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Military Discount

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Military Discount

Military discount 3. Military discount   Ordinary or Capital Gain or Loss for Business Property Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Section 1231 Gains and LossesNonrecaptured section 1231 losses. Military discount Depreciation RecaptureSection 1245 Property Section 1250 Property Installment Sales Gifts Transfers at Death Like-Kind Exchanges and Involuntary Conversions Multiple Properties Introduction When you dispose of business property, your taxable gain or loss is usually a section 1231 gain or loss. Military discount Its treatment as ordinary or capital is determined under rules for section 1231 transactions. Military discount When you dispose of depreciable property (section 1245 property or section 1250 property) at a gain, you may have to recognize all or part of the gain as ordinary income under the depreciation recapture rules. Military discount Any remaining gain is a section 1231 gain. Military discount Topics - This chapter discusses: Section 1231 gains and losses Depreciation recapture Useful Items - You may want to see: Publication 534 Depreciating Property Placed in Service Before 1987 537 Installment Sales 547 Casualties, Disasters and Thefts 551 Basis of Assets 946 How To Depreciate Property Form (and Instructions) 4797 Sales of Business Property See chapter 5 for information about getting publications and forms. Military discount Section 1231 Gains and Losses Section 1231 gains and losses are the taxable gains and losses from section 1231 transactions (discussed below). Military discount Their treatment as ordinary or capital depends on whether you have a net gain or a net loss from all your section 1231 transactions. Military discount If you have a gain from a section 1231 transaction, first determine whether any of the gain is ordinary income under the depreciation recapture rules (explained later). Military discount Do not take that gain into account as section 1231 gain. Military discount Section 1231 transactions. Military discount   The following transactions result in gain or loss subject to section 1231 treatment. Military discount Sales or exchanges of real property or depreciable personal property. Military discount This property must be used in a trade or business and held longer than 1 year. Military discount Generally, property held for the production of rents or royalties is considered to be used in a trade or business. Military discount Depreciable personal property includes amortizable section 197 intangibles (described in chapter 2 under Other Dispositions). Military discount Sales or exchanges of leaseholds. Military discount The leasehold must be used in a trade or business and held longer than 1 year. Military discount Sales or exchanges of cattle and horses. Military discount The cattle and horses must be held for draft, breeding, dairy, or sporting purposes and held for 2 years or longer. Military discount Sales or exchanges of other livestock. Military discount This livestock does not include poultry. Military discount It must be held for draft, breeding, dairy, or sporting purposes and held for 1 year or longer. Military discount Sales or exchanges of unharvested crops. Military discount The crop and land must be sold, exchanged, or involuntarily converted at the same time and to the same person and the land must be held longer than 1 year. Military discount You cannot keep any right or option to directly or indirectly reacquire the land (other than a right customarily incident to a mortgage or other security transaction). Military discount Growing crops sold with a lease on the land, though sold to the same person in the same transaction, are not included. Military discount Cutting of timber or disposal of timber, coal, or iron ore. Military discount The cutting or disposal must be treated as a sale, as described in chapter 2 under Timber and Coal and Iron Ore. Military discount Condemnations. Military discount The condemned property must have been held longer than 1 year. Military discount It must be business property or a capital asset held in connection with a trade or business or a transaction entered into for profit, such as investment property. Military discount It cannot be property held for personal use. Military discount Casualties and thefts. Military discount The casualty or theft must have affected business property, property held for the production of rents and royalties, or investment property (such as notes and bonds). Military discount You must have held the property longer than 1 year. Military discount However, if your casualty or theft losses are more than your casualty or theft gains, neither the gains nor the losses are taken into account in the section 1231 computation. Military discount For more information on casualties and thefts, see Publication 547. Military discount Property for sale to customers. Military discount   A sale, exchange, or involuntary conversion of property held mainly for sale to customers is not a section 1231 transaction. Military discount If you will get back all, or nearly all, of your investment in the property by selling it rather than by using it up in your business, it is property held mainly for sale to customers. Military discount Example. Military discount You manufacture and sell steel cable, which you deliver on returnable reels that are depreciable property. Military discount Customers make deposits on the reels, which you refund if the reels are returned within a year. Military discount If they are not returned, you keep each deposit as the agreed-upon sales price. Military discount Most reels are returned within the 1-year period. Military discount You keep adequate records showing depreciation and other charges to the capitalized cost of the reels. Military discount Under these conditions, the reels are not property held for sale to customers in the ordinary course of your business. Military discount Any gain or loss resulting from their not being returned may be capital or ordinary, depending on your section 1231 transactions. Military discount Copyrights. Military discount    The sale of a copyright, a literary, musical, or artistic composition, or similar property is not a section 1231 transaction if your personal efforts created the property, or if you acquired the property in a way that entitled you to the basis of the previous owner whose personal efforts created it (for example, if you receive the property as a gift). Military discount The sale of such property results in ordinary income and generally is reported in Part II of Form 4797. Military discount Treatment as ordinary or capital. Military discount   To determine the treatment of section 1231 gains and losses, combine all your section 1231 gains and losses for the year. Military discount If you have a net section 1231 loss, it is ordinary loss. Military discount If you have a net section 1231 gain, it is ordinary income up to the amount of your nonrecaptured section 1231 losses from previous years. Military discount The rest, if any, is long-term capital gain. Military discount Nonrecaptured section 1231 losses. Military discount   Your nonrecaptured section 1231 losses are your net section 1231 losses for the previous 5 years that have not been applied against a net section 1231 gain. Military discount Therefore, if in any of your five preceding tax years you had section 1231 losses, a net gain for the current year from the sale of section 1231 assets is ordinary gain to the extent of your prior losses. Military discount These losses are applied against your net section 1231 gain beginning with the earliest loss in the 5-year period. Military discount Example. Military discount In 2013, Ben has a $2,000 net section 1231 gain. Military discount To figure how much he has to report as ordinary income and long-term capital gain, he must first determine his section 1231 gains and losses from the previous 5-year period. Military discount From 2008 through 2012 he had the following section 1231 gains and losses. Military discount Year Amount 2008 -0- 2009 -0- 2010 ($2,500) 2011 -0- 2012 $1,800 Ben uses this information to figure how to report his net section 1231 gain for 2013 as shown below. Military discount 1) Net section 1231 gain (2013) $2,000 2) Net section 1231 loss (2010) ($2,500)   3) Net section 1231 gain (2012) 1,800   4) Remaining net section 1231 loss from prior 5 years ($700)   5) Gain treated as  ordinary income $700 6) Gain treated as long-term  capital gain $1,300 Depreciation Recapture If you dispose of depreciable or amortizable property at a gain, you may have to treat all or part of the gain (even if otherwise nontaxable) as ordinary income. Military discount To figure any gain that must be reported as ordinary income, you must keep permanent records of the facts necessary to figure the depreciation or amortization allowed or allowable on your property. Military discount This includes the date and manner of acquisition, cost or other basis, depreciation or amortization, and all other adjustments that affect basis. Military discount On property you acquired in a nontaxable exchange or as a gift, your records also must indicate the following information. Military discount Whether the adjusted basis was figured using depreciation or amortization you claimed on other property. Military discount Whether the adjusted basis was figured using depreciation or amortization another person claimed. Military discount Corporate distributions. Military discount   For information on property distributed by corporations, see Distributions to Shareholders in Publication 542, Corporations. Military discount General asset accounts. Military discount   Different rules apply to dispositions of property you depreciated using a general asset account. Military discount For information on these rules, see Publication 946. Military discount Section 1245 Property A gain on the disposition of section 1245 property is treated as ordinary income to the extent of depreciation allowed or allowable on the property. Military discount See Gain Treated as Ordinary Income, later. Military discount Any gain recognized that is more than the part that is ordinary income from depreciation is a section 1231 gain. Military discount See Treatment as ordinary or capital under Section 1231 Gains and Losses, earlier. Military discount Section 1245 property defined. Military discount   Section 1245 property includes any property that is or has been subject to an allowance for depreciation or amortization and that is any of the following types of property. Military discount Personal property (either tangible or intangible). Military discount Other tangible property (except buildings and their structural components) used as any of the following. Military discount See Buildings and structural components below. Military discount An integral part of manufacturing, production, or extraction, or of furnishing transportation, communications, electricity, gas, water, or sewage disposal services. Military discount A research facility in any of the activities in (a). Military discount A facility in any of the activities in (a) for the bulk storage of fungible commodities (discussed on the next page). Military discount That part of real property (not included in (2)) with an adjusted basis reduced by (but not limited to) the following. Military discount Amortization of certified pollution control facilities. Military discount The section 179 expense deduction. Military discount Deduction for clean-fuel vehicles and certain refueling property. Military discount Deduction for capital costs incurred in complying with Environmental Protection Agency sulfur regulations. Military discount Deduction for certain qualified refinery property. Military discount Deduction for qualified energy efficient commercial building property. Military discount Amortization of railroad grading and tunnel bores, if in effect before the repeal by the Revenue Reconciliation Act of 1990. Military discount (Repealed by Public Law 99-514, Tax Reform Act of 1986, section 242(a). Military discount ) Certain expenditures for child care facilities if in effect before repeal by Public Law 101-58, Omnibus Budget Reconciliation Act of 1990, section 11801(a)(13) (except with regards to deductions made prior to November 5, 1990). Military discount Expenditures to remove architectural and transportation barriers to the handicapped and elderly. Military discount Deduction for qualified tertiary injectant expenses. Military discount Certain reforestation expenditures. Military discount Deduction for election to expense qualified advanced mine safety equipment property. Military discount Single purpose agricultural (livestock) or horticultural structures. Military discount Storage facilities (except buildings and their structural components) used in distributing petroleum or any primary product of petroleum. Military discount Any railroad grading or tunnel bore. Military discount Buildings and structural components. Military discount   Section 1245 property does not include buildings and structural components. Military discount The term building includes a house, barn, warehouse, or garage. Military discount The term structural component includes walls, floors, windows, doors, central air conditioning systems, light fixtures, etc. Military discount   Do not treat a structure that is essentially machinery or equipment as a building or structural component. Military discount Also, do not treat a structure that houses property used as an integral part of an activity as a building or structural component if the structure's use is so closely related to the property's use that the structure can be expected to be replaced when the property it initially houses is replaced. Military discount   The fact that the structure is specially designed to withstand the stress and other demands of the property and cannot be used economically for other purposes indicates it is closely related to the use of the property it houses. Military discount Structures such as oil and gas storage tanks, grain storage bins, silos, fractionating towers, blast furnaces, basic oxygen furnaces, coke ovens, brick kilns, and coal tipples are not treated as buildings, but as section 1245 property. Military discount Facility for bulk storage of fungible commodities. Military discount   This term includes oil or gas storage tanks and grain storage bins. Military discount Bulk storage means the storage of a commodity in a large mass before it is used. Military discount For example, if a facility is used to store oranges that have been sorted and boxed, it is not used for bulk storage. Military discount To be fungible, a commodity must be such that one part may be used in place of another. Military discount   Stored materials that vary in composition, size, and weight are not fungible. Military discount Materials are not fungible if one part cannot be used in place of another part and the materials cannot be estimated and replaced by simple reference to weight, measure, and number. Military discount For example, the storage of different grades and forms of aluminum scrap is not storage of fungible commodities. Military discount Gain Treated as Ordinary Income The gain treated as ordinary income on the sale, exchange, or involuntary conversion of section 1245 property, including a sale and leaseback transaction, is the lesser of the following amounts. Military discount The depreciation and amortization allowed or allowable on the property. Military discount The gain realized on the disposition (the amount realized from the disposition minus the adjusted basis of the property). Military discount A limit on this amount for gain on like-kind exchanges and involuntary conversions is explained later. Military discount For any other disposition of section 1245 property, ordinary income is the lesser of (1) earlier or the amount by which its fair market value is more than its adjusted basis. Military discount See Gifts and Transfers at Death, later. Military discount Use Part III of Form 4797 to figure the ordinary income part of the gain. Military discount Depreciation taken on other property or taken by other taxpayers. Military discount   Depreciation and amortization include the amounts you claimed on the section 1245 property as well as the following depreciation and amortization amounts. Military discount Amounts you claimed on property you exchanged for, or converted to, your section 1245 property in a like-kind exchange or involuntary conversion. Military discount Amounts a previous owner of the section 1245 property claimed if your basis is determined with reference to that person's adjusted basis (for example, the donor's depreciation deductions on property you received as a gift). Military discount Depreciation and amortization. Military discount   Depreciation and amortization that must be recaptured as ordinary income include (but are not limited to) the following items. Military discount Ordinary depreciation deductions. Military discount Any special depreciation allowance you claimed. Military discount Amortization deductions for all the following costs. Military discount Acquiring a lease. Military discount Lessee improvements. Military discount Certified pollution control facilities. Military discount Certain reforestation expenses. Military discount Section 197 intangibles. Military discount Childcare facility expenses made before 1982, if in effect before the repeal of IRC 188. Military discount Franchises, trademarks, and trade names acquired before August 11, 1993. Military discount The section 179 deduction. Military discount Deductions for all the following costs. Military discount Removing barriers to the disabled and the elderly. Military discount Tertiary injectant expenses. Military discount Depreciable clean-fuel vehicles and refueling property (minus the amount of any recaptured deduction). Military discount Environmental cleanup costs. Military discount Certain reforestation expenses. Military discount Qualified disaster expenses. Military discount Any basis reduction for the investment credit (minus any basis increase for credit recapture). Military discount Any basis reduction for the qualified electric vehicle credit (minus any basis increase for credit recapture). Military discount Example. Military discount You file your returns on a calendar year basis. Military discount In February 2011, you bought and placed in service for 100% use in your business a light-duty truck (5-year property) that cost $10,000. Military discount You used the half-year convention and your MACRS deductions for the truck were $2,000 in 2011 and $3,200 in 2012. Military discount You did not take the section 179 deduction. Military discount You sold the truck in May 2013 for $7,000. Military discount The MACRS deduction in 2013, the year of sale, is $960 (½ of $1,920). Military discount Figure the gain treated as ordinary income as follows. Military discount 1) Amount realized $7,000 2) Cost (February 2011) $10,000   3) Depreciation allowed or allowable (MACRS deductions: $2,000 + $3,200 + $960) 6,160   4) Adjusted basis (subtract line 3 from line 2) $3,840 5) Gain realized (subtract line 4 from line 1) $3,160 6) Gain treated as ordinary income (lesser of line 3 or line 5) $3,160 Depreciation on other tangible property. Military discount   You must take into account depreciation during periods when the property was not used as an integral part of an activity or did not constitute a research or storage facility, as described earlier under Section 1245 property. Military discount   For example, if depreciation deductions taken on certain storage facilities amounted to $10,000, of which $6,000 is from the periods before their use in a prescribed business activity, you must use the entire $10,000 in determining ordinary income from depreciation. Military discount Depreciation allowed or allowable. Military discount   The greater of the depreciation allowed or allowable is generally the amount to use in figuring the part of gain to report as ordinary income. Military discount However, if in prior years, you have consistently taken proper deductions under one method, the amount allowed for your prior years will not be increased even though a greater amount would have been allowed under another proper method. Military discount If you did not take any deduction at all for depreciation, your adjustments to basis for depreciation allowable are figured by using the straight line method. Military discount   This treatment applies only when figuring what part of gain is treated as ordinary income under the rules for section 1245 depreciation recapture. Military discount Multiple asset accounts. Military discount   In figuring ordinary income from depreciation, you can treat any number of units of section 1245 property in a single depreciation account as one item if the total ordinary income from depreciation figured by using this method is not less than it would be if depreciation on each unit were figured separately. Military discount Example. Military discount In one transaction you sold 50 machines, 25 trucks, and certain other property that is not section 1245 property. Military discount All of the depreciation was recorded in a single depreciation account. Military discount After dividing the total received among the various assets sold, you figured that each unit of section 1245 property was sold at a gain. Military discount You can figure the ordinary income from depreciation as if the 50 machines and 25 trucks were one item. Military discount However, if five of the trucks had been sold at a loss, only the 50 machines and 20 of the trucks could be treated as one item in determining the ordinary income from depreciation. Military discount Normal retirement. Military discount   The normal retirement of section 1245 property in multiple asset accounts does not require recognition of gain as ordinary income from depreciation if your method of accounting for asset retirements does not require recognition of that gain. Military discount Section 1250 Property Gain on the disposition of section 1250 property is treated as ordinary income to the extent of additional depreciation allowed or allowable on the property. Military discount To determine the additional depreciation on section 1250 property, see Additional Depreciation, below. Military discount Section 1250 property defined. Military discount   This includes all real property that is subject to an allowance for depreciation and that is not and never has been section 1245 property. Military discount It includes a leasehold of land or section 1250 property subject to an allowance for depreciation. Military discount A fee simple interest in land is not included because it is not depreciable. Military discount   If your section 1250 property becomes section 1245 property because you change its use, you can never again treat it as section 1250 property. Military discount Additional Depreciation If you hold section 1250 property longer than 1 year, the additional depreciation is the actual depreciation adjustments that are more than the depreciation figured using the straight line method. Military discount For a list of items treated as depreciation adjustments, see Depreciation and amortization under Gain Treated as Ordinary Income, earlier. Military discount For the treatment of unrecaptured section 1250 gain, see Capital Gains Tax Rate, later. Military discount If you hold section 1250 property for 1 year or less, all the depreciation is additional depreciation. Military discount You will not have additional depreciation if any of the following conditions apply to the property disposed of. Military discount You figured depreciation for the property using the straight line method or any other method that does not result in depreciation that is more than the amount figured by the straight line method; you held the property longer than 1 year; and, if the property was qualified property, you made a timely election not to claim any special depreciation allowance. Military discount In addition, if the property was in a renewal community, you must not have elected to claim a commercial revitalization deduction for property placed in service before January 1, 2010. Military discount The property was residential low-income rental property you held for 162/3 years or longer. Military discount For low-income rental housing on which the special 60-month depreciation for rehabilitation expenses was allowed, the 162/3 years start when the rehabilitated property is placed in service. Military discount You chose the alternate ACRS method for the property, which was a type of 15-, 18-, or 19-year real property covered by the section 1250 rules. Military discount The property was residential rental property or nonresidential real property placed in service after 1986 (or after July 31, 1986, if the choice to use MACRS was made); you held it longer than 1 year; and, if the property was qualified property, you made a timely election not to claim any special depreciation allowance. Military discount These properties are depreciated using the straight line method. Military discount In addition, if the property was in a renewal community, you must not have elected to claim a commercial revitalization deduction. Military discount Depreciation taken by other taxpayers or on other property. Military discount   Additional depreciation includes all depreciation adjustments to the basis of section 1250 property whether allowed to you or another person (as carryover basis property). Military discount Example. Military discount Larry Johnson gives his son section 1250 property on which he took $2,000 in depreciation deductions, of which $500 is additional depreciation. Military discount Immediately after the gift, the son's adjusted basis in the property is the same as his father's and reflects the $500 additional depreciation. Military discount On January 1 of the next year, after taking depreciation deductions of $1,000 on the property, of which $200 is additional depreciation, the son sells the property. Military discount At the time of sale, the additional depreciation is $700 ($500 allowed the father plus $200 allowed the son). Military discount Depreciation allowed or allowable. Military discount   The greater of depreciation allowed or allowable (to any person who held the property if the depreciation was used in figuring its adjusted basis in your hands) generally is the amount to use in figuring the part of the gain to be reported as ordinary income. Military discount If you can show that the deduction allowed for any tax year was less than the amount allowable, the lesser figure will be the depreciation adjustment for figuring additional depreciation. Military discount Retired or demolished property. Military discount   The adjustments reflected in adjusted basis generally do not include deductions for depreciation on retired or demolished parts of section 1250 property unless these deductions are reflected in the basis of replacement property that is section 1250 property. Military discount Example. Military discount A wing of your building is totally destroyed by fire. Military discount The depreciation adjustments figured in the adjusted basis of the building after the wing is destroyed do not include any deductions for depreciation on the destroyed wing unless it is replaced and the adjustments for depreciation on it are reflected in the basis of the replacement property. Military discount Figuring straight line depreciation. Military discount   The useful life and salvage value you would have used to figure straight line depreciation are the same as those used under the depreciation method you actually used. Military discount If you did not use a useful life under the depreciation method actually used (such as with the units-of-production method) or if you did not take salvage value into account (such as with the declining balance method), the useful life or salvage value for figuring what would have been the straight line depreciation is the useful life and salvage value you would have used under the straight line method. Military discount   Salvage value and useful life are not used for the ACRS method of depreciation. Military discount Figure straight line depreciation for ACRS real property by using its 15-, 18-, or 19-year recovery period as the property's useful life. Military discount   The straight line method is applied without any basis reduction for the investment credit. Military discount Property held by lessee. Military discount   If a lessee makes a leasehold improvement, the lease period for figuring what would have been the straight line depreciation adjustments includes all renewal periods. Military discount This inclusion of the renewal periods cannot extend the lease period taken into account to a period that is longer than the remaining useful life of the improvement. Military discount The same rule applies to the cost of acquiring a lease. Military discount   The term renewal period means any period for which the lease may be renewed, extended, or continued under an option exercisable by the lessee. Military discount However, the inclusion of renewal periods cannot extend the lease by more than two-thirds of the period that was the basis on which the actual depreciation adjustments were allowed. Military discount Applicable Percentage The applicable percentage used to figure the ordinary income because of additional depreciation depends on whether the real property you disposed of is nonresidential real property, residential rental property, or low-income housing. Military discount The percentages for these types of real property are as follows. Military discount Nonresidential real property. Military discount   For real property that is not residential rental property, the applicable percentage for periods after 1969 is 100%. Military discount For periods before 1970, the percentage is zero and no ordinary income because of additional depreciation before 1970 will result from its disposition. Military discount Residential rental property. Military discount   For residential rental property (80% or more of the gross income is from dwelling units) other than low-income housing, the applicable percentage for periods after 1975 is 100%. Military discount The percentage for periods before 1976 is zero. Military discount Therefore, no ordinary income because of additional depreciation before 1976 will result from a disposition of residential rental property. Military discount Low-income housing. Military discount    Low-income housing includes all the following types of residential rental property. Military discount Federally assisted housing projects if the mortgage is insured under section 221(d)(3) or 236 of the National Housing Act or housing financed or assisted by direct loan or tax abatement under similar provisions of state or local laws. Military discount Low-income rental housing for which a depreciation deduction for rehabilitation expenses was allowed. Military discount Low-income rental housing held for occupancy by families or individuals eligible to receive subsidies under section 8 of the United States Housing Act of 1937, as amended, or under provisions of state or local laws that authorize similar subsidies for low-income families. Military discount Housing financed or assisted by direct loan or insured under Title V of the Housing Act of 1949. Military discount   The applicable percentage for low-income housing is 100% minus 1% for each full month the property was held over 100 full months. Military discount If you have held low-income housing at least 16 years and 8 months, the percentage is zero and no ordinary income will result from its disposition. Military discount Foreclosure. Military discount   If low-income housing is disposed of because of foreclosure or similar proceedings, the monthly applicable percentage reduction is figured as if you disposed of the property on the starting date of the proceedings. Military discount Example. Military discount On June 1, 2001, you acquired low-income housing property. Military discount On April 3, 2012 (130 months after the property was acquired), foreclosure proceedings were started on the property and on December 3, 2013 (150 months after the property was acquired), the property was disposed of as a result of the foreclosure proceedings. Military discount The property qualifies for a reduced applicable percentage because it was held more than 100 full months. Military discount The applicable percentage reduction is 30% (130 months minus 100 months) rather than 50% (150 months minus 100 months) because it does not apply after April 3, 2012, the starting date of the foreclosure proceedings. Military discount Therefore, 70% of the additional depreciation is treated as ordinary income. Military discount Holding period. Military discount   The holding period used to figure the applicable percentage for low-income housing generally starts on the day after you acquired it. Military discount For example, if you bought low-income housing on January 1, 1997, the holding period starts on January 2, 1997. Military discount If you sold it on January 2, 2013, the holding period is exactly 192 full months. Military discount The applicable percentage for additional depreciation is 8%, or 100% minus 1% for each full month the property was held over 100 full months. Military discount Holding period for constructed, reconstructed, or erected property. Military discount   The holding period used to figure the applicable percentage for low-income housing you constructed, reconstructed, or erected starts on the first day of the month it is placed in service in a trade or business, in an activity for the production of income, or in a personal activity. Military discount Property acquired by gift or received in a tax-free transfer. Military discount   For low-income housing you acquired by gift or in a tax-free transfer the basis of which is figured by reference to the basis in the hands of the transferor, the holding period for the applicable percentage includes the holding period of the transferor. Military discount   If the adjusted basis of the property in your hands just after acquiring it is more than its adjusted basis to the transferor just before transferring it, the holding period of the difference is figured as if it were a separate improvement. Military discount See Low-Income Housing With Two or More Elements, next. Military discount Low-Income Housing With Two or More Elements If you dispose of low-income housing property that has two or more separate elements, the applicable percentage used to figure ordinary income because of additional depreciation may be different for each element. Military discount The gain to be reported as ordinary income is the sum of the ordinary income figured for each element. Military discount The following are the types of separate elements. Military discount A separate improvement (defined below). Military discount The basic section 1250 property plus improvements not qualifying as separate improvements. Military discount The units placed in service at different times before all the section 1250 property is finished. Military discount For example, this happens when a taxpayer builds an apartment building of 100 units and places 30 units in service (available for renting) on January 4, 2011, 50 on July 18, 2011, and the remaining 20 on January 18, 2012. Military discount As a result, the apartment house consists of three separate elements. Military discount The 36-month test for separate improvements. Military discount   A separate improvement is any improvement (qualifying under The 1-year test, below) added to the capital account of the property, but only if the total of the improvements during the 36-month period ending on the last day of any tax year is more than the greatest of the following amounts. Military discount Twenty-five percent of the adjusted basis of the property at the start of the first day of the 36-month period, or the first day of the holding period of the property, whichever is later. Military discount Ten percent of the unadjusted basis (adjusted basis plus depreciation and amortization adjustments) of the property at the start of the period determined in (1). Military discount $5,000. Military discount The 1-year test. Military discount   An addition to the capital account for any tax year (including a short tax year) is treated as an improvement only if the sum of all additions for the year is more than the greater of $2,000 or 1% of the unadjusted basis of the property. Military discount The unadjusted basis is figured as of the start of that tax year or the holding period of the property, whichever is later. Military discount In applying the 36-month test, improvements in any one of the 3 years are omitted entirely if the total improvements in that year do not qualify under the 1-year test. Military discount Example. Military discount The unadjusted basis of a calendar year taxpayer's property was $300,000 on January 1 of this year. Military discount During the year, the taxpayer made improvements A, B, and C, which cost $1,000, $600, and $700, respectively. Military discount The sum of the improvements, $2,300, is less than 1% of the unadjusted basis ($3,000), so the improvements do not satisfy the 1-year test and are not treated as improvements for the 36-month test. Military discount However, if improvement C had cost $1,500, the sum of these improvements would have been $3,100. Military discount Then, it would be necessary to apply the 36-month test to figure if the improvements must be treated as separate improvements. Military discount Addition to the capital account. Military discount   Any addition to the capital account made after the initial acquisition or completion of the property by you or any person who held the property during a period included in your holding period is to be considered when figuring the total amount of separate improvements. Military discount   The addition to the capital account of depreciable real property is the gross addition not reduced by amounts attributable to replaced property. Military discount For example, if a roof with an adjusted basis of $20,000 is replaced by a new roof costing $50,000, the improvement is the gross addition to the account, $50,000, and not the net addition of $30,000. Military discount The $20,000 adjusted basis of the old roof is no longer reflected in the basis of the property. Military discount The status of an addition to the capital account is not affected by whether it is treated as a separate property for determining depreciation deductions. Military discount   Whether an expense is treated as an addition to the capital account may depend on the final disposition of the entire property. Military discount If the expense item property and the basic property are sold in two separate transactions, the entire section 1250 property is treated as consisting of two distinct properties. Military discount Unadjusted basis. Military discount   In figuring the unadjusted basis as of a certain date, include the actual cost of all previous additions to the capital account plus those that did not qualify as separate improvements. Military discount However, the cost of components retired before that date is not included in the unadjusted basis. Military discount Holding period. Military discount   Use the following guidelines for figuring the applicable percentage for property with two or more elements. Military discount The holding period of a separate element placed in service before the entire section 1250 property is finished starts on the first day of the month that the separate element is placed in service. Military discount The holding period for each separate improvement qualifying as a separate element starts on the day after the improvement is acquired or, for improvements constructed, reconstructed, or erected, the first day of the month that the improvement is placed in service. Military discount The holding period for each improvement not qualifying as a separate element takes the holding period of the basic property. Military discount   If an improvement by itself does not meet the 1-year test (greater of $2,000 or 1% of the unadjusted basis), but it does qualify as a separate improvement that is a separate element (when grouped with other improvements made during the tax year), determine the start of its holding period as follows. Military discount Use the first day of a calendar month that is closest to the middle of the tax year. Military discount If there are two first days of a month that are equally close to the middle of the year, use the earlier date. Military discount Figuring ordinary income attributable to each separate element. Military discount   Figure ordinary income attributable to each separate element as follows. Military discount   Step 1. Military discount Divide the element's additional depreciation after 1975 by the sum of all the elements' additional depreciation after 1975 to determine the percentage used in Step 2. Military discount   Step 2. Military discount Multiply the percentage figured in Step 1 by the lesser of the additional depreciation after 1975 for the entire property or the gain from disposition of the entire property (the difference between the fair market value or amount realized and the adjusted basis). Military discount   Step 3. Military discount Multiply the result in Step 2 by the applicable percentage for the element. Military discount Example. Military discount You sold at a gain of $25,000 low-income housing property subject to the ordinary income rules of section 1250. Military discount The property consisted of four elements (W, X, Y, and Z). Military discount Step 1. Military discount The additional depreciation for each element is: W-$12,000; X-None; Y-$6,000; and Z-$6,000. Military discount The sum of the additional depreciation for all the elements is $24,000. Military discount Step 2. Military discount The depreciation deducted on element X was $4,000 less than it would have been under the straight line method. Military discount Additional depreciation on the property as a whole is $20,000 ($24,000 − $4,000). Military discount $20,000 is lower than the $25,000 gain on the sale, so $20,000 is used in Step 2. Military discount Step 3. Military discount The applicable percentages to be used in Step 3 for the elements are: W-68%; X-85%; Y-92%; and Z-100%. Military discount From these facts, the sum of the ordinary income for each element is figured as follows. Military discount   Step 1 Step 2 Step 3 Ordinary Income W . Military discount 50 $10,000 68% $ 6,800 X -0- -0- 85% -0- Y . Military discount 25 5,000 92% 4,600 Z . Military discount 25 5,000 100% 5,000 Sum of ordinary income of separate elements $16,400 Gain Treated as Ordinary Income To find what part of the gain from the disposition of section 1250 property is treated as ordinary income, follow these steps. Military discount In a sale, exchange, or involuntary conversion of the property, figure the amount realized that is more than the adjusted basis of the property. Military discount In any other disposition of the property, figure the fair market value that is more than the adjusted basis. Military discount Figure the additional depreciation for the periods after 1975. Military discount Multiply the lesser of (1) or (2) by the applicable percentage, discussed earlier under Applicable Percentage. Military discount Stop here if this is residential rental property or if (2) is equal to or more than (1). Military discount This is the gain treated as ordinary income because of additional depreciation. Military discount Subtract (2) from (1). Military discount Figure the additional depreciation for periods after 1969 but before 1976. Military discount Add the lesser of (4) or (5) to the result in (3). Military discount This is the gain treated as ordinary income because of additional depreciation. Military discount A limit on the amount treated as ordinary income for gain on like-kind exchanges and involuntary conversions is explained later. Military discount Use Form 4797, Part III, to figure the ordinary income part of the gain. Military discount Corporations. Military discount   Corporations, other than S corporations, must recognize an additional amount as ordinary income on the sale or other disposition of section 1250 property. Military discount The additional amount treated as ordinary income is 20% of the excess of the amount that would have been ordinary income if the property were section 1245 property over the amount treated as ordinary income under section 1250. Military discount Report this additional ordinary income on Form 4797, Part III, line 26 (f). Military discount Installment Sales If you report the sale of property under the installment method, any depreciation recapture under section 1245 or 1250 is taxable as ordinary income in the year of sale. Military discount This applies even if no payments are received in that year. Military discount If the gain is more than the depreciation recapture income, report the rest of the gain using the rules of the installment method. Military discount For this purpose, include the recapture income in your installment sale basis to determine your gross profit on the installment sale. Military discount If you dispose of more than one asset in a single transaction, you must figure the gain on each asset separately so that it may be properly reported. Military discount To do this, allocate the selling price and the payments you receive in the year of sale to each asset. Military discount Report any depreciation recapture income in the year of sale before using the installment method for any remaining gain. Military discount For a detailed discussion of installment sales, see Publication 537. Military discount Gifts If you make a gift of depreciable personal property or real property, you do not have to report income on the transaction. Military discount However, if the person who receives it (donee) sells or otherwise disposes of the property in a disposition subject to recapture, the donee must take into account the depreciation you deducted in figuring the gain to be reported as ordinary income. Military discount For low-income housing, the donee must take into account the donor's holding period to figure the applicable percentage. Military discount See Applicable Percentage and its discussion Holding period under Section 1250 Property, earlier. Military discount Part gift and part sale or exchange. Military discount   If you transfer depreciable personal property or real property for less than its fair market value in a transaction considered to be partly a gift and partly a sale or exchange and you have a gain because the amount realized is more than your adjusted basis, you must report ordinary income (up to the amount of gain) to recapture depreciation. Military discount If the depreciation (additional depreciation, if section 1250 property) is more than the gain, the balance is carried over to the transferee to be taken into account on any later disposition of the property. Military discount However, see Bargain sale to charity, later. Military discount Example. Military discount You transferred depreciable personal property to your son for $20,000. Military discount When transferred, the property had an adjusted basis to you of $10,000 and a fair market value of $40,000. Military discount You took depreciation of $30,000. Military discount You are considered to have made a gift of $20,000, the difference between the $40,000 fair market value and the $20,000 sale price to your son. Military discount You have a taxable gain on the transfer of $10,000 ($20,000 sale price minus $10,000 adjusted basis) that must be reported as ordinary income from depreciation. Military discount You report $10,000 of your $30,000 depreciation as ordinary income on the transfer of the property, so the remaining $20,000 depreciation is carried over to your son for him to take into account on any later disposition of the property. Military discount Gift to charitable organization. Military discount   If you give property to a charitable organization, you figure your deduction for your charitable contribution by reducing the fair market value of the property by the ordinary income and short-term capital gain that would have resulted had you sold the property at its fair market value at the time of the contribution. Military discount Thus, your deduction for depreciable real or personal property given to a charitable organization does not include the potential ordinary gain from depreciation. Military discount   You also may have to reduce the fair market value of the contributed property by the long-term capital gain (including any section 1231 gain) that would have resulted had the property been sold. Military discount For more information, see Giving Property That Has Increased in Value in Publication 526. Military discount Bargain sale to charity. Military discount   If you transfer section 1245 or section 1250 property to a charitable organization for less than its fair market value and a deduction for the contribution part of the transfer is allowable, your ordinary income from depreciation is figured under different rules. Military discount First, figure the ordinary income as if you had sold the property at its fair market value. Military discount Then, allocate that amount between the sale and the contribution parts of the transfer in the same proportion that you allocated your adjusted basis in the property to figure your gain. Military discount See Bargain Sale under Gain or Loss From Sales and Exchanges in chapter 1. Military discount Report as ordinary income the lesser of the ordinary income allocated to the sale or your gain from the sale. Military discount Example. Military discount You sold section 1245 property in a bargain sale to a charitable organization and are allowed a deduction for your contribution. Military discount Your gain on the sale was $1,200, figured by allocating 20% of your adjusted basis in the property to the part sold. Military discount If you had sold the property at its fair market value, your ordinary income would have been $5,000. Military discount Your ordinary income is $1,000 ($5,000 × 20%) and your section 1231 gain is $200 ($1,200 – $1,000). Military discount Transfers at Death When a taxpayer dies, no gain is reported on depreciable personal property or real property transferred to his or her estate or beneficiary. Military discount For information on the tax liability of a decedent, see Publication 559, Survivors, Executors, and Administrators. Military discount However, if the decedent disposed of the property while alive and, because of his or her method of accounting or for any other reason, the gain from the disposition is reportable by the estate or beneficiary, it must be reported in the same way the decedent would have had to report it if he or she were still alive. Military discount Ordinary income due to depreciation must be reported on a transfer from an executor, administrator, or trustee to an heir, beneficiary, or other individual if the transfer is a sale or exchange on which gain is realized. Military discount Example 1. Military discount Janet Smith owned depreciable property that, upon her death, was inherited by her son. Military discount No ordinary income from depreciation is reportable on the transfer, even though the value used for estate tax purposes is more than the adjusted basis of the property to Janet when she died. Military discount However, if she sold the property before her death and realized a gain and if, because of her method of accounting, the proceeds from the sale are income in respect of a decedent reportable by her son, he must report ordinary income from depreciation. Military discount Example 2. Military discount The trustee of a trust created by a will transfers depreciable property to a beneficiary in satisfaction of a specific bequest of $10,000. Military discount If the property had a value of $9,000 at the date used for estate tax valuation purposes, the $1,000 increase in value to the date of distribution is a gain realized by the trust. Military discount Ordinary income from depreciation must be reported by the trust on the transfer. Military discount Like-Kind Exchanges and Involuntary Conversions A like-kind exchange of your depreciable property or an involuntary conversion of the property into similar or related property will not result in your having to report ordinary income from depreciation unless money or property other than like-kind, similar, or related property is also received in the transaction. Military discount For information on like-kind exchanges and involuntary conversions, see chapter 1. Military discount Depreciable personal property. Military discount   If you have a gain from either a like-kind exchange or an involuntary conversion of your depreciable personal property, the amount to be reported as ordinary income from depreciation is the amount figured under the rules explained earlier (see Section 1245 Property), limited to the sum of the following amounts. Military discount The gain that must be included in income under the rules for like-kind exchanges or involuntary conversions. Military discount The fair market value of the like-kind, similar, or related property other than depreciable personal property acquired in the transaction. Military discount Example 1. Military discount You bought a new machine for $4,300 cash plus your old machine for which you were allowed a $1,360 trade-in. Military discount The old machine cost you $5,000 two years ago. Military discount You took depreciation deductions of $3,950. Military discount Even though you deducted depreciation of $3,950, the $310 gain ($1,360 trade-in allowance minus $1,050 adjusted basis) is not reported because it is postponed under the rules for like-kind exchanges and you received only depreciable personal property in the exchange. Military discount Example 2. Military discount You bought office machinery for $1,500 two years ago and deducted $780 depreciation. Military discount This year a fire destroyed the machinery and you received $1,200 from your fire insurance, realizing a gain of $480 ($1,200 − $720 adjusted basis). Military discount You choose to postpone reporting gain, but replacement machinery cost you only $1,000. Military discount Your taxable gain under the rules for involuntary conversions is limited to the remaining $200 insurance payment. Military discount All your replacement property is depreciable personal property, so your ordinary income from depreciation is limited to $200. Military discount Example 3. Military discount A fire destroyed office machinery you bought for $116,000. Military discount The depreciation deductions were $91,640 and the machinery had an adjusted basis of $24,360. Military discount You received a $117,000 insurance payment, realizing a gain of $92,640. Military discount You immediately spent $105,000 of the insurance payment for replacement machinery and $9,000 for stock that qualifies as replacement property and you choose to postpone reporting the gain. Military discount $114,000 of the $117,000 insurance payment was used to buy replacement property, so the gain that must be included in income under the rules for involuntary conversions is the part not spent, or $3,000. Military discount The part of the insurance payment ($9,000) used to buy the nondepreciable property (the stock) also must be included in figuring the gain from depreciation. Military discount The amount you must report as ordinary income on the transaction is $12,000, figured as follows. Military discount 1) Gain realized on the transaction ($92,640) limited to depreciation ($91,640) $91,640 2) Gain includible in income (amount not spent) 3,000     Plus: fair market value of property other than depreciable personal property (the stock) 9,000 12,000 Amount reportable as ordinary income (lesser of (1) or (2)) $12,000   If, instead of buying $9,000 in stock, you bought $9,000 worth of depreciable personal property similar or related in use to the destroyed property, you would only report $3,000 as ordinary income. Military discount Depreciable real property. Military discount   If you have a gain from either a like-kind exchange or involuntary conversion of your depreciable real property, ordinary income from additional depreciation is figured under the rules explained earlier (see Section 1250 Property), limited to the greater of the following amounts. Military discount The gain that must be reported under the rules for like-kind exchanges or involuntary conversions plus the fair market value of stock bought as replacement property in acquiring control of a corporation. Military discount The gain you would have had to report as ordinary income from additional depreciation had the transaction been a cash sale minus the cost (or fair market value in an exchange) of the depreciable real property acquired. Military discount   The ordinary income not reported for the year of the disposition is carried over to the depreciable real property acquired in the like-kind exchange or involuntary conversion as additional depreciation from the property disposed of. Military discount Further, to figure the applicable percentage of additional depreciation to be treated as ordinary income, the holding period starts over for the new property. Military discount Example. Military discount The state paid you $116,000 when it condemned your depreciable real property for public use. Military discount You bought other real property similar in use to the property condemned for $110,000 ($15,000 for depreciable real property and $95,000 for land). Military discount You also bought stock for $5,000 to get control of a corporation owning property similar in use to the property condemned. Military discount You choose to postpone reporting the gain. Military discount If the transaction had been a sale for cash only, under the rules described earlier, $20,000 would have been reportable as ordinary income because of additional depreciation. Military discount The ordinary income to be reported is $6,000, which is the greater of the following amounts. Military discount The gain that must be reported under the rules for involuntary conversions, $1,000 ($116,000 − $115,000) plus the fair market value of stock bought as qualified replacement property, $5,000, for a total of $6,000. Military discount The gain you would have had to report as ordinary income from additional depreciation ($20,000) had this transaction been a cash sale minus the cost of the depreciable real property bought ($15,000), or $5,000. Military discount   The ordinary income not reported, $14,000 ($20,000 − $6,000), is carried over to the depreciable real property you bought as additional depreciation. Military discount Basis of property acquired. Military discount   If the ordinary income you have to report because of additional depreciation is limited, the total basis of the property you acquired is its fair market value (its cost, if bought to replace property involuntarily converted into money) minus the gain postponed. Military discount   If you acquired more than one item of property, allocate the total basis among the properties in proportion to their fair market value (their cost, in an involuntary conversion into money). Military discount However, if you acquired both depreciable real property and other property, allocate the total basis as follows. Military discount Subtract the ordinary income because of additional depreciation that you do not have to report from the fair market value (or cost) of the depreciable real property acquired. Military discount Add the fair market value (or cost) of the other property acquired to the result in (1). Military discount Divide the result in (1) by the result in (2). Military discount Multiply the total basis by the result in (3). Military discount This is the basis of the depreciable real property acquired. Military discount If you acquired more than one item of depreciable real property, allocate this basis amount among the properties in proportion to their fair market value (or cost). Military discount Subtract the result in (4) from the total basis. Military discount This is the basis of the other property acquired. Military discount If you acquired more than one item of other property, allocate this basis amount among the properties in proportion to their fair market value (or cost). Military discount Example 1. Military discount In 1988, low-income housing property that you acquired and placed in service in 1983 was destroyed by fire and you received a $90,000 insurance payment. Military discount The property's adjusted basis was $38,400, with additional depreciation of $14,932. Military discount On December 1, 1988, you used the insurance payment to acquire and place in service replacement low-income housing property. Military discount Your realized gain from the involuntary conversion was $51,600 ($90,000 − $38,400). Military discount You chose to postpone reporting the gain under the involuntary conversion rules. Military discount Under the rules for depreciation recapture on real property, the ordinary gain was $14,932, but you did not have to report any of it because of the limit for involuntary conversions. Military discount The basis of the replacement low-income housing property was its $90,000 cost minus the $51,600 gain you postponed, or $38,400. Military discount The $14,932 ordinary gain you did not report is treated as additional depreciation on the replacement property. Military discount If you sold the property in 2013, your holding period for figuring the applicable percentage of additional depreciation to report as ordinary income will have begun December 2, 1988, the day after you acquired the property. Military discount Example 2. Military discount John Adams received a $90,000 fire insurance payment for depreciable real property (office building) with an adjusted basis of $30,000. Military discount He uses the whole payment to buy property similar in use, spending $42,000 for depreciable real property and $48,000 for land. Military discount He chooses to postpone reporting the $60,000 gain realized on the involuntary conversion. Military discount Of this gain, $10,000 is ordinary income from additional depreciation but is not reported because of the limit for involuntary conversions of depreciable real property. Military discount The basis of the property bought is $30,000 ($90,000 − $60,000), allocated as follows. Military discount The $42,000 cost of depreciable real property minus $10,000 ordinary income not reported is $32,000. Military discount The $48,000 cost of other property (land) plus the $32,000 figured in (1) is $80,000. Military discount The $32,000 figured in (1) divided by the $80,000 figured in (2) is 0. Military discount 4. Military discount The basis of the depreciable real property is $12,000. Military discount This is the $30,000 total basis multiplied by the 0. Military discount 4 figured in (3). Military discount The basis of the other property (land) is $18,000. Military discount This is the $30,000 total basis minus the $12,000 figured in (4). Military discount The ordinary income that is not reported ($10,000) is carried over as additional depreciation to the depreciable real property that was bought and may be taxed as ordinary income on a later disposition. Military discount Multiple Properties If you dispose of depreciable property and other property in one transaction and realize a gain, you must allocate the amount realized between the two types of property in proportion to their respective fair market values to figure the part of your gain to be reported as ordinary income from depreciation. Military discount Different rules may apply to the allocation of the amount realized on the sale of a business that includes a group of assets. Military discount See chapter 2. Military discount In general, if a buyer and seller have adverse interests as to the allocation of the amount realized between the depreciable property and other property, any arm's length agreement between them will establish the allocation. Military discount In the absence of an agreement, the allocation should be made by taking into account the appropriate facts and circumstances. Military discount These include, but are not limited to, a comparison between the depreciable property and all the other property being disposed of in the transaction. Military discount The comparison should take into account all the following facts and circumstances. Military discount The original cost and reproduction cost of construction, erection, or production. Military discount The remaining economic useful life. Military discount The state of obsolescence. Military discount The anticipated expenditures required to maintain, renovate, or modernize the properties. Military discount Like-kind exchanges and involuntary conversions. Military discount   If you dispose of and acquire depreciable personal property and other property (other than depreciable real property) in a like-kind exchange or involuntary conversion, the amount realized is allocated in the following way. Military discount The amount allocated to the depreciable personal property disposed of is treated as consisting of, first, the fair market value of the depreciable personal property acquired and, second (to the extent of any remaining balance), the fair market value of the other property acquired. Military discount The amount allocated to the other property disposed of is treated as consisting of the fair market value of all property acquired that has not already been taken into account. Military discount   If you dispose of and acquire depreciable real property and other property in a like-kind exchange or involuntary conversion, the amount realized is allocated in the following way. Military discount The amount allocated to each of the three types of property (depreciable real property, depreciable personal property, or other property) disposed of is treated as consisting of, first, the fair market value of that type of property acquired and, second (to the extent of any remaining balance), any excess fair market value of the other types of property acquired. Military discount If the excess fair market value is more than the remaining balance of the amount realized and is from both of the other two types of property, you can apply the unallocated amount in any manner you choose. Military discount Example. Military discount A fire destroyed your property with a total fair market value of $50,000. Military discount It consisted of machinery worth $30,000 and nondepreciable property worth $20,000. Military discount You received an insurance payment of $40,000 and immediately used it with $10,000 of your own funds (for a total of $50,000) to buy machinery with a fair market value of $15,000 and nondepreciable property with a fair market value of $35,000. Military discount The adjusted basis of the destroyed machinery was $5,000 and your depreciation on it was $35,000. Military discount You choose to postpone reporting your gain from the involuntary conversion. Military discount You must report $9,000 as ordinary income from depreciation arising from this transaction, figured as follows. Military discount The $40,000 insurance payment must be allocated between the machinery and the other property destroyed in proportion to the fair market value of each. Military discount The amount allocated to the machinery is 30,000/50,000 × $40,000, or $24,000. Military discount The amount allocated to the other property is 20,000/50,000 × $40,000, or $16,000. Military discount Your gain on the involuntary conversion of the machinery is $24,000 minus $5,000 adjusted basis, or $19,000. Military discount The $24,000 allocated to the machinery disposed of is treated as consisting of the $15,000 fair market value of the replacement machinery bought and $9,000 of the fair market value of other property bought in the transaction. Military discount All $16,000 allocated to the other property disposed of is treated as consisting of the fair market value of the other property that was bought. Military discount Your potential ordinary income from depreciation is $19,000, the gain on the machinery, because it is less than the $35,000 depreciation. Military discount However, the amount you must report as ordinary income is limited to the $9,000 included in the amount realized for the machinery that represents the fair market value of property other than the depreciable property you bought. 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Understanding your CP88 Notice

We are holding your refund because you have not filed one or more tax returns and we believe you will owe tax.


What you need to do

  • File your personal tax return immediately or explain to us why you don't need to file.
  • Use the response form on your notice to explain:
    • why you're filing late
    • why you don't have to file
    • that you've already filed

You may want to...

 

Page Last Reviewed or Updated: 07-Mar-2014

How to get help

  • Call the 1-800 number listed on the top right corner of your notice.
  • Authorize someone (e.g., accountant) to contact the IRS on your behalf using Form 2848.
  • See if you qualify for help from a Low Income Taxpayer Clinic.
     

The Military Discount

Military discount Publication 555 - Additional Material Prev  Up  Next   Home   More Online Publications