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Taxact2012 16. Taxact2012   How To Get Tax Help Table of Contents Go online, use a smart phone, call or walk in to an office near you. Taxact2012 Whether it's help with a tax issue, preparing your tax return or picking up a free publication or form, get the help you need the way you want it. Taxact2012 Free help with your tax return. Taxact2012   Free help in preparing your return is available nationwide from IRS-certified volunteers. Taxact2012 The Volunteer Income Tax Assistance (VITA) program is designed to help low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers. Taxact2012 The Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. Taxact2012 Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Taxact2012 Some VITA and TCE sites provide taxpayers the opportunity to prepare their return with the assistance of an IRS-certified volunteer. Taxact2012 To find the nearest VITA or TCE site, visit IRS. Taxact2012 gov or call 1-800-906-9887. Taxact2012   As part of the TCE program, AARP offers the Tax-Aide counseling program. Taxact2012 To find the nearest AARP Tax-Aide site, visit AARP's website at www. Taxact2012 aarp. Taxact2012 org/money/taxaide or call 1-888-227-7669. Taxact2012   For more information on these programs, go to IRS. Taxact2012 gov and enter “VITA” in the search box. Taxact2012 Internet. Taxact2012 IRS. Taxact2012 gov and IRS2Go are ready when you are — every day, every night, 24 hours a day, 7 days a week. Taxact2012 Apply for an Employer Identification Number (EIN). Taxact2012 Go to IRS. Taxact2012 gov and enter Apply for an EIN in the search box. Taxact2012 Request an Electronic Filing PIN by going to IRS. Taxact2012 gov and entering Electronic Filing PIN in the search box. Taxact2012 Check the status of your 2013 refund with Where's My Refund? Go to IRS. Taxact2012 gov or the IRS2Go app, and click on Where's My Refund? You'll get a personalized refund date as soon as the IRS processes your tax return and approves your refund. Taxact2012 If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. Taxact2012 Checking the status of your amended return. Taxact2012 Go to IRS. Taxact2012 gov and enter Where's My Amended Return in the search box. Taxact2012 Download forms, instructions, and publications, including some accessible versions. Taxact2012 Order free transcripts of your tax returns or tax account using the Order a Transcript tool on IRS. Taxact2012 gov or IRS2Go. Taxact2012 Tax return and tax account transcripts are generally available for the current year and past three years. Taxact2012 Figure your income tax withholding with the IRS Withholding Calculator on IRS. Taxact2012 gov. Taxact2012 Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. Taxact2012 Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Taxact2012 gov. Taxact2012 Locate the nearest Taxpayer Assistance Center using the Office Locator tool on IRS. Taxact2012 gov or IRS2Go. Taxact2012 Stop by most business days for face-to-face tax help, no appointment necessary — just walk in. Taxact2012 An employee can explain IRS letters, request adjustments to your tax account or help you set up a payment plan. Taxact2012 Before you visit, check the Office Locator for the address, phone number, hours of operation and the services provided. Taxact2012 If you have an ongoing tax account problem or a special need, such as a disability, you can request an appointment. Taxact2012 Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. Taxact2012 Locate the nearest volunteer help site with the VITA Locator Tool on IRS. Taxact2012 gov. Taxact2012 Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. Taxact2012 The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. Taxact2012 Most VITA and TCE sites offer free electronic filing and some provide IRS-certified volunteers who can help prepare your tax return. Taxact2012 AARP offers the Tax-Aide counseling program as part of the TCE program. Taxact2012 Visit AARP's website to find the nearest Tax-Aide location. Taxact2012 Research your tax questions. Taxact2012 Search publications and instructions by topic or keyword. Taxact2012 Read the Internal Revenue Code, regulations, or other official guidance. Taxact2012 Read Internal Revenue Bulletins. Taxact2012 Sign up to receive local and national tax news by email. Taxact2012 Phone. Taxact2012 You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. Taxact2012 Download the free IRS2Go mobile app from the iTunes app store or from Google Play. Taxact2012 Use it to watch the IRS YouTube channel, get IRS news as soon as it's released to the public, order transcripts of your tax returns or tax account, check your refund status, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. Taxact2012 Call to locate the nearest volunteer help site, 1-800-906-9887. Taxact2012 Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. Taxact2012 The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. Taxact2012 Most VITA and TCE sites offer free electronic filing. Taxact2012 Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. Taxact2012 Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. Taxact2012 Call to check the status of your 2013 refund, 1-800-829-1954 or 1-800-829-4477. Taxact2012 The automated Where's My Refund? information is available 24 hours a day, 7 days a week. Taxact2012 If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. Taxact2012 Before you call, have your 2013 tax return handy so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Taxact2012 Where's My Refund? can give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. Taxact2012 Where's My Refund? includes information for the most recent return filed in the current year and does not include information about amended returns. Taxact2012 Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. Taxact2012 Call to order forms, instructions and publications, 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions and publications, and prior-year forms and instructions (limited to 5 years). Taxact2012 You should receive your order within 10 business days. Taxact2012 Call to order transcripts of your tax returns or tax account, 1-800-908-9946. Taxact2012 Follow the prompts to provide your Social Security Number or Individual Taxpayer Identification Number, date of birth, street address and ZIP code. Taxact2012 Call for TeleTax topics, 1-800-829-4477, to listen to pre-recorded messages covering various tax topics. Taxact2012 Call to ask tax questions, 1-800-829-1040. Taxact2012 Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. Taxact2012 The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. Taxact2012 These individuals can also contact the IRS through relay services such as the Federal Relay Service available at www. Taxact2012 gsa. Taxact2012 gov/fedrelay. Taxact2012 Walk-in. Taxact2012 You can find a selection of forms, publications and services — in-person, face-to-face. Taxact2012 Products. Taxact2012 You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Taxact2012 Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. Taxact2012 Services. Taxact2012 You can walk in to your local TAC most business days for personal, face-to-face tax help. Taxact2012 An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. Taxact2012 If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local TAC where you can talk with an IRS representative face-to-face. Taxact2012 No appointment is necessary—just walk in. Taxact2012 Before visiting, check www. Taxact2012 irs. Taxact2012 gov/localcontacts for hours of operation and services provided. Taxact2012 Mail. Taxact2012 You can send your order for forms, instructions, and publications to the address below. Taxact2012 You should receive a response within 10 business days after your request is received. Taxact2012  Internal Revenue Service 1201 N. Taxact2012 Mitsubishi Motorway Bloomington, IL 61705-6613 The Taxpayer Advocate Service Is Here to Help You. Taxact2012   The Taxpayer Advocate Service (TAS) is your voice at the IRS. Taxact2012 Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. Taxact2012 What can TAS do for you?   We can offer you free help with IRS problems that you can't resolve on your own. Taxact2012 We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. Taxact2012 You face (or your business is facing) an immediate threat of adverse action. Taxact2012 You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. Taxact2012   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. Taxact2012 Here's why we can help: TAS is an independent organization within the IRS. Taxact2012 Our advocates know how to work with the IRS. Taxact2012 Our services are free and tailored to meet your needs. Taxact2012 We have offices in every state, the District of Columbia, and Puerto Rico. Taxact2012 How can you reach us?   If you think TAS can help you, call your local advocate, whose number is in your local directory and at www. Taxact2012 irs. Taxact2012 gov/advocate, or call us toll-free at 1-877-777-4778. Taxact2012 How else does TAS help taxpayers?   TAS also works to resolve large-scale, systemic problems that affect many taxpayers. Taxact2012 If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. Taxact2012 irs. Taxact2012 gov/sams. Taxact2012 Low Income Taxpayer Clinics. Taxact2012   Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals, and tax collection disputes. Taxact2012 Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Taxact2012 Visit www. Taxact2012 TaxpayerAdvocate. Taxact2012 irs. Taxact2012 gov or see IRS Publication 4134, Low Income Taxpayer Clinic List. Taxact2012 Prev  Up  Next   Home   More Online Publications
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  • Fraudulent Mail Sneaks through the Cracks
    Foreign lottery promoters continue to target Americans with illegal lotteries by using new ways to avoid legal regulations. The latest scheme con artists are using is to send lottery letters in boxes shipped and labeled as cargo in anticipation of inspection by customs officials.
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    Better Business Bureau warns that a new scam is fraudulently using the organization's name in order to steal tens of thousands of dollars from victims who are led to believe they have won a lottery. BBB has been notified an individual was contacted over the phone by someone claiming they were with the Council of Better Business Bureaus (CBBB). The caller used the name Jacob Chasen and offered his phone number, however, it is not a BBB number. The caller indicated the individual had won a BBB lottery, but to receive the winnings, taxes and fees must be paid in advance.

The Taxact2012

Taxact2012 Depreciation Table of Contents Introduction Special Depreciation AllowanceQualified Property Election Not To Claim the Allowance Rules for Returns Filed Before June 1, 2002 Passenger Automobiles New York Liberty Zone BenefitsSpecial Liberty Zone Depreciation Allowance Increased Section 179 Deduction Liberty Zone Leasehold Improvement Property If you depreciate business property that you acquired and placed in service after September 10, 2001, new law contains provisions that may affect your depreciation deduction for that property. Taxact2012 Publication 946, How To Depreciate Property, contains information on depreciation. Taxact2012 However, Publication 946 does not contain the new provisions because it was printed before the law was enacted. Taxact2012 The new provisions are in the Supplement to Publication 946, which is reprinted below. Taxact2012 Supplement to Publication 946 How To Depreciate Property   Introduction After Publication 946 was printed, the Job Creation and Worker Assistance Act of 2002 was signed into law by the President. Taxact2012 The new law made several changes in the tax rules explained in the publication. Taxact2012 Some of the changes apply to property placed in service during 2001. Taxact2012 This supplemental publication describes those changes and explains what you should do if you are affected by them. Taxact2012 The situations and examples in Publication 946 do not reflect any of the changes made by the Job Creation and Worker Assistance Act of 2002. Taxact2012 The new law contains the following provisions. Taxact2012 30% depreciation deductions (special depreciation allowance and special New York Liberty Zone (Liberty Zone) depreciation allowance) for the year qualified property is placed in service after September 10, 2001. Taxact2012 An increased dollar limit on the section 179 deduction for qualified Liberty Zone property purchased after September 10, 2001. Taxact2012 A shorter recovery period for qualified Liberty Zone leasehold improvement property placed in service after September 10, 2001. Taxact2012 An increase in the maximum depreciation deduction for 2001 for a qualified passenger automobile placed in service after September 10, 2001. Taxact2012 If you believe you qualify for an increased deduction under any of these new rules, you must file the revised 2001 Form 4562 (dated March 2002) for 2001 calendar or fiscal years and 2000 fiscal years ending after September 10, 2001. Taxact2012 If you have already filed a tax return, this supplemental publication explains how to claim these benefits and how to elect not to claim the special depreciation allowance or special Liberty Zone depreciation allowance. Taxact2012 See Table 2 at the end of the supplement for an overview of the rules that apply if you filed your return before June 1, 2002. Taxact2012 Special Depreciation Allowance You can take a special depreciation allowance for qualified property you place in service after September 10, 2001. Taxact2012 The allowance is an additional deduction of 30% of the property's depreciable basis. Taxact2012 To figure the depreciable basis, you must first multiply the property's cost or other basis by the percentage of business/investment use and then reduce that amount by any section 179 deduction and certain other deductions and credits for the property. Taxact2012 See What Is the Basis for Depreciation? on page 23 in Publication 946 for more information on figuring depreciable basis. Taxact2012 The allowance is deductible for both regular tax and alternative minimum tax (AMT) purposes. Taxact2012 There is no AMT adjustment required for any depreciation figured on the remaining basis of the property. Taxact2012 In the year you claim the allowance (generally the year you place the property in service), you must reduce the depreciable basis of the property by the allowance before figuring your regular depreciation deduction. Taxact2012 Example 1. Taxact2012 On November 1, 2001, you bought and placed in service in your business qualified property that cost $100,000. Taxact2012 You did not elect to claim a section 179 deduction. Taxact2012 You can deduct 30% of the cost ($30,000) as a special depreciation allowance for 2001. Taxact2012 You use the remaining $70,000 of cost to figure your regular depreciation deduction for 2001 and later years. Taxact2012 Example 2. Taxact2012 The facts are the same as in Example 1, except that you choose to deduct $24,000 of the property's cost as a section 179 deduction. Taxact2012 You use the remaining $76,000 of cost to figure your special depreciation allowance of $22,800 ($76,000 × 30%). Taxact2012 You use the remaining $53,200 of cost to figure your regular depreciation deduction for 2001 and later years. Taxact2012 Qualified Property To qualify for the special depreciation allowance, your property must meet the following requirements. Taxact2012 It is new property of one of the following types. Taxact2012 Property depreciated under the modified accelerated cost recovery system (MACRS) with a recovery period of 20 years or less. Taxact2012 See Can You Use MACRS To Depreciate Your Property and Which Recovery Period Applies? on pages 7 and 23, respectively, in Publication 946. Taxact2012 Water utility property. Taxact2012 See 25-year property on page 22 in Publication 946. Taxact2012 Computer software that is not a section 197 intangible as described in Computer software on page 5 in Publication 946. Taxact2012 (The cost of some computer software is treated as part of the cost of hardware and is depreciated under MACRS. Taxact2012 ) Qualified leasehold improvement property (defined later). Taxact2012 It meets the following tests (explained later under Tests To Be Met). Taxact2012 Acquisition date test. Taxact2012 Placed in service date test. Taxact2012 Original use test. Taxact2012 It is not excepted property (explained later under Excepted Property). Taxact2012 Qualified leasehold improvement property. Taxact2012    Generally, this is any improvement to an interior part of a building that is nonresidential real property, provided all of the following requirements are met. Taxact2012 The improvement is made under or pursuant to a lease by the lessee (or any sublessee) or the lessor of that part of the building. Taxact2012 That part of the building is to be occupied exclusively by the lessee (or any sublessee) of that part. Taxact2012 The improvement is placed in service more than 3 years after the date the building was first placed in service. Taxact2012   However, a qualified leasehold improvement does not include any improvement for which the expenditure is attributable to any of the following. Taxact2012 The enlargement of the building. Taxact2012 Any elevator or escalator. Taxact2012 Any structural component benefiting a common area. Taxact2012 The internal structural framework of the building. Taxact2012   Generally, a binding commitment to enter into a lease is treated as a lease and the parties to the commitment are treated as the lessor and lessee. Taxact2012 However, a binding commitment between related persons is not treated as a lease. Taxact2012 Related persons. Taxact2012   For this purpose, the following are related persons. Taxact2012 Members of an affiliated group. Taxact2012 The persons listed in items (1) through (9) under Related persons on page 8 of Publication 946 (except that “80% or more” should be substituted for “more than 10%” each place it appears). Taxact2012 An executor and a beneficiary of the same estate. Taxact2012 Tests To Be Met To qualify for the special depreciation allowance, the property must meet all of the following tests. Taxact2012 Acquisition date test. Taxact2012    Generally, you must have acquired the property either: After September 10, 2001, and before September 11, 2004, but only if no written binding contract for the acquisition was in effect before September 11, 2001, or Pursuant to a written binding contract entered into after September 10, 2001, and before September 11, 2004. Taxact2012   Property you manufacture, construct, or produce for your own use meets this test if you began the manufacture, construction, or production of the property after September 10, 2001, and before September 11, 2004. Taxact2012 Placed in service date test. Taxact2012   Generally, the property must be placed in service for use in your trade or business or for the production of income after September 10, 2001, and before January 1, 2005. Taxact2012   If you sold property you placed in service after September 10, 2001, and you leased it back within 3 months after the property was originally placed in service, the property is treated as placed in service no earlier than the date it is used under the leaseback. Taxact2012 Original use test. Taxact2012   The original use of the property must have begun with you after September 10, 2001. Taxact2012 “Original use” means the first use to which the property is put, whether or not by you. Taxact2012 Additional capital expenditures you incurred after September 10, 2001, to recondition or rebuild your property meet the original use test. Taxact2012 Excepted Property The following property does not qualify for the special depreciation allowance. Taxact2012 Property used by any person before September 11, 2001. Taxact2012 Property required to be depreciated using ADS. Taxact2012 This includes listed property used 50% or less in a qualified business use. Taxact2012 Qualified New York Liberty Zone leasehold improvement property (defined next). Taxact2012 Qualified New York Liberty Zone leasehold improvement property. Taxact2012   This is any qualified leasehold improvement property (as defined earlier) if all of the following requirements are met. Taxact2012 The improvement is to a building located in the New York Liberty Zone (defined later under New York Liberty Zone Benefits). Taxact2012 The improvement is placed in service after September 10, 2001, and before January 1, 2007. Taxact2012 No written binding contract for the improvement was in effect before September 11, 2001. Taxact2012 Election Not To Claim the Allowance You can elect not to claim the special depreciation allowance for qualified property. Taxact2012 If you make this election for any property, it applies to all property in the same property class placed in service during the year. Taxact2012 To make this election, attach a statement to your return indicating you elect not to claim the allowance and the class of property for which you are making the election. Taxact2012 When to make election. Taxact2012   Generally, you must make the election on a timely filed tax return (including extensions) for the year in which you place the property in service. Taxact2012   However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the original return (not including extensions). Taxact2012 Attach the election statement to the amended return. Taxact2012 At the top of the election statement, write “Filed pursuant to section 301. Taxact2012 9100–2. Taxact2012 ” Revoking an election. Taxact2012   Once you elect not to deduct the special depreciation allowance for a class of property, you cannot revoke the election without IRS consent. Taxact2012 A request to revoke the election is subject to a user fee. Taxact2012 Rules for Returns Filed Before June 1, 2002 The following rules apply if you placed qualified property in service after September 10, 2001, and filed your return before June 1, 2002. Taxact2012 The rules apply to returns for the following years. Taxact2012 2000 fiscal years that end after September 10, 2001. Taxact2012 2001 calendar and fiscal years. Taxact2012 Claiming the allowance. Taxact2012   If you did not claim the allowance on your return and did not make the election not to claim the allowance, you can do either of the following to claim the allowance. Taxact2012 File an amended return by the due date (not including extensions) of your return for the year following the year the property was placed in service. Taxact2012 Write “Filed Pursuant to Rev. Taxact2012 Proc. Taxact2012 2002–33” at the top of the amended return. Taxact2012 File Form 3115, Application for Change in Accounting Method, with your return for the year following the year the property was placed in service. Taxact2012 Your return must be filed by the due date (including extensions). Taxact2012 Write “Automatic Change Filed Under Rev. Taxact2012 Proc. Taxact2012 2002–33” on the appropriate line of Form 3115. Taxact2012 You must also file a copy (with signature) of the completed Form 3115 with the IRS National Office no later than when you file the original with your return. Taxact2012 For more information about filing Form 3115, including the address to send it to, see Revenue Procedure 2002–9, Revenue Procedure 2002–19, and Revenue Procedure 2002–33. Taxact2012 Example 1. Taxact2012 You are an individual and you use the calendar year. Taxact2012 You placed qualified property in service for your business in December 2001. Taxact2012 You filed your 2001 income tax return before April 15, 2002. Taxact2012 You did not claim the special depreciation allowance for the property and did not make the election not to claim the allowance. Taxact2012 You can claim the special allowance by filing an amended 2001 return by April 15, 2003, with “Filed Pursuant to Rev. Taxact2012 Proc. Taxact2012 2002–33” at the top of the amended return. Taxact2012 You must file an amended return by April 15, 2003, even if you get an extension of time to file your 2002 tax return. Taxact2012 Example 2. Taxact2012 The facts concerning your 2001 return are the same as in Example 1. Taxact2012 In addition, you got an automatic 4-month extension of time (to August 15, 2003) to file your 2002 return. Taxact2012 You can claim the special allowance by filing a Form 3115 (with “Filed Pursuant to Rev. Taxact2012 Proc. Taxact2012 2002–33” on the appropriate line) with your 2002 return by August 15, 2003. Taxact2012 You must also file a copy of this Form 3115 with the IRS National Office no later than when you file your 2002 return. Taxact2012 Electing not to claim the allowance. Taxact2012   Generally, you have elected not to claim the special depreciation allowance for a class of property if you: Filed your return timely (including extensions) for the year you placed qualified property in service and indicated on a statement with the return that you are not claiming the allowance, or Filed your return timely and filed an amended return within 6 months of the due date of the original return (not including extensions) and indicated on a statement with the amended return that you are not claiming the allowance. Taxact2012 The statement must indicate that you are not deducting the special depreciation allowance and the class of property to which the election applies. Taxact2012 The statement can be either attached to or written on the return. Taxact2012 You can, for example, write “not deducting 30%” on Form 4562. Taxact2012 Deemed election. Taxact2012   If you have not followed either of the procedures described above to elect not to claim the allowance, you may still be treated as making the election. Taxact2012 You will be treated as making the election if you meet both of the following conditions. Taxact2012 You filed your return for the year you placed the property in service and claimed depreciation, but not the special allowance, for any class of property. Taxact2012 You do not file an amended return or a Form 3115 within the time prescribed for claiming the special allowance. Taxact2012 See Claiming the allowance, earlier. Taxact2012 Passenger Automobiles The limit on your depreciation deduction (including any section 179 deduction) for any passenger automobile that is qualified property (defined earlier) placed in service after September 10, 2001, and for which you claim the special depreciation allowance is increased. Taxact2012 Generally, the limit is increased from $3,060 to $7,660. Taxact2012 However, if the automobile is a qualified electric car, the limit is increased from $9,280 to $23,080 ($22,980 if placed in service in 2002). Taxact2012 Table 1 shows the maximum deduction amounts for 2001. Taxact2012 Table 1. Taxact2012 Maximum Deduction for 2001 Qualified Vehicle Placed in Service Before Sept. Taxact2012 11 Placed in Service After Sept. Taxact2012 10 Passenger automobile $3,060 $7,660 Electric car 9,280 23,080 1 1$22,980 if you place an electric car in service in 2002. Taxact2012 Election not to claim the allowance. Taxact2012   The increased maximum depreciation deduction does not apply if you elected not to claim the special depreciation allowance as explained earlier under Election Not To Claim the Allowance and Rules for Returns Filed Before June 1, 2002. Taxact2012 New York Liberty Zone Benefits Several benefits are available for property you place in service in the New York Liberty Zone (Liberty Zone). Taxact2012 They include a special depreciation allowance for the year you place the property in service, an increased section 179 deduction, and the classification of certain leasehold improvement property as 5-year property. Taxact2012 Area defined. Taxact2012   The New York Liberty Zone is the area located on or south of Canal Street, East Broadway (east of its intersection with Canal Street), or Grand Street (east of its intersection with East Broadway) in the Borough of Manhattan in the City of New York, New York. Taxact2012 Special Liberty Zone Depreciation Allowance You can take a special depreciation allowance for qualified Liberty Zone property you place in service after September 10, 2001. Taxact2012 The allowance is an additional deduction of 30% of the property's depreciable basis. Taxact2012 To figure the depreciable basis, you must first multiply the property's cost or other basis by the percentage of business/investment use and then reduce that amount by any section 179 deduction and certain other deductions and credits for the property. Taxact2012 See What Is the Basis for Depreciation? on page 23 in Publication 946 for more information on figuring depreciable basis. Taxact2012 The allowance is deductible for both regular tax and alternative minimum tax (AMT) purposes. Taxact2012 There is no AMT adjustment required for any depreciation figured on the remaining basis of the property. Taxact2012 In the year you claim the allowance (generally the year you place the property in service), you must reduce the depreciable basis of the property by the allowance before figuring your regular depreciation deduction. Taxact2012 You cannot claim the special Liberty Zone depreciation allowance for property eligible for the special depreciation allowance explained earlier in Qualified Property under Special Depreciation Allowance. Taxact2012 Qualified property is eligible for only one special depreciation allowance. Taxact2012 Example 1. Taxact2012 On November 1, 2001, you bought and placed in service in your business, which is in the Liberty Zone, qualified Liberty Zone property that cost $200,000. Taxact2012 You did not elect to claim a section 179 deduction. Taxact2012 You can deduct 30% of the cost ($60,000) as a special Liberty Zone depreciation allowance for 2001. Taxact2012 You use the remaining $140,000 of cost to figure your regular depreciation deduction for 2001 and later years. Taxact2012 Example 2. Taxact2012 The facts are the same as in Example 1, except that you choose to deduct $59,000 of the property's cost as a section 179 deduction. Taxact2012 (See Increased Section 179 Deduction, later, for information concerning how this section 179 deduction amount is figured). Taxact2012 You use the remaining $141,000 of cost to figure your special Liberty Zone depreciation allowance of $42,300 ($141,000 × 30%). Taxact2012 You use the remaining $98,700 of cost to figure your regular depreciation deduction for 2001 and later years. Taxact2012 Qualified Liberty Zone Property For a 2001 calendar or fiscal year and a 2000 fiscal year that ends after September 10, 2001, property qualifies for the special Liberty Zone depreciation allowance if it meets the following requirements. Taxact2012 It is one of the following types of property. Taxact2012 Used property depreciated under MACRS with a recovery period of 20 years or less. Taxact2012 See Can You Use MACRS To Depreciate Your Property and Which Recovery Period Applies? on pages 7 and 23, respectively, in Publication 946. Taxact2012 Used water utility property. Taxact2012 See 25-year property on page 22 in Publication 946. Taxact2012 Used computer software that is not a section 197 intangible as described in Computer software on page 5 in Publication 946. Taxact2012 (The cost of some computer software is treated as part of the cost of hardware and is depreciated under MACRS. Taxact2012 ) Certain nonresidential real property and residential rental property (defined later). Taxact2012 It meets the following tests (explained later under Tests to be met). Taxact2012 Acquisition date test. Taxact2012 Placed in service date test. Taxact2012 Substantial use test. Taxact2012 Original use test. Taxact2012 It is not excepted property (explained later under Excepted property). Taxact2012 Nonresidential real property and residential rental property. Taxact2012   This property is qualifying property only to the extent it rehabilitates real property damaged, or replaces real property destroyed or condemned, as a result of the terrorist attack of September 11, 2001. Taxact2012 Property is treated as replacing destroyed or condemned property if, as part of an integrated plan, such property replaces real property included in a continuous area that includes real property destroyed or condemned. Taxact2012   For these purposes, real property is considered destroyed (or condemned) only if an entire building or structure was destroyed (or condemned) as a result of the terrorist attack. Taxact2012 Otherwise, the property is considered damaged real property. Taxact2012 For example, if certain structural components of a building (such as walls, floors, or plumbing fixtures) are damaged or destroyed as a result of the terrorist attack, but the building is not destroyed (or condemned), then only costs related to replacing the damaged or destroyed structural components qualify for the special Liberty Zone depreciation allowance. Taxact2012 Tests to be met. Taxact2012   To qualify for the special Liberty Zone depreciation allowance, your property must meet all of the following tests. Taxact2012 Acquisition date test. Taxact2012   You must have acquired the property by purchase after September 10, 2001, and there must not have been a binding written contract for the acquisition in effect before September 11, 2001. Taxact2012   For information on the acquisition of property by purchase, see Property Acquired by Purchase on page 15 of Publication 946. Taxact2012   Property you manufacture, construct, or produce for your own use meets this test if you began the manufacture, construction, or production of the property after September 10, 2001. Taxact2012 Placed in service date test. Taxact2012   Generally, the property must be placed in service for use in your trade or business or for the production of income before January 1, 2007 (January 1, 2010, in the case of qualifying nonresidential real property and residential rental property). Taxact2012   If you sold property you placed in service after September 10, 2001, and you leased it back within 3 months after the property was originally placed in service, the property is treated as placed in service no earlier than the date it is used under the leaseback. Taxact2012 Substantial use test. Taxact2012   Substantially all use of the property must be in the Liberty Zone and in the active conduct of your trade or business in the Liberty Zone. Taxact2012 Original use test. Taxact2012   The original use of the property in the Liberty Zone must have begun with you after September 10, 2001. Taxact2012   Used property can be qualified Liberty Zone property if it has not previously been used within the Liberty Zone. Taxact2012 Also, additional capital expenditures you incurred after September 10, 2001, to recondition or rebuild your property meet the original use test if the original use of the property in the Liberty Zone began with you. Taxact2012 Excepted property. Taxact2012   The following property does not qualify for the special Liberty Zone depreciation allowance. Taxact2012 Property eligible for the special depreciation allowance explained earlier in Qualified Property under Special Depreciation Allowance. Taxact2012 Property required to be depreciated using ADS. Taxact2012 This includes listed property used 50% or less in a qualified business use. Taxact2012 Qualified New York Liberty Zone leasehold improvement property (defined earlier in Excepted Property under Special Depreciation Allowance). Taxact2012 Example. Taxact2012 In December 2001, you bought and placed in service in your business in the Liberty Zone the following property. Taxact2012 New office furniture with a MACRS recovery period of 7 years. Taxact2012 A used computer with a MACRS recovery period of 5 years. Taxact2012 The computer had not previously been used within the Liberty Zone. Taxact2012 Because the office furniture is new property, it qualifies for the special depreciation allowance, but not the special Liberty Zone depreciation allowance. Taxact2012 Because the computer is used property that had not previously been used in the Liberty Zone, it qualifies for the special Liberty Zone depreciation allowance, but not the special depreciation allowance. Taxact2012 Election Not To Claim the Liberty Zone Allowance You can elect not to claim the special Liberty Zone depreciation allowance for qualified property. Taxact2012 If you make this election for any property, it applies to all property in the same property class placed in service during the year. Taxact2012 To make this election, attach a statement to your return indicating you elect not to claim the allowance and the class of property for which you are making the election. Taxact2012 When to make the election. Taxact2012   Generally, you must make the election on a timely filed tax return (including extensions) for the year in which you place the property in service. Taxact2012   However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the original return (not including extensions). Taxact2012 Attach the election statement to the amended return. Taxact2012 At the top of the election statement, write “Filed pursuant to section 301. Taxact2012 9100–2. Taxact2012 ” Revoking an election. Taxact2012   Once you elect not to deduct the special Liberty Zone depreciation allowance for a class of property, you cannot revoke the election without IRS consent. Taxact2012 A request to revoke the election is subject to a user fee. Taxact2012 Returns filed before June 1, 2002. Taxact2012   The rules that apply to the special depreciation allowance discussed earlier in Rules for Returns Filed Before June 1, 2002 under Special Depreciation Allowance also apply to the special Liberty Zone depreciation allowance. Taxact2012 Increased Section 179 Deduction Under section 179 of the Internal Revenue Code, you can choose to recover all or part of the cost of certain qualifying property, up to a limit, by deducting it in the year you place the property in service. Taxact2012 For tax years beginning in 2000, that limit was $20,000. Taxact2012 For tax years beginning in 2001 and 2002, that limit is generally $24,000. Taxact2012 If the cost of qualifying section 179 property placed in service in a year is over $200,000, you must reduce the dollar limit (but not below zero) by the amount of the cost over $200,000. Taxact2012 Increased Dollar Limit The dollar limit on the section 179 deduction is increased for certain property placed in service in the Liberty Zone. Taxact2012 The increase is the smaller of the following amounts. Taxact2012 $35,000. Taxact2012 The cost of section 179 property that is qualified Liberty Zone property placed in service during the year. Taxact2012 If you use the revised 2001 Form 4562 (dated March 2002) for a tax year beginning in 2000, you must reduce the section 179 dollar limit to $20,000 before adding the additional amount for qualified property. Taxact2012 Qualified property. Taxact2012   To qualify for the increased section 179 deduction, your property must be section 179 property that is either: Qualified Liberty Zone property, or Property that would be qualified Liberty Zone property except that it is eligible for the special depreciation allowance. Taxact2012 Qualified Liberty Zone property is explained earlier in Qualified Liberty Zone Property under Special Liberty Zone Depreciation Allowance. Taxact2012 Property eligible for the special depreciation allowance is explained earlier in Qualified Property under Special Depreciation Allowance. Taxact2012 For information on the requirements that must be met for property to qualify for the section 179 deduction, see What Property Qualifies? on page 14 of Publication 946. Taxact2012 Example 1. Taxact2012 In 2002, you place in service in your business, which is in the Liberty Zone, qualified property (defined earlier) costing $25,000. Taxact2012 Because this cost is less than $35,000, the dollar limit on the section 179 deduction is increased by $25,000 to $49,000 ($24,000 + $25,000). Taxact2012 Example 2. Taxact2012 In 2002, you place in service in your business, which is in the Liberty Zone, qualified property (defined earlier) costing $75,000. Taxact2012 Because $35,000 is less than the cost of the property you place in service, the dollar limit on the section 179 deduction you can claim is increased by $35,000 to $59,000 ($24,000 + $35,000). Taxact2012 Reduced Dollar Limit Generally, you must reduce the dollar limit for a year by the cost of qualifying section 179 property placed in service in the year that is more than $200,000. Taxact2012 However, if the cost of your Liberty Zone property exceeds $200,000, you take into account only 50% (instead of 100%) of the cost of qualified property placed in service in a year. Taxact2012 Example. Taxact2012 In 2002, you place in service in your business, which is in the Liberty Zone, qualified property costing $460,000. Taxact2012 Your increased dollar limit is $59,000 ($35,000 + $24,000). Taxact2012 Because 50% of the cost of the property you place in service ($230,000) is $30,000 more than $200,000, you must reduce your $59,000 dollar limit to $29,000 ($59,000 - $30,000). Taxact2012 Recapture Rules Rules similar to those explained on page 20 of Publication 946 under When Must You Recapture the Deduction? apply with respect to any qualified property you stop using in the Liberty Zone. Taxact2012 Returns Filed Before June 1, 2002 If you filed a return before June 1, 2002, and did not deduct the increased section 179 amount for qualified property placed in service after September 10, 2001, you can deduct the increased amount by filing an amended return by the due date (not including extensions) of the return for the year after the year the property was placed in service. Taxact2012 This rule applies to returns for the following years. Taxact2012 2000 fiscal years that end after September 10, 2001. Taxact2012 2001 calendar and fiscal years. Taxact2012 On the amended return, write “Filed Pursuant to Rev. Taxact2012 Proc. Taxact2012 2002–33. Taxact2012 ” Liberty Zone Leasehold Improvement Property Qualified Liberty Zone leasehold improvement property (described earlier in Qualified Property under Special Depreciation Allowance) is 5-year property. Taxact2012 This means that it is depreciated over a recovery period of 5 years. Taxact2012 For information about recovery periods, see Which Recovery Period Applies? on page 23 of Publication 946. Taxact2012 The straight-line method must be used with respect to qualified Liberty Zone leasehold improvement property. Taxact2012 Under ADS, the recovery period for qualified Liberty Zone leasehold improvement property is 9 years. Taxact2012 Returns Filed Before June 1, 2002 If you filed either of the following returns before June 1, 2002, and did not depreciate qualified Liberty Zone leasehold improvement property placed in service during the tax year as 5-year property using the straight line method, you should file an amended return before you file your return for the year after the year the property was placed in service. Taxact2012 Your 2000 fiscal year return (for a 2000 fiscal year that ends after September 10, 2001). Taxact2012 Your 2001 calendar or fiscal year return. Taxact2012 On the amended return, write “Filed Pursuant to Rev. Taxact2012 Proc. Taxact2012 2002–33. Taxact2012 ” Table 2. Taxact2012 Rules for Returns Filed Before June 1, 2002 Note:This chart highlights the rules for returns affected by the Job Creation and Worker Assistance Act of 2002 that were filed before June 1, 2002, without accounting for any of the new benefits under the law. Taxact2012 See the text for definitions and examples. Taxact2012 Do not rely on this chart alone. Taxact2012 IF you want to. Taxact2012 . Taxact2012 . Taxact2012 THEN you. Taxact2012 . Taxact2012 . Taxact2012 BY. Taxact2012 . Taxact2012 . Taxact2012 claim the special depreciation allowance or special Liberty Zone depreciation allowance • must file an amended return • the due date (not including extensions) of your return for the year after the year the property was placed in service, or • must file Form 3115, Application for Change in Accounting Method, with your return for the year after the year the property was placed in service • the due date (including extensions) of your return for the year after the year the property was placed in service, and • must file a copy of your completed Form 3115 with the IRS National Office • the date you file the original Form 3115 with your return for the year after the year the property was placed in service. Taxact2012 elect not to claim the special depreciation allowance or the special Liberty Zone depreciation allowance 1 • must have filed your return timely for the year the property was placed in service, and   • must file an amended return stating you are not claiming the allowance • the date that is 6 months after the due date of the original return (not including extensions). Taxact2012 deduct the increased section 179 amount • must file an amended return • the due date (not including extensions) of your return for the year after the year the property was placed in service. Taxact2012 use a 5-year recovery period for depreciating qualified Liberty Zone leasehold improvement property • should file an amended return • the date you file your return for the year after the year the property was placed in service. Taxact2012 1See also Deemed election under Rules for Returns Filed Before June 1, 2002, earlier. Taxact2012 Prev  Up  Next   Home   More Online Publications