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Student Income

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Student Income

Student income 1. Student income   Fuel Taxes Table of Contents Definitions Information Returns Registration RequirementsAdditional information. Student income Gasoline and Aviation GasolineTaxable Events Gasoline Blendstocks Diesel Fuel and KeroseneTaxable Events Dyed Diesel Fuel and Dyed Kerosene Alaska and Feedstocks Back-up Tax Diesel-Water Fuel Emulsion Kerosene for Use in AviationTaxable Events Liability For Tax Surtax on any liquid used in a fractional ownership program aircraft as fuel Certificate for Commercial Aviation and Exempt UsesExempt use. Student income Reseller statement. Student income Other Fuels (Including Alternative Fuels)Taxable Events Compressed Natural Gas (CNG)Taxable Events Fuels Used on Inland WaterwaysFishing vessels. Student income Deep-draft ocean-going vessels. Student income Passenger vessels. Student income Ocean-going barges. Student income State or local governments. Student income Cellulosic or Second Generation Biofuel Not Used as Fuel Biodiesel Sold as But Not Used as Fuel Definitions Excise taxes are imposed on all the following fuels. Student income Gasoline, including aviation gasoline and gasoline blendstocks. Student income Diesel fuel, including dyed diesel fuel. Student income Diesel-water fuel emulsion. Student income Kerosene, including dyed kerosene and kerosene used in aviation. Student income Other Fuels (including alternative fuels). Student income Compressed natural gas (CNG). Student income Fuels used in commercial transportation on inland waterways. Student income Any liquid used in a fractional ownership program aircraft as fuel. Student income The following terms are used throughout the discussion of fuel taxes. Student income Other terms are defined in the discussion of the specific fuels to which they pertain. Student income Agri-biodiesel. Student income   Agri-biodiesel means biodiesel derived solely from virgin oils, including esters derived from virgin vegetable oils from corn, soybeans, sunflower seeds, cottonseeds, canola, crambe, rapeseeds, safflowers, flaxseeds, rice bran, mustard seeds, and camelina, and from animal fats. Student income Approved terminal or refinery. Student income   This is a terminal operated by a registrant that is a terminal operator or a refinery operated by a registrant that is a refiner. Student income Biodiesel. Student income   Biodiesel means the monoalkyl esters of long chain fatty acids derived from plant or animal matter that meet the registration requirements for fuels and fuel additives established by the Environmental Protection Agency (EPA) under section 211 of the Clean Air Act, and the requirements of the American Society of Testing Materials (ASTM) D6751. Student income Blended taxable fuel. Student income   This means any taxable fuel produced outside the bulk transfer/terminal system by mixing taxable fuel on which excise tax has been imposed and any other liquid on which excise tax has not been imposed. Student income This does not include a mixture removed or sold during the calendar quarter if all such mixtures removed or sold by the blender contain less than 400 gallons of a liquid on which the tax has not been imposed. Student income Blender. Student income   This is the person that produces blended taxable fuel. Student income Bulk transfer. Student income   This is the transfer of taxable fuel by pipeline or vessel. Student income Bulk transfer/terminal system. Student income   This is the taxable fuel distribution system consisting of refineries, pipelines, vessels, and terminals. Student income Fuel in the supply tank of any engine, or in any tank car, railcar, trailer, truck, or other equipment suitable for ground transportation is not in the bulk transfer/terminal system. Student income Cellulosic biofuel. Student income   Cellulosic biofuel means any liquid fuel produced from any lignocellulosic or hemicellulosic matter that is available on a renewable or recurring basis that meets the registration requirements for fuels and fuel additives established by the EPA under section 211 of the Clean Air Act. Student income Cellulosic biofuel does not include any alcohol with a proof of less than 150 (without regard to denaturants). Student income For fuels sold or used after December 31, 2009, cellulosic biofuel does not include fuel of which more than 4% (determined by weight) is any combination of water and sediment, fuel of which the ash content is more than 1%, or fuel that has an acid number greater than 25. Student income Also see Second generation biofuel below. Student income Diesel-water fuel emulsion. Student income   A diesel-water fuel emulsion means an emulsion at least 14% of which is water. Student income The emulsion additive used to produce the fuel must be registered by a United States manufacturer with the EPA under section 211 of the Clean Air Act as in effect on March 31, 2003. Student income Dry lease aircraft exchange. Student income   See later, under Surtax on any liquid used in a fractional ownership program aircraft as fuel. Student income Enterer. Student income   This is the importer of record (under customs law) for the taxable fuel. Student income However, if the importer of record is acting as an agent, such as a customs broker, the person for whom the agent is acting is the enterer. Student income If there is no importer of record, the owner at the time of entry into the United States is the enterer. Student income Entry. Student income   Taxable fuel is entered into the United States when it is brought into the United States and applicable customs law requires that it be entered for consumption, use, or warehousing. Student income This does not apply to fuel brought into Puerto Rico (which is part of the U. Student income S. Student income customs territory), but does apply to fuel brought into the United States from Puerto Rico. Student income Fractional ownership aircraft program and fractional program aircraft. Student income   See later, under Surtax on any liquid used in a fractional ownership program aircraft as fuel. Student income Measurement of taxable fuel. Student income   Volumes of taxable fuel can be measured on the basis of actual volumetric gallons or gallons adjusted to 60 degrees Fahrenheit. Student income Other fuels. Student income   See Other Fuels (Including Alternative Fuels), later, and Alternative Fuel Credit and Alternative Fuel Mixture Credit in chapter 2. Student income Pipeline operator. Student income   This is the person that operates a pipeline within the bulk transfer/terminal system. Student income Position holder. Student income   This is the person that holds the inventory position in the taxable fuel in the terminal, as reflected in the records of the terminal operator. Student income You hold the inventory position when you have a contractual agreement with the terminal operator for the use of the storage facilities and terminaling services for the taxable fuel. Student income A terminal operator that owns taxable fuel in its terminal is a position holder. Student income Rack. Student income   This is a mechanism capable of delivering fuel into a means of transport other than a pipeline or vessel. Student income Refiner. Student income   This is any person that owns, operates, or otherwise controls a refinery. Student income Refinery. Student income   This is a facility used to produce taxable fuel and from which taxable fuel may be removed by pipeline, by vessel, or at a rack. Student income However, this term does not include a facility where only blended fuel, and no other type of fuel, is produced. Student income For this purpose, blended fuel is any mixture that would be blended taxable fuel if produced outside the bulk transfer/terminal system. Student income Registrant. Student income   This is a taxable fuel registrant (see Registration Requirements, later). Student income Removal. Student income   This is any physical transfer of taxable fuel. Student income It also means any use of taxable fuel other than as a material in the production of taxable fuel or Other Fuels. Student income However, taxable fuel is not removed when it evaporates or is otherwise lost or destroyed. Student income Renewable diesel. Student income   See Renewable Diesel Credits in chapter 2. Student income Sale. Student income   For taxable fuel not in a terminal, this is the transfer of title to, or substantial incidents of ownership in, taxable fuel to the buyer for money, services, or other property. Student income For taxable fuel in a terminal, this is the transfer of the inventory position if the transferee becomes the position holder for that taxable fuel. Student income Second generation biofuel. Student income   This is any liquid fuel derived by, or from, qualified feedstocks, and meets the registration requirements for fuels and fuel additives established by the Environmental Protection Agency under section 211 of the Clean Air Act (42 U. Student income S. Student income C. Student income 7545). Student income It also includes certain liquid fuel which is derived by, or from, any cultivated algae, cyanobacteria, or lemna. Student income It is not alcohol of less than 150 proof (disregard any added denaturants). Student income See Form 6478 for more information. Student income State. Student income   This includes any state, any of its political subdivisions, the District of Columbia, and the American Red Cross. Student income An Indian tribal government is treated as a state only if transactions involve the exercise of an essential tribal government function. Student income Taxable fuel. Student income   This means gasoline, diesel fuel, and kerosene. Student income Terminal. Student income   This is a storage and distribution facility supplied by pipeline or vessel, and from which taxable fuel may be removed at a rack. Student income It does not include a facility at which gasoline blendstocks are used in the manufacture of products other than finished gasoline if no gasoline is removed from the facility. Student income A terminal does not include any facility where finished gasoline, diesel fuel, or kerosene is stored if the facility is operated by a registrant and all such taxable fuel stored at the facility has been previously taxed upon removal from a refinery or terminal. Student income Terminal operator. Student income   This is any person that owns, operates, or otherwise controls a terminal. Student income Throughputter. Student income   This is any person that is a position holder or that owns taxable fuel within the bulk transfer/terminal system (other than in a terminal). Student income Vessel operator. Student income   This is the person that operates a vessel within the bulk transfer/terminal system. Student income However, vessel does not include a deep draft ocean-going vessel. Student income Information Returns Form 720-TO and Form 720-CS are information returns used to report monthly receipts and disbursements of liquid products. Student income A liquid product is any liquid transported into storage at a terminal or delivered out of a terminal. Student income For a list of products, see the product code table in the Instructions for Forms 720-TO and 720-CS. Student income The returns are due the last day of the month following the month in which the transaction occurs. Student income Generally, these returns can be filed on paper or electronically. Student income For information on filing electronically, see Publication 3536, Motor Fuel Excise Tax EDI Guide. Student income Publication 3536 is only available on the IRS website. Student income Form 720-TO. Student income   This information return is used by terminal operators to report receipts and disbursements of all liquid products to and from all approved terminals. Student income Each terminal operator must file a separate form for each approved terminal. Student income Form 720-CS. Student income   This information return must be filed by bulk transport carriers (barges, vessels, and pipelines) who receive liquid product from an approved terminal or deliver liquid product to an approved terminal. Student income Registration Requirements The following discussion applies to excise tax registration requirements for activities relating to fuels only. Student income See Form 637 for other persons who must register and for more information about registration. Student income Persons that are required to be registered. Student income   You are required to be registered if you are a: Blender; Enterer; Pipeline operator; Position holder; Refiner; Terminal operator; Vessel operator; Producer or importer of alcohol, biodiesel, agri-biodiesel, and renewable diesel; or Producer of cellulosic or second generation biofuel. Student income Persons that may register. Student income   You may, but are not required to, register if you are a: Feedstock user, Industrial user, Throughputter that is not a position holder, Ultimate vendor, Diesel-water fuel emulsion producer, Credit card issuer, or Alternative fuel claimant. Student income Ultimate vendors, credit card issuers, and alternative fuel claimants do not need to be registered to buy or sell fuel. Student income However, they must be registered to file claims for certain sales and uses of fuel. Student income See Form 637 for more information. Student income Taxable fuel registrant. Student income   This is an enterer, an industrial user, a refiner, a terminal operator, or a throughputter who received a Letter of Registration under the excise tax registration provisions and whose registration has not been revoked or suspended. Student income The term registrant as used in the discussions of these fuels means a taxable fuel registrant. Student income Additional information. Student income   See the Form 637 instructions for the information you must submit when you apply for registration. Student income Failure to register. Student income   The penalty for failure to register if you must register, unless due to reasonable cause, is $10,000 for the initial failure, and then $1,000 each day thereafter you fail to register. Student income Gasoline and Aviation Gasoline Gasoline. Student income   Gasoline means all products commonly or commercially known or sold as gasoline with an octane rating of 75 or more that are suitable for use as a motor fuel. Student income Gasoline includes any gasoline blend other than: Qualified ethanol and methanol fuel (at least 85 percent of the blend consists of alcohol produced from coal, including peat), Partially exempt ethanol and methanol fuel (at least 85 percent of the blend consists of alcohol produced from natural gas), or Denatured alcohol. Student income Gasoline also includes gasoline blendstocks, discussed later. Student income Aviation gasoline. Student income   This means all special grades of gasoline suitable for use in aviation reciprocating engines and covered by ASTM specification D910 or military specification MIL-G-5572. Student income Taxable Events The tax on gasoline is $. Student income 184 per gallon. Student income The tax on aviation gasoline is $. Student income 194 per gallon. Student income When used in a fractional ownership program aircraft, gasoline also is subject to a surtax of $. Student income 141 per gallon. Student income See Surtax on any liquid used in a fractional ownership program aircraft as fuel, later. Student income Tax is imposed on the removal, entry, or sale of gasoline. Student income Each of these events is discussed later. Student income Also, see the special rules that apply to gasoline blendstocks, later. Student income If the tax is paid on the gasoline in more than one event, a refund may be allowed for the “second” tax paid. Student income See Refunds of Second Tax in chapter 2. Student income Removal from terminal. Student income   All removals of gasoline at a terminal rack are taxable. Student income The position holder for that gasoline is liable for the tax. Student income Two-party exchanges. Student income   In a two-party exchange, the receiving person, not the delivering person, is liable for the tax imposed on the removal of taxable fuel from the terminal at the terminal rack. Student income A two-party exchange means a transaction (other than a sale) where the delivering person and receiving person are both taxable fuel registrants and all of the following apply. Student income The transaction includes a transfer from the delivering person, who holds the inventory position for the taxable fuel in the terminal as reflected in the records of the terminal operator. Student income The exchange transaction occurs before or at the same time as removal across the rack by the receiving person. Student income The terminal operator in its records treats the receiving person as the person that removes the product across the terminal rack for purposes of reporting the transaction on Form 720-TO. Student income The transaction is subject to a written contract. Student income Terminal operator's liability. Student income   The terminal operator is jointly and severally liable for the tax if the position holder is a person other than the terminal operator and is not a registrant. Student income   However, a terminal operator meeting all the following conditions at the time of the removal will not be liable for the tax. Student income The terminal operator is a registrant. Student income The terminal operator has an unexpired notification certificate (discussed later) from the position holder. Student income The terminal operator has no reason to believe any information on the certificate is false. Student income Removal from refinery. Student income   The removal of gasoline from a refinery is taxable if the removal meets either of the following conditions. Student income It is made by bulk transfer and the refiner, the owner of the gasoline immediately before the removal, or the operator of the pipeline or vessel is not a registrant. Student income It is made at the refinery rack. Student income The refiner is liable for the tax. Student income Exception. Student income   The tax does not apply to a removal of gasoline at the refinery rack if all the following requirements are met. Student income The gasoline is removed from an approved refinery not served by pipeline (other than for receiving crude oil) or vessel. Student income The gasoline is received at a facility operated by a registrant and located within the bulk transfer/terminal system. Student income The removal from the refinery is by railcar. Student income The same person operates the refinery and the facility at which the gasoline is received. Student income Entry into the United States. Student income   The entry of gasoline into the United States is taxable if the entry meets either of the following conditions. Student income It is made by bulk transfer and the enterer or the operator of the pipeline or vessel is not a registrant. Student income It is not made by bulk transfer. Student income The enterer is liable for the tax. Student income Importer of record's liability. Student income   The importer of record is jointly and severally liable for the tax with the enterer if the importer of record is not the enterer of the taxable fuel and the enterer is not a taxable fuel registrant. Student income   However, an importer of record meeting both of the following conditions at the time of the entry will not be liable for the tax. Student income The importer of record has an unexpired notification certificate (discussed later) from the enterer. Student income The importer of record has no reason to believe any information in the certificate is false. Student income Customs bond. Student income   The customs bond will not be charged for the tax imposed on the entry of the gasoline if at the time of entry the surety has an unexpired notification certificate from the enterer and has no reason to believe any information in the certificate is false. Student income Removal from a terminal by unregistered position holder or unregistered pipeline or vessel operator. Student income   The removal by bulk transfer of gasoline from a terminal is taxable if the position holder for the gasoline or the operator of the pipeline or vessel is not a registrant. Student income The position holder is liable for the tax. Student income The terminal operator is jointly and severally liable for the tax if the position holder is a person other than the terminal operator. Student income However, see Terminal operator's liability under Removal from terminal, earlier, for an exception. Student income Bulk transfers not received at approved terminal or refinery. Student income   The removal by bulk transfer of gasoline from a terminal or refinery, or the entry of gasoline by bulk transfer into the United States, is taxable if the following conditions apply. Student income No tax was previously imposed (as discussed earlier) on any of the following events. Student income The removal from the refinery. Student income The entry into the United States. Student income The removal from a terminal by an unregistered position holder. Student income Upon removal from the pipeline or vessel, the gasoline is not received at an approved terminal or refinery (or at another pipeline or vessel). Student income   The owner of the gasoline when it is removed from the pipeline or vessel is liable for the tax. Student income However, an owner meeting all the following conditions at the time of the removal will not be liable for the tax. Student income The owner is a registrant. Student income The owner has an unexpired notification certificate (discussed later) from the operator of the terminal or refinery where the gasoline is received. Student income The owner has no reason to believe any information on the certificate is false. Student income The operator of the facility where the gasoline is received is liable for the tax if the owner meets these conditions. Student income The operator is jointly and severally liable if the owner does not meet these conditions. Student income Sales to unregistered person. Student income   The sale of gasoline located within the bulk transfer/terminal system to a person that is not a registrant is taxable if tax was not previously imposed under any of the events discussed earlier. Student income   The seller is liable for the tax. Student income However, a seller meeting all the following conditions at the time of the sale will not be liable for the tax. Student income   The seller is a registrant. Student income The seller has an unexpired notification certificate (discussed later) from the buyer. Student income The seller has no reason to believe any information on the certificate is false. Student income The buyer of the gasoline is liable for the tax if the seller meets these conditions. Student income The buyer is jointly and severally liable if the seller does not meet these conditions. Student income Exception. Student income   The tax does not apply to a sale if all of the following apply. Student income The buyer's principal place of business is not in the United States. Student income The sale occurs as the fuel is delivered into a transport vessel with a capacity of at least 20,000 barrels of fuel. Student income The seller is a registrant and the exporter of record. Student income The fuel was exported. Student income Removal or sale of blended gasoline. Student income   The removal or sale of blended gasoline by the blender is taxable. Student income See Blended taxable fuel under Definitions, earlier. Student income   The blender is liable for the tax. Student income The tax is figured on the number of gallons not previously subject to the tax on gasoline. Student income   Persons who blend alcohol with gasoline to produce an alcohol fuel mixture outside the bulk transfer/terminal system must pay the gasoline tax on the volume of alcohol in the mixture. Student income See Form 720 to report this tax. Student income You also must be registered with the IRS as a blender. Student income See Form 637. Student income   However, if an untaxed liquid is sold as taxed taxable fuel and that untaxed liquid is used to produce blended taxable fuel, the person that sold the untaxed liquid is jointly and severally liable for the tax imposed on the blender's sale or removal of the blended taxable fuel. Student income Notification certificate. Student income   The notification certificate is used to notify a person of the registration status of the registrant. Student income A copy of the registrant's letter of registration cannot be used as a notification certificate. Student income A model notification certificate is shown in the Appendix as Model Certificate C. Student income A notification certificate must contain all information necessary to complete the model. Student income   The certificate may be included as part of any business records normally used for a sale. Student income A certificate expires on the earlier of the date the registrant provides a new certificate, or the date the recipient of the certificate is notified that the registrant's registration has been revoked or suspended. Student income The registrant must provide a new certificate if any information on a certificate has changed. Student income Additional persons liable. Student income   When the person liable for the tax willfully fails to pay the tax, joint and several liability for the tax is imposed on: Any officer, employee, or agent of the person who is under a duty to ensure the payment of the tax and who willfully fails to perform that duty, or Anyone who willfully causes the person to fail to pay the tax. Student income Gasoline Blendstocks Gasoline blendstocks may be subject to $. Student income 001 per gallon LUST tax as discussed below. Student income Gasoline includes gasoline blendstocks. Student income The previous discussions apply to these blendstocks. Student income However, if certain conditions are met, the removal, entry, or sale of gasoline blendstocks are taxed at $. Student income 001 per gallon or are not subject to the excise tax. Student income Blendstocks. Student income   Gasoline blendstocks are: Alkylate, Butane, Butene, Catalytically cracked gasoline, Coker gasoline, Ethyl tertiary butyl ether (ETBE), Hexane, Hydrocrackate, Isomerate, Methyl tertiary butyl ether (MTBE), Mixed xylene (not including any separated isomer of xylene), Natural gasoline, Pentane, Pentane mixture, Polymer gasoline, Raffinate, Reformate, Straight-run gasoline, Straight-run naphtha, Tertiary amyl methyl ether (TAME), Tertiary butyl alcohol (gasoline grade) (TBA), Thermally cracked gasoline, and Toluene. Student income   However, gasoline blendstocks do not include any product that cannot be used without further processing in the production of finished gasoline. Student income Not used to produce finished gasoline. Student income   Gasoline blendstocks not used to produce finished gasoline are not taxable (other than LUST) if the following conditions are met. Student income Removals and entries not connected to sale. Student income   Nonbulk removals and entries are not taxable if the person otherwise liable for the tax (position holder, refiner, or enterer) is a registrant. Student income Removals and entries connected to sale. Student income   Nonbulk removals and entries are not taxable if the person otherwise liable for the tax (position holder, refiner, or enterer) is a registrant, and at the time of the sale, meets the following requirements. Student income The person has an unexpired certificate (discussed later) from the buyer. Student income The person has no reason to believe any information in the certificate is false. Student income Sales after removal or entry. Student income   The sale of a gasoline blendstock that was not subject to tax on its nonbulk removal or entry, as discussed earlier, is taxable. Student income The seller is liable for the tax. Student income However, the sale is not taxable if, at the time of the sale, the seller meets the following requirements. Student income The seller has an unexpired certificate (discussed next) from the buyer. Student income The seller has no reason to believe any information in the certificate is false. Student income Certificate of buyer. Student income   The certificate from the buyer certifies the gasoline blendstocks will not be used to produce finished gasoline. Student income The certificate may be included as part of any business records normally used for a sale. Student income A model certificate is shown in the Appendix as Model Certificate D. Student income The certificate must contain all information necessary to complete the model. Student income   A certificate expires on the earliest of the following dates. Student income The date 1 year after the effective date (not earlier than the date signed) of the certificate. Student income The date a new certificate is provided to the seller. Student income The date the seller is notified that the buyer's right to provide a certificate has been withdrawn. Student income The buyer must provide a new certificate if any information on a certificate has changed. Student income   The IRS may withdraw the buyer's right to provide a certificate if that buyer uses the gasoline blendstocks in the production of finished gasoline or resells the blendstocks without getting a certificate from its buyer. Student income Received at approved terminal or refinery. Student income   The nonbulk removal or entry of gasoline blendstocks received at an approved terminal or refinery is not taxable if the person otherwise liable for the tax (position holder, refiner, or enterer) meets all the following requirements. Student income The person is a registrant. Student income The person has an unexpired notification certificate (discussed earlier) from the operator of the terminal or refinery where the gasoline blendstocks are received. Student income The person has no reason to believe any information on the certificate is false. Student income Bulk transfers to registered industrial user. Student income   The removal of gasoline blendstocks from a pipeline or vessel is not taxable (other than LUST) if the blendstocks are received by a registrant that is an industrial user. Student income An industrial user is any person that receives gasoline blendstocks by bulk transfer for its own use in the manufacture of any product other than finished gasoline. Student income Credits or Refunds. Student income   A credit or refund of the gasoline tax may be allowable if gasoline is used for a nontaxable purpose or exempt use. Student income For more information, see chapter 2. Student income Diesel Fuel and Kerosene Generally, diesel fuel and kerosene are taxed in the same manner as gasoline (discussed earlier). Student income However, special rules (discussed later) apply to dyed diesel fuel and dyed kerosene, and to undyed diesel fuel and undyed kerosene sold or used in Alaska for certain nontaxable uses and undyed kerosene used for a feedstock purpose. Student income Diesel fuel means: Any liquid that without further processing or blending is suitable for use as a fuel in a diesel-powered highway vehicle or train, and Transmix. Student income A liquid is suitable for this use if the liquid has practical and commercial fitness for use in the propulsion engine of a diesel-powered highway vehicle or diesel-powered train. Student income A liquid may possess this practical and commercial fitness even though the specified use is not the predominant use of the liquid. Student income However, a liquid does not possess this practical and commercial fitness solely by reason of its possible or rare use as a fuel in the propulsion engine of a diesel-powered highway vehicle or diesel-powered train. Student income Diesel fuel does not include gasoline, kerosene, excluded liquid, No. Student income 5 and No. Student income 6 fuel oils covered by ASTM specification D396, or F-76 (Fuel Naval Distillate) covered by military specification MIL-F-16884. Student income An excluded liquid is either of the following. Student income A liquid that contains less than 4% normal paraffins. Student income A liquid with all the following properties. Student income Distillation range of 125 degrees Fahrenheit or less. Student income Sulfur content of 10 ppm or less. Student income Minimum color of +27 Saybolt. Student income Transmix means a by-product of refined products created by the mixing of different specification products during pipeline transportation. Student income Kerosene. Student income   This means any of the following liquids. Student income One of the two grades of kerosene (No. Student income 1-K and No. Student income 2-K) covered by ASTM specification D3699. Student income Kerosene-type jet fuel covered by ASTM specification D1655 or military specification MIL-DTL-5624T (Grade JP-5) or MIL-DTL-83133E (Grade JP-8). Student income See Kerosene for Use in Aviation, later. Student income   However, kerosene does not include excluded liquid, discussed earlier. Student income   Kerosene also includes any liquid that would be described above but for the presence of a dye of the type used to dye kerosene for a nontaxable use. Student income Diesel-powered highway vehicle. Student income   This is any self-propelled vehicle designed to carry a load over public highways (whether or not also designed to perform other functions) and propelled by a diesel-powered engine. Student income Specially designed mobile machinery for nontransportation functions and vehicles specially designed for off-highway transportation are generally not considered diesel-powered highway vehicles. Student income For more information about these vehicles and for information about vehicles not considered highway vehicles, see Off-Highway Business Use (No. Student income 2) in chapter 2. Student income Diesel-powered train. Student income   This is any diesel-powered equipment or machinery that rides on rails. Student income The term includes a locomotive, work train, switching engine, and track maintenance machine. Student income Taxable Events The tax on diesel fuel and kerosene is $. Student income 244 per gallon. Student income It is imposed on the removal, entry, or sale of diesel fuel and kerosene. Student income Each of these events is discussed later. Student income Only the $. Student income 001 LUST tax applies to dyed diesel fuel and dyed kerosene, discussed later. Student income If the tax is paid on the diesel fuel or kerosene in more than one event, a refund may be allowed for the “second” tax paid. Student income See Refunds of Second Tax in chapter 2. Student income Use in certain intercity and local buses. Student income   Dyed diesel fuel and dyed kerosene cannot be used in certain intercity and local buses. Student income A claim for $. Student income 17 per gallon may be made by the registered ultimate vendor (under certain conditions) or the ultimate purchaser for undyed diesel fuel or undyed kerosene sold for use in certain intercity or local buses. Student income An intercity or local bus is a bus engaged in furnishing (for compensation) passenger land transportation available to the general public. Student income The bus must be engaged in one of the following activities. Student income Scheduled transportation along regular routes regardless of the size of the bus. Student income Nonscheduled transportation if the seating capacity of the bus is at least 20 adults (not including the driver). Student income A bus is available to the general public if the bus is available for hire to more than a limited number of persons, groups, or organizations. Student income Removal from terminal. Student income   All removals of diesel fuel and kerosene at a terminal rack are taxable. Student income The position holder for that fuel is liable for the tax. Student income Two-party exchanges. Student income   In a two-party exchange, the receiving person, not the delivering person, is liable for the tax imposed on the removal of taxable fuel from the terminal at the terminal rack. Student income A two-party exchange means a transaction (other than a sale) where the delivering person and receiving person are both taxable fuel registrants and all of the following apply. Student income The transaction includes a transfer from the delivering person, who holds the inventory position for the taxable fuel in the terminal as reflected in the records of the terminal operator. Student income The exchange transaction occurs before or at the same time as completion of removal across the rack by the receiving person. Student income The terminal operator in its records treats the receiving person as the person that removes the product across the terminal rack for purposes of reporting the transaction on Form 720-TO. Student income The transaction is subject to a written contract. Student income Terminal operator's liability. Student income   The terminal operator is jointly and severally liable for the tax if the terminal operator provides any person with any bill of lading, shipping paper, or similar document indicating that diesel fuel or kerosene is dyed (discussed later). Student income   The terminal operator is jointly and severally liable for the tax if the position holder is a person other than the terminal operator and is not a registrant. Student income However, a terminal operator will not be liable for the tax in this situation if, at the time of the removal, the following conditions are met. Student income The terminal operator is a registrant. Student income The terminal operator has an unexpired notification certificate (discussed under Gasoline) from the position holder. Student income The terminal operator has no reason to believe any information on the certificate is false. Student income Removal from refinery. Student income   The removal of diesel fuel or kerosene from a refinery is taxable if the removal meets either of the following conditions. Student income It is made by bulk transfer and the refiner, the owner of the fuel immediately before the removal, or the operator of the pipeline or vessel is not a registrant. Student income It is made at the refinery rack. Student income The refiner is liable for the tax. Student income Exception. Student income   The tax does not apply to a removal of diesel fuel or kerosene at the refinery rack if all the following conditions are met. Student income The diesel fuel or kerosene is removed from an approved refinery not served by pipeline (other than for receiving crude oil) or vessel. Student income The diesel fuel or kerosene is received at a facility operated by a registrant and located within the bulk transfer/terminal system. Student income The removal from the refinery is by: Railcar and the same person operates the refinery and the facility at which the diesel fuel or kerosene is received, or For diesel fuel only, a trailer or semi-trailer used exclusively to transport the diesel fuel from a refinery (described in (1)) to a facility (described in (2)) less than 20 miles from the refinery. Student income Entry into the United States. Student income   The entry of diesel fuel or kerosene into the United States is taxable if the entry meets either of the following conditions. Student income It is made by bulk transfer and the enterer or the operator of the pipeline or vessel is not a registrant. Student income It is not made by bulk transfer. Student income The enterer is liable for the tax. Student income Importer of record's liability. Student income   The importer of record is jointly and severally liable for the tax with the enterer if the importer of record is not the enterer of the taxable fuel and the enterer is not a taxable fuel registrant. Student income   However, an importer of record meeting both of the following conditions at the time of the entry will not be liable for the tax. Student income The importer of record has an unexpired notification certificate (discussed under Gasoline) from the enterer. Student income The importer of record has no reason to believe any information in the certificate is false. Student income Customs bond. Student income   The customs bond will not be charged for the tax imposed on the entry of the diesel fuel or kerosene if at the time of entry the surety has an unexpired notification certificate from the enterer and has no reason to believe any information in the certificate is false. Student income Removal from a terminal by unregistered position holder or unregistered pipeline or vessel operator. Student income   The removal by bulk transfer of diesel fuel or kerosene from a terminal is taxable if the position holder for that fuel or the operator of the pipeline or vessel is not a registrant. Student income The position holder is liable for the tax. Student income The terminal operator is jointly and severally liable for the tax if the position holder is a person other than the terminal operator. Student income However, see Terminal operator's liability under Removal from terminal, earlier, for an exception. Student income Bulk transfers not received at approved terminal or refinery. Student income   The removal by bulk transfer of diesel fuel or kerosene from a terminal or refinery or the entry of diesel fuel or kerosene by bulk transfer into the United States is taxable if the following conditions apply. Student income No tax was previously imposed (as discussed earlier) on any of the following events. Student income The removal from the refinery. Student income The entry into the United States. Student income The removal from a terminal by an unregistered position holder. Student income Upon removal from the pipeline or vessel, the diesel fuel or kerosene is not received at an approved terminal or refinery (or at another pipeline or vessel). Student income   The owner of the diesel fuel or kerosene when it is removed from the pipeline or vessel is liable for the tax. Student income However, an owner meeting all the following conditions at the time of the removal will not be liable for the tax. Student income The owner is a registrant. Student income The owner has an unexpired notification certificate (discussed under Gasoline) from the operator of the terminal or refinery where the diesel fuel or kerosene is received. Student income The owner has no reason to believe any information on the certificate is false. Student income The operator of the facility where the diesel fuel or kerosene is received is liable for the tax if the owner meets these conditions. Student income The operator is jointly and severally liable if the owner does not meet these conditions. Student income Sales to unregistered person. Student income   The sale of diesel fuel or kerosene located within the bulk transfer/terminal system to a person that is not a registrant is taxable if tax was not previously imposed under any of the events discussed earlier. Student income   The seller is liable for the tax. Student income However, a seller meeting all the following conditions at the time of the sale will not be liable for the tax. Student income The seller is a registrant. Student income The seller has an unexpired notification certificate (discussed under Gasoline) from the buyer. Student income The seller has no reason to believe any information on the certificate is false. Student income The buyer of the diesel fuel or kerosene is liable for the tax if the seller meets these conditions. Student income The buyer is jointly and severally liable if the seller does not meet these conditions. Student income Exception. Student income   The tax does not apply to a sale if all of the following apply. Student income The buyer's principal place of business is not in the United States. Student income The sale occurs as the fuel is delivered into a transport vessel with a capacity of at least 20,000 barrels of fuel. Student income The seller is a registrant and the exporter of record. Student income The fuel was exported. Student income Removal or sale of blended diesel fuel or kerosene. Student income   The removal or sale of blended diesel fuel or blended kerosene by the blender is taxable. Student income Blended taxable fuel produced using biodiesel is subject to the tax. Student income See Blended taxable fuel under Definitions, earlier. Student income   The blender is liable for the tax. Student income The tax is figured on the number of gallons not previously subject to the tax. Student income   Persons who blend biodiesel with undyed diesel fuel to produce and sell or use a biodiesel mixture outside the bulk transfer/terminal system must pay the diesel fuel tax on the volume of biodiesel in the mixture. Student income Generally, the biodiesel mixture must be diesel fuel (defined earlier). Student income See Form 720 to report this tax. Student income You also must be registered by the IRS as a blender. Student income See Form 637 for more information. Student income   However, if an untaxed liquid is sold as taxable fuel and that untaxed liquid is used to produce blended taxable fuel, the person that sold the untaxed liquid is jointly and severally liable for the tax imposed on the blender's sale or removal of the blended taxable fuel. Student income Additional persons liable. Student income   When the person liable for the tax willfully fails to pay the tax, joint and several liability for the tax applies to: Any officer, employee, or agent of the person who is under a duty to ensure the payment of the tax and who willfully fails to perform that duty; or Anyone who willfully causes the person to fail to pay the tax. Student income Credits or Refunds. Student income   A credit or refund is allowable for the tax on undyed diesel fuel or undyed kerosene used for a nontaxable use. Student income For more information, see chapter 2. Student income Dyed Diesel Fuel and Dyed Kerosene Dyed diesel fuel and dyed kerosene are subject to $. Student income 001 per gallon LUST tax as discussed below, unless the fuel is for export. Student income The excise tax is not imposed on the removal, entry, or sale of diesel fuel or kerosene (other than the LUST tax) if all the following tests are met. Student income The person otherwise liable for tax (for example, the position holder) is a registrant. Student income In the case of a removal from a terminal, the terminal is an approved terminal. Student income The diesel fuel or kerosene satisfies the dyeing requirements (described next). Student income Dyeing requirements. Student income   Diesel fuel or kerosene satisfies the dyeing requirements only if it satisfies the following requirements. Student income It contains the dye Solvent Red 164 (and no other dye) at a concentration spectrally equivalent to at least 3. Student income 9 pounds of the solid dye standard Solvent Red 26 per thousand barrels of fuel or any dye of a type and in a concentration that has been approved by the Commissioner. Student income Is indelibly dyed by mechanical injection. Student income See section 6 of Notice 2005-80 for transition rules that apply until final regulations are issued by the IRS. Student income Notice required. Student income   A legible and conspicuous notice stating either: DYED DIESEL FUEL, NONTAXABLE USE ONLY, PENALTY FOR TAXABLE USE or DYED KEROSENE, NONTAXABLE USE ONLY, PENALTY FOR TAXABLE USE must be: Provided by the terminal operator to any person that receives dyed diesel fuel or dyed kerosene at a terminal rack of that operator, and Posted by a seller on any retail pump or other delivery facility where it sells dyed diesel fuel or dyed kerosene for use by its buyer. Student income   The notice under item (1) must be provided by the time of the removal and must appear on all shipping papers, bills of lading, and similar documents accompanying the removal of the fuel. Student income   Any seller that fails to post the required notice under item (2) is presumed to know that the fuel will be used for a taxable use (a use other than a nontaxable use listed later). Student income That seller is subject to the penalty described next. Student income Penalty. Student income   A penalty is imposed on a person if any of the following situations apply. Student income Any dyed fuel is sold or held for sale by the person for a use the person knows or has reason to know is not a nontaxable use of the fuel. Student income Any dyed fuel is held for use or used by the person for a use other than a nontaxable use and the person knew, or had reason to know, that the fuel was dyed. Student income The person willfully alters, chemically or otherwise, or attempts to so alter, the strength or composition of any dye in dyed fuel. Student income The person has knowledge that a dyed fuel that has been altered, as described in (3) above, sells or holds for sale such fuel for any use for which the person knows or has reason to know is not a nontaxable use of the fuel. Student income   The penalty is the greater of $1,000 or $10 per gallon of the dyed diesel fuel or dyed kerosene involved. Student income After the first violation, the $1,000 portion of the penalty increases depending on the number of violations. Student income   This penalty is in addition to any tax imposed on the fuel. Student income   If the penalty is imposed, each officer, employee, or agent of a business entity who willfully participated in any act giving rise to the penalty is jointly and severally liable with that entity for the penalty. Student income   There is no administrative appeal or review allowed for the third and subsequent penalty imposed by section 6715 on any person except for: Fraud or a mistake in the chemical analysis, or Mathematical calculation of the penalty. Student income   If you are liable for the penalty, you may also be liable for the back-up tax, discussed later. Student income However, the penalty applies only to dyed diesel fuel and dyed kerosene, while the back-up tax may apply to other fuels. Student income The penalty may apply if the fuel is held for sale or use for a taxable use while the back-up tax does not apply unless the fuel is delivered into a fuel supply tank. Student income Exception to penalty. Student income   The penalty under item (3) will not apply in any of the following situations. Student income Diesel fuel or kerosene meeting the dyeing requirements (described earlier) is blended with any undyed liquid and the resulting product meets the dyeing requirements. Student income Diesel fuel or kerosene meeting the dyeing requirements (described earlier) is blended with any other liquid (other than diesel fuel or kerosene) that contains the type and amount of dye required to meet the dyeing requirements. Student income The alteration or attempted alteration occurs in an exempt area of Alaska. Student income See Removal for sale or use in Alaska, later. Student income Diesel fuel or kerosene meeting the dyeing requirements (described earlier) is blended with diesel fuel or kerosene not meeting the dyeing requirements and the blending occurs as part of a nontaxable use (other than export), discussed later. Student income Alaska and Feedstocks Tax of $. Student income 001 per gallon is imposed on: Undyed diesel fuel or undyed kerosene sold or used in Alaska for certain nontaxable uses (see Later sales on page 10). Student income Undyed kerosene used for feedstock purposes. Student income Removal for sale or use in Alaska. Student income   No tax is imposed on the removal, entry, or sale of diesel fuel or kerosene in Alaska for ultimate sale or use in certain areas of Alaska for certain nontaxable uses. Student income The removal or entry of any diesel fuel or kerosene is not taxed if all the following requirements are satisfied. Student income The person otherwise liable for the tax (position holder, refiner, or enterer): Is a registrant, Can show satisfactory evidence of the nontaxable nature of the transaction, and Has no reason to believe the evidence is false. Student income In the case of a removal from a terminal, the terminal is an approved terminal. Student income The owner of the fuel immediately after the removal or entry holds the fuel for its own use in a nontaxable use (discussed later) or is a qualified dealer. Student income   If all three of the requirements above are not met, then tax is imposed at $. Student income 244 per gallon. Student income   A qualified dealer is any person that holds a qualified dealer license from the state of Alaska or has been registered by the IRS as a qualified retailer. Student income Satisfactory evidence may include copies of qualified dealer licenses or exemption certificates obtained for state tax purposes. Student income Later sales. Student income   The excise tax applies to diesel fuel or kerosene sold by a qualified dealer after the removal or entry. Student income The tax is imposed at the time of the sale and the qualified dealer is liable for the tax. Student income However, the sale is not taxable (other than the LUST tax at $. Student income 001 per gallon) if all the following requirements are met. Student income The fuel is sold in Alaska for certain nontaxable uses. Student income The buyer buys the fuel for its own use in a nontaxable use or is a qualified dealer. Student income The seller can show satisfactory evidence of the nontaxable nature of the transaction and has no reason to believe the evidence is false. Student income Feedstock purposes. Student income   The $. Student income 001 per gallon LUST tax is imposed on the removal or entry of undyed kerosene if all the following conditions are met. Student income The person otherwise liable for tax (position holder, refiner, or enterer) is a registrant. Student income In the case of a removal from a terminal, the terminal is an approved terminal. Student income Either: The person otherwise liable for tax uses the kerosene for a feedstock purpose, or The kerosene is sold for use by the buyer for a feedstock purpose and, at the time of the sale, the person otherwise liable for tax has an unexpired certificate (described later) from the buyer and has no reason to believe any information on the certificate is false. Student income   If all of the requirements above are not met, then tax is imposed at $. Student income 244 per gallon. Student income   Kerosene is used for a feedstock purpose when it is used for nonfuel purposes in the manufacture or production of any substance other than gasoline, diesel fuel, or Other Fuels. Student income For example, kerosene is used for a feedstock purpose when it is used as an ingredient in the production of paint, but is not used for a feedstock purpose when it is used to power machinery at a factory where paint is produced. Student income A feedstock user is a person that uses kerosene for a feedstock purpose. Student income A registered feedstock user is a person that has been registered by the IRS as a feedstock user. Student income See Registration Requirements, earlier. Student income Later sales. Student income   The excise tax ($. Student income 244 per gallon) applies to kerosene sold for use by the buyer for a feedstock purpose (item (3)(b) above) if the buyer in that sale later sells the kerosene. Student income The tax is imposed at the time of the later sale and that seller is liable for the tax. Student income Certificate. Student income   The certificate from the buyer certifies the buyer is a registered feedstock user and the kerosene will be used by the buyer for a feedstock purpose. Student income The certificate may be included as part of any business records normally used for a sale. Student income A model certificate is shown in the Appendix as Model Certificate G. Student income Your certificate must contain all information necessary to complete the model. Student income   A certificate expires on the earliest of the following dates. Student income The date 1 year after the effective date (not earlier than the date signed) of the certificate. Student income The date the seller is provided a new certificate or notice that the current certificate is invalid. Student income The date the seller is notified the buyer's registration has been revoked or suspended. Student income   The buyer must provide a new certificate if any information on a certificate has changed. Student income Back-up Tax Tax is imposed on the delivery of any of the following into the fuel supply tank of a diesel-powered highway vehicle. Student income Any dyed diesel fuel or dyed kerosene for other than a nontaxable use. Student income Any undyed diesel fuel or undyed kerosene on which a credit or refund (for fuel used for a nontaxable purpose) has been allowed. Student income Any liquid other than gasoline, diesel fuel, or kerosene. Student income Generally, this back-up tax is imposed at a rate of $. Student income 244 per gallon. Student income Liability for tax. Student income   Generally, the operator of the vehicle into which the fuel is delivered is liable for the tax. Student income In addition, the seller of the diesel fuel or kerosene is jointly and severally liable for the tax if the seller knows or has reason to know that the fuel will be used for other than a nontaxable use. Student income Exemptions from the back-up tax. Student income   The back-up tax does not apply to a delivery of diesel fuel or kerosene for uses 1, 2, 6, 7, 12, 13, 14, and 15 listed under Definitions of Nontaxable Uses in chapter 2. Student income   In addition, since the back-up tax is imposed only on the delivery into the fuel supply tank of a diesel-powered vehicle or train, the tax does not apply to diesel fuel or kerosene used as heating oil or in stationary engines. Student income Diesel-Water Fuel Emulsion Diesel-water fuel emulsion means diesel fuel at least 14% of which is water and for which the emulsion additive is registered by a United States manufacturer with the EPA under section 211 of the Clean Air Act as in effect on March 31, 2003. Student income A reduced tax rate of $. Student income 198 per gallon is imposed on a diesel-water fuel emulsion. Student income To be eligible for the reduced rate, the person who sells, removes, or uses the diesel-water fuel emulsion must be registered by the IRS. Student income If the diesel-water fuel emulsion does not meet the requirements above, or if the person who sells, removes, or uses the fuel is not registered, the diesel-water fuel emulsion is taxed at $. Student income 244 per gallon. Student income Credits or refunds. Student income   The allowance for a credit or refund on a diesel-water fuel emulsion is discussed in chapter 2. Student income Kerosene for Use in Aviation Taxable Events Generally, kerosene is taxed at $. Student income 244 per gallon unless a reduced rate applies (see Diesel Fuel and Kerosene, earlier). Student income For kerosene removed directly from a terminal into the fuel tank of an aircraft for use in noncommercial aviation, the tax rate is $. Student income 219. Student income The rate of $. Student income 219 also applies if kerosene is removed into any aircraft from a qualified refueler truck, tanker, or tank wagon that is loaded with the kerosene from a terminal that is located within an airport. Student income The airport terminal does not need to be a secured airport terminal for this rate to apply. Student income However, the refueler truck, tanker, or tank wagon must meet the requirements discussed under Certain refueler trucks, tankers, and tank wagons, treated as terminals, later. Student income For kerosene removed directly into the fuel tank of an aircraft for use in commercial aviation, the rate of tax is $. Student income 044 per gallon. Student income For kerosene removed into an aircraft from a qualified refueler truck, tanker, or tank wagon, the $. Student income 044 rate applies only if the truck, tanker, or tank wagon is loaded at a terminal that is located in a secured area of the airport. Student income See Terminal located within a secured area of an airport, later. Student income In addition, the operator must provide the position holder with a certificate similar to Model Certificate K in the Appendix. Student income For kerosene removed directly into the fuel tank of an aircraft for a use exempt from tax under section 4041(c) (such as use in an aircraft for the exclusive use of a state or local government), the rate of tax is $. Student income 001. Student income There is no tax on kerosene removed directly into the fuel tank of an aircraft for use in foreign trade. Student income The kerosene must be removed from a qualifying refueler truck, tanker, or tank wagon loaded at a terminal located within a secured area of an airport. Student income See Terminal located within a secured area of an airport, later. Student income In addition, the operator must provide the position holder with a certificate similar to Model Certificate K in the Appendix. Student income The position holder is liable for the $. Student income 001 per gallon tax. Student income For kerosene removed directly from a terminal into the fuel tank of an fractional ownership program aircraft after March 31, 2012, a surtax of $. Student income 141 per gallon applies. Student income Certain refueler trucks, tankers, and tank wagons treated as terminals. Student income   For purposes of the tax imposed on kerosene for use in aviation removed directly into the fuel tank of an aircraft for use in commercial aviation, certain refueler trucks, tankers, and tank wagons are treated as part of a terminal if the following conditions are met. Student income Such terminal is located within an area of an airport. Student income Any kerosene for use in aviation that is loaded in a refueler truck, tanker, or tank wagon at a terminal is for delivery into aircraft at the airport in which the terminal is located. Student income Except in exigent circumstances, such as those identified in Notice 2005-80, no vehicle registered for highway use is loaded with kerosene for use in aviation at the terminal. Student income The refueler truck, tanker, or tank wagon meets the following requirements: Has storage tanks, hose, and coupling equipment designed and used for fueling aircraft, Is not registered for highway use, and Is operated by the terminal operator or a person that makes a daily accounting to the terminal operator of each delivery of fuel from the refueler truck, tanker, or tank wagon. Student income Information reporting will be required by terminal operators regarding this provision. Student income Until the format of this information reporting is issued, taxpayers are required to retain records regarding the daily accounting, but are not required to report such information. Student income Terminal located within a secured area of an airport. Student income   See Notice 2005-4 and Notice 2005-80 for the list of terminals located within a secured area of an airport. Student income This list refers to fueling operations at airport terminals as it applies to the federal excise tax on kerosene for use in aviation, and has nothing to do with the general security of airports either included or not included in the list. Student income Liability For Tax If the kerosene is removed directly into the fuel tank of an aircraft for use in commercial aviation, the operator of the aircraft in commercial aviation is liable for the tax on the removal at the rate of $. Student income 044 per gallon. Student income However, the position holder is liable for the LUST tax for kerosene for use in aviation removed directly into the fuel tank of an aircraft for use exempt from tax under section 4041(c) (except foreign trade). Student income For example, for kerosene removed directly into the aircraft for use in military aircraft, the position holder is liable for the tax. Student income For the aircraft operator to be liable for the tax $. Student income 044 rate, the position holder must meet the following requirements: Is a taxable fuel registrant, Has an unexpired certificate (a model certificate is shown in the Appendix as Model Certificate K) from the operator of the aircraft, and Has no reason to believe any of the information in the certificate is false. Student income Commercial aviation. Student income   Commercial aviation is any use of an aircraft in the business of transporting persons or property by air for pay. Student income However, commercial aviation does not include any of the following uses. Student income Any use exclusively for the purpose of skydiving. Student income Certain air transportation by seaplane. Student income See Seaplanes under Transportation of Persons by Air in chapter 4. Student income Any use of an aircraft owned or leased by a member of an affiliated group and unavailable for hire by nonmembers. Student income For more information, see Aircraft used by affiliated corporations under Special Rules on Transportation Taxes in chapter 4. Student income Any use of an aircraft that has a maximum certificated takeoff weight of 6,000 pounds or less, unless the aircraft is operated on an established line. Student income For more information, see Small aircraft under Special Rules on Transportation Taxes in chapter 4. Student income Any use where the surtax on fuel used in a fractional ownership program aircraft is imposed. Student income See Surtax on any liquid used in a fractional ownership program aircraft as fuel below. Student income Surtax on any liquid used in a fractional ownership program aircraft as fuel Fuel used in a fractional ownership program aircraft (as defined below) after March 31, 2012, is subject to a surtax of $. Student income 141 per gallon. Student income The fractional ownership program manager is liable for the tax. Student income The surtax applies in addition to any other taxes imposed on the removal, entry, use, or sale of the fuel. Student income If the surtax is imposed, the following air transportation taxes do not apply. Student income Transportation of persons by air. Student income Transportation of property by air. Student income Use of international air travel facilities. Student income These taxes are described under Air Transportation Taxes, later. Student income A fractional ownership program aircraft flight is considered noncommercial aviation, for the rules for kerosene used in noncommercial aviation, see Kerosene for Use in Aviation above. Student income Fractional ownership aircraft program    is a program under which:  A single fractional ownership program manager provides fractional ownership program management services on behalf of the fractional owners; There are one or more fractional owners per fractional program aircraft, with at least one fractional program aircraft having more than one owner; For at least two fractional program aircraft, none of the ownership interests in the aircraft are less than the minimum fractional ownership interest or held by the program manager; There exists a dry-lease aircraft exchange arrangement among all of the fractional owners; and There are multi-year program agreements covering the fractional ownership, fractional ownership program management services, and dry-lease aircraft exchange aspects of the program. Student income Fractional program aircraft. Student income   Any aircraft that, in any fractional ownership aircraft program, is listed as a fractional program aircraft in the management specifications issued to the manager of such program by Federal Aviation Administration under subpart K of part 91 title 14, Code of Federal Regulations, and is registered in the U. Student income S. Student income   Fractional program aircraft are not considered used for transportation of a qualified fractional owner, or on account of such qualified fractional owner when they are used for flight demonstration, maintenance or crew training. Student income In such situations, the flight is not commercial aviation. Student income Instead, the tax on the fuel used in the flight is imposed at the non-commercial aviation rate. Student income Fractional owner. Student income   Any person owning any interest (including the entire interest) in a fractional program aircraft. Student income Dry lease aircraft exchange. Student income   An agreement, documented by the written program agreements, under which the fractional program aircraft are available, on an as-needed basis without crew, to each fractional owner. Student income Special rule relating to deadhead service. Student income   A fractional program aircraft will not be considered to be used on account of a qualified fractional owner when it is used in deadhead service and a person other than a qualified fractional owner is separately charged for such service. Student income More information. Student income   See section 4043 for more information on the surtax. Student income Certificate for Commercial Aviation and Exempt Uses A certificate is required from the aircraft operator: To support aircraft operator liability for tax on removal of kerosene for use in aviation directly into the fuel tank of an aircraft in commercial aviation, or For exempt uses. Student income Certificate. Student income   The certificate may be included as part of any business records normally used for a sale. Student income See Model Certificate K in the Appendix. Student income   A certificate expires on the earliest of the following dates. Student income The date 1 year after the effective date (not earlier than the date signed) of the certificate. Student income The date the buyer provides the seller a new certificate or notice that the current certificate is invalid. Student income The date the IRS or the buyer notifies the seller that the buyer's right to provide a certificate has been withdrawn. Student income   The buyer must provide a new certificate if any information on a certificate has changed. Student income   The IRS may withdraw the buyer's right to provide a certificate if the buyer uses the kerosene for use in aviation to which a certificate relates other than as stated in the certificate. Student income Exempt use. Student income   The rate on kerosene for use in aviation is $. Student income 001 (LUST tax) if it is removed from any refinery or terminal directly into the fuel tank of an aircraft for an exempt use. Student income An exempt use includes kerosene for the exclusive use of a state or local government. Student income There is no tax on kerosene removed directly into the fuel tank of an aircraft for use in foreign trade. Student income Flash title transaction. Student income   A position holder is not liable for tax if, among other conditions, it obtains a certificate (described above) from the operator of the aircraft into which the kerosene is delivered. Student income In a “flash title transaction” the position holder sells the kerosene to a wholesale distributor (reseller) that in turn sells the kerosene to the aircraft operator as the kerosene is being removed from a terminal into the fuel tank of an aircraft. Student income In this case, the position holder will be treated as having a certificate from the operator of the aircraft if: The aircraft operator puts the reseller's name, address, and EIN on the certificate in place of the position holder's information; and The reseller provides the position holder with a statement of the kerosene reseller. Student income Reseller statement. Student income   This is a statement that is signed under penalties of perjury by a person with authority to bind the reseller; is provided at the bottom or on the back of the certificate (or in an attached document); and contains: The reseller's name, address, and EIN; The position holder's name, address, and EIN; and A statement that the reseller has no reason to believe that any information in the accompanying aircraft operator's certificate is false. Student income Credits or Refunds. Student income   A claim may be made by the ultimate purchaser (the operator) for taxed kerosene for use in aviation used in commercial aviation (other than foreign trade) and noncommercial aviation (other than nonexempt, noncommercial aviation and exclusive use by a state, political subdivision of a state, or the District of Columbia). Student income A claim may be made by a registered ultimate vendor for certain sales. Student income For more information, see chapter 2. Student income Other Fuels (Including Alternative Fuels) Other Fuels means any liquid except gas oil, fuel oil, or any product taxable under section 4081. Student income Other Fuels include alternative fuels. Student income Alternative fuels are: Liquefied petroleum gas (LPG), “P Series” fuels, Compressed natural gas (CNG) (discussed later), Liquefied hydrogen, Any liquid fuel derived from coal (including peat) through the Fischer-Tropsch process, Liquid fuel derived from biomass, Liquefied natural gas (LNG), and Liquefied gas derived from biomass. Student income Liquefied petroleum gas includes propane, butane, pentane, or mixtures of those products. Student income Qualified methanol and ethanol fuels. Student income   Qualified ethanol and methanol means any liquid at least 85 percent of which consists of alcohol produced from coal, including peat. Student income The tax rates are listed in the Instructions for Form 720. Student income Partially exempt methanol and ethanol fuels. Student income   A reduced tax rate applies to these fuels. Student income Partially exempt ethanol and methanol means any liquid at least 85 percent of which consists of alcohol produced from natural gas. Student income The tax rates are listed in the Instructions for Form 720. Student income Motor vehicles. Student income   Motor vehicles include all types of vehicles, whether or not registered (or required to be registered) for highway use, that have both the following characteristics. Student income They are propelled by a motor. Student income They are designed for carrying or towing loads from one place to another, regardless of the type of material or load carried or t
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Uncertain Tax Positions - Schedule UTP

Third Year of Uncertain Tax Position Reporting

The IRS is currently reviewing its third year of returns filed with Schedule UTP. Beginning with Tax Year 2010, Schedule UTP was a new schedule that certain corporations  used to report uncertain tax positions. Additionally, with Announcement 2010-76, the IRS expanded its policy of restraint in connection with its decision to require certain corporations to file Schedule UTP. Directives to LB&I personnel have been issued setting forth the IRS’s planned treatment of these UTPs by examiners and other personnel.

Submit your questions, comments, or concerns regarding Schedule UTP to the IRS. Although individual responses will not be provided, the IRS will consider submissions in efforts to improve Schedule UTP.

Information about UTP Education and Outreach Efforts:

LB&I is undertaking an education and outreach effort regarding Schedule UTP. LB&I will mail letters to inform certain taxpayers that a review of their Schedule UTP determined that one or more of the concise descriptions they provided did not meet the requirements set forth in the Schedule UTP instructions. If the taxpayer has a valid Power of Attorney on file with the IRS, the Power of Attorney will also receive a copy of this letter.

While the letter requires no action by taxpayers regarding their Schedule UTP, taxpayers are advised to ensure that on any future filings of a Schedule UTP, the concise descriptions follow the Schedule UTP Instructions. All returns filed with a Schedule UTP will continue to be subject to a review in LB&I.

Taxpayers with questions about the letter or the concise descriptions are being referred to this WEB Site.

Related Documents:

Date

Document

Document Description or Originator

 

 

Forms

Instructions

2013 Form 1120 Schedule UTP Instructions for Form 1120 Schedule UTP
2012 Form 1120 Schedule UTP Instructions for Form 1120 Schedule UTP
2011 Form 1120 Schedule UTP Instructions for Form 1120 Schedule UTP
2010 Form 1120 Schedule UTP Instructions for Form 1120 Schedule UTP
 
IRS Pronouncements:
09-24-10 Announcement 2010-76, Policy of Restraint and Uncertain Tax Positions Impact of the Policy of Restraint on Uncertain Tax Positions. 
09-24-10 Announcement 2010-75, Reporting of Uncertain Tax Positions Reporting of Uncertain Tax Positions.
04-19-10 Announcement 2010-30 Schedule UTP draft form and instructions.
03-05-10 Announcement 2010-17 Extension for comment request for Uncertain Tax Position reporting requirements.
01-26-10 Announcement 2010-9 Comment request for Uncertain Tax Position reporting requirements.
 
IRS and LB&I Guidance Memorandums:
05-31-13 Guidance for Preparing UTP Concise Descriptions Specific Guidance
11-01-11

UTP Guidance and Procedures for the Field

Cover memo by Commissioner, LB&I    
11-01-11 LB&I Schedule UTP Guidance Specific guidance
08-31-11 UTP Guidance and Procedures for the Compliance Assurance Process (CAP) Program Commissioner, LB&I memo
05-11-11

Centralized Management of LB&I Returns with UTP Schedules

Commissioner, LB&I memo
03-23-11 Uncertain Tax Positions - Modified Policy of Restraint Commissioner, LB&I memo
09-24-10 Directive for LB&I: Reporting of Uncertain Tax Positions Deputy Commissioner, Services and Enforcement
 
Public Statements and Comments by IRS Executives:
03-26-12 IRS Deputy Commissioner, Service and Enforcement Remarks before Tax Executives Institute  Remarks of Steven T. Miller, Deputy Commissioner, Service and Enforcement Internal Revenue Service Before the Tax Executives Institute, Mid Year Conference
09-24-10 IRS Commissioner Shulman Remarks before the American Bar Association, 9/24/2010   
04-12-10 Remarks of IRS Commissioner Shulman at the Tax Executives Institute Mid-Year Meeting   
01-26-10 IR-2010-13 Remarks of IRS Commissioner Doug Shulman to the New York State Bar Association Taxation Section Annual Meeting
 
Other Documents:
02-04-14 UTP Filing Statistics  
03-14-13 Frequently Asked Questions  

 

Page Last Reviewed or Updated: 26-Feb-2014

The Student Income

Student income 12. Student income   Self-Employment Tax Table of Contents What's New for 2013 What's New for 2014 Introduction Topics - This chapter discusses: Useful Items - You may want to see: Why Pay Self-Employment Tax? How To Pay Self-Employment TaxReplacing a lost social security card. Student income Name change. Student income Penalty for underpayment of estimated tax. Student income Who Must Pay Self-Employment Tax?Limited partner. Student income Community property. Student income Figuring Self-Employment EarningsLandlord Participation in Farming Methods for Figuring Net EarningsRegular Method Farm Optional Method Nonfarm Optional Method Using Both Optional Methods Reporting Self-Employment Tax What's New for 2013 Tax rates. Student income  For tax years beginning in 2013, the social security part of the self-employment tax increases from 10. Student income 4% to 12. Student income 4%. Student income The Medicare part of the tax remains at 2. Student income 9%. Student income As a result, the self-employment tax is increased from 13. Student income 3% to 15. Student income 3%. Student income Additional Medicare Tax. Student income . Student income  For tax years beginning in 2013, a 0. Student income 9% Additional Medicare Tax applies to your Medicare wages, Railroad Retirement Tax Act (RRTA) compensation, and self-employment income above a threshold amount. Student income Use Form 8959, Additional Medicare Tax, to figure this tax. Student income For more information, see the Instructions for Form 8959. Student income Maximum net earnings. Student income  The maximum net self-employment earnings subject to the social security part (12. Student income 4%) of the self-employment tax increased to $113,700 for 2013. Student income There is no maximum limit on earnings subject to the Medicare part (2. Student income 9%). Student income What's New for 2014 Maximum net earnings. Student income  The maximum net self-employment earnings subject to the social security part of the self-employment tax for 2014 will be discussed in the 2013 Publication 334. Student income Introduction Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. Student income It is similar to the social security and Medicare taxes withheld from the pay of most wage earners. Student income You usually have to pay SE tax if you are self-employed. Student income You are usually self-employed if you operate your own farm on land you either own or rent. Student income You have to figure SE tax on Schedule SE (Form 1040). Student income Farmers who have employees may have to pay the employer's share of social security and Medicare taxes, as well. Student income See chapter 13 for information on employment taxes. Student income Self-employment tax rate. Student income   For tax years beginning in 2013, the self-employment tax rate is 15. Student income 3%. Student income The rate consists of two parts: 12. Student income 4% for social security (old-age, survivors, and disability insurance) and 2. Student income 9% for Medicare (hospital insurance). Student income Topics - This chapter discusses: Why pay self-employment tax How to pay self-employment tax Who must pay self-employment tax Figuring self-employment earnings Landlord participation in farming Methods for figuring net earnings Reporting self-employment tax Useful Items - You may want to see: Publication 541 Partnerships Form (and Instructions) 1040 U. Student income S. Student income Individual Income Tax Return Sch F (Form 1040) Profit or Loss From Farming Sch SE (Form 1040) Self-Employment Tax 1065 U. Student income S. Student income Return of Partnership Income Sch K-1 (Form 1065) Partner's Share of Income, Deductions, Credits, etc. Student income See chapter 16 for information about getting publications and forms. Student income Why Pay Self-Employment Tax? Social security benefits are available to self-employed persons just as they are to wage earners. Student income Your payments of SE tax contribute to your coverage under the social security system. Student income Social security coverage provides you with retirement benefits, disability benefits, survivor benefits, and hospital insurance (Medicare) benefits. Student income How to become insured under social security. Student income   You must be insured under the social security system before you begin receiving social security benefits. Student income You are insured if you have the required number of credits (also called quarters of coverage). Student income Earning credits in 2013. Student income   You can earn a maximum of four credits per year. Student income For 2013, you earn one credit for each $1,160 of combined wages and self-employment earnings subject to social security tax. Student income You need $4,640 ($1,160 × 4) of combined wages and self-employment earnings subject to social security tax to earn four credits in 2013. Student income It does not matter whether the income is earned in 1 quarter or is spread over 2 or more quarters. Student income For an explanation of the number of credits you must have to be insured and the benefits available to you and your family under the social security program, consult your nearest Social Security Administration (SSA) office or visit the SSA website at www. Student income socialsecurity. Student income gov. Student income Making false statements to get or to increase social security benefits may subject you to penalties. Student income The Social Security Administration (SSA) time limit for posting self-employment earnings. Student income   Generally, the SSA will give you credit only for self-employment earnings reported on a tax return filed within 3 years, 3 months, and 15 days after the tax year you earned the income. Student income    If you file your tax return or report a change in your self-employment earnings after the SSA time limit for posting self-employment earnings, the SSA may change its records, but only to remove or reduce the amount. Student income The SSA will not change its records to increase your self-employment earnings after the SSA time limit listed above. Student income How To Pay Self-Employment Tax To pay SE tax, you must have a social security number (SSN) or an individual taxpayer identification number (ITIN). Student income This section explains how to: Obtain an SSN or ITIN, and Pay your SE tax using estimated tax. Student income An ITIN does not entitle you to social security benefits. Student income Obtaining an ITIN does not change your immigration or employment status under U. Student income S. Student income law. Student income Obtaining a social security number. Student income   If you have never had an SSN, apply for one using Form SS-5, Application for a Social Security Card. Student income The application is also available in Spanish. Student income You can get this form at any Social Security office or by calling 1-800-772-1213. Student income    You can also download Form SS-5 from the Social Security Administration website at  www. Student income socialsecurity. Student income gov. Student income   If you have a social security number from the time you were an employee, you must use that number. Student income Do not apply for a new one. Student income Replacing a lost social security card. Student income   If you have a number but lost your card, file Form SS-5. Student income You will get a new card showing your original number, not a new number. Student income Name change. Student income   If your name has changed since you received your social security card, complete Form SS-5 to report a name change. Student income Obtaining an individual taxpayer identification number. Student income   The IRS will issue you an ITIN, for tax use only, if you are a nonresident or resident alien and you do not have, and are not eligible to get, an SSN. Student income To apply for an ITIN, file Form W-7, Application for IRS Individual Taxpayer Identification Number. Student income You can get this form by calling 1-800-829-3676. Student income For more information on ITINs, see Publication 1915, Understanding Your IRS Individual Taxpayer Identification Number. Student income Form W-7 and Publication 1915 are also available in Spanish. Student income    You can also download Form W-7 from the IRS website at IRS. Student income gov. Student income Paying estimated tax. Student income   Estimated tax is the method used to pay tax (including SE tax) on income not subject to withholding. Student income You generally have to make estimated tax payments if you expect to owe tax, including SE tax, of $1,000 or more when you file your return. Student income Use Form 1040-ES, Estimated Tax for Individuals, to figure and pay the tax. Student income   However, if at least two-thirds of your gross income for 2013 or 2014 was from farming and you file your 2014 Form 1040 and pay all the tax due by March 2, 2015, you do not have to pay any estimated tax. Student income For more information about estimated tax for farmers, see chapter 15. Student income Penalty for underpayment of estimated tax. Student income   You may have to pay a penalty if you do not pay enough estimated tax by its due date. Student income Who Must Pay Self-Employment Tax? You must pay SE tax and file Schedule SE (Form 1040) if your net earnings from self-employment were $400 or more. Student income The SE tax rules apply no matter how old you are and even if you are already receiving social security or Medicare benefits. Student income Aliens. Student income   Generally, resident aliens must pay self-employment tax under the same rules that apply to U. Student income S. Student income citizens. Student income Nonresident aliens are not subject to self-employment tax. Student income However, residents of the Virgin Islands, Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, or American Samoa are subject to self-employment tax, as they are considered U. Student income S. Student income residents for self-employment tax purposes. Student income For more information on aliens, see Publication 519, U. Student income S. Student income Tax Guide for Aliens. Student income Are you self-employed?   You are self-employed if you carry on a trade or business (such as running a farm) as a sole proprietor, an independent contractor, a member of a partnership, or are otherwise in business for yourself. Student income A trade or business is generally an activity carried on for a livelihood or in good faith to make a profit. Student income Share farmer. Student income   You are a self-employed farmer under an income-sharing arrangement if both the following apply. Student income You produce a crop or raise livestock on land belonging to another person. Student income Your share of the crop or livestock, or the proceeds from their sale, depends on the amount produced. Student income Your net farm profit or loss from the income-sharing arrangement is reported on Schedule F (Form 1040) and included in your self-employment earnings. Student income   If you produce a crop or livestock on land belonging to another person and are to receive a specified rate of pay, a fixed sum of money, or a fixed quantity of the crop or livestock, and not a share of the crop or livestock or their proceeds, you may be either self-employed or an employee of the landowner. Student income This will depend on whether the landowner has the right to direct or control your performance of services. Student income Example. Student income A share farmer produces a crop on land owned by another person on a 50-50 crop-share basis. Student income Under the terms of their agreement, the share farmer furnishes the labor and half the cost of seed and fertilizer. Student income The landowner furnishes the machinery and equipment used to produce and harvest the crop, and half the cost of seed and fertilizer. Student income The share farmer is provided a house in which to live. Student income The landowner and the share farmer decide on a cropping plan. Student income The share farmer is a self-employed farmer for purposes of the agreement to produce the crops, and the share farmer's part of the profit or loss from the crops is reported on Schedule F (Form 1040) and included in self-employment earnings. Student income The tax treatment of the landowner is discussed later under Landlord Participation in Farming. Student income Contract farming. Student income   Under typical contract farming arrangements, the grower receives a fixed payment per unit of crops or finished livestock delivered to the processor or packing company. Student income Since the grower typically furnishes labor and bears some production risk, the payments are reported on Schedule F and are therefore subject to self-employment tax. Student income 4-H Club or FFA project. Student income   If an individual participates in a 4-H Club or Future Farmers of America (FFA) project, any net income received from sales or prizes related to the project may be subject to income tax. Student income Report the net income as “Other income” on line 21 of Form 1040. Student income If necessary, attach a statement showing the gross income and expenses. Student income The net income may not be subject to SE tax if the project is primarily for educational purposes and not for profit, and is completed by the individual under the rules and economic restrictions of the sponsoring 4-H or FFA organization. Student income Such a project is generally not considered a trade or business. Student income Partners in a partnership. Student income   Generally, you are self-employed if you are a member of a partnership that carries on a trade or business. Student income Limited partner. Student income   If you are a limited partner, your partnership income is generally not subject to SE tax. Student income However, guaranteed payments you receive for services you perform for the partnership are subject to SE tax and should be reported to you in box 14 of your Schedule K-1 (Form 1065). Student income Business Owned and Operated by Spouses. Student income   If you and your spouse jointly own and operate a farm as an unincorporated business and share in the profits and losses, you are partners in a partnership whether or not you have a formal partnership agreement. Student income You must file Form 1065, instead of Schedule F, unless you make a joint election to be treated as a qualified joint venture. Student income Making this election will allow you to avoid the complexity of Form 1065 but still give each spouse credit for social security earnings on which retirement benefits are based. Student income Qualified joint venture. Student income   If you and your spouse each materially participate as the only members of a jointly owned and operated farm, and you file a joint tax return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership for the tax year. Student income For an explanation of “material participation,” see the instructions for Schedule C, line G, and the instructions for Schedule F, line E. Student income   To make this election, you must divide all items of income, gain, loss, deduction, and credit attributable to the business between you and your spouse in accordance with your respective interests in the venture. Student income Each of you must file a separate Schedule F and a separate Schedule SE. Student income For more information, see Qualified Joint Venture in the Instructions for Schedule SE (Form 1040). Student income Spouse employee. Student income   If your spouse is your employee, not your partner, you must withhold and pay social security and Medicare taxes for him or her. Student income For more information about employment taxes, see chapter 13. Student income Community property. Student income   If you are a partner and your distributive share of any income or loss from a trade or business carried on by the partnership is community property, treat your share as your self-employment earnings. Student income Do not treat any of your share as self-employment earnings of your spouse. Student income Figuring Self-Employment Earnings Farmer. Student income   If you are self-employed as a farmer, use Schedule F (Form 1040) to figure your self-employment earnings. Student income Partnership income or loss. Student income   If you are a member of a partnership that carries on a trade or business, the partnership should report your self-employment earnings in box 14, code A, of your Schedule K-1 (Form 1065). Student income Box 14 of Schedule K-1 may also provide amounts for gross farming or fishing income (code B) and gross nonfarm income (code C). Student income Use these amounts if you use the farm or nonfarm optional method to figure net earnings from self-employment (see Methods for Figuring Net Earnings , later). Student income   If you are a general partner, you may need to reduce these reported earnings by amounts you claim as a section 179 deduction, unreimbursed partnership expenses, or depletion on oil and gas properties. Student income   If the amount reported is a loss, include only the deductible amount when you figure your total self-employment earnings. Student income   For more information, see the Partner's Instructions for Schedule K-1 (Form 1065). Student income   For general information on partnerships, see Publication 541. Student income More than one business. Student income   If you have self-employment earnings from more than one trade, business, or profession, you generally must combine the net profit or loss from each to determine your total self-employment earnings. Student income A loss from one business reduces your profit from another business. Student income However, do not combine earnings from farm and nonfarm businesses if you are using one of the optional methods (discussed later) to figure net earnings. Student income Community property. Student income   If any of the income from a farm or business, other than a partnership, is community property under state law, it is included in the self-employment earnings of the spouse carrying on the trade or business. Student income Lost income payments. Student income   Lost income payments received from insurance or other sources for reducing or stopping farming activities are included in self-employment earnings. Student income These include USDA payments to compensate for lost income resulting from reductions in tobacco quotas and allotments. Student income Even if you are not farming when you receive the payment, it is included in self-employment earnings if it relates to your farm business (even though it is temporarily inactive). Student income A connection exists if it is clear the payment would not have been made but for your conduct of your farm business. Student income Gain or loss. Student income   A gain or loss from the disposition of property that is neither stock in trade nor held primarily for sale to customers is not included in self-employment earnings. Student income It does not matter whether the disposition is a sale, exchange, or involuntary conversion. Student income For example, gains or losses from the disposition of the following types of property are not included in self-employment earnings. Student income Investment property. Student income Depreciable property or other fixed assets used in your trade or business. Student income Livestock held for draft, breeding, sport, or dairy purposes, and not held primarily for sale, regardless of how long the livestock was held, or whether it was raised or purchased. Student income Unharvested standing crops sold with land held more than 1 year. Student income Timber, coal, or iron ore held for more than 1 year if an economic interest was retained, such as a right to receive coal royalties. Student income   A gain or loss from the cutting of timber is not included in self-employment earnings if the cutting is treated as a sale or exchange. Student income For more information on electing to treat the cutting of timber as a sale or exchange, see Timber in chapter 8. Student income Wages and salaries. Student income   Wages and salaries received for services performed as an employee and covered by social security or railroad retirement are not included in self-employment earnings. Student income   Wages paid in kind to you for agricultural labor, such as commodity wages, are not included in self-employment earnings. Student income Retired partner. Student income   Retirement income received by a partner from his or her partnership under a written plan is not included in self-employment earnings if all the following apply. Student income The retired partner performs no services for the partnership during the year. Student income The retired partner is owed only the retirement payments. Student income The retired partner's share (if any) of the partnership capital was fully paid to the retired partner. Student income The payments to the retired partner are lifelong periodic payments. Student income Conservation Reserve Program (CRP) payments. Student income   Under the Conservation Reserve Program (CRP), if you own or operate highly erodible or other specified cropland, you may enter into a longterm contract with the USDA, agreeing to convert to a less intensive use of that cropland. Student income You must include the annual rental payments and any onetime incentive payment you receive under the program on Schedule F, lines 4a and 4b. Student income Cost share payments you receive may qualify for the costsharing exclusion. Student income See Cost-Sharing Exclusion (Improvements), above. Student income CRP payments are reported to you on Form 1099G. Student income Individuals who are receiving Social Security retirement or disability benefits may exclude CRP payments when calculating self-employment tax. Student income See the instructions for Schedule SE (Form 1040). Student income Self-employed health insurance deduction. Student income   You cannot deduct the self-employed health insurance deduction you report on Form 1040, line 29, from self-employment earnings on Schedule SE (Form 1040). Student income Landlord Participation in Farming As a general rule, income and deductions from rentals and from personal property leased with real estate are not included in determining self-employment earnings. Student income However, income and deductions from farm rentals, including government commodity program payments received by a landowner who rents land, are included if the rental arrangement provides that the landowner will, and does, materially participate in the production or management of production of the farm products on the land. Student income Crop shares. Student income   Rent paid in the form of crop shares is included in self-employment earnings for the year you sell, exchange, give away, or use the crop shares if you meet one of the four material participation tests (discussed next) at the time the crop shares are produced. Student income Feeding such crop shares to livestock is considered using them. Student income Your gross income for figuring your self-employment earnings includes the fair market value of the crop shares when they are used as feed. Student income Material participation for landlords. Student income   You materially participate if you have an arrangement with your tenant for your participation and you meet one or more of the following tests. Student income You do at least three of the following. Student income Pay, using cash or credit, at least half the direct costs of producing the crop or livestock. Student income Furnish at least half the tools, equipment, and livestock used in the production activities. Student income Advise or consult with your tenant. Student income Inspect the production activities periodically. Student income You regularly and frequently make, or take an important part in making, management decisions substantially contributing to or affecting the success of the enterprise. Student income You work 100 hours or more spread over a period of 5 weeks or more in activities connected with agricultural production. Student income You do things that, considered in their totality, show you are materially and significantly involved in the production of the farm commodities. Student income These tests may be used as general guides for determining whether you are a material participant. Student income Example. Student income Drew Houston agrees to produce a crop on J. Student income Clarke's cotton farm, with each receiving half the proceeds. Student income Clarke advises Houston when to plant, spray, and pick the cotton. Student income During the growing season, Clarke inspects the crop every few days to determine whether Houston is properly taking care of the crop. Student income Houston furnishes all labor needed to grow and harvest the crop. Student income The management decisions made by Clarke in connection with the care of the cotton crop and his regular inspection of the crop establish that he participates to a material degree in the cotton production operations. Student income The income Clarke receives from his cotton farm is included in his self-employment earnings. Student income Methods for Figuring Net Earnings There are three ways to figure your net earnings from self-employment. Student income The regular method. Student income The farm optional method. Student income The nonfarm optional method. Student income You must use the regular method unless you are eligible to use one or both of the optional methods. Student income See Figure 12-1 , shown later. Student income Figure 12-1. Student income Can I Use the Optional Methods? Please click here for the text description of the image. Student income Figure 12–1. Student income Can I Use the Optional Methods? Why use an optional method?   You may want to use the optional methods (discussed later) when you have a loss or a small net profit and any one of the following applies. Student income You want to receive credit for social security benefit coverage. Student income You incurred child or dependent care expenses for which you could claim a credit. Student income (An optional method may increase your earned income, which could increase your credit. Student income ) You are entitled to the earned income credit. Student income (An optional method may increase your earned income, which could increase your credit. Student income ) You are entitled to the additional child tax credit. Student income (An optional method may increase your earned income, which could increase your credit. Student income ) Effects of using an optional method. Student income   Using an optional method could increase your SE tax. Student income Paying more SE tax may result in you getting higher social security disability or retirement benefits. Student income   If you use either or both optional methods, you must figure and pay the SE tax due under these methods even if you would have had a smaller SE tax or no SE tax using the regular method. Student income   The optional methods may be used only to figure your SE tax. Student income To figure your income tax, include your actual self-employment earnings in gross income, regardless of which method you use to determine SE tax. Student income Regular Method Multiply your total self-employment earnings by 92. Student income 35% (. Student income 9235) to get your net earnings under the regular method. Student income See Short Schedule SE, line 4, or Long Schedule SE, line 4a. Student income Net earnings figured using the regular method are also called “actual net earnings. Student income ” Farm Optional Method Use the farm optional method only for self-employment earnings from a farming business. Student income You can use this method if you meet either of the following tests. Student income Your gross farm income is $6,960 or less. Student income Your net farm profits are less than $5,024. Student income Gross farm income. Student income   Your gross farm income is the total of the amounts from: Schedule F (Form 1040), line 9, and Schedule K-1 (Form 1065), box 14, code B (from farm partnerships). Student income Net farm profits. Student income   Net farm profits generally are the total of the amounts from: Schedule F (Form 1040), line 34, and Schedule K-1 (Form 1065), box 14, code A (from farm partnerships). Student income However, you may need to adjust the amount reported on Schedule K-1 if you are a general partner or if it is a loss. Student income For more information, see Partnership income or loss , earlier. Student income Figuring farm net earnings. Student income   If you meet either of the two tests explained above, use Table 12-1. Student income Figuring Farm Net Earnings , to figure your net earnings from self-employment under the farm optional method. Student income Table 12-1. Student income Figuring Farm Net Earnings IF your gross farm income  is. Student income . Student income . Student income THEN your net earnings are equal to. Student income . Student income . Student income $6,960 or less Two-thirds of your gross farm income. Student income More than $6,960 $4,640 Optional method can reduce or eliminate SE tax. Student income   If your gross farm income is $6,960 or less and your farm net earnings figured under the farm optional method are less than your actual net earnings, you can use the farm optional method to reduce or eliminate your SE tax. Student income Your actual net earnings are your net earnings figured using the regular method, explained earlier. Student income Example. Student income Your gross farm income is $540 and your net farm profit is $460. Student income Consequently, your net earnings figured under the farm optional method are $360 (2/3 of $540) and your actual net earnings are $425 (92. Student income 35% of $460). Student income You owe no SE tax if you use the optional method because your net earnings under the farm optional method are less than $400. Student income Nonfarm Optional Method This is an optional method available for determining net earnings from nonfarm self-employment, much like the farm optional method. Student income If you are also engaged in a nonfarm business, you may be able to use this method to figure your nonfarm net earnings. Student income You can use this method even if you do not use the farm optional method for determining your farm net earnings and even if you have a net loss from your nonfarm business. Student income For more information about the nonfarm optional method, see Publication 334. Student income You cannot combine farm and nonfarm self-employment earnings to figure your net earnings under either of the optional methods. Student income Using Both Optional Methods If you use both optional methods, you must add the net earnings figured under each method to arrive at your total net earnings from self-employment. Student income You can report less than your total actual farm and nonfarm net earnings but not less than actual nonfarm net earnings. Student income If you use both optional methods, you can report no more than $4,640 as your combined net earnings from self-employment. Student income Reporting Self-Employment Tax Use Schedule SE (Form 1040) to figure and report your SE tax. Student income Then, enter the SE tax on line 56 of Form 1040 and attach Schedule SE to Form 1040. Student income Most taxpayers can use Section A–Short Schedule SE to figure their SE tax. Student income However, certain taxpayers must use Section B–Long Schedule SE. Student income Use the chart on page 1 of Schedule SE to find out which one to use. Student income If you have to pay SE tax, you must file Form 1040 (with Schedule SE attached) even if you do not otherwise have to file a federal income tax return. Student income Deduction for employer-equivalent portion of self-employment tax. Student income   You can deduct the employer-equivalent portion of your SE tax in figuring your adjusted gross income. Student income This deduction only affects your income tax. Student income It does not affect either your net earnings from self-employment or your SE tax. Student income   To deduct the tax, enter on Form 1040, line 27, the amount shown on Section A, Line 6, or Section B, line 13, Deduction for employer-equivalent portion of self-employment tax, of the Schedule SE. Student income Joint return. Student income   Even if you file a joint return, you cannot file a joint Schedule SE. Student income This is true whether one spouse or both spouses have self-employment earnings. Student income Your spouse is not considered self-employed just because you are. Student income If both of you have self-employment earnings, each of you must complete a separate Schedule SE. Student income However, if one spouse uses the Short Schedule SE and the other spouse has to use the Long Schedule SE, both can use the same form. Student income Attach both schedules to the joint return. Student income If you and your spouse operate a business as a partnership, see Business Owned and Operated by Spouses and Qualified joint venture , earlier, under Who Must Pay Self-Employment Tax . Student income Prev  Up  Next   Home   More Online Publications