor of the kind chiefly used for highway transportation in combination with a trailer or semitrailer. How to file 2010 taxes late Highway vehicle. How to file 2010 taxes late   A highway vehicle is any self-propelled vehicle designed to carry a load over public highways, whether or not it is also designed to perform other functions. How to file 2010 taxes late Examples of vehicles designed to carry a load over public highways are passenger automobiles, motorcycles, buses, and highway-type trucks and truck tractors. How to file 2010 taxes late A vehicle is a highway vehicle even though the vehicle's design allows it to perform a highway transportation function for only one of the following. How to file 2010 taxes late A particular type of load, such as passengers, furnishings, and personal effects (as in a house, office, or utility trailer). How to file 2010 taxes late A special kind of cargo, goods, supplies, or materials. How to file 2010 taxes late Some off-highway task unrelated to highway transportation, except as discussed next. How to file 2010 taxes late Vehicles not considered highway vehicles. How to file 2010 taxes late   Generally, the following kinds of vehicles are not considered highway vehicles for purposes of the retail tax. How to file 2010 taxes late Specially designed mobile machinery for nontransportation functions. How to file 2010 taxes late A self-propelled vehicle is not a highway vehicle if all the following apply. How to file 2010 taxes late The chassis has permanently mounted to it machinery or equipment used to perform certain operations (construction, manufacturing, drilling, mining, timbering, processing, farming, or similar operations) if the operation of the machinery or equipment is unrelated to transportation on or off the public highways. How to file 2010 taxes late The chassis has been specially designed to serve only as a mobile carriage and mount (and power source, if applicable) for the machinery or equipment, whether or not the machinery or equipment is in operation. How to file 2010 taxes late The chassis could not, because of its special design and without substantial structural modification, be used as part of a vehicle designed to carry any other load. How to file 2010 taxes late Vehicles specially designed for off-highway transportation. How to file 2010 taxes late A vehicle is not treated as a highway vehicle if the vehicle is specially designed for the primary function of transporting a particular type of load other than over the public highway and because of this special design, the vehicles's capability to transport a load over a public highway is substantially limited or impaired. How to file 2010 taxes late To make this determination, you can take into account the vehicle's size, whether the vehicle is subject to licensing, safety, or other requirements, and whether the vehicle can transport a load at a sustained speed of at least 25 miles per hour. How to file 2010 taxes late It does not matter that the vehicle can carry heavier loads off highway than it is allowed to carry over the highway. How to file 2010 taxes late Nontransportation trailers and semitrailers. How to file 2010 taxes late A trailer or semitrailer is not treated as a highway vehicle if it is specially designed to function only as an enclosed stationary shelter for carrying on a nontransportation function at an off-highway site. How to file 2010 taxes late For example, a trailer that is capable only of functioning as an office for an off-highway construction operation is not a highway vehicle. How to file 2010 taxes late Gross vehicle weight. How to file 2010 taxes late   The tax does not apply to truck chassis and bodies suitable for use with a vehicle that has a gross vehicle weight (defined below) of 33,000 pounds or less. How to file 2010 taxes late It also does not apply to truck trailer and semitrailer chassis and bodies suitable for use with a trailer or semitrailer that has a gross vehicle weight of 26,000 pounds or less. How to file 2010 taxes late Tractors that have a gross vehicle weight of 19,500 pounds or less and a gross combined weight of 33,000 pounds or less are excluded from the 12% retail tax. How to file 2010 taxes late   The following four classifications of truck body types meet the suitable for use standard and will be excluded from the retail excise tax. How to file 2010 taxes late Platform truck bodies 21 feet or less in length. How to file 2010 taxes late Dry freight and refrigerated truck van bodies 24 feet or less in length. How to file 2010 taxes late Dump truck bodies with load capacities of 8 cubic yards or less. How to file 2010 taxes late Refuse packer truck bodies with load capacities of 20 cubic yards or less. How to file 2010 taxes late For more information on these classifications, see Revenue Procedure 2005-19, which is on page 832 of I. How to file 2010 taxes late R. How to file 2010 taxes late B. How to file 2010 taxes late 2005-14 at www. How to file 2010 taxes late irs. How to file 2010 taxes late gov/pub/irs-irbs/irb05-14. How to file 2010 taxes late pdf. How to file 2010 taxes late   The gross vehicle weight means the maximum total weight of a loaded vehicle. How to file 2010 taxes late Generally, this maximum total weight is the gross vehicle weight rating provided by the manufacturer or determined by the seller of the completed article. How to file 2010 taxes late The seller's gross vehicle weight rating is determined solely on the basis of the strength of the chassis frame and the axle capacity and placement. How to file 2010 taxes late The seller may not take into account any readily attachable components (such as tires or rim assemblies) in determining the gross vehicle weight. How to file 2010 taxes late See Regulations section 145. How to file 2010 taxes late 4051-1(e)(3) for more information. How to file 2010 taxes late Parts or accessories. How to file 2010 taxes late   The tax applies to parts or accessories sold on or in connection with, or with the sale of, a taxable article. How to file 2010 taxes late For example, if at the time of the sale by the retailer, the part or accessory has been ordered from the retailer, the part or accessory will be considered as sold in connection with the sale of the vehicle. How to file 2010 taxes late The tax applies in this case whether or not the retailer bills the parts or accessories separately. How to file 2010 taxes late   If the retailer sells a taxable chassis, body, or tractor without parts or accessories considered essential for the operation or appearance of the taxable article, the sale of the parts or accessories by the retailer to the purchaser is considered made in connection with the sale of the taxable article even though they are shipped separately, at the same time, or on a different date. How to file 2010 taxes late The tax applies unless there is evidence to the contrary. How to file 2010 taxes late For example, if a retailer sells to any person a chassis and the bumpers for the chassis, or sells a taxable tractor and the fifth wheel and attachments, the tax applies to the parts or accessories regardless of the method of billing or the time at which the shipments were made. How to file 2010 taxes late The tax does not apply to parts and accessories that are spares or replacements. How to file 2010 taxes late   The tax imposed on parts and accessories sold on or in connection with the taxable articles listed earlier and the tax imposed on the separate purchase of parts and accessories (discussed next) for the taxable articles listed earlier do not apply to an idling reduction device or insulation that has an R value of at least R35 per inch. How to file 2010 taxes late Idling reduction device. How to file 2010 taxes late   An idling reduction device is any device or system of devices that provide the tractor with services, such as heat, air conditioning, and electricity, without the use of the main drive engine while the tractor is temporarily parked or stationary. How to file 2010 taxes late The device must be affixed to the tractor and determined by the Administrator of the EPA, in consultation with the Secretary of Energy and Secretary of Transportation, to reduce idling while parked or stationary. How to file 2010 taxes late The EPA discusses idling reduction technologies on its website at www. How to file 2010 taxes late epa. How to file 2010 taxes late gov/smartway/technology/idling. How to file 2010 taxes late htm. How to file 2010 taxes late Separate purchase. How to file 2010 taxes late   The tax generally applies to the price of a part or accessory and its installation if the following conditions are met. How to file 2010 taxes late The owner, lessee, or operator of any vehicle that contains a taxable article installs any part or accessory on the vehicle. How to file 2010 taxes late The installation occurs within 6 months after the vehicle is first placed in service. How to file 2010 taxes late   The owners of the trade or business installing the parts or accessories are secondarily liable for the tax. How to file 2010 taxes late   A vehicle is placed in service on the date the owner takes actual possession of the vehicle. How to file 2010 taxes late This date is established by a signed delivery ticket or other comparable document indicating delivery to and acceptance by the owner. How to file 2010 taxes late   The tax does not apply if the installed part or accessory is a replacement part or accessory. How to file 2010 taxes late The tax also does not apply if the total price of the parts and accessories, including installation charges, during the 6-month period is $1,000 or less. How to file 2010 taxes late However, if the total price is more than $1,000, the tax applies to the cost of all parts and accessories (and installation charges) during that period. How to file 2010 taxes late Example. How to file 2010 taxes late You bought a taxable vehicle and placed it in service on April 8. How to file 2010 taxes late On May 3, you bought and installed parts and accessories at a cost of $850. How to file 2010 taxes late On July 15, you bought and installed parts and accessories for $300. How to file 2010 taxes late Tax of $138 (12% of $1,150) applies on July 15. How to file 2010 taxes late Also, tax will apply to any costs of additional parts and accessories installed on the vehicle before October 8. How to file 2010 taxes late First retail sale defined. How to file 2010 taxes late   The sale of an article is treated as the first retail sale, and the seller will be liable for the tax imposed on the sale unless one of the following exceptions applies. How to file 2010 taxes late There has been a prior taxable sale, lease, or use of the article (however, see Tax on resale of tax-paid trailers and semitrailers, later). How to file 2010 taxes late The sale qualifies as a tax-free sale under section 4221 (see Sales exempt from tax, later). How to file 2010 taxes late The seller in good faith accepts from the purchaser a statement signed under penalties of perjury and executed in good faith that the purchaser intends to resell the article or lease it on a long-term basis. How to file 2010 taxes late There is no registration requirement. How to file 2010 taxes late Leases. How to file 2010 taxes late   A long-term lease (a lease with a term of 1 year or more, taking into account options to renew) before a first retail sale is treated as a taxable sale. How to file 2010 taxes late The tax is imposed on the lessor at the time of the lease. How to file 2010 taxes late   A short-term lease (a lease with a term of less than 1 year, taking into account options to renew) before a first retail sale is treated as a taxable use. How to file 2010 taxes late The tax is imposed on the lessor at the time of the lease. How to file 2010 taxes late Exported vehicle. How to file 2010 taxes late   A vehicle exported before its first retail sale, used in a foreign country, and then returned to the United States is subject to the retail tax on its first domestic use or retail sale after importation. How to file 2010 taxes late Tax on resale of tax-paid trailers and semitrailers. How to file 2010 taxes late   The tax applies to a trailer or semitrailer resold within 6 months after having been sold in a taxable sale. How to file 2010 taxes late The seller liable for the tax on the resale can claim a credit equal to the tax paid on the prior taxable sale. How to file 2010 taxes late The credit cannot exceed the tax on the resale. How to file 2010 taxes late See Regulations section 145. How to file 2010 taxes late 4052-1(a)(4) for information on the conditions to allowance for the credit. How to file 2010 taxes late Use treated as sale. How to file 2010 taxes late   If any person uses a taxable article before the first retail sale of the article, that person is liable for the tax as if the article had been sold at retail by that person. How to file 2010 taxes late Figure the tax on the price at which similar articles are sold in the ordinary course of trade by retailers. How to file 2010 taxes late The tax attaches when the use begins. How to file 2010 taxes late   If the seller of an article regularly sells the articles at retail in arm's-length transactions, figure the tax on its use on the lowest established retail price for the articles in effect at the time of the taxable use. How to file 2010 taxes late   If the seller of an article does not regularly sell the articles at retail in arm's-length transactions, a constructive price on which the tax is figured will be determined by the IRS after considering the selling practices and price structures of sellers of similar articles. How to file 2010 taxes late   If a seller of an article incurs liability for tax on the use of the article and later sells or leases the article in a transaction that otherwise would be taxable, liability for tax is not incurred on the later sale or lease. How to file 2010 taxes late Presumptive retail sales price. How to file 2010 taxes late   There are rules to ensure that the tax base of transactions considered to be taxable sales includes either an actual or presumed markup percentage. How to file 2010 taxes late If the person liable for tax is the vehicle's manufacturer, producer, or importer, the following discussions show how you figure the presumptive retail sales price depending on the type of transaction and the persons involved in the transaction. How to file 2010 taxes late Table 6-1 outlines the appropriate tax base calculation for various transactions. How to file 2010 taxes late   The presumed markup percentage to be used for trucks and truck-tractors is 4%. How to file 2010 taxes late But for truck trailers and semitrailers and remanufactured trucks and tractors, the presumed markup percentage is zero. How to file 2010 taxes late Sale. How to file 2010 taxes late   For a taxable sale by a manufacturer, producer, importer, or related person, you generally figure the tax on a tax base of the sales price plus an amount equal to the presumed markup percentage times that sales price. How to file 2010 taxes late Long-term lease. How to file 2010 taxes late   In the case of a long-term lease by a manufacturer, producer, importer, or related person, figure the tax on a tax base of the constructive sales price plus an amount equal to the presumed markup percentage times the constructive sales price. How to file 2010 taxes late Short-term lease. How to file 2010 taxes late   When a manufacturer, producer, importer, or related person leases an article in a short-term lease considered a taxable use, figure the tax on a constructive sales price at which those or similar articles generally are sold in the ordinary course of trade by retailers. How to file 2010 taxes late   But if the lessor in this situation regularly sells articles at retail in arm's-length transactions, figure the tax on the lowest established retail price in effect at the time of the taxable use. How to file 2010 taxes late   If a person other than the manufacturer, producer, importer, or related person leases an article in a short-term lease considered a taxable use, figure the tax on a tax base of the price for which the article was sold to the lessor plus the cost of parts and accessories installed by the lessor and a presumed markup percentage. How to file 2010 taxes late Related person. How to file 2010 taxes late   A related person is any member of the same controlled group as the manufacturer, producer, or importer. How to file 2010 taxes late Do not treat as a related person a person that sells the articles through a permanent retail establishment in the normal course of being a retailer if that person has records to prove the article was sold for a price that included a markup equal to or greater than the presumed markup percentage. How to file 2010 taxes late Table 6-1. How to file 2010 taxes late Tax Base IF the transaction is a. How to file 2010 taxes late . How to file 2010 taxes late . How to file 2010 taxes late THEN figuring the base by using the. How to file 2010 taxes late . How to file 2010 taxes late . How to file 2010 taxes late Sale by the manufacturer, producer, importer, or related person Sales price plus (presumed markup percentage × sales price) Sale by the dealer Total consideration paid for the item including any charges incident to placing it in a condition ready for use Long-term lease by the manufacturer, producer, importer, or related person Constructive sales price plus (presumed markup percentage × constructive sales price) Short-term lease by the manufacturer, producer, importer, or related person Constructive sales price at which such or similar articles are sold Short-term lease by a lessor other than the manufacturer, producer, importer, or related person Price for which the article was sold to the lessor plus the cost of parts and accessories installed by the lessor plus a presumed markup percentage Short-term lease where the articles are regularly sold at arm's length Lowest established retail price in effect at the time of the taxable use General rule for sales by dealers to the consumer. How to file 2010 taxes late   For a taxable sale, other than a long-term lease, by a person other than a manufacturer, producer, importer, or related person, your tax base is the retail sales price as discussed next under Determination of tax base. How to file 2010 taxes late   When you sell an article to the consumer, generally you do not add a presumed markup to the tax base. How to file 2010 taxes late However, you do add a markup if all the following apply. How to file 2010 taxes late You do not perform any significant activities relating to the processing of the sale of a taxable article. How to file 2010 taxes late The main reason for processing the sale through you is to avoid or evade the presumed markup. How to file 2010 taxes late You do not have records proving that the article was sold for a price that included a markup equal to or greater than the presumed markup percentage. How to file 2010 taxes late In these situations, your tax base is the sales price plus an amount equal to the presumed markup percentage times that selling price. How to file 2010 taxes late Determination of tax base. How to file 2010 taxes late   These rules apply to both normal retail sales price and presumptive retail sales price computations. How to file 2010 taxes late To arrive at the tax base, the price is the total consideration paid (including trade-in allowance) for the item and includes any charge incident to placing the article in a condition ready for use. How to file 2010 taxes late However, see Presumptive retail sales price, earlier. How to file 2010 taxes late Exclusions from tax base. How to file 2010 taxes late   Exclude from the tax base the retail excise tax imposed on the sale. How to file 2010 taxes late Exclude any state or local retail sales tax if stated as a separate charge from the price whether the sales tax is imposed on the seller or purchaser. How to file 2010 taxes late Also exclude the value of any used component of the article furnished by the first user of the article. How to file 2010 taxes late   Exclude charges for transportation, delivery, insurance, and installation (other than installation charges for parts and accessories, discussed earlier) and other expenses incurred in connection with the delivery of an article to a purchaser. How to file 2010 taxes late These expenses are those incurred in delivery from the retail dealer to the customer. How to file 2010 taxes late In the case of delivery directly from the manufacturer to the dealer's customer, include the transportation and delivery charges to the extent the charges do not exceed what it would have cost to ship the article to the dealer. How to file 2010 taxes late   Exclude amounts charged for machinery or equipment that does not contribute to the highway transportation function of the vehicle, provided those charges are supported by adequate records. How to file 2010 taxes late For example, for an industrial vacuum loader vehicle, exclude amounts charged for the vacuum pump and hose, filter system, material separator, silencer or muffler, control cabinet, and ladder. How to file 2010 taxes late Similarly, for a sewer cleaning vehicle, exclude amounts charged for the high pressure water pump, hose components, and the vacuum pipe. How to file 2010 taxes late Sales not at arm's length. How to file 2010 taxes late   For any taxable article sold (not at arm's length) at less than the fair market price, figure the excise tax on the price for which similar articles are sold at retail in the ordinary course of trade. How to file 2010 taxes late   A sale is not at arm's length if either of the following apply. How to file 2010 taxes late One of the parties is controlled (in law or in fact) by the other or there is common control, whether or not the control is actually exercised to influence the sales price. How to file 2010 taxes late The sale is made under special arrangements between a seller and a purchaser. How to file 2010 taxes late Installment sales. How to file 2010 taxes late   If the first retail sale is an installment sale, or other form of sale in which the sales price is paid in installments, tax liability arises at the time of the sale. How to file 2010 taxes late The tax is figured on the entire sales price. How to file 2010 taxes late No part of the tax is deferred because the sales price is paid in installments. How to file 2010 taxes late Repairs and modifications. How to file 2010 taxes late   The tax does not apply to the sale or use of an article that has been repaired or modified unless the cost of the repairs and modifications is more than 75% of the retail price of a comparable new article. How to file 2010 taxes late This includes modifications that change the transportation function of an article or restore a wrecked article to a functional condition. How to file 2010 taxes late However, this exception generally does not apply to an article that was not subject to the tax when it was new. How to file 2010 taxes late Further manufacture. How to file 2010 taxes late   The tax does not apply to the use by a person of a taxable article as material in the manufacture or production of, or as a component part of, another article to be manufactured or produced by that person. How to file 2010 taxes late Do not treat a person as engaged in the manufacture of any article merely because that person combines the article with a: Coupling device (including any fifth wheel); Wrecker crane; Loading and unloading equipment (including any crane, hoist, winch, or power liftgate); Aerial ladder or tower; Ice and snow control equipment; Earth moving, excavation, and construction equipment; Spreader; Sleeper cab; Cab shield; or Wood or metal floor. How to file 2010 taxes late Combining an article with an item in this list does not give rise to taxability. How to file 2010 taxes late However, see Parts or accessories discussed earlier. How to file 2010 taxes late Articles exempt from tax. How to file 2010 taxes late   The tax on heavy trucks, trailers, and tractors does not apply to sales of the articles described in the following discussions. How to file 2010 taxes late Rail trailers and rail vans. How to file 2010 taxes late   This is any chassis or body of a trailer or semitrailer designed for use both as a highway vehicle and a railroad car (including any parts and accessories designed primarily for use on and in connection with it). How to file 2010 taxes late Do not treat a piggyback trailer or semitrailer as designed for use as a railroad car. How to file 2010 taxes late Parts and accessories. How to file 2010 taxes late   This is any part or accessory sold separately from the truck or trailer, except as described earlier under Parts or accessories and Separate purchase. How to file 2010 taxes late Trash containers. How to file 2010 taxes late   This is any box, container, receptacle, bin, or similar article that meets all the following conditions. How to file 2010 taxes late It is designed to be used as a trash container. How to file 2010 taxes late It is not designed to carry freight other than trash. How to file 2010 taxes late It is not designed to be permanently mounted on or affixed to a truck chassis or body. How to file 2010 taxes late House trailers. How to file 2010 taxes late   This is any house trailer (regardless of size) suitable for use in connection with either passenger automobiles or trucks. How to file 2010 taxes late Camper coaches or bodies for self-propelled mobile homes. How to file 2010 taxes late   This is any article designed to be mounted or placed on trucks, truck chassis, or automobile chassis and to be used primarily as living quarters or camping accommodations. How to file 2010 taxes late Further, the tax does not apply to chassis specifically designed and constructed to accommodate and transport self-propelled mobile home bodies. How to file 2010 taxes late Farm feed, seed, and fertilizer equipment. How to file 2010 taxes late   This is any body primarily designed to process or prepare, haul, spread, load, or unload feed, seed, or fertilizer to or on farms. How to file 2010 taxes late This exemption applies only to the farm equipment body (and parts and accessories) and not to the chassis upon which the farm equipment is mounted. How to file 2010 taxes late Ambulances and hearses. How to file 2010 taxes late   This is any ambulance, hearse, or combination ambulance-hearse. How to file 2010 taxes late Truck-tractors. How to file 2010 taxes late   This is any truck-tractor specifically designed for use in shifting semitrailers in and around freight yards and freight terminals. How to file 2010 taxes late Concrete mixers. How to file 2010 taxes late   This is any article designed to be placed or mounted on a truck, truck trailer, or semitrailer chassis to be used to process or prepare concrete. How to file 2010 taxes late This exemption does not apply to the chassis on which the article is mounted. How to file 2010 taxes late Sales exempt from tax. How to file 2010 taxes late   The following sales are ordinarily exempt from tax. How to file 2010 taxes late Sales to a state or local government for its exclusive use. How to file 2010 taxes late Sales to Indian tribal governments, but only if the transaction involves the exercise of an essential tribal government function. How to file 2010 taxes late Sales to a nonprofit educational organization for its exclusive use. How to file 2010 taxes late Sales to a qualified blood collector organization (as defined under Communications Tax in chapter 4) for its exclusive use in the collection, storage, or transportation of blood. How to file 2010 taxes late Sales for use by the purchaser for further manufacture of other taxable articles (see below). How to file 2010 taxes late Sales for export or for resale by the purchaser to a second purchaser for export. How to file 2010 taxes late Sales to the United Nations for official use. How to file 2010 taxes late Registration requirement. How to file 2010 taxes late   In general, the seller and buyer must be registered for a sale to be tax free. How to file 2010 taxes late See the Form 637 instructions for more information. How to file 2010 taxes late Certain registration exceptions apply in the case of sales to state and local governments, sales to foreign purchasers for export, and sales for resale or long term leasing. How to file 2010 taxes late Further manufacture. How to file 2010 taxes late   If you buy articles tax free and resell or use them other than in the manufacture of another article, you are liable for the tax on their resale or use just as if you had manufactured and made the first retail sale of them. How to file 2010 taxes late Credits or refunds. How to file 2010 taxes late   A credit or refund (without interest) of the retail tax on the taxable articles described earlier may be allowable if the tax has been paid with respect to an article and, before any other use, such article is used by any person as a component part of another taxable article manufactured or produced. How to file 2010 taxes late The person using the article as a component part is eligible for the credit or refund. How to file 2010 taxes late   A credit or refund is allowable if, before any other use, an article is, by any person: Exported, Used or sold for use as supplies for vessels, Sold to a state or local government for its exclusive use, Sold to a nonprofit educational organization for its exclusive use, or Sold to a qualified blood collector organization (as defined under Communications Tax in chapter 4) for its exclusive use in the collection, storage, or transportation of blood. How to file 2010 taxes late A credit or refund is also allowable if there is a price readjustment by reason of the return or repossession of an article or by reason of a bona fide discount, rebate, or allowance. How to file 2010 taxes late   See also Conditions to allowance in chapter 5. How to file 2010 taxes late Tire credit. How to file 2010 taxes late   A credit is allowed against the retail tax on the taxable articles described earlier if taxable tires are sold on or in connection with the sale of the article. How to file 2010 taxes late The credit is equal to the manufacturers excise tax imposed on the taxable tires (discussed earlier). How to file 2010 taxes late This is the section 4051(d) taxable tire credit and is claimed on Schedule C (Form 720) for the same quarter for which the tax on the heavy vehicle is reported. How to file 2010 taxes late Prev  Up  Next   Home   More Online Publications
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Tips for Taxpayers, Victims about Identity Theft and Tax Returns

IRS YouTube Videos
ID Theft: IRS Efforts on Identity Theft

FS-2014-2, January 2014

Identity theft remains a top priority for the Internal Revenue Service in 2014. Identity theft is one of the fastest growing crimes nationwide, and refund fraud caused by identity theft is one of the biggest challenges facing the IRS. This year, the IRS continues to take new steps and strong actions to protect taxpayers and help victims of identity theft and refund fraud.

Stopping refund fraud related to identity theft is a top priority for the tax agency. The IRS is focused on preventing, detecting and resolving identity theft cases as soon as possible. The IRS has more than 3,000 employees working on identity theft cases. We have trained more than 35,000 employees who work with taxpayers to recognize and provide assistance when identity theft occurs.

Taxpayers can encounter identity theft involving their tax returns in several ways. One instance is where identity thieves try filing fraudulent refund claims using another person’s identifying information, which has been stolen. Innocent taxpayers are victimized because their refunds are delayed.

Here are some tips to protect you from becoming a victim, and steps to take if you think someone may have filed a tax return using your name:

Tips to protect you from becoming a victim of identity theft

  • Don’t carry your Social Security card or any documents that include your Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN).
  • Don’t give a business your SSN or ITIN just because they ask. Give it only when required.
  • Protect your financial information.
  • Check your credit report every 12 months.
  • Secure personal information in your home.
  • Protect your personal computers by using firewalls and anti-spam/virus software, updating security patches and changing passwords for Internet accounts.
  • Don’t give personal information over the phone, through the mail or on the Internet unless you have initiated the contact or you are sure you know who you are dealing with.

If your tax records are not currently affected by identity theft, but you believe you may be at risk due to a lost or stolen purse or wallet, questionable credit card activity or credit report, contact the IRS Identity Protection Specialized Unit at 800-908-4490, extension 245 (Monday - Friday, 7 a.m. - 7 p.m. local time; Alaska and Hawaii follow Pacific time).

If you believe you’re a victim of identity theft

Be alert to possible identity theft if you receive a notice from the IRS or learn from your tax professional that:

  • More than one tax return for you was filed;
  • You have a balance due, refund offset or have had collection actions taken against you for a year you did not file a tax return;
  • IRS records indicate you received more wages than you actually earned or
  • Your state or federal benefits were reduced or cancelled because the agency received information reporting an income change.

If you receive a notice from the IRS and you suspect your identity has been used fraudulently, respond immediately by calling the number on the notice.

If you did not receive an IRS notice but believe you’ve been the victim of identity theft, contact the IRS Identity Protection Specialized Unit at 800-908-4490, extension 245 right away so we can take steps to secure your tax account and match your SSN or ITIN.

Also, fill out the IRS Identity Theft Affidavit, Form 14039. Please write legibly and follow the directions on the back of the form that relate to your specific circumstances.

In addition, we recommend you take additional steps with agencies outside the IRS:

  • Report incidents of identity theft to the Federal Trade Commission at www.consumer.ftc.gov or the FTC Identity Theft hotline at 877-438-4338 or TTY 866-653-4261.
  • File a report with the local police.
  • Contact the fraud departments of the three major credit bureaus:
    • Equifax – www.equifax.com, 800-525-6285
    • Experian – www.experian.com, 888-397-3742
    • TransUnion – www.transunion.com, 800-680-7289
  • Close any accounts that have been tampered with or opened fraudulently.

More information is available at IRS.gov:

Help if you have reported an identity theft case to the IRS and are waiting for your federal tax refund

The IRS is working to speed up and further streamline identity theft case resolution to help innocent taxpayers.

The IRS more than doubled the level of employees dedicated to working identity theft cases between 2011 and 2012.  As the IRS enters the 2014 filing season, we now have more than 3,000 employees working identity theft issues.

These are extremely complex cases to resolve, frequently touching on multiple issues and multiple tax years. Cases of resolving identity can be complicated by the thieves themselves contacting the IRS. Due to the complexity of the situation, this is a time-consuming process. Taxpayers are likely to see their refunds delayed for an extended period of time while we take the necessary actions to resolve the matter. A typical case can take about 180 days to resolve, and the IRS is working to reduce that time period.

If you have an open identity theft case that is being worked by the IRS, you need to continue to file your tax returns during this period.

For victims of identity theft who have previously been in contact with the IRS and have not achieved a resolution to their case, you may contact the IRS Identity Protection Specialized Unit, toll-free, at 800-908-4490. If you are unable to get your issue resolved and are experiencing financial difficulties, contact the Taxpayer Advocate Service toll-free at 877-777-4778.

More Information

It is a top priority for the IRS to help victims and reduce the time it takes to resolve cases. In addition, the IRS continues to aggressively expand its efforts to protect and prevent refund fraud involving identity theft before it occurs as well as work with federal, state and local officials to pursue the perpetrators of this fraud.

For more information, see the special identity theft section on IRS.gov and IRS Fact Sheet 2014-1, IRS Combats Identity Theft and Refund Fraud on Many Fronts.

Page Last Reviewed or Updated: 07-Jan-2014

The How To File 2010 Taxes Late

How to file 2010 taxes late 4. How to file 2010 taxes late   Interest Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Allocation of InterestOrder of funds spent. How to file 2010 taxes late Payments from checking accounts. How to file 2010 taxes late Amounts paid within 30 days. How to file 2010 taxes late Optional method for determining date of reallocation. How to file 2010 taxes late Interest on a segregated account. How to file 2010 taxes late How to report. How to file 2010 taxes late Interest You Can DeductStatement. How to file 2010 taxes late Expenses paid to obtain a mortgage. How to file 2010 taxes late Prepayment penalty. How to file 2010 taxes late De minimis OID. How to file 2010 taxes late Constant-yield method. How to file 2010 taxes late Loan or mortgage ends. How to file 2010 taxes late Interest You Cannot DeductPenalties. How to file 2010 taxes late Who is a key person? Exceptions for pre-June 1997 contracts. How to file 2010 taxes late Interest allocated to unborrowed policy cash value. How to file 2010 taxes late Capitalization of Interest When To Deduct InterestPrepaid interest. How to file 2010 taxes late Discounted loan. How to file 2010 taxes late Refunds of interest. How to file 2010 taxes late Prepaid interest. How to file 2010 taxes late Discounted loan. How to file 2010 taxes late Tax deficiency. How to file 2010 taxes late Related person. How to file 2010 taxes late Below-Market LoansLimit on forgone interest for gift loans of $100,000 or less. How to file 2010 taxes late Introduction This chapter discusses the tax treatment of business interest expense. How to file 2010 taxes late Business interest expense is an amount charged for the use of money you borrowed for business activities. How to file 2010 taxes late Topics - This chapter discusses: Allocation of interest Interest you can deduct Interest you cannot deduct Capitalization of interest When to deduct interest Below-market loans Useful Items - You may want to see: Publication 537 Installment Sales 550 Investment Income and Expenses 936 Home Mortgage Interest Deduction Form (and Instructions) Sch A (Form 1040) Itemized Deductions Sch E (Form 1040) Supplemental Income and Loss Sch K-1 (Form 1065) Partner's Share of Income, Deductions, Credits, etc. How to file 2010 taxes late Sch K-1 (Form 1120S) Shareholder's Share of Income, Deductions, Credits, etc. How to file 2010 taxes late 1098 Mortgage Interest Statement 3115 Application for Change in Accounting Method 4952 Investment Interest Expense Deduction 8582 Passive Activity Loss Limitations See chapter 12 for information about getting publications and forms. How to file 2010 taxes late Allocation of Interest The rules for deducting interest vary, depending on whether the loan proceeds are used for business, personal, or investment activities. How to file 2010 taxes late If you use the proceeds of a loan for more than one type of expense, you must allocate the interest based on the use of the loan's proceeds. How to file 2010 taxes late Allocate your interest expense to the following categories. How to file 2010 taxes late Nonpassive trade or business activity interest Passive trade or business activity interest Investment interest Portfolio interest Personal interest In general, you allocate interest on a loan the same way you allocate the loan proceeds. How to file 2010 taxes late You allocate loan proceeds by tracing disbursements to specific uses. How to file 2010 taxes late The easiest way to trace disbursements to specific uses is to keep the proceeds of a particular loan separate from any other funds. How to file 2010 taxes late Secured loan. How to file 2010 taxes late   The allocation of loan proceeds and the related interest is not generally affected by the use of property that secures the loan. How to file 2010 taxes late Example. How to file 2010 taxes late You secure a loan with property used in your business. How to file 2010 taxes late You use the loan proceeds to buy an automobile for personal use. How to file 2010 taxes late You must allocate interest expense on the loan to personal use (purchase of the automobile) even though the loan is secured by business property. How to file 2010 taxes late    If the property that secures the loan is your home, you generally do not allocate the loan proceeds or the related interest. How to file 2010 taxes late The interest is usually deductible as qualified home mortgage interest, regardless of how the loan proceeds are used. How to file 2010 taxes late For more information, see Publication 936. How to file 2010 taxes late Allocation period. How to file 2010 taxes late   The period for which a loan is allocated to a particular use begins on the date the proceeds are used and ends on the earlier of the following dates. How to file 2010 taxes late The date the loan is repaid. How to file 2010 taxes late The date the loan is reallocated to another use. How to file 2010 taxes late Proceeds not disbursed to borrower. How to file 2010 taxes late   Even if the lender disburses the loan proceeds to a third party, the allocation of the loan is still based on your use of the funds. How to file 2010 taxes late This applies whether you pay for property, services, or anything else by incurring a loan, or you take property subject to a debt. How to file 2010 taxes late Proceeds deposited in borrower's account. How to file 2010 taxes late   Treat loan proceeds deposited in an account as property held for investment. How to file 2010 taxes late It does not matter whether the account pays interest. How to file 2010 taxes late Any interest you pay on the loan is investment interest expense. How to file 2010 taxes late If you withdraw the proceeds of the loan, you must reallocate the loan based on the use of the funds. How to file 2010 taxes late Example. How to file 2010 taxes late Celina, a calendar-year taxpayer, borrows $100,000 on January 4 and immediately uses the proceeds to open a checking account. How to file 2010 taxes late No other amounts are deposited in the account during the year and no part of the loan principal is repaid during the year. How to file 2010 taxes late On April 2, Celina uses $20,000 from the checking account for a passive activity expenditure. How to file 2010 taxes late On September 4, Celina uses an additional $40,000 from the account for personal purposes. How to file 2010 taxes late Under the interest allocation rules, the entire $100,000 loan is treated as property held for investment for the period from January 4 through April 1. How to file 2010 taxes late From April 2 through September 3, Celina must treat $20,000 of the loan as used in the passive activity and $80,000 of the loan as property held for investment. How to file 2010 taxes late From September 4 through December 31, she must treat $40,000 of the loan as used for personal purposes, $20,000 as used in the passive activity, and $40,000 as property held for investment. How to file 2010 taxes late Order of funds spent. How to file 2010 taxes late   Generally, you treat loan proceeds deposited in an account as used (spent) before either of the following amounts. How to file 2010 taxes late Any unborrowed amounts held in the same account. How to file 2010 taxes late Any amounts deposited after these loan proceeds. How to file 2010 taxes late Example. How to file 2010 taxes late On January 9, Olena opened a checking account, depositing $500 of the proceeds of Loan A and $1,000 of unborrowed funds. How to file 2010 taxes late The following table shows the transactions in her account during the tax year. How to file 2010 taxes late Date Transaction January 9 $500 proceeds of Loan A and $1,000 unborrowed funds deposited January 14 $500 proceeds of Loan B  deposited February 19 $800 used for personal purposes February 27 $700 used for passive activity June 19 $1,000 proceeds of Loan C  deposited November 20 $800 used for an investment December 18 $600 used for personal purposes Olena treats the $800 used for personal purposes as made from the $500 proceeds of Loan A and $300 of the proceeds of Loan B. How to file 2010 taxes late She treats the $700 used for a passive activity as made from the remaining $200 proceeds of Loan B and $500 of unborrowed funds. How to file 2010 taxes late She treats the $800 used for an investment as made entirely from the proceeds of Loan C. How to file 2010 taxes late She treats the $600 used for personal purposes as made from the remaining $200 proceeds of Loan C and $400 of unborrowed funds. How to file 2010 taxes late For the periods during which loan proceeds are held in the account, Olena treats them as property held for investment. How to file 2010 taxes late Payments from checking accounts. How to file 2010 taxes late   Generally, you treat a payment from a checking or similar account as made at the time the check is written if you mail or deliver it to the payee within a reasonable period after you write it. How to file 2010 taxes late You can treat checks written on the same day as written in any order. How to file 2010 taxes late Amounts paid within 30 days. How to file 2010 taxes late   If you receive loan proceeds in cash or if the loan proceeds are deposited in an account, you can treat any payment (up to the amount of the proceeds) made from any account you own, or from cash, as made from those proceeds. How to file 2010 taxes late This applies to any payment made within 30 days before or after the proceeds are received in cash or deposited in your account. How to file 2010 taxes late   If the loan proceeds are deposited in an account, you can apply this rule even if the rules stated earlier under Order of funds spent would otherwise require you to treat the proceeds as used for other purposes. How to file 2010 taxes late If you apply this rule to any payments, disregard those payments (and the proceeds from which they are made) when applying the rules stated under Order of funds spent. How to file 2010 taxes late   If you received the loan proceeds in cash, you can treat the payment as made on the date you received the cash instead of the date you actually made the payment. How to file 2010 taxes late Example. How to file 2010 taxes late Giovanni gets a loan of $1,000 on August 4 and receives the proceeds in cash. How to file 2010 taxes late Giovanni deposits $1,500 in an account on August 18 and on August 28 writes a check on the account for a passive activity expense. How to file 2010 taxes late Also, Giovanni deposits his paycheck, deposits other loan proceeds, and pays his bills during the same period. How to file 2010 taxes late Regardless of these other transactions, Giovanni can treat $1,000 of the deposit he made on August 18 as being paid on August 4 from the loan proceeds. How to file 2010 taxes late In addition, Giovanni can treat the passive activity expense he paid on August 28 as made from the $1,000 loan proceeds treated as deposited in the account. How to file 2010 taxes late Optional method for determining date of reallocation. How to file 2010 taxes late   You can use the following method to determine the date loan proceeds are reallocated to another use. How to file 2010 taxes late You can treat all payments from loan proceeds in the account during any month as taking place on the later of the following dates. How to file 2010 taxes late The first day of that month. How to file 2010 taxes late The date the loan proceeds are deposited in the account. How to file 2010 taxes late However, you can use this optional method only if you treat all payments from the account during the same calendar month in the same way. How to file 2010 taxes late Interest on a segregated account. How to file 2010 taxes late   If you have an account that contains only loan proceeds and interest earned on the account, you can treat any payment from that account as being made first from the interest. How to file 2010 taxes late When the interest earned is used up, any remaining payments are from loan proceeds. How to file 2010 taxes late Example. How to file 2010 taxes late You borrowed $20,000 and used the proceeds of this loan to open a new savings account. How to file 2010 taxes late When the account had earned interest of $867, you withdrew $20,000 for personal purposes. How to file 2010 taxes late You can treat the withdrawal as coming first from the interest earned on the account, $867, and then from the loan proceeds, $19,133 ($20,000 − $867). How to file 2010 taxes late All the interest charged on the loan from the time it was deposited in the account until the time of the withdrawal is investment interest expense. How to file 2010 taxes late The interest charged on the part of the proceeds used for personal purposes ($19,133) from the time you withdrew it until you either repay it or reallocate it to another use is personal interest expense. How to file 2010 taxes late The interest charged on the loan proceeds you left in the account ($867) continues to be investment interest expense until you either repay it or reallocate it to another use. How to file 2010 taxes late Loan repayment. How to file 2010 taxes late   When you repay any part of a loan allocated to more than one use, treat it as being repaid in the following order. How to file 2010 taxes late Personal use. How to file 2010 taxes late Investments and passive activities (other than those included in (3)). How to file 2010 taxes late Passive activities in connection with a rental real estate activity in which you actively participate. How to file 2010 taxes late Former passive activities. How to file 2010 taxes late Trade or business use and expenses for certain low-income housing projects. How to file 2010 taxes late Line of credit (continuous borrowings). How to file 2010 taxes late   The following rules apply if you have a line of credit or similar arrangement. How to file 2010 taxes late Treat all borrowed funds on which interest accrues at the same fixed or variable rate as a single loan. How to file 2010 taxes late Treat borrowed funds or parts of borrowed funds on which interest accrues at different fixed or variable rates as different loans. How to file 2010 taxes late Treat these loans as repaid in the order shown on the loan agreement. How to file 2010 taxes late Loan refinancing. How to file 2010 taxes late   Allocate the replacement loan to the same uses to which the repaid loan was allocated. How to file 2010 taxes late Make the allocation only to the extent you use the proceeds of the new loan to repay any part of the original loan. How to file 2010 taxes late Debt-financed distribution. How to file 2010 taxes late   A debt-financed distribution occurs when a partnership or S corporation borrows funds and allocates those funds to distributions made to partners or shareholders. How to file 2010 taxes late The manner in which you report the interest expense associated with the distributed debt proceeds depends on your use of those proceeds. How to file 2010 taxes late How to report. How to file 2010 taxes late   If the proceeds were used in a nonpassive trade or business activity, report the interest on Schedule E (Form 1040), line 28; enter “interest expense” and the name of the partnership or S corporation in column (a) and the amount in column (h). How to file 2010 taxes late If the proceeds were used in a passive activity, follow the Instructions for Form 8582, Passive Activity Loss Limitations, to determine the amount of interest expense that can be reported on Schedule E (Form 1040), line 28; enter “interest expense” and the name of the partnership in column (a) and the amount in column (f). How to file 2010 taxes late If the proceeds were used in an investment activity, enter the interest on Form 4952. How to file 2010 taxes late If the proceeds are used for personal purposes, the interest is generally not deductible. How to file 2010 taxes late Interest You Can Deduct You can generally deduct as a business expense all interest you pay or accrue during the tax year on debts related to your trade or business. How to file 2010 taxes late Interest relates to your trade or business if you use the proceeds of the loan for a trade or business expense. How to file 2010 taxes late It does not matter what type of property secures the loan. How to file 2010 taxes late You can deduct interest on a debt only if you meet all the following requirements. How to file 2010 taxes late You are legally liable for that debt. How to file 2010 taxes late Both you and the lender intend that the debt be repaid. How to file 2010 taxes late You and the lender have a true debtor-creditor relationship. How to file 2010 taxes late Partial liability. How to file 2010 taxes late   If you are liable for part of a business debt, you can deduct only your share of the total interest paid or accrued. How to file 2010 taxes late Example. How to file 2010 taxes late You and your brother borrow money. How to file 2010 taxes late You are liable for 50% of the note. How to file 2010 taxes late You use your half of the loan in your business, and you make one-half of the loan payments. How to file 2010 taxes late You can deduct your half of the total interest payments as a business deduction. How to file 2010 taxes late Mortgage. How to file 2010 taxes late   Generally, mortgage interest paid or accrued on real estate you own legally or equitably is deductible. How to file 2010 taxes late However, rather than deducting the interest currently, you may have to add it to the cost basis of the property as explained later under Capitalization of Interest. How to file 2010 taxes late Statement. How to file 2010 taxes late   If you paid $600 or more of mortgage interest (including certain points) during the year on any one mortgage, you generally will receive a Form 1098 or a similar statement. How to file 2010 taxes late You will receive the statement if you pay interest to a person (including a financial institution or a cooperative housing corporation) in the course of that person's trade or business. How to file 2010 taxes late A governmental unit is a person for purposes of furnishing the statement. How to file 2010 taxes late   If you receive a refund of interest you overpaid in an earlier year, this amount will be reported in box 3 of Form 1098. How to file 2010 taxes late You cannot deduct this amount. How to file 2010 taxes late For information on how to report this refund, see Refunds of interest, later in this chapter. How to file 2010 taxes late Expenses paid to obtain a mortgage. How to file 2010 taxes late   Certain expenses you pay to obtain a mortgage cannot be deducted as interest. How to file 2010 taxes late These expenses, which include mortgage commissions, abstract fees, and recording fees, are capital expenses. How to file 2010 taxes late If the property mortgaged is business or income-producing property, you can amortize the costs over the life of the mortgage. How to file 2010 taxes late Prepayment penalty. How to file 2010 taxes late   If you pay off your mortgage early and pay the lender a penalty for doing this, you can deduct the penalty as interest. How to file 2010 taxes late Interest on employment tax deficiency. How to file 2010 taxes late   Interest charged on employment taxes assessed on your business is deductible. How to file 2010 taxes late Original issue discount (OID). How to file 2010 taxes late   OID is a form of interest. How to file 2010 taxes late A loan (mortgage or other debt) generally has OID when its proceeds are less than its principal amount. How to file 2010 taxes late The OID is the difference between the stated redemption price at maturity and the issue price of the loan. How to file 2010 taxes late   A loan's stated redemption price at maturity is the sum of all amounts (principal and interest) payable on it other than qualified stated interest. How to file 2010 taxes late Qualified stated interest is stated interest that is unconditionally payable in cash or property (other than another loan of the issuer) at least annually over the term of the loan at a single fixed rate. How to file 2010 taxes late You generally deduct OID over the term of the loan. How to file 2010 taxes late Figure the amount to deduct each year using the constant-yield method, unless the OID on the loan is de minimis. How to file 2010 taxes late De minimis OID. How to file 2010 taxes late   The OID is de minimis if it is less than one-fourth of 1% (. How to file 2010 taxes late 0025) of the stated redemption price of the loan at maturity multiplied by the number of full years from the date of original issue to maturity (the term of the loan). How to file 2010 taxes late   If the OID is de minimis, you can choose one of the following ways to figure the amount you can deduct each year. How to file 2010 taxes late On a constant-yield basis over the term of the loan. How to file 2010 taxes late On a straight-line basis over the term of the loan. How to file 2010 taxes late In proportion to stated interest payments. How to file 2010 taxes late In its entirety at maturity of the loan. How to file 2010 taxes late You make this choice by deducting the OID in a manner consistent with the method chosen on your timely filed tax return for the tax year in which the loan is issued. How to file 2010 taxes late Example. How to file 2010 taxes late On January 1, 2013, you took out a $100,000 discounted loan and received $98,500 in proceeds. How to file 2010 taxes late The loan will mature on January 1, 2023 (a 10-year term), and the $100,000 principal is payable on that date. How to file 2010 taxes late Interest of $10,000 is payable on January 1 of each year, beginning January 1, 2014. How to file 2010 taxes late The $1,500 OID on the loan is de minimis because it is less than $2,500 ($100,000 × . How to file 2010 taxes late 0025 × 10). How to file 2010 taxes late You choose to deduct the OID on a straight-line basis over the term of the loan. How to file 2010 taxes late Beginning in 2013, you can deduct $150 each year for 10 years. How to file 2010 taxes late Constant-yield method. How to file 2010 taxes late   If the OID is not de minimis, you must use the constant-yield method to figure how much you can deduct each year. How to file 2010 taxes late You figure your deduction for the first year using the following steps. How to file 2010 taxes late Determine the issue price of the loan. How to file 2010 taxes late Generally, this equals the proceeds of the loan. How to file 2010 taxes late If you paid points on the loan (as discussed later), the issue price generally is the difference between the proceeds and the points. How to file 2010 taxes late Multiply the result in (1) by the yield to maturity. How to file 2010 taxes late Subtract any qualified stated interest payments from the result in (2). How to file 2010 taxes late This is the OID you can deduct in the first year. How to file 2010 taxes late   To figure your deduction in any subsequent year, follow the above steps, except determine the adjusted issue price in step (1). How to file 2010 taxes late To get the adjusted issue price, add to the issue price any OID previously deducted. How to file 2010 taxes late Then follow steps (2) and (3) above. How to file 2010 taxes late   The yield to maturity is generally shown in the literature you receive from your lender. How to file 2010 taxes late If you do not have this information, consult your lender or tax advisor. How to file 2010 taxes late In general, the yield to maturity is the discount rate that, when used in computing the present value of all principal and interest payments, produces an amount equal to the principal amount of the loan. How to file 2010 taxes late Example. How to file 2010 taxes late The facts are the same as in the previous example, except that you deduct the OID on a constant yield basis over the term of the loan. How to file 2010 taxes late The yield to maturity on your loan is 10. How to file 2010 taxes late 2467%, compounded annually. How to file 2010 taxes late For 2013, you can deduct $93 [($98,500 × . How to file 2010 taxes late 102467) − $10,000]. How to file 2010 taxes late For 2014, you can deduct $103 [($98,593 × . How to file 2010 taxes late 102467) − $10,000]. How to file 2010 taxes late Loan or mortgage ends. How to file 2010 taxes late   If your loan or mortgage ends, you may be able to deduct any remaining OID in the tax year in which the loan or mortgage ends. How to file 2010 taxes late A loan or mortgage may end due to a refinancing, prepayment, foreclosure, or similar event. How to file 2010 taxes late If you refinance with the original lender, you generally cannot deduct the remaining OID in the year in which the refinancing occurs, but you may be able to deduct it over the term of the new mortgage or loan. How to file 2010 taxes late See Interest paid with funds borrowed from original lender under Interest You Cannot Deduct, later. How to file 2010 taxes late Points. How to file 2010 taxes late   The term “points” is used to describe certain charges paid, or treated as paid, by a borrower to obtain a loan or a mortgage. How to file 2010 taxes late These charges are also called loan origination fees, maximum loan charges, discount points, or premium charges. How to file 2010 taxes late If any of these charges (points) are solely for the use of money, they are interest. How to file 2010 taxes late   Because points are prepaid interest, you generally cannot deduct the full amount in the year paid. How to file 2010 taxes late However, you can choose to fully deduct points in the year paid if you meet certain tests. How to file 2010 taxes late For exceptions to the general rule, see Publication 936. How to file 2010 taxes late The points reduce the issue price of the loan and result in original issue discount (OID), deductible as explained in the preceding discussion. How to file 2010 taxes late Partial payments on a nontax debt. How to file 2010 taxes late   If you make partial payments on a debt (other than a debt owed the IRS), the payments are applied, in general, first to interest and any remainder to principal. How to file 2010 taxes late You can deduct only the interest. How to file 2010 taxes late This rule does not apply when it can be inferred that the borrower and lender understood that a different allocation of the payments would be made. How to file 2010 taxes late Installment purchase. How to file 2010 taxes late   If you make an installment purchase of business property, the contract between you and the seller generally provides for the payment of interest. How to file 2010 taxes late If no interest or a low rate of interest is charged under the contract, a portion of the stated principal amount payable under the contract may be recharacterized as interest (unstated interest). How to file 2010 taxes late The amount recharacterized as interest reduces your basis in the property and increases your interest expense. How to file 2010 taxes late For more information on installment sales and unstated interest, see Publication 537. How to file 2010 taxes late Interest You Cannot Deduct Certain interest payments cannot be deducted. How to file 2010 taxes late In addition, certain other expenses that may seem to be interest but are not, cannot be deducted as interest. How to file 2010 taxes late You cannot currently deduct interest that must be capitalized, and you generally cannot deduct personal interest. How to file 2010 taxes late Interest paid with funds borrowed from original lender. How to file 2010 taxes late   If you use the cash method of accounting, you cannot deduct interest you pay with funds borrowed from the original lender through a second loan, an advance, or any other arrangement similar to a loan. How to file 2010 taxes late You can deduct the interest expense once you start making payments on the new loan. How to file 2010 taxes late   When you make a payment on the new loan, you first apply the payment to interest and then to the principal. How to file 2010 taxes late All amounts you apply to the interest on the first loan are deductible, along with any interest you pay on the second loan, subject to any limits that apply. How to file 2010 taxes late Capitalized interest. How to file 2010 taxes late   You cannot currently deduct interest you are required to capitalize under the uniform capitalization rules. How to file 2010 taxes late See Capitalization of Interest, later. How to file 2010 taxes late In addition, if you buy property and pay interest owed by the seller (for example, by assuming the debt and any interest accrued on the property), you cannot deduct the interest. How to file 2010 taxes late Add this interest to the basis of the property. How to file 2010 taxes late Commitment fees or standby charges. How to file 2010 taxes late   Fees you incur to have business funds available on a standby basis, but not for the actual use of the funds, are not deductible as interest payments. How to file 2010 taxes late You may be able to deduct them as business expenses. How to file 2010 taxes late   If the funds are for inventory or certain property used in your business, the fees are indirect costs and you generally must capitalize them under the uniform capitalization rules. How to file 2010 taxes late See Capitalization of Interest, later. How to file 2010 taxes late Interest on income tax. How to file 2010 taxes late   Interest charged on income tax assessed on your individual income tax return is not a business deduction even though the tax due is related to income from your trade or business. How to file 2010 taxes late Treat this interest as a business deduction only in figuring a net operating loss deduction. How to file 2010 taxes late Penalties. How to file 2010 taxes late   Penalties on underpaid deficiencies and underpaid estimated tax are not interest. How to file 2010 taxes late You cannot deduct them. How to file 2010 taxes late Generally, you cannot deduct any fines or penalties. How to file 2010 taxes late Interest on loans with respect to life insurance policies. How to file 2010 taxes late   You generally cannot deduct interest on a debt incurred with respect to any life insurance, annuity, or endowment contract that covers any individual unless that individual is a key person. How to file 2010 taxes late   If the policy or contract covers a key person, you can deduct the interest on up to $50,000 of debt for that person. How to file 2010 taxes late However, the deduction for any month cannot be more than the interest figured using Moody's Composite Yield on Seasoned Corporate Bonds (formerly known as Moody's Corporate Bond Yield Average-Monthly Average Corporates) (Moody's rate) for that month. How to file 2010 taxes late Who is a key person?   A key person is an officer or 20% owner. How to file 2010 taxes late However, the number of individuals you can treat as key persons is limited to the greater of the following. How to file 2010 taxes late Five individuals. How to file 2010 taxes late The lesser of 5% of the total officers and employees of the company or 20 individuals. How to file 2010 taxes late Exceptions for pre-June 1997 contracts. How to file 2010 taxes late   You can generally deduct the interest if the contract was issued before June 9, 1997, and the covered individual is someone other than an employee, officer, or someone financially interested in your business. How to file 2010 taxes late If the contract was purchased before June 21, 1986, you can generally deduct the interest no matter who is covered by the contract. How to file 2010 taxes late Interest allocated to unborrowed policy cash value. How to file 2010 taxes late   Corporations and partnerships generally cannot deduct any interest expense allocable to unborrowed cash values of life insurance, annuity, or endowment contracts. How to file 2010 taxes late This rule applies to contracts issued after June 8, 1997, that cover someone other than an officer, director, employee, or 20% owner. How to file 2010 taxes late For more information, see section 264(f) of the Internal Revenue Code. How to file 2010 taxes late Capitalization of Interest Under the uniform capitalization rules, you generally must capitalize interest on debt equal to your expenditures to produce real property or certain tangible personal property. How to file 2010 taxes late The property must be produced by you for use in your trade or business or for sale to customers. How to file 2010 taxes late You cannot capitalize interest related to property that you acquire in any other manner. How to file 2010 taxes late Interest you paid or incurred during the production period must be capitalized if the property produced is designated property. How to file 2010 taxes late Designated property is any of the following. How to file 2010 taxes late Real property. How to file 2010 taxes late Tangible personal property with a class life of 20 years or more. How to file 2010 taxes late Tangible personal property with an estimated production period of more than 2 years. How to file 2010 taxes late Tangible personal property with an estimated production period of more than 1 year if the estimated cost of production is more than $1 million. How to file 2010 taxes late Property you produce. How to file 2010 taxes late   You produce property if you construct, build, install, manufacture, develop, improve, create, raise, or grow it. How to file 2010 taxes late Treat property produced for you under a contract as produced by you up to the amount you pay or incur for the property. How to file 2010 taxes late Carrying charges. How to file 2010 taxes late   Carrying charges include taxes you pay to carry or develop real estate or to carry, transport, or install personal property. How to file 2010 taxes late You can choose to capitalize carrying charges not subject to the uniform capitalization rules if they are otherwise deductible. How to file 2010 taxes late For more information, see chapter 7. How to file 2010 taxes late Capitalized interest. How to file 2010 taxes late   Treat capitalized interest as a cost of the property produced. How to file 2010 taxes late You recover your interest when you sell or use the property. How to file 2010 taxes late If the property is inventory, recover capitalized interest through cost of goods sold. How to file 2010 taxes late If the property is used in your trade or business, recover capitalized interest through an adjustment to basis, depreciation, amortization, or other method. How to file 2010 taxes late Partnerships and S corporations. How to file 2010 taxes late   The interest capitalization rules are applied first at the partnership or S corporation level. How to file 2010 taxes late The rules are then applied at the partners' or shareholders' level to the extent the partnership or S corporation has insufficient debt to support the production or construction costs. How to file 2010 taxes late   If you are a partner or a shareholder, you may have to capitalize interest you incur during the tax year for the production costs of the partnership or S corporation. How to file 2010 taxes late You may also have to capitalize interest incurred by the partnership or S corporation for your own production costs. How to file 2010 taxes late To properly capitalize interest under these rules, you must be given the required information in an attachment to the Schedule K-1 you receive from the partnership or S corporation. How to file 2010 taxes late Additional information. How to file 2010 taxes late   The procedures for applying the uniform capitalization rules are beyond the scope of this publication. How to file 2010 taxes late For more information, see sections 1. How to file 2010 taxes late 263A-8 through 1. How to file 2010 taxes late 263A-15 of the regulations and Notice 88-99. How to file 2010 taxes late Notice 88-99 is in Cumulative Bulletin 1988-2. How to file 2010 taxes late When To Deduct Interest If the uniform capitalization rules, discussed under Capitalization of Interest, earlier, do not apply to you, deduct interest as follows. How to file 2010 taxes late Cash method. How to file 2010 taxes late   Under the cash method, you can generally deduct only the interest you actually paid during the tax year. How to file 2010 taxes late You cannot deduct a promissory note you gave as payment because it is a promise to pay and not an actual payment. How to file 2010 taxes late Prepaid interest. How to file 2010 taxes late   You generally cannot deduct any interest paid before the year it is due. How to file 2010 taxes late Interest paid in advance can be deducted only in the tax year in which it is due. How to file 2010 taxes late Discounted loan. How to file 2010 taxes late   If interest or a discount is subtracted from your loan proceeds, it is not a payment of interest and you cannot deduct it when you get the loan. How to file 2010 taxes late For more information, see Original issue discount (OID) under Interest You Can Deduct, earlier. How to file 2010 taxes late Refunds of interest. How to file 2010 taxes late   If you pay interest and then receive a refund in the same tax year of any part of the interest, reduce your interest deduction by the refund. How to file 2010 taxes late If you receive the refund in a later tax year, include the refund in your income to the extent the deduction for the interest reduced your tax. How to file 2010 taxes late Accrual method. How to file 2010 taxes late   Under an accrual method, you can deduct only interest that has accrued during the tax year. How to file 2010 taxes late Prepaid interest. How to file 2010 taxes late   See Prepaid interest, earlier. How to file 2010 taxes late Discounted loan. How to file 2010 taxes late   See Discounted loan, earlier. How to file 2010 taxes late Tax deficiency. How to file 2010 taxes late   If you contest a federal income tax deficiency, interest does not accrue until the tax year the final determination of liability is made. How to file 2010 taxes late If you do not contest the deficiency, then the interest accrues in the year the tax was asserted and agreed to by you. How to file 2010 taxes late   However, if you contest but pay the proposed tax deficiency and interest, and you do not designate the payment as a cash bond, then the interest is deductible in the year paid. How to file 2010 taxes late Related person. How to file 2010 taxes late   If you use an accrual method, you cannot deduct interest owed to a related person who uses the cash method until payment is made and the interest is includible in the gross income of that person. How to file 2010 taxes late The relationship is determined as of the end of the tax year for which the interest would otherwise be deductible. How to file 2010 taxes late See section 267 of the Internal Revenue Code for more information. How to file 2010 taxes late Below-Market Loans If you receive a below-market gift or demand loan and use the proceeds in your trade or business, you may be able to deduct the forgone interest. How to file 2010 taxes late See Treatment of gift and demand loans, later, in this discussion. How to file 2010 taxes late A below-market loan is a loan on which no interest is charged or on which interest is charged at a rate below the applicable federal rate. How to file 2010 taxes late A gift or demand loan that is a below-market loan generally is considered an arm's-length transaction in which you, the borrower, are considered as having received both the following. How to file 2010 taxes late A loan in exchange for a note that requires the payment of interest at the applicable federal rate. How to file 2010 taxes late An additional payment in an amount equal to the forgone interest. How to file 2010 taxes late The additional payment is treated as a gift, dividend, contribution to capital, payment of compensation, or other payment, depending on the substance of the transaction. How to file 2010 taxes late Forgone interest. How to file 2010 taxes late   For any period, forgone interest is The interest that would be payable for that period if interest accrued on the loan at the applicable federal rate and was payable annually on December 31, minus Any interest actually payable on the loan for the period. How to file 2010 taxes late Applicable federal rates are published by the IRS each month in the Internal Revenue Bulletin. How to file 2010 taxes late Internal Revenue Bulletins are available on the IRS web site at www. How to file 2010 taxes late irs. How to file 2010 taxes late gov/irb. How to file 2010 taxes late You can also contact an IRS office to get these rates. How to file 2010 taxes late Loans subject to the rules. How to file 2010 taxes late   The rules for below-market loans apply to the following. How to file 2010 taxes late Gift loans (below-market loans where the forgone interest is in the nature of a gift). How to file 2010 taxes late Compensation-related loans (below-market loans between an employer and an employee or between an independent contractor and a person for whom the contractor provides services). How to file 2010 taxes late Corporation-shareholder loans. How to file 2010 taxes late Tax avoidance loans (below-market loans where the avoidance of federal tax is one of the main purposes of the interest arrangement). How to file 2010 taxes late Loans to qualified continuing care facilities under a continuing care contract (made after October 11, 1985). How to file 2010 taxes late   Except as noted in (5) above, these rules apply to demand loans (loans payable in full at any time upon the lender's demand) outstanding after June 6, 1984, and to term loans (loans that are not demand loans) made after that date. How to file 2010 taxes late Treatment of gift and demand loans. How to file 2010 taxes late   If you receive a below-market gift loan or demand loan, you are treated as receiving an additional payment (as a gift, dividend, etc. How to file 2010 taxes late ) equal to the forgone interest on the loan. How to file 2010 taxes late You are then treated as transferring this amount back to the lender as interest. How to file 2010 taxes late These transfers are considered to occur annually, generally on December 31. How to file 2010 taxes late If you use the loan proceeds in your trade or business, you can deduct the forgone interest each year as a business interest expense. How to file 2010 taxes late The lender must report it as interest income. How to file 2010 taxes late Limit on forgone interest for gift loans of $100,000 or less. How to file 2010 taxes late   For gift loans between individuals, forgone interest treated as transferred back to the lender is limited to the borrower's net investment income for the year. How to file 2010 taxes late This limit applies if the outstanding loans between the lender and borrower total $100,000 or less. How to file 2010 taxes late If the borrower's net investment income is $1,000 or less, it is treated as zero. How to file 2010 taxes late This limit does not apply to a loan if the avoidance of any federal tax is one of the main purposes of the interest arrangement. How to file 2010 taxes late Treatment of term loans. How to file 2010 taxes late   If you receive a below-market term loan other than a gift or demand loan, you are treated as receiving an additional cash payment (as a dividend, etc. How to file 2010 taxes late ) on the date the loan is made. How to file 2010 taxes late This payment is equal to the loan amount minus the present value, at the applicable federal rate, of all payments due under the loan. How to file 2010 taxes late The same amount is treated as original issue discount on the loan. How to file 2010 taxes late See Original issue discount (OID) under Interest You Can Deduct, earlier. How to file 2010 taxes late Exceptions for loans of $10,000 or less. How to file 2010 taxes late   The rules for below-market loans do not apply to any day on which the total outstanding loans between the borrower and lender is $10,000 or less. How to file 2010 taxes late This exception applies only to the following. How to file 2010 taxes late Gift loans between individuals if the loan is not directly used to buy or carry income-producing assets. How to file 2010 taxes late Compensation-related loans or corporation-shareholder loans if the avoidance of any federal tax is not a principal purpose of the interest arrangement. How to file 2010 taxes late This exception does not apply to a term loan described in (2) above that was previously subject to the below-market loan rules. How to file 2010 taxes late Those rules will continue to apply even if the outstanding balance is reduced to $10,000 or less. How to file 2010 taxes late Exceptions for loans without significant tax effect. How to file 2010 taxes late   The following loans are specifically exempted from the rules for below-market loans because their interest arrangements do not have a significant effect on the federal tax liability of the borrower or the lender. How to file 2010 taxes late Loans made available by lenders to the general public on the same terms and conditions that are consistent with the lender's customary business practices. How to file 2010 taxes late Loans subsidized by a federal, state, or municipal government that are made available under a program of general application to the public. How to file 2010 taxes late Certain employee-relocation loans. How to file 2010 taxes late Certain loans to or from a foreign person, unless the interest income would be effectively connected with the conduct of a U. How to file 2010 taxes late S. How to file 2010 taxes late trade or business and not exempt from U. How to file 2010 taxes late S. How to file 2010 taxes late tax under an income tax treaty. How to file 2010 taxes late Any other loan if the taxpayer can show that the interest arrangement has no significant effect on the federal tax liability of the lender or the borrower. How to file 2010 taxes late Whether an interest arrangement has a significant effect on the federal tax liability of the lender or the borrower will be determined by all the facts and circumstances. How to file 2010 taxes late Consider all the following factors. How to file 2010 taxes late Whether items of income and deduction generated by the loan offset each other. How to file 2010 taxes late The amount of the items. How to file 2010 taxes late The cost of complying with the below-market loan provisions if they were to apply. How to file 2010 taxes late Any reasons, other than taxes, for structuring the transaction as a below-market loan. How to file 2010 taxes late Exception for loans to qualified continuing care facilities. How to file 2010 taxes late   The below-market interest rules do not apply to a loan owed by a qualified continuing care facility under a continuing care contract if the lender or lender's spouse is age 62 or older by the end of the calendar year. How to file 2010 taxes late A qualified continuing care facility is one or more facilities (excluding nursing homes) meeting the requirements listed below. How to file 2010 taxes late Designed to provide services under continuing care contracts (defined below). How to file 2010 taxes late Includes an independent living unit, and either an assisted living or nursing facility, or both. How to file 2010 taxes late Substantially all of the independent living unit residents are covered by continuing care contracts. How to file 2010 taxes late A continuing care contract is a written contract between an individual and a qualified continuing care facility that includes all of the following conditions. How to file 2010 taxes late The individual or individual's spouse must be entitled to use the facility for the rest of their life or lives. How to file 2010 taxes late The individual or individual's spouse will be provided with housing, as appropriate for the health of the individual or individual's spouse in an: independent living unit (which has additional available facilities outside the unit for the provision of meals and other personal care), and assisted living or nursing facility available in the continuing care facility. How to file 2010 taxes late The individual or individual's spouse will be provided with assisted living or nursing care available in the continuing care facility, as required for the health of the individual or the individual's spouse. How to file 2010 taxes late For more information, see section 7872(h) of the Internal Revenue Code. How to file 2010 taxes late Sale or exchange of property. How to file 2010 taxes late   Different rules generally apply to a loan connected with the sale or exchange of property. How to file 2010 taxes late If the loan does not provide adequate stated interest, part of the principal payment may be considered interest. How to file 2010 taxes late However, there are exceptions that may require you to apply the below-market interest rate rules to these loans. How to file 2010 taxes late See Unstated Interest and Original Issue Discount (OID) in Publication 537. How to file 2010 taxes late More information. How to file 2010 taxes late   For more information on below-market loans, see section 7872 of the Internal Revenue Code and section 1. How to file 2010 taxes late 7872-5 of the regulations. How to file 2010 taxes late Prev  Up  Next   Home   More Online Publications