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Tax Forms 2007

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Tax Forms 2007

Tax forms 2007 5. Tax forms 2007   Soil and Water Conservation Expenses Table of Contents Introduction Topics - This chapter discusses: Business of Farming Plan Certification Conservation ExpensesWater well. Tax forms 2007 Assessment by Conservation DistrictAssessment for Depreciable Property 25% Limit on DeductionNet operating loss. Tax forms 2007 When to Deduct or Capitalize Sale of a Farm Introduction If you are in the business of farming, you can choose to deduct certain expenses for: Soil or water conservation, Prevention of erosion of land used in farming, or Endangered species recovery. Tax forms 2007 Otherwise, these are capital expenses that must be added to the basis of the land. Tax forms 2007 (See chapter 6 for information on determining basis. Tax forms 2007 ) Conservation expenses for land in a foreign country do not qualify for this special treatment. Tax forms 2007 The deduction for conservation expenses cannot be more than 25% of your gross income from farming. Tax forms 2007 See 25% Limit on Deduction , later. Tax forms 2007 Although some expenses are not deductible as soil and water conservation expenses, they may be deductible as ordinary and necessary farm expenses. Tax forms 2007 These include interest and taxes, the cost of periodically clearing brush from productive land, the regular removal of sediment from a drainage ditch, and expenses paid or incurred primarily to produce an agricultural crop that may also conserve soil. Tax forms 2007 You must include in income most government payments for approved conservation practices. Tax forms 2007 However, you can exclude some payments you receive under certain cost-sharing conservation programs. Tax forms 2007 For more information, see Agricultural Program Payments in chapter 3. Tax forms 2007 To get the full deduction to which you are entitled, you should maintain your records to clearly distinguish between your ordinary and necessary farm business expenses and your soil and water conservation expenses. Tax forms 2007 Topics - This chapter discusses: Business of farming Plan certification Conservation expenses Assessment by conservation district 25% limit on deduction When to deduct or capitalize Sale of a farm Business of Farming For purposes of soil and water conservation expenses, you are in the business of farming if you cultivate, operate, or manage a farm for profit, either as an owner or a tenant. Tax forms 2007 You are not in the business of farming if you cultivate or operate a farm for recreation or pleasure, rather than for profit. Tax forms 2007 You are not farming if you are engaged only in forestry or the growing of timber. Tax forms 2007 Farm defined. Tax forms 2007   A farm includes livestock, dairy, poultry, fish, fruit, and truck farms. Tax forms 2007 It also includes plantations, ranches, ranges, and orchards. Tax forms 2007 A fish farm is an area where fish and other marine animals are grown or raised and artificially fed, protected, etc. Tax forms 2007 It does not include an area where they are merely caught or harvested. Tax forms 2007 A plant nursery is a farm for purposes of deducting soil and water conservation expenses. Tax forms 2007 Farm rental. Tax forms 2007   If you own a farm and receive farm rental payments based on farm production, either in cash or crop shares, you are in the business of farming. Tax forms 2007 If you get cash rental for a farm you own that is not used in farm production, you cannot deduct soil and water conservation expenses for that farm. Tax forms 2007   If you receive a fixed rental payment that is not based on farm production, you are in the business of farming only if you materially participate in operating or managing the farm. Tax forms 2007 Example. Tax forms 2007 You own a farm in Iowa and live in California. Tax forms 2007 You rent the farm for $175 in cash per acre and do not materially participate in producing or managing production of the crops grown on the farm. Tax forms 2007 You cannot deduct your soil conservation expenses for this farm. Tax forms 2007 You must capitalize the expenses and add them to the basis of the land. Tax forms 2007     For more information, see Material participation for landlords under Landlord Participation in Farming in chapter 12. Tax forms 2007 Plan Certification You can deduct soil and water conservation expenses only if they are consistent with a plan approved by the Natural Resources Conservation Service (NRCS) of the Department of Agriculture. Tax forms 2007 If no such plan exists, the expenses must be consistent with a soil conservation plan of a comparable state agency. Tax forms 2007 Keep a copy of the plan with your books and records to support your deductions. Tax forms 2007 Conservation plan. Tax forms 2007   A conservation plan includes the farming conservation practices approved for the area where your farmland is located. Tax forms 2007 There are three types of approved plans. Tax forms 2007 NRCS individual site plans. Tax forms 2007 These plans are issued individually to farmers who request assistance from NRCS to develop a conservation plan designed specifically for their farmland. Tax forms 2007 NRCS county plans. Tax forms 2007 These plans include a listing of farm conservation practices approved for the county where the farmland is located. Tax forms 2007 You can deduct expenses for conservation practices not included on the NRCS county plans only if the practice is a part of an individual site plan. Tax forms 2007 Comparable state agency plans. Tax forms 2007 These plans are approved by state agencies and can be approved individual site plans or county plans. Tax forms 2007   A list of NRCS conservation programs is available at www. Tax forms 2007 nrcs. Tax forms 2007 usda. Tax forms 2007 gov/programs. Tax forms 2007 Individual site plans can be obtained from NRCS offices and the comparable state agencies. Tax forms 2007 Conservation Expenses You can deduct conservation expenses only for land you or your tenant are using, or have used in the past, for farming. Tax forms 2007 These expenses include, but are not limited to, the following. Tax forms 2007 The treatment or movement of earth, such as: Leveling, Conditioning, Grading, Terracing, Contour furrowing, and Restoration of soil fertility. Tax forms 2007 The construction, control, and protection of: Diversion channels, Drainage ditches, Irrigation ditches, Earthen dams, and Watercourses, outlets, and ponds. Tax forms 2007 The eradication of brush. Tax forms 2007 The planting of windbreaks. Tax forms 2007 You cannot deduct expenses to drain or fill wetlands, or to prepare land for center pivot irrigation systems, as soil and water conservation expenses. Tax forms 2007 These expenses are added to the basis of the land. Tax forms 2007 If you choose to deduct soil and water conservation expenses, you cannot exclude from gross income any cost-sharing payments you receive for those expenses. Tax forms 2007 See chapter 3 for information about payments eligible for the cost-sharing exclusion. Tax forms 2007 New farm or farmland. Tax forms 2007   If you acquire a new farm or new farmland from someone who was using it in farming immediately before you acquired the land, soil and water conservation expenses you incur on it will be treated as made on land used in farming at the time the expenses were paid or incurred. Tax forms 2007 You can deduct soil and water conservation expenses for this land if your use of it is substantially a continuation of its use in farming. Tax forms 2007 The new farming activity does not have to be the same as the old farming activity. Tax forms 2007 For example, if you buy land that was used for grazing cattle and then prepare it for use as an apple orchard, you can deduct your conservation expenses. Tax forms 2007 Land not used for farming. Tax forms 2007   If your conservation expenses benefit both land that does not qualify as land used for farming and land that does qualify, you must allocate the expenses between the two types of land. Tax forms 2007 For example, if the expenses benefit 200 acres of your land, but only 120 acres of this land are used for farming, then you can deduct 60% (120 ÷ 200) of the expenses. Tax forms 2007 You can use another method to allocate these expenses if you can clearly show that your method is more reasonable. Tax forms 2007 Depreciable conservation assets. Tax forms 2007   You generally cannot deduct your expenses for depreciable conservation assets. Tax forms 2007 However, you can deduct certain amounts you pay or incur for an assessment for depreciable property that a soil and water conservation or drainage district levies against your farm. Tax forms 2007 See Assessment for Depreciable Property , later. Tax forms 2007   You must capitalize expenses to buy, build, install, or improve depreciable structures or facilities. Tax forms 2007 These expenses include those for materials, supplies, wages, fuel, hauling, and moving dirt when making structures such as tanks, reservoirs, pipes, culverts, canals, dams, wells, or pumps composed of masonry, concrete, tile, metal, or wood. Tax forms 2007 You recover your capital investment through annual allowances for depreciation. Tax forms 2007   You can deduct soil and water conservation expenses for nondepreciable earthen items. Tax forms 2007 Nondepreciable earthen items include certain dams, ponds, and terraces described under Property Having a Determinable Useful Life in chapter 7. Tax forms 2007 Water well. Tax forms 2007   You cannot deduct the cost of drilling a water well for irrigation and other agricultural purposes as a soil and water conservation expense. Tax forms 2007 It is a capital expense. Tax forms 2007 You recover your cost through depreciation. Tax forms 2007 You also must capitalize your cost for drilling a test hole. Tax forms 2007 If the test hole produces no water and you continue drilling, the cost of the test hole is added to the cost of the producing well. Tax forms 2007 You can recover the total cost through depreciation deductions. Tax forms 2007   If a test hole, dry hole, or dried-up well (resulting from prolonged lack of rain, for instance) is abandoned, you can deduct your unrecovered cost in the year of abandonment. Tax forms 2007 Abandonment means that all economic benefits from the well are terminated. Tax forms 2007 For example, filling or sealing a well excavation or casing so that all economic benefits from the well are terminated constitutes an abandonment. Tax forms 2007 Endangered species recovery expenses. Tax forms 2007   If you are in the business of farming and meet other specific requirements, you can choose to deduct the conservation expenses discussed earlier as endangered species recovery expenses. Tax forms 2007 Otherwise, these are capital expenses that must be added to the basis of the land. Tax forms 2007   The expenses must be paid or incurred for the purpose of achieving site-specific management actions recommended in a recovery plan approved under section 4(f) of the Endangered Species Act of 1973. Tax forms 2007 See Internal Revenue Code section 175 for more information. Tax forms 2007 Assessment by Conservation District In some localities, a soil or water conservation or drainage district incurs expenses for soil or water conservation and levies an assessment against the farmers who benefit from the expenses. Tax forms 2007 You can deduct as a conservation expense amounts you pay or incur for the part of an assessment that: Covers expenses you could deduct if you had paid them directly, or Covers expenses for depreciable property used in the district's business. Tax forms 2007 Assessment for Depreciable Property You generally can deduct as a conservation expense amounts you pay or incur for the part of a conservation or drainage district assessment that covers expenses for depreciable property. Tax forms 2007 This includes items such as pumps, locks, concrete structures (including dams and weir gates), draglines, and similar equipment. Tax forms 2007 The depreciable property must be used in the district's soil and water conservation activities. Tax forms 2007 However, the following limits apply to these assessments. Tax forms 2007 The total assessment limit. Tax forms 2007 The yearly assessment limit. Tax forms 2007 After you apply these limits, the amount you can deduct is added to your other conservation expenses for the year. Tax forms 2007 The total for these expenses is then subject to the 25% of gross income from farming limit on the deduction, discussed later. Tax forms 2007 See Table 5-1 for a brief summary of these limits. Tax forms 2007 Table 5-1. Tax forms 2007 Limits on Deducting an Assessment by a Conservation District for Depreciable Property Total Limit on Deduction for Assessment for Depreciable Property Yearly Limit on Deduction for Assessment for Depreciable Property Yearly Limit for All Conservation Expenses 10% of: $500 + 10% of: 25% of: Total assessment against all members of the district for the property. Tax forms 2007 Your deductible share of the cost to the district for the property. Tax forms 2007 Your gross income from farming. Tax forms 2007 No one taxpayer can deduct more than 10% of the total assessment. Tax forms 2007 Any amount over 10% is a capital expense and is added to the basis of your land. Tax forms 2007 If an assessment is paid in installments, each payment must be prorated between the conservation expense and the capital expense. Tax forms 2007 If the amount you pay or incur for any year is more than the limit, you can deduct for that year only 10% of your deductible share of the cost. Tax forms 2007 You can deduct the remainder in equal amounts over the next 9 tax years. Tax forms 2007 Limit for all conservation expenses, including assessments for depreciable property. Tax forms 2007 Amounts greater than 25% can be carried to the following year and added to that year's expenses. Tax forms 2007 The total is then subject to the 25% of gross income from farming limit in that year. Tax forms 2007 To ensure your deduction is within the deduction limits, keep records to show the following. Tax forms 2007 The total assessment against all members of the district for the depreciable property. Tax forms 2007 Your deductible share of the cost to the district for the depreciable property. Tax forms 2007 Your gross income from farming. Tax forms 2007 Total assessment limit. Tax forms 2007   You cannot deduct more than 10% of the total amount assessed to all members of the conservation or drainage district for the depreciable property. Tax forms 2007 This applies whether you pay the assessment in one payment or in installments. Tax forms 2007 If your assessment is more than 10% of the total amount assessed, both the following rules apply. Tax forms 2007 The amount over 10% is a capital expense and is added to the basis of your land. Tax forms 2007 If the assessment is paid in installments, each payment must be prorated between the conservation expense and the capital expense. Tax forms 2007 Yearly assessment limit. Tax forms 2007   The maximum amount you can deduct in any one year is the total of 10% of your deductible share of the cost as explained earlier, plus $500. Tax forms 2007 If the amount you pay or incur is equal to or less than the maximum amount, you can deduct it in the year it is paid or incurred. Tax forms 2007 If the amount you pay or incur is more, you can deduct in that year only 10% of your deductible share of the cost. Tax forms 2007 You can deduct the remainder in equal amounts over the next 9 tax years. Tax forms 2007 Your total conservation expense deduction for each year is also subject to the 25% of gross income from farming limit on the deduction, discussed later. Tax forms 2007 Example 1. Tax forms 2007 This year, the soil conservation district levies and you pay an assessment of $2,400 against your farm. Tax forms 2007 Of the assessment, $1,500 is for digging drainage ditches. Tax forms 2007 You can deduct this part as a soil or conservation expense as if you had paid it directly. Tax forms 2007 The remaining $900 is for depreciable equipment to be used in the district's irrigation activities. Tax forms 2007 The total amount assessed by the district against all its members for the depreciable equipment is $7,000. Tax forms 2007 The total amount you can deduct for the depreciable equipment is limited to 10% of the total amount assessed by the district against all its members for depreciable equipment, or $700. Tax forms 2007 The $200 excess ($900 − $700) is a capital expense you must add to the basis of your farm. Tax forms 2007 To figure the maximum amount you can deduct for the depreciable equipment this year, multiply your deductible share of the total assessment ($700) by 10%. Tax forms 2007 Add $500 to the result for a total of $570. Tax forms 2007 Your deductible share, $700, is greater than the maximum amount deductible in one year, so you can deduct only $70 of the amount you paid or incurred for depreciable property this year (10% of $700). Tax forms 2007 You can deduct the balance at the rate of $70 a year over the next 9 years. Tax forms 2007 You add $70 to the $1,500 portion of the assessment for drainage ditches. Tax forms 2007 You can deduct $1,570 of the $2,400 assessment as a soil and water conservation expense this year, subject to the 25% of gross income from farming limit on the deduction, discussed later. Tax forms 2007 Example 2. Tax forms 2007 Assume the same facts in Example 1 except that $1,850 of the $2,400 assessment is for digging drainage ditches and $550 is for depreciable equipment. Tax forms 2007 The total amount assessed by the district against all its members for depreciable equipment is $5,500. Tax forms 2007 The total amount you can deduct for the depreciable equipment is limited to 10% of this amount, or $550. Tax forms 2007 The maximum amount you can deduct this year for the depreciable equipment is $555 (10% of your deductible share of the total assessment, $55, plus $500). Tax forms 2007 Since your deductible share is less than the maximum amount deductible in one year, you can deduct the entire $550 this year. Tax forms 2007 You can deduct the entire assessment, $2,400, as a soil and water conservation expense this year, subject to the 25% of gross income from farming limit on the deduction, discussed below. Tax forms 2007 Sale or other disposal of land during 9-year period. Tax forms 2007   If you dispose of the land during the 9-year period for deducting conservation expenses subject to the yearly limit, any amounts you have not yet deducted because of this limit are added to the basis of the property. Tax forms 2007 Death of farmer during 9-year period. Tax forms 2007   If a farmer dies during the 9-year period, any remaining amounts not yet deducted are deducted in the year of death. Tax forms 2007 25% Limit on Deduction The total deduction for conservation expenses in any tax year is limited to 25% of your gross income from farming for the year. Tax forms 2007 Gross income from farming. Tax forms 2007   Gross income from farming is the income you derive in the business of farming from the production of crops, fish, fruits, other agricultural products, or livestock. Tax forms 2007 Gains from sales of draft, breeding, or dairy livestock are included. Tax forms 2007 Gains from sales of assets such as farm machinery, or from the disposition of land, are not included. Tax forms 2007 Carryover of deduction. Tax forms 2007   If your deductible conservation expenses in any year are more than 25% of your gross income from farming for that year, you can carry the unused deduction over to later years. Tax forms 2007 However, the deduction in any later year is limited to 25% of the gross income from farming for that year as well. Tax forms 2007 Example. Tax forms 2007 In 2012, you have gross income of $32,000 from two farms. Tax forms 2007 During the year, you incurred $10,000 of deductible soil and water conservation expenses for one of the farms. Tax forms 2007 However, your deduction is limited to 25% of $32,000, or $8,000. Tax forms 2007 The $2,000 excess ($10,000 − $8,000) is carried over to 2013 and added to deductible soil and water conservation expenses made in that year. Tax forms 2007 The total of the 2012 carryover plus 2013 expenses is deductible in 2013, subject to the limit of 25% of your gross income from farming in 2013. Tax forms 2007 Any expenses over the limit in that year are carried to 2014 and later years. Tax forms 2007 Net operating loss. Tax forms 2007   The deduction for soil and water conservation expenses, after applying the 25% limit, is included when figuring a net operating loss (NOL) for the year. Tax forms 2007 If the NOL is carried to another year, the soil and water conservation deduction included in the NOL is not subject to the 25% limit in the year to which it is carried. Tax forms 2007 When to Deduct or Capitalize If you choose to deduct soil and water conservation expenses, you must deduct the total allowable amount on your tax return for the first year you pay or incur these expenses. Tax forms 2007 If you do not choose to deduct the expenses, you must capitalize them. Tax forms 2007 Change of method. Tax forms 2007   If you want to change your method for the treatment of soil and water conservation expenses, or you want to treat the expenses for a particular project or a single farm in a different manner, you must get the approval of the IRS. Tax forms 2007 To get this approval, submit a written request by the due date of your return for the first tax year you want the new method to apply. Tax forms 2007 You or your authorized representative must sign the request. Tax forms 2007   The request must include the following information. Tax forms 2007 Your name and address. Tax forms 2007 The first tax year the method or change of method is to apply. Tax forms 2007 Whether the method or change of method applies to all your soil and water conservation expenses or only to those for a particular project or farm. Tax forms 2007 If the method or change of method does not apply to all your expenses, identify the project or farm to which the expenses apply. Tax forms 2007 The total expenses you paid or incurred in the first tax year the method or change of method is to apply. Tax forms 2007 A statement that you will account separately in your books for the expenses to which this method or change of method relates. Tax forms 2007 Send your request to the following  address. Tax forms 2007  Department of the Treasury Internal Revenue Service Center Cincinnati, OH 45999  For more information, see Change in  Accounting Method in chapter 2. Tax forms 2007 Sale of a Farm If you sell your farm, you cannot adjust the basis of the land at the time of the sale for any unused carryover of soil and water conservation expenses (except for deductions of assessments for depreciable property, discussed earlier). Tax forms 2007 However, if you acquire another farm and return to the business of farming, you can start taking deductions again for the unused carryovers. Tax forms 2007 Gain on sale of farmland. Tax forms 2007   If you held the land 5 years or less before you sold it, gain on the sale of the land is treated as ordinary income up to the amount you previously deducted for soil and water conservation expenses. Tax forms 2007 If you held the land less than 10 but more than 5 years, the gain is treated as ordinary income up to a specified percentage of the previous deductions. Tax forms 2007 See Section 1252 property under Other Gains in chapter 9. Tax forms 2007 Prev  Up  Next   Home   More Online Publications
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IRS Alerta sobre Nueva Estafa de “Phishing” Que Falsamente Alega Venir del Servicio del Defensor del Contribuyente

Video de YouTube del IRS : 
Consejo Tributario: Phishing-Malware

IR-2014-39SP, 28 de marzo de 2014

WASHINGTON — El Servicio de Impuestos Internos (IRS) alertó hoy al público de una nueva estafa por correo electrónico que pesca información usando la práctica conocida como "phishing".  Los correos electrónicos parecen provenir del Servicio del Defensor del Contribuyente (TAS, por sus siglas en inglés), e incluyen números de casos ficticios.

Los emails falsos pudieran incluir el siguiente mensaje: Su ingreso reportado del 2013 ha sido seleccionado para una revisión debido a un error del procesamiento de documentos. Su caso ha sido referido al Servicio del Defensor del Contribuyente para asistencia con su resolución. Para evitar demoras en el procesamiento de su presentación del 2013, contacte al Servicio del Defensor del Contribuyente para asistencia con la resolución.

Al destinatario se le indica que haga clic en enlaces que supuestamente proveen información sobre el "defensor" asignado al caso o donde se les permite "revisar el ingreso reportado". Los enlaces conllevan a páginas web que solicitan información personal.

Los contribuyentes que reciben estos mensajes no deben responder al correo electrónico ni hacer clic en los enlaces. Sin embargo, deben reenviar las estafas por correo electrónico a phishing@irs.gov. Para más información, visite la página del IRS acerca de Phishing.

El Servicio del Defensor del Contribuyente es una organización legítima del IRS que ayuda a los contribuyentes a resolver asuntos de impuestos federales que no han sido resueltos mediante los canales normales de la agencia.  El IRS, incluyendo al Servicio del Defensor al Contribuyente no inicia contacto con los contribuyentes a través de correo electrónico, textos, ni mediante ningún tipo de red social.

‪Para más información acerca de estafas a las que estar alerta vea la lista de la “Docena Sucia” en IRS.gov.

Page Last Reviewed or Updated: 28-Mar-2014

The Tax Forms 2007

Tax forms 2007 14. Tax forms 2007   Excise Taxes Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Fuels Used in FarmingBuyer of fuel, including undyed diesel fuel or undyed kerosene. Tax forms 2007 Undyed diesel fuel, undyed kerosene, and Other Fuels (including alternative fuel). Tax forms 2007 Custom application of fertilizer and pesticide. Tax forms 2007 Fuel not used for farming. Tax forms 2007 Dyed Diesel Fuel and Dyed Kerosene Fuels Used in Off-Highway Business Use Fuels Used for Household Purposes or Other Than as a Fuel for Propulsion Engines How To Claim a Credit or RefundCredit only. Tax forms 2007 Claiming a Credit Claiming a Refund Including the Credit or Refund in Income Introduction You may be eligible to claim a credit on your income tax return for the federal excise tax on certain fuels. Tax forms 2007 You may also be eligible to claim a quarterly refund of the fuel taxes during the year, instead of waiting to claim a credit on your income tax return. Tax forms 2007 Whether you can claim a credit or refund depends on whether the fuel was taxed and the purpose (nontaxable use) for which you used the fuel. Tax forms 2007 The nontaxable uses of fuel for which a farmer may claim a credit or refund are generally the following. Tax forms 2007 Use on a farm for farming purposes. Tax forms 2007 Off-highway business use. Tax forms 2007 Uses other than as a fuel in a propulsion engine, such as home use. Tax forms 2007 Table 14-1 presents an overview of credits and refunds that may be claimed for fuels used for the nontaxable uses listed above. Tax forms 2007 See Publication 510, Excise Taxes, for more information. Tax forms 2007 Topics - This chapter discusses: Fuels used in farming Dyed diesel fuel and dyed kerosene Fuels used in off-highway business use Fuels used for household purposes How to claim a credit or refund Including the credit or refund in income Useful Items - You may want to see: Publication 510 Excise Taxes Form (and Instructions) 720 Quarterly Federal Excise Tax Return 4136 Credit for Federal Tax Paid on Fuels 8849 Claim for Refund of Excise Taxes See chapter 16 for information about getting publications and forms. Tax forms 2007 Fuels Used in Farming Owners, operators, and tenants of farms and certain other persons may be eligible to claim a credit or refund of excise taxes on fuel used in the trade or business of farming, when used on a farm in the United States for farming purposes. Tax forms 2007 See Table 14-1 for a list of available fuel tax credits and refunds. Tax forms 2007 Fuel is used on a farm for farming purposes only if used in carrying on a trade or business of farming, on a farm in the United States, and for farming purposes. Tax forms 2007 Farm. Tax forms 2007   A farm includes livestock, dairy, fish, poultry, fruit, fur-bearing animals, and truck farms, orchards, plantations, ranches, nurseries, ranges, and feed yards for finishing cattle. Tax forms 2007 It also includes structures such as greenhouses used primarily for raising agricultural or horticultural commodities. Tax forms 2007 A fish farm is an area where fish are grown or raised and not merely caught or harvested. Tax forms 2007 Table 14-1. Tax forms 2007 Fuel Tax Credits and Refunds at a Glance Use this table to see if you can take a credit or refund for a nontaxable use of the fuel listed. Tax forms 2007 Fuel Used On a Farm for Farming Purposes Off-Highway Business Use Household Use or Use Other Than as a Fuel1 Gasoline Credit only Credit or refund None Aviation gasoline Credit only None None Undyed diesel fuel and undyed kerosene Credit or refund Credit or refund2 Credit or refund2 Kerosene for use in aviation Credit or refund None None Dyed diesel fuel and dyed kerosene None None None Other Fuels (including alternative fuels)3 Credit or refund Credit or refund None 1For a use other than as fuel in a propulsion engine. Tax forms 2007 2Applies to undyed kerosene not sold from a blocked pump or, under certain circumstances, for blending with undyed diesel fuel to be used for heating purposes. Tax forms 2007 See Reg. Tax forms 2007 48. Tax forms 2007 6427-10 (b)(1) for the definition of a blocked pump. Tax forms 2007 3Other Fuels means any liquid except gas oil, fuel oil, or any product taxable under Internal Revenue Code section 4081. Tax forms 2007 It includes the alternative fuels: liquefied petroleum gas (LPG),“P” Series fuels, compressed natural gas (CNG), liquefied hydrogen, any liquid fuel derived from coal (including peat) through the Fischer-Tropsch process, liquid fuel derived from biomass, liquid natural gas (LNG), liquefied gas derived from biomass, and compressed gas derived from biomass. Tax forms 2007 Farming purposes. Tax forms 2007   As the owner, tenant, or operator and the ultimate purchaser of fuel that you purchased, you use the fuel on a farm for farming purposes if you use it in any of the following ways. Tax forms 2007 To cultivate the soil or to raise or harvest any agricultural or horticultural commodity. Tax forms 2007 To raise, shear, feed, care for, train, or manage livestock, bees, poultry, fur-bearing animals, or wildlife. Tax forms 2007 To operate, manage, conserve, improve, or maintain your farm and its tools and equipment. Tax forms 2007 To handle, dry, pack, grade, or store any raw agricultural or horticultural commodity. Tax forms 2007 For this use to qualify, you must have produced more than half the commodity so treated during the tax year. Tax forms 2007 The more-than-one-half test applies separately to each commodity. Tax forms 2007 Commodity means a single raw product. Tax forms 2007 For example, apples and peaches are two separate commodities. Tax forms 2007 To plant, cultivate, care for, or cut trees or to prepare (other than sawing logs into lumber, chipping, or other milling) trees for market, but only if these activities are incidental to your farming operations. Tax forms 2007 Your tree operations are incidental only if they are minor in nature when compared to the total farming operations. Tax forms 2007   If any other person, such as a neighbor or custom operator (independent contractor), performs a service for you on your farm for any of the purposes included in list items (1) or (2), above, you are considered to be the ultimate purchaser who used the fuel on a farm for farming purposes. Tax forms 2007 Therefore, you can still claim the credit or refund for the fuel so used. Tax forms 2007 However, see Custom application of fertilizer and pesticide, later. Tax forms 2007 If the other person performs any other services for you on your farm for purposes not included in list items (1) or (2) above, no one can claim the credit or refund for fuel used on your farm for those other services. Tax forms 2007 Buyer of fuel, including undyed diesel fuel or undyed kerosene. Tax forms 2007   If doubt exists whether the owner, tenant, or operator of the farm bought the fuel, determine who actually bore the cost of the fuel. Tax forms 2007 For example, if the owner of a farm and his or her tenant equally share the cost of gasoline used on the farm, each can claim a credit for the tax on half the fuel used. Tax forms 2007 Undyed diesel fuel, undyed kerosene, and Other Fuels (including alternative fuel). Tax forms 2007   Usually, the farmer is the only person who can make a claim for credit or refund for the tax on undyed diesel fuel, undyed kerosene, or other fuels (including alternative fuel) used for farming purposes. Tax forms 2007 However, see Custom application of fertilizer and pesticide, next. Tax forms 2007 Also see Dyed Diesel Fuel and Dyed Kerosene, later. Tax forms 2007 Example. Tax forms 2007 Farm owner Haleigh Blue hired custom operator Tyler Steele to cultivate the soil on her farm. Tax forms 2007 Tyler used 200 gallons of undyed diesel fuel that he purchased to perform the work on Haleigh's farm. Tax forms 2007 In addition, Haleigh hired contractor Lee Brown to pack and store her apple crop. Tax forms 2007 Lee bought 25 gallons of undyed diesel fuel to use in packing the apples. Tax forms 2007 Haleigh can claim the credit for the 200 gallons of undyed diesel fuel used by Tyler on her farm because it qualifies as fuel used on the farm for farming purposes. Tax forms 2007 No one can claim a credit for the 25 gallons used by Lee because that fuel was not used for a farming purpose included in list items (1) or (2), above. Tax forms 2007 In the above example, both Tyler Steele and Lee Brown could have purchased dyed (untaxed) diesel fuel for their tasks. Tax forms 2007 Custom application of fertilizer and pesticide. Tax forms 2007   Fuel used on a farm for farming purposes includes fuel used in the application (including aerial application) of fertilizer, pesticides, or other substances. Tax forms 2007 Generally, the applicator is treated as having used the fuel on a farm for farming purposes. Tax forms 2007 For applicators using highway vehicles, only the fuel used on the farm is exempt. Tax forms 2007 Fuel used traveling on the highway to and from the farm is taxable. Tax forms 2007 Fuel used by an aerial applicator for the direct flight between the airfield and one or more farms is treated as used for a farming purpose. Tax forms 2007 For aviation gasoline, the aerial applicator makes the claim as the ultimate purchaser. Tax forms 2007 For kerosene used in aviation, the ultimate purchaser may make the claim or waive the right to make the claim to the registered ultimate vendor. Tax forms 2007 A sample waiver is included as Model Waiver L in the appendix of Publication 510. Tax forms 2007 A registered ultimate vendor is the person who sells undyed diesel fuel, undyed kerosene, or kerosene for use in aviation to the user (ultimate purchaser) of the fuel for use on a farm for farming purposes. Tax forms 2007 To claim a credit or refund of tax, the ultimate vendor must be registered with the Internal Revenue Service at the time the claim is made. Tax forms 2007 However, registered ultimate vendors cannot make claims for undyed diesel fuel and undyed kerosene sold for use on a farm for farming purposes. Tax forms 2007 Fuel not used for farming. Tax forms 2007   You do not use fuel on a farm for farming purposes when you use it in any of the following ways. Tax forms 2007 Off the farm, such as on the highway or in noncommercial aviation, even if the fuel is used in transporting livestock, feed, crops, or equipment. Tax forms 2007 For personal use, such as lawn mowing. Tax forms 2007 In processing, packaging, freezing, or canning operations. Tax forms 2007 In processing crude gum into gum spirits of turpentine or gum resin or in processing maple sap into maple syrup or maple sugar. Tax forms 2007 All-terrain vehicles (ATVs). Tax forms 2007   Fuel used in ATVs on a farm for farming purposes, discussed earlier, is eligible for a credit or refund of excise taxes on the fuel. Tax forms 2007 Fuel used in ATVs for nonfarming purposes is not eligible for a credit or refund of the taxes. Tax forms 2007 If ATVs are used both for farming and nonfarming purposes, only that portion of the fuel used for farming purposes is eligible for the credit or refund. Tax forms 2007 Dyed Diesel Fuel and Dyed Kerosene If you purchase dyed diesel fuel or dyed kerosene for a nontaxable use, you must use it only on a farm for farming purposes or for other nontaxable purposes. Tax forms 2007 For example, you should not use dyed diesel fuel in a truck that is used both on the farm for farming purposes and on the highway, even though the highway use is in connection with farm business. Tax forms 2007 Excise tax applies to the fuel used by the truck on the highways. Tax forms 2007 In this situation, undyed (taxed) fuel should be purchased for the truck. Tax forms 2007 You should keep fuel records of the use of the truck on the farm for farming purposes, and for other uses. Tax forms 2007 You may be eligible for a credit or refund for the excise tax on fuel used on the farm for farming purposes. Tax forms 2007 Penalty. Tax forms 2007   A penalty is imposed on any person who knowingly uses, sells, or alters dyed diesel fuel or dyed kerosene for any purpose other than a nontaxable use. Tax forms 2007 The penalty is the greater of $1,000 or $10 per gallon of the dyed diesel fuel or dyed kerosene involved. Tax forms 2007 After the first violation, the $1,000 portion of the penalty increases depending on the number of violations. Tax forms 2007 For more information on this penalty, see Publication 510. Tax forms 2007 Fuels Used in Off-Highway Business Use You may be eligible to claim a credit or refund for the excise tax on fuel used in an off-highway business use. Tax forms 2007 Off-highway business use. Tax forms 2007   This is any use of fuel in a trade or business or in an income-producing activity. Tax forms 2007 The use must not be in a highway vehicle registered or required to be registered for use on public highways. Tax forms 2007 Off-highway business use generally does not include any use in a recreational motorboat. Tax forms 2007 Examples. Tax forms 2007   Off-highway business use includes the use of fuels in a trade or business in any of the following ways. Tax forms 2007 In stationary machines such as generators, compressors, power saws, and similar equipment; For cleaning ; and In forklift trucks, bulldozers, and earthmovers. Tax forms 2007   Off-highway nonbusiness (taxable) use of fuel includes: use in minibikes, snowmobiles, power lawn mowers, chain saws, and other yard equipment. Tax forms 2007 For more information, see Publication 510. Tax forms 2007 Fuels Used for Household Purposes or Other Than as a Fuel for Propulsion Engines You may be eligible to claim a credit or refund for the excise tax on undyed diesel fuel or kerosene used for home heating, lighting, and cooking. Tax forms 2007 This also applies to diesel fuel and kerosene used in a home generator to produce electricity for home use. Tax forms 2007 Home use of a fuel does not include use in a propulsion engine and it is not considered an off-highway business use. Tax forms 2007 How To Claim a Credit or Refund You may be able to claim a credit or refund of the excise tax on fuels you use for nontaxable uses. Tax forms 2007 The basic rules for claiming credits and refunds are listed in Table 14-2 . Tax forms 2007 Table 14-2. Tax forms 2007 Claiming a Credit or Refund of Excise Taxes This table gives the basic rules for claiming a credit or refund of excise taxes on fuels used for a nontaxable use. Tax forms 2007   Credit Refund Which form to use Form 4136, Credit for Federal Tax Paid on Fuels Form 8849, Claim for Refund of Excise Taxes, and Schedule 1 (Form 8849), Nontaxable Use of Fuels Type of form Annual Quarterly When to file With your income tax return By the last day of the quarter following the last quarter included in the claim Amount of tax Any amount $750 or more1 1You may carry over an amount less than $750 to the next quarter. Tax forms 2007 Keep at your principal place of business all records needed to enable the IRS to verify that you are the person entitled to claim a credit or refund and the amount you claimed. Tax forms 2007 You do not have to use any special form, but the records should establish the following information. Tax forms 2007 The total number of gallons bought and used during the period covered by your claim. Tax forms 2007 The dates of the purchases. Tax forms 2007 The names and addresses of suppliers and amounts bought from each during the period covered by your claim. Tax forms 2007 The nontaxable use for which you used the fuel. Tax forms 2007 The number of gallons used for each nontaxable use. Tax forms 2007 It is important that your records separately show the number of gallons used for each nontaxable use that qualifies as a claim. Tax forms 2007 For more information about recordkeeping, see Publication 583, Starting a Business and Keeping Records. Tax forms 2007 Credit or refund. Tax forms 2007   A credit is an amount that reduces the tax on your income tax return when you file it at the end of the year. Tax forms 2007 If you meet certain requirements, you may claim a refund during the year instead of waiting until you file your income tax return. Tax forms 2007 Credit only. Tax forms 2007   You can claim the following taxes only as a credit on your income tax return. Tax forms 2007 Tax on gasoline and aviation gasoline you used on a farm for farming purposes. Tax forms 2007 Tax on fuels (including undyed diesel fuel or undyed kerosene) you used for nontaxable uses if the total for the tax year is less than $750. Tax forms 2007 Tax on fuel you did not include in any claim for refund previously filed for any quarter of the tax year. Tax forms 2007 Claiming a Credit You make a claim for a fuel tax credit on Form 4136 and attach it to your income tax return. Tax forms 2007 Do not claim a credit for any excise tax for which you have filed a refund claim. Tax forms 2007 How to claim a credit. Tax forms 2007   How you claim a credit depends on whether you are an individual, partnership, corporation, S corporation, trust, or farmers' cooperative association. Tax forms 2007 Individuals. Tax forms 2007   You claim the credit on the “Credit for federal tax on fuels” line of your Form 1040. Tax forms 2007 If you would not otherwise have to file an income tax return, you must do so to get a fuel tax credit. Tax forms 2007 Partnership. Tax forms 2007   Partnerships (other than electing large partnerships) claim the credit by including a statement on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Tax forms 2007 , showing each partner's share of the number of gallons of each fuel sold or used for a nontaxable use, the type of use, and the applicable credit per gallon. Tax forms 2007 Each partner claims the credit on his or her income tax return for the partner's share of the fuel used by the partnership. Tax forms 2007 An electing large partnership can claim the credit on the “Other payments” line of Form 1065-B, U. Tax forms 2007 S. Tax forms 2007 Return of Income for Electing Large Partnerships. Tax forms 2007 Other entities. Tax forms 2007   Corporations, S corporations, farmers' cooperative associations, and trusts make the claim on the appropriate line of their income tax return. Tax forms 2007 When to claim a credit. Tax forms 2007   You can claim a fuel tax credit on your income tax return for the year you used the fuel. Tax forms 2007 You may be able to make a fuel tax claim on an amended income tax return for the year you used the fuel. Tax forms 2007 A claim for credit or refund of an overpayment must generally be filed within the later of: Three years from the date the original return was filed, or Two years from the date the tax was paid. Tax forms 2007 Claiming a Refund Generally, you may claim a refund of excise taxes on Form 8849. Tax forms 2007 Complete and attach to Form 8849 the appropriate Form 8849 schedule(s). Tax forms 2007 The instructions for Form 8849 and the separate instructions for each schedule explain the requirements for making a claim for refund. Tax forms 2007 If you file Form 720, you can use its Schedule C for your refund claims for the quarter. Tax forms 2007 See the Instructions for Form 720. Tax forms 2007 Do not claim a refund on Form 8849 for any amount for which you have filed or will file a claim on Form 720 or Form 4136. Tax forms 2007 You may file a claim for refund for any quarter of your tax year for which you can claim $750 or more. Tax forms 2007 This amount is the excise tax on all fuels used for a nontaxable use during that quarter or any prior quarter (for which no other claim has been filed) during the tax year. Tax forms 2007 If you cannot claim at least $750 at the end of a quarter, you carry the amount over to the next quarter of your tax year to determine if you can claim at least $750 for that quarter. Tax forms 2007 If you cannot claim at least $750 at the end of the fourth quarter of your tax year, you must claim a credit on your income tax return using Form 4136. Tax forms 2007 Only one claim can be filed for a quarter. Tax forms 2007 You cannot claim a refund for excise tax on gasoline and aviation gasoline used on a farm for farming purposes. Tax forms 2007 You must claim a credit on your income tax return for the tax. Tax forms 2007 How to file a quarterly claim. Tax forms 2007   File the claim for refund by filling out Schedule 1 (Form 8849) and attaching it to Form 8849. Tax forms 2007 Send it to the address shown in the instructions. Tax forms 2007 If you file Form 720, you can use its Schedule C for your refund claims. Tax forms 2007 See the Instructions for Form 720. Tax forms 2007 When to file a quarterly claim. Tax forms 2007   You must file a quarterly claim by the last day of the first quarter following the last quarter included in the claim. Tax forms 2007 If you do not file a timely refund claim for the fourth quarter of your tax year, you will have to claim a credit for that amount on your income tax return, as discussed earlier. Tax forms 2007    In most situations, the amount claimed as a credit or refund will be less than the amount deducted as fuel tax expense because the Leaking Underground Storage Tank (LUST) tax of $0. Tax forms 2007 001 per gallon is generally not subject to credit or refund. Tax forms 2007 Including the Credit or Refund in Income Include any credit or refund of excise taxes on fuels in your gross income if you claimed the total cost of the fuel (including the excise taxes) as an expense deduction that reduced your income tax liability. Tax forms 2007 Which year you include a credit or refund in gross income depends on whether you use the cash or an accrual method of accounting. Tax forms 2007 Cash method. Tax forms 2007   If you use the cash method and file a claim for refund, include the refund amount in gross income for the tax year in which you receive the refund. Tax forms 2007 If you claim a credit on your income tax return, include the credit amount in gross income for the tax year in which you file Form 4136. Tax forms 2007 If you file an amended return and claim a credit, include the credit amount in gross income for the tax year in which you receive the credit. Tax forms 2007 Example. Tax forms 2007 Sharon Brown, a farmer who uses the cash method, filed her 2012 Form 1040 on March 3, 2013. Tax forms 2007 On her Schedule F, she deducted the total cost of gasoline (including $110 of excise taxes) used on the farm for farming purposes. Tax forms 2007 Then, on Form 4136, she claimed the $110 as a credit. Tax forms 2007 Sharon reports the $110 as other income on line 8b of her 2013 Schedule F. Tax forms 2007 Accrual method. Tax forms 2007   If you use an accrual method, include the amount of credit or refund in gross income for the tax year in which you used the fuels. Tax forms 2007 It does not matter whether you filed for a quarterly refund or claimed the entire amount as a credit. Tax forms 2007 Example. Tax forms 2007 Patty Green, a farmer who uses the accrual method, files her 2012 Form 1040 on April 15, 2013. Tax forms 2007 On Schedule F, she deducts the total cost of gasoline (including $155 of excise taxes) she used on the farm for farming purposes during 2012. Tax forms 2007 On Form 4136, Patty claims the $155 as a credit. Tax forms 2007 She reports the $155 as other income on line 8b of her 2012 Schedule F. Tax forms 2007 Prev  Up  Next   Home   More Online Publications