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Turbo Tax Form 1040x

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Turbo Tax Form 1040x

Turbo tax form 1040x Part One -   The Income Tax Return The four chapters in this part provide basic information on the tax system. Turbo tax form 1040x They take you through the first steps of filling out a tax return—such as deciding what your filing status is, how many exemptions you can take, and what form to file. Turbo tax form 1040x They also discuss recordkeeping requirements, IRS e-file (electronic filing), certain penalties, and the two methods used to pay tax during the year: withholding and estimated tax. Turbo tax form 1040x Table of Contents 1. Turbo tax form 1040x   Filing InformationWhat's New Reminders Introduction Do I Have To File a Return?Individuals—In General Dependents Certain Children Under Age 19 or Full-Time Students Self-Employed Persons Aliens Who Should File Which Form Should I Use?Form 1040EZ Form 1040A Form 1040 Does My Return Have To Be on Paper?IRS e-file When Do I Have To File?Private delivery services. Turbo tax form 1040x Extensions of Time To File How Do I Prepare My Return?When Do I Report My Income and Expenses? Social Security Number (SSN) Presidential Election Campaign Fund Computations Attachments Third Party Designee Signatures Paid Preparer Refunds Amount You Owe Gift To Reduce Debt Held by the Public Name and Address Where Do I File? What Happens After I File?What Records Should I Keep? Why Keep Records? Kinds of Records to Keep Basic Records How Long to Keep Records Refund Information Interest on Refunds Change of Address What If I Made a Mistake?Amended Returns and Claims for Refund Penalties Identity Theft 2. Turbo tax form 1040x   Filing StatusWhat's New Introduction Useful Items - You may want to see: Marital StatusDivorced persons. Turbo tax form 1040x Divorce and remarriage. Turbo tax form 1040x Annulled marriages. Turbo tax form 1040x Head of household or qualifying widow(er) with dependent child. Turbo tax form 1040x Considered married. Turbo tax form 1040x Same-sex marriage. Turbo tax form 1040x Spouse died during the year. Turbo tax form 1040x Married persons living apart. Turbo tax form 1040x Single Married Filing JointlyFiling a Joint Return Married Filing SeparatelySpecial Rules Head of HouseholdConsidered Unmarried Keeping Up a Home Qualifying Person Qualifying Widow(er) With Dependent Child 3. Turbo tax form 1040x   Personal Exemptions and DependentsWhat's New Introduction Useful Items - You may want to see: ExemptionsPersonal Exemptions Exemptions for Dependents Qualifying Child Qualifying Relative Phaseout of Exemptions Social Security Numbers for DependentsBorn and died in 2013. Turbo tax form 1040x Taxpayer identification numbers for aliens. Turbo tax form 1040x Taxpayer identification numbers for adoptees. Turbo tax form 1040x 4. Turbo tax form 1040x   Tax Withholding and Estimated TaxWhat's New for 2014 Reminders Introduction Useful Items - You may want to see: Tax Withholding for 2014Salaries and Wages Tips Taxable Fringe Benefits Sick Pay Pensions and Annuities Gambling Winnings Unemployment Compensation Federal Payments Backup Withholding Estimated Tax for 2014Who Does Not Have To Pay Estimated Tax Who Must Pay Estimated Tax How To Figure Estimated Tax When To Pay Estimated Tax How To Figure Each Payment How To Pay Estimated Tax Credit for Withholding and Estimated Tax for 2013Withholding Estimated Tax Underpayment Penalty for 2013 Prev  Up  Next   Home   More Online Publications
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2010-2011 Priority Guidance Plan
The IRS announced the release of the 2010 - 2011 Priority Guidance Plan. Click here to see items of interest to the tax-exempt bond community.

2009-2010 Priority Guidance Plan
The IRS announced the release of the 2009 – 2010 Priority Guidance Plan. Click here to see items of interest to the tax-exempt bond community.

Internal Revenue Manual (IRM) Materials relating to Tax Exempt Bonds
The IRM contains the policies, procedural instructions and guidelines used by the Internal Revenue Service. The provided materials relate specifically to tax-exempt bonds.

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Page Last Reviewed or Updated: 22-Feb-2014

The Turbo Tax Form 1040x

Turbo tax form 1040x Accelerated Cost Recovery System (ACRS) Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: ACRS Defined What Can and Cannot Be Depreciated Under ACRSRecovery Property Nonrecovery Property How To Figure the DeductionUnadjusted Basis Classes of Recovery Property Recovery Periods Alternate ACRS Method (Modified Straight Line Method) ACRS Deduction in Short Tax Year DispositionsEarly dispositions of ACRS property other than 15-, 18-, or 19-year real property. Turbo tax form 1040x Dispositions — mass asset accounts. Turbo tax form 1040x Early dispositions — 15-year real property. Turbo tax form 1040x Early dispositions — 18- and 19-year real property. Turbo tax form 1040x Depreciation Recapture Topics - This chapter discusses: The definition of ACRS What can and cannot be depreciated under ACRS How to figure the deduction Dispositions Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets 551 Basis of Assets 583 Starting a Business and Keeping Records Form (and Instructions) 3115 Application for Change in Accounting Method 4562 Depreciation and Amortization The Accelerated Cost Recovery System (ACRS) applies to property first used before 1987. Turbo tax form 1040x It is the name given to tax rules for getting back (recovering) through depreciation deductions the cost of property used in a trade or business or to produce income. Turbo tax form 1040x These rules are mandatory and generally apply to tangible property placed in service after 1980 and before 1987. Turbo tax form 1040x If you placed property in service during this period, you must continue to figure your depreciation under ACRS. Turbo tax form 1040x If you used listed property placed in service after June 18, 1984, less than 50% for business in 1995, see Predominant Use Test in chapter 3. Turbo tax form 1040x Listed property includes cars, other means of transportation, and certain computers. Turbo tax form 1040x Any additions or improvements placed in service after 1986, including any components of a building (such as plumbing, wiring, storm windows, etc. Turbo tax form 1040x ), are depreciated using MACRS, discussed in chapter 3 of Publication 946. Turbo tax form 1040x It does not matter that the underlying property is depreciated under ACRS or one of the other methods. Turbo tax form 1040x ACRS Defined ACRS consists of accelerated depreciation methods and an alternate ACRS method that could have been elected. Turbo tax form 1040x The alternate ACRS method used a recovery percentage based on a modified straight line method. Turbo tax form 1040x The law prescribes fixed percentages to be uses for each class of property. Turbo tax form 1040x Property depreciable under ACRS is called recovery property. Turbo tax form 1040x The recovery class of property determines the recovery period. Turbo tax form 1040x Generally, the class life of property places it in a 3-year, 5-year, 10-year, 15-year, 18-year, or 19-year recovery class. Turbo tax form 1040x Under ACRS, the prescribed percentages are used to recover the unadjusted basis of recovery property. Turbo tax form 1040x To figure a depreciation deduction, you multiply the prescribed percentage for the recovery class by the unadjusted basis of the recovery property. Turbo tax form 1040x You must continue to figure your depreciation under ACRS for property placed in service after 1980 and before 1987. Turbo tax form 1040x For property you placed in service after 1986, you must use MACRS, discussed in chapter 3 of Publication 946. Turbo tax form 1040x What Can and Cannot Be Depreciated Under ACRS ACRS applies to most depreciable tangible property placed in service after 1980 and before 1987. Turbo tax form 1040x It includes new or used and real or personal property. Turbo tax form 1040x The property must be for use in a trade or business or for the production of income. Turbo tax form 1040x Property you acquired before 1981 or after 1986 is not ACRS recovery property. Turbo tax form 1040x For information on depreciating property acquired before 1981, see chapter 2. Turbo tax form 1040x For information on depreciating property acquired after 1986, see chapter 3 of Publication 946. Turbo tax form 1040x Recovery Property Recovery property under ACRS is tangible depreciable property placed in service after 1980 and before 1987. Turbo tax form 1040x It generally includes new or used property that you acquired after 1980 and before 1987 for use in your trade or business or for the production of income. Turbo tax form 1040x Nonrecovery Property You cannot use ACRS for property you placed in service before 1981 or after 1986. Turbo tax form 1040x Nonrecovery property also includes: Intangible property, Property you elected to exclude from ACRS that is properly depreciated under a method of depreciation that is not based on a term of years, Certain public utility property, and Certain property acquired and excluded from ACRS because of the antichurning rules. Turbo tax form 1040x Intangible property. Turbo tax form 1040x   Intangible property is not depreciated under ACRS. Turbo tax form 1040x Property depreciated under methods not expressed in a term of years. Turbo tax form 1040x   Certain property depreciated under a method not expressed in a term of years is not depreciated under ACRS. Turbo tax form 1040x This included any property: If you made an irrevocable election to exclude such property, and In the first year that you could have claimed depreciation, you properly used the unit-of-production method or any method of depreciation not expressed in a term of years (not including the retirement-replacement-betterment method). Turbo tax form 1040x Public utility property. Turbo tax form 1040x   Public utility property for which the taxpayer does not use a normalization method of accounting is excluded from ACRS and is subject to depreciation under a special rule. Turbo tax form 1040x Additions or improvements to ACRS property after 1986. Turbo tax form 1040x   Any additions or improvements placed in service after 1986, including any components of a building (plumbing, wiring, storm windows, etc. Turbo tax form 1040x ) are depreciated using MACRS, discussed in chapter 3 of Publication 946. Turbo tax form 1040x It does not matter that the underlying property is depreciated under ACRS or one of the other methods. Turbo tax form 1040x How To Figure the Deduction After you determine that your property can be depreciated under ACRS, you are ready to figure your deduction. Turbo tax form 1040x Because the conventions are built into the percentage table rates, you only need to know the following: The unadjusted basis of your recovery property, The classes of recovery property, The recovery periods, and Whether to use the prescribed percentages based on accelerated methods or percentages based on using the alternate ACRS method. Turbo tax form 1040x Unadjusted Basis To figure your ACRS deduction, you multiply the unadjusted basis in your recovery property by its applicable percentage for the year. Turbo tax form 1040x Unadjusted basis is the same amount you would use to figure gain on a sale, but it is figured without taking into account any depreciation taken in earlier years. Turbo tax form 1040x However, reduce your original basis by the amount of amortization taken on the property and by any section 179 deduction claimed as discussed in chapter 2 of Publication 946. Turbo tax form 1040x If you buy property, your unadjusted basis is usually its cost minus any amortized amount and minus any section 179 deduction elected. Turbo tax form 1040x If you acquire property in some other way, such as by inheriting it, getting it as a gift, or building it yourself, you figure your unadjusted basis under other rules. Turbo tax form 1040x See Publication 551. Turbo tax form 1040x Classes of Recovery Property All recovery property under ACRS is in one of the following classes. Turbo tax form 1040x The class for your property was determined when you began to depreciate it. Turbo tax form 1040x 3-Year Property 3-year property includes automobiles, light-duty trucks (actual unloaded weight less than 13,000 pounds), and tractor units for use over-the-road. Turbo tax form 1040x Race horses over 2 years old when placed in service are 3-year property. Turbo tax form 1040x Any other horses over 12 years old when you placed them in service are also included in the 3-year property class. Turbo tax form 1040x The ACRS percentages for 3-year recovery property are: Recovery Period Percentage 1st year 25% 2nd year 38% 3rd year 37% If you used the percentages above to depreciate your 3-year recovery property, your property, except for certain passenger automobiles, is fully depreciated. Turbo tax form 1040x You cannot claim depreciation for this property after 1988. Turbo tax form 1040x 5-Year Property 5-year property includes computers, copiers, and equipment, such as office furniture and fixtures. Turbo tax form 1040x It also includes single purpose agricultural or horticultural structures and petroleum storage facilities (other than buildings and their structural components). Turbo tax form 1040x The ACRS percentages for 5-year recovery property are: Recovery period Percentage 1st year 15% 2nd year 22% 3rd through 5th year 21% If you used the percentages above to depreciate your 5-year recovery property, it is fully depreciated. Turbo tax form 1040x You cannot claim depreciation for this property after 1990. Turbo tax form 1040x 10-Year Property 10-year property includes certain real property such as theme-park structures and certain public utility property. Turbo tax form 1040x Manufactured homes (including mobile homes) and railroad tank cars are also 10-year property. Turbo tax form 1040x You do not treat a building, and its structural components, as 10-year property by reason of a change in use after you placed the property in service. Turbo tax form 1040x For example, a building (15-year real property) that was placed in service in 1981 and was converted to a theme-park structure in 1986 remains 15-year real property. Turbo tax form 1040x The ACRS percentages for 10-year recovery property are: Recovery Period Percentage 1st year 8% 2nd year 14% 3rd year 12% 4th through 6th year 10% 7th through 10th year 9% If you used the percentages above, you cannot claim depreciation for this property after 1995. Turbo tax form 1040x Example. Turbo tax form 1040x On April 21, 1986, you bought and placed in service a new mobile home for $26,000 to be used as rental property. Turbo tax form 1040x You paid $10,000 cash and signed a note for $16,000 giving you an unadjusted basis of $26,000. Turbo tax form 1040x On June 8, 1986, you bought and placed in service a used mobile home for use as rental property at a total cost of $11,500. Turbo tax form 1040x The total unadjusted basis of your 10-year recovery property placed in service in 1986 was $37,500 ($26,000 + $11,500). Turbo tax form 1040x Your ACRS deduction was $3,000 (8% × $37,500). Turbo tax form 1040x In 1987, your ACRS deduction was $5,250 (14% × $37,500). Turbo tax form 1040x In 1988, your ACRS deduction was $4,500 (12% × $37,500). Turbo tax form 1040x In 1989, 1990, and 1991, your ACRS deduction was $3,750 (10% × $37,500). Turbo tax form 1040x In 1992, 1993, 1994, and 1995 your deduction for each year is $3,375 (9% × $37,500). Turbo tax form 1040x 15-Year Real Property 15-year real property is real property that is recovery property placed in service before March 16, 1984. Turbo tax form 1040x It includes all real property, such as buildings, other than that designated as 5-year or 10-year property. Turbo tax form 1040x Unlike the 3-, 5-, or 10-year classes of property, the percentages for 15-year real property depend on when you placed the property in service during your tax year. Turbo tax form 1040x You could group 15-year real property by month and year placed in service. Turbo tax form 1040x In Table 1, at the end of this publication in the Appendix, find the month in your tax year that you placed the property in service in your trade or business or for the production of income. Turbo tax form 1040x You use the percentages listed under that month for each year of the recovery period to determine your depreciation deduction each year. Turbo tax form 1040x Example. Turbo tax form 1040x On March 5, 1984, you placed an apartment building in service in your business. Turbo tax form 1040x It is 15-year real property. Turbo tax form 1040x After subtracting the value of the land, your unadjusted basis in the building is $250,000. Turbo tax form 1040x You use the calendar year as your tax year. Turbo tax form 1040x March is the third month of your tax year. Turbo tax form 1040x Your ACRS deduction for 1984 was $25,000 (10% × $250,000). Turbo tax form 1040x For 1985, the percentage for the third month of the second year of the recovery period is 11%. Turbo tax form 1040x Your deduction was $27,500 (11% × $250,000). Turbo tax form 1040x For the third, fourth, and fifth years of the recovery period (1986, 1987, and 1988), the percentages are 9%, 8%, and 7%. Turbo tax form 1040x For 1989 through 1992, the percentage for the third month is 6%. Turbo tax form 1040x Your deduction each year is $15,000 (6% × $250,000). Turbo tax form 1040x For 1993, 1994, and 1995, the percentage for the third month is 5%. Turbo tax form 1040x Your depreciation deduction is $12,500 (5% × $250,000) for 1993, 1994, and 1995. Turbo tax form 1040x Low-Income Housing Low-income housing that was assigned a 15-year recovery period under ACRS includes the following types of property: Federally assisted housing projects where the mortgage is insured under section 221(d)(3) or 236 of the National Housing Act, or housing financed or assisted by direct loan or tax abatement under similar provisions of state or local laws. Turbo tax form 1040x Low-income rental housing for which a depreciation deduction for rehabilitation expenditures is allowed. Turbo tax form 1040x Low-income rental housing held for occupancy by families or individuals eligible to receive subsidies under section 8 of the United States Housing Act of 1937, as amended, or under the provisions of state or local laws that authorize similar subsidies for low-income families. Turbo tax form 1040x Housing financed or assisted by direct loan or insured under Title V of the Housing Act of 1949. Turbo tax form 1040x The ACRS percentages for low-income housing real property, like the regular 15-year real property percentages, depend on when you placed the property in service. Turbo tax form 1040x Find the month in your tax year in Table 2 or 3 at the end of this publication in the Appendix that you first placed the property in service as rental housing. Turbo tax form 1040x Use the percentages listed under that month for each year of the recovery period. Turbo tax form 1040x Table 2 shows percentages for low-income housing placed in service before May 9, 1985. Turbo tax form 1040x Table 3 shows percentages for low-income housing placed in service after May 8, 1985, and before 1987. Turbo tax form 1040x Example. Turbo tax form 1040x In May 1986, you acquired and placed in service a house that qualified as low-income rental housing under item 3) of the above listing. Turbo tax form 1040x You use the calendar year as your tax year. Turbo tax form 1040x You use Table C–3 because the property was placed in service after May 8, 1985. Turbo tax form 1040x Your unadjusted basis for the property, not including the land, was $59,000. Turbo tax form 1040x Your deduction for 1986 through 2001 is shown in the following table. Turbo tax form 1040x Year Rate Deduction 1986 8. Turbo tax form 1040x 9% $5,251 1987 12. Turbo tax form 1040x 1% 7,139 1988 10. Turbo tax form 1040x 5% 6,195 1989 9. Turbo tax form 1040x 1% 5,369 1990 7. Turbo tax form 1040x 9% 4,661 1991 6. Turbo tax form 1040x 9% 4,071 1992 5. Turbo tax form 1040x 9% 3,481 1993 5. Turbo tax form 1040x 2% 3,068 1994 4. Turbo tax form 1040x 6% 2,714 1995 4. Turbo tax form 1040x 6% 2,714 1996 4. Turbo tax form 1040x 6% 2,714 1997 4. Turbo tax form 1040x 6% 2,714 1998 4. Turbo tax form 1040x 6% 2,714 1999 4. Turbo tax form 1040x 5% 2,655 2000 4. Turbo tax form 1040x 5% 2,655 2001 1. Turbo tax form 1040x 5% 885 18-Year Real Property 18-year real property is real property that is recovery property placed in service after March 15, 1984, and before May 9, 1985. Turbo tax form 1040x It includes real property, such as buildings, other than that designated as 5-year, 10-year, 15-year real property, or low-income housing. Turbo tax form 1040x The ACRS percentages for 18-year real property depend on when you placed the property in service in your trade or business or for the production of income during your tax year. Turbo tax form 1040x There are also tables for 18-year real property in the Appendix. Turbo tax form 1040x Table 4 shows the percentages for 18-year real property you placed in service after June 22, 1984, and before May 9, 1985. Turbo tax form 1040x Table 5 is for 18-year real property placed in service after March 15, 1984, and before June 23, 1984. Turbo tax form 1040x Find the month in your tax year that you placed the property in service in a trade or business or for the production of income. Turbo tax form 1040x Use the percentages listed under that month for each year of the recovery period. Turbo tax form 1040x Example. Turbo tax form 1040x On April 28, 1985, you bought and placed in service a rental house. Turbo tax form 1040x The house, not including the land, cost $95,000. Turbo tax form 1040x This is your unadjusted basis for the house. Turbo tax form 1040x You use the calendar year as your tax year. Turbo tax form 1040x Because the house was placed in service after June 22, 1984, and before May 9, 1985, it is 18-year real property. Turbo tax form 1040x You use Table 4 to figure your deduction for the house. Turbo tax form 1040x April is the fourth month of your tax year. Turbo tax form 1040x Your deduction for 1985 through 2003 is shown in the following table. Turbo tax form 1040x Year Rate Deduction 1985 7. Turbo tax form 1040x 0% $6,650 1986 9. Turbo tax form 1040x 0% 8,550 1987 8. Turbo tax form 1040x 0% 7,600 1988 7. Turbo tax form 1040x 0% 6,650 1989 7. Turbo tax form 1040x 0% 6,650 1990 6. Turbo tax form 1040x 0% 5,700 1991 5. Turbo tax form 1040x 0% 4,750 1992 5. Turbo tax form 1040x 0% 4,750 1993 5. Turbo tax form 1040x 0% 4,750 1994 5. Turbo tax form 1040x 0% 4,750 1995 5. Turbo tax form 1040x 0% 4,750 1996 5. Turbo tax form 1040x 0% 4,750 1997 5. Turbo tax form 1040x 0% 4,750 1998 4. Turbo tax form 1040x 0% 3,800 1999 4. Turbo tax form 1040x 0% 3,800 2000 4. Turbo tax form 1040x 0% 3,800 2001 4. Turbo tax form 1040x 0% 3,800 2002 4. Turbo tax form 1040x 0% 3,800 2003 1. Turbo tax form 1040x 0% 950 19-Year Real Property 19-year real property is real property that is recovery property placed in service after May 8, 1985, and before 1987. Turbo tax form 1040x It includes all real property, other than that designated as 5-year, 10-year, 15-year, or 18-year real property, or low-income housing. Turbo tax form 1040x The ACRS percentages for 19-year real property depend on when you placed the property in service in a trade or business or for the production of income during your tax year. Turbo tax form 1040x Table 6 shows the percentages for 19-year real property. Turbo tax form 1040x You find the month in your tax year that you placed the property in service. Turbo tax form 1040x You use the percentages listed under that month for each year of the recovery period. Turbo tax form 1040x Recovery Periods Each item of recovery property is assigned to a class of property. Turbo tax form 1040x The classes of recovery property establish the recovery periods over which the unadjusted basis of items in a class is recovered. Turbo tax form 1040x The classes of property are: 3-Year property 5-Year property 10-Year property 15-Year real property Low-income housing 18-Year real property 19-Year real property Alternate ACRS Method (Modified Straight Line Method) ACRS provides an alternate ACRS method that could be elected. Turbo tax form 1040x This alternate ACRS method uses a recovery percentage based on a modified straight line method. Turbo tax form 1040x This alternate ACRS method generally uses percentages other than those from the tables. Turbo tax form 1040x If you elected the alternate ACRS method, you determine the recovery period by using the following schedule. Turbo tax form 1040x This schedule is for other than 18- and 19-year real property and low-income housing: In the case of: You could have elected a recovery period of: 3-year property 3, 5, or 12 years 5-year property 5, 12, or 25 years 15-year real property 15, 35, or 45 years Percentages. Turbo tax form 1040x   The straight-line percentages for the alternate ACRS method are: Recovery Period Percentage 5 years 20. Turbo tax form 1040x 00% 10 years 10. Turbo tax form 1040x 00% 12 years 8. Turbo tax form 1040x 333% 15 years 6. Turbo tax form 1040x 667% 25 years 4. Turbo tax form 1040x 00% 35 years 2. Turbo tax form 1040x 857%   You apply the percentage to the unadjusted basis(defined earlier) of the property to figure your ACRS deduction. Turbo tax form 1040x There are tables for 18- and 19-year real property later in this publication in the Appendix. Turbo tax form 1040x For 15-year real property, see 15-year real property, later. Turbo tax form 1040x 3-, 5-, and 10-year property. Turbo tax form 1040x   If you elected to use an alternate recovery percentage, you have to use the same recovery percentage for all property in that class that you placed in service in that tax year. Turbo tax form 1040x This applies throughout the recovery period you selected. Turbo tax form 1040x Half-year convention. Turbo tax form 1040x   If you elected the alternate method, only a half-year of depreciation was deducted for the year you placed the property in service. Turbo tax form 1040x This applied regardless of when in the tax year you placed the property in service. Turbo tax form 1040x For each of the remaining years in the recovery period, you take a full year's deduction. Turbo tax form 1040x If you hold the property for the entire recovery period, a half-year of depreciation is allowable for the year following the end of the recovery period. Turbo tax form 1040x Example. Turbo tax form 1040x You operate a small upholstery business. Turbo tax form 1040x On March 19, 1986, you bought and placed in service a $13,000 light-duty panel truck to be used in your business and a $500 electric saw. Turbo tax form 1040x You elected to use the alternate ACRS method. Turbo tax form 1040x You did not elect to take a section 179 deduction. Turbo tax form 1040x You decided to recover the cost of the truck, which is 3-year recovery property, over 5 years. Turbo tax form 1040x The saw is 5-year property, but you decided to recover its cost over 12 years. Turbo tax form 1040x For 1986, your ACRS deduction reflected the half-year convention. Turbo tax form 1040x In the first year, you deducted half of the amount determined for a full year. Turbo tax form 1040x Your ACRS deduction for 1986 is as follows: Light-duty truck   5 years straight line = 20% 20% ÷ $13,000 = $2,600 Half-year convention -½ of $2,600= $1,300. Turbo tax form 1040x 00     Electric saw   12 years straight line = 8. Turbo tax form 1040x 333% 8. Turbo tax form 1040x 333% ÷ $500 = $41. Turbo tax form 1040x 67 Half-year convention -½ of $41. Turbo tax form 1040x 67= 20. Turbo tax form 1040x 84 Total ACRS deduction for 1986 $1,320. Turbo tax form 1040x 84       You take a full year of depreciation for both the truck and the saw for the years 1987 through 1990. Turbo tax form 1040x Your ACRS deduction for each of those years is as follows: Light-duty truck   5 years straight line = 20% 20% ÷ $13,000 = $2,600     Electric saw     12 years straight line = 8. Turbo tax form 1040x 333% 8. Turbo tax form 1040x 333% ÷ $500 = $41. Turbo tax form 1040x 67 Total annual ACRS deduction for 1987 through 1990 $2,641. Turbo tax form 1040x 67       In 1991, you take a half-year of depreciation for the truck and a full year of depreciation for the saw. Turbo tax form 1040x Your ACRS deduction for 1991 is as follows: Light-duty truck   5 years straight line = 20% 20% ÷ $13,000 = $2,600 Half-year convention -½ of $2,600= $1,300. Turbo tax form 1040x 00     Electric saw   12 years straight line = 8. Turbo tax form 1040x 333% 8. Turbo tax form 1040x 333% ÷ $500 = $41. Turbo tax form 1040x 67 Total ACRS deduction for 1991 $1,341. Turbo tax form 1040x 67       The truck is fully depreciated after 1991. Turbo tax form 1040x You take a full year of depreciation for the saw for the years 1992 through 1997. Turbo tax form 1040x Your ACRS deduction for each of those years is as follows: Electric saw     12 years straight line = 8. Turbo tax form 1040x 333% 8. Turbo tax form 1040x 333% ÷ $500 = $41. Turbo tax form 1040x 67 Total annual ACRS deduction for 1992 through 1997 $41. Turbo tax form 1040x 67       You take a half-year of depreciation for the saw for 1998. Turbo tax form 1040x Your ACRS deduction for 1998 is as follows: Electric saw   12 years straight line = 8. Turbo tax form 1040x 333% 8. Turbo tax form 1040x 333% ÷ $500 = $41. Turbo tax form 1040x 67 Half-year convention -½ of $41. Turbo tax form 1040x 67= 20. Turbo tax form 1040x 84 Total ACRS deduction for 1998 $20. Turbo tax form 1040x 84       The saw is fully depreciated after 1998. Turbo tax form 1040x 15-year real property. Turbo tax form 1040x   Under ACRS, you could also elect to use the alternate ACRS method for 15-year real property. Turbo tax form 1040x The alternate ACRS method allows you to depreciate your 15-year real property using the straight line ACRS method over the alternate recovery periods of 15, 35, or 45 years. Turbo tax form 1040x If you selected a 15-year recovery period, you use the percentage (6. Turbo tax form 1040x 667%) from the schedule above. Turbo tax form 1040x You prorate this percentage for the number of months the property was in service in the first year. Turbo tax form 1040x If you selected a 35- or 45-year recovery period, you use either Table 11 or 15. Turbo tax form 1040x Alternate periods for 18-year real property. Turbo tax form 1040x   For 18-year real property, the alternate recovery periods are 18, 35, or 45 years. Turbo tax form 1040x The percentages for 18-year real property under the alternate method are in Tables 7, 8, 10, 11, 14, and 15 in the Appendix. Turbo tax form 1040x There are two tables for each alternate recovery period. Turbo tax form 1040x One table shows the percentage for property placed in service after June 22, 1984. Turbo tax form 1040x The other table has the percentages for property placed in service after March 15, 1984, and before June 23, 1984. Turbo tax form 1040x Alternate periods for 19-year real property. Turbo tax form 1040x   For 19-year real property, the alternate recovery periods are 19, 35, or 45 years. Turbo tax form 1040x If you selected a 19-year recovery period, use Table 9 to determine your deduction. Turbo tax form 1040x If you select a 35- or 45-year recovery period, use either Table 13 or 14. Turbo tax form 1040x Example. Turbo tax form 1040x You placed in service an apartment building on August 3, 1986. Turbo tax form 1040x The building is 19-year real property. Turbo tax form 1040x The sales contract allocated $300,000 to the building and $100,000 to the land. Turbo tax form 1040x You use the calendar year as your tax year. Turbo tax form 1040x You chose the alternate ACRS method over a recovery period of 35 years. Turbo tax form 1040x For 1986, you figure your ACRS deduction usingTable 13. Turbo tax form 1040x August is the eighth month of your tax year. Turbo tax form 1040x The percentage from Table 13 for the eighth month is 1. Turbo tax form 1040x 1%. Turbo tax form 1040x Your deduction was $3,300 ($300,000 ÷ 1. Turbo tax form 1040x 1%). Turbo tax form 1040x The deduction rate from ACRS Table 13 for years 2 through 20 is 2. Turbo tax form 1040x 9% so that your deduction in 1987 through 2005 is $8,700 ($300,000 ÷ 2. Turbo tax form 1040x 9%). Turbo tax form 1040x Alternate periods for low-income housing. Turbo tax form 1040x   For low-income housing, the alternate recovery periods are 15, 35, or 45 years. Turbo tax form 1040x If you selected a 15-year period for this property, use 6. Turbo tax form 1040x 667% as the percentage. Turbo tax form 1040x If you selected a 35- or 45-year period, use either Table 11, 12, or 15. Turbo tax form 1040x Election. Turbo tax form 1040x   You had to make the election to use the alternate ACRS method by the return due date (including extensions) for the tax year you placed the property in service. Turbo tax form 1040x Revocation of election. Turbo tax form 1040x   Your election to use an alternate ACRS method, once made, can be changed only with the consent of the Commissioner. Turbo tax form 1040x The Commissioner grants consent only in extraordinary circumstances. Turbo tax form 1040x Any request for a revocation will be considered a request for a ruling. Turbo tax form 1040x ACRS Deduction in Short Tax Year For a tax year that is less than 12 months, the ACRS deduction is prorated on a 12-month basis. Turbo tax form 1040x Figure the amount of the ACRS deduction for a short tax year as follows: First, you figure the ACRS deduction for a full year. Turbo tax form 1040x You figure this by multiplying the unadjusted basis by the recovery percentage. Turbo tax form 1040x You then multiply the ACRS deduction determined for a full tax year by a fraction. Turbo tax form 1040x The numerator (top number) of the fraction is the number of months in the short tax year and the denominator (bottom number) is 12. Turbo tax form 1040x For example, a corporation placed in service in June 1986 an item of 3-year property with an unadjusted basis of $10,000. Turbo tax form 1040x The corporation files a tax return, because of a change in its accounting period, for the 6-month short tax year ending June 30, 1986. Turbo tax form 1040x The full year's ACRS deduction for this item is $2,500 ($10,000 ÷ 25%), the first year percentage from the 3-year table. Turbo tax form 1040x The ACRS deduction for the short tax year is $1,250 ($2,500 ÷ 6/12). Turbo tax form 1040x You use the full ACRS percentages during the remaining years of the recovery period. Turbo tax form 1040x For the first tax year after the recovery period, the unrecovered basis will be deductible. Turbo tax form 1040x Exception. Turbo tax form 1040x   For the tax year in which you placed 15-, 18-, or 19-year real property in service or in the tax year you dispose of it, you compute the ACRS deduction for the number of months that the property is in service during that tax year. Turbo tax form 1040x You compute the number of months using either a full month or mid-month convention. Turbo tax form 1040x This is true regardless of the number of months in the tax year and the recovery period and method used. Turbo tax form 1040x Dispositions A disposition is the permanent withdrawal of property from use in your trade or business or in the production of income. Turbo tax form 1040x You can make a withdrawal by sale, exchange, retirement, abandonment, or destruction. Turbo tax form 1040x You generally recognize gain or loss on the disposition of an asset by sale. Turbo tax form 1040x However, nonrecognition rules can allow you to postpone some gain. Turbo tax form 1040x See Publication 544. Turbo tax form 1040x If you physically abandon property, you can deduct as a loss the adjusted basis of the asset at the time of its abandonment. Turbo tax form 1040x Your intent must be to discard the asset so that you will not use it again or retrieve it for sale, exchange, or other disposition. Turbo tax form 1040x Early dispositions. Turbo tax form 1040x   The disposal of an asset before the end of its specified recovery period, is referred to as an early disposition. Turbo tax form 1040x When an early disposition occurs, the depreciation deduction in the year of disposition depends on the class of property involved. Turbo tax form 1040x Early dispositions of ACRS property other than 15-, 18-, or 19-year real property. Turbo tax form 1040x   Generally, you get no ACRS deduction for the tax year in which you dispose of or retire recovery property, except for 15-, 18-, and 19-year real property. Turbo tax form 1040x This means there is no depreciation deduction under ACRS in the year you dispose of or retire any of your 3-, 5-, or 10-year recovery property. Turbo tax form 1040x Dispositions — mass asset accounts. Turbo tax form 1040x   The law provides a special rule to avoid the calculation of gain on the disposition of assets from mass asset accounts. Turbo tax form 1040x A mass asset account includes items usually minor in value in relation to the group, numerous in quantity, impractical to separately identify, and not usually accounted for on a separate basis, but on a total dollar value. Turbo tax form 1040x Examples of mass assets include minor items of office, plant, and store furniture and fixtures. Turbo tax form 1040x   Under the special rule, if you elected to use a mass asset account, you recognize gain to the extent of the proceeds from the disposition of the asset. Turbo tax form 1040x You leave the unadjusted basis of the property in the account until recovered in future years. Turbo tax form 1040x If you did this, include the total proceeds realized from the disposition in income on the tax return for the year of disposition. Turbo tax form 1040x Early dispositions — 15-year real property. Turbo tax form 1040x   If you dispose of 15-year real property, you base your ACRS deduction for the year of disposition on the number of months in use. Turbo tax form 1040x You use a full-month convention. Turbo tax form 1040x For a disposition at any time during a particular month before the end of the recovery period, no deduction is allowed for the month of disposition. Turbo tax form 1040x This applies whether you use the regular ACRS method or elected the alternate ACRS method. Turbo tax form 1040x Example. Turbo tax form 1040x You purchased and placed in service a rental house on March 2, 1984, for $98,000 (not including the cost of land). Turbo tax form 1040x You file your return based on a calendar year. Turbo tax form 1040x Your rate from Table 1 for the third month is 10%. Turbo tax form 1040x Your ACRS deduction for 1984 was $9,800 ($98. Turbo tax form 1040x 000 ÷ 10%). Turbo tax form 1040x For 1985 through 1988, you figured your ACRS deductions using 11%, 9%, 8%, and 7% ÷ $98,000. Turbo tax form 1040x For 1989 through 1992, you figured your ACRS deductions using 6% for each year. Turbo tax form 1040x The deduction each year was $98,000 ÷ 6%. Turbo tax form 1040x For 1993 and 1994, the ACRS deduction is ($98,000 ÷ 5%) $4,900 for each year. Turbo tax form 1040x You sell the house on June 1, 1995. Turbo tax form 1040x You figure your ACRS deduction for 1995 for the full year and then prorate that amount for the months of use. Turbo tax form 1040x The full ACRS deduction for 1995 is $4,900 ($98,000 ÷ 5%). Turbo tax form 1040x You then prorate this amount to the 5 months in 1995 during which it was rented. Turbo tax form 1040x Your ACRS deduction for 1995 is $2,042 ($4,900 ÷ 5/12). Turbo tax form 1040x Early dispositions — 18- and 19-year real property. Turbo tax form 1040x   If you dispose of 18- or 19-year real property, you base your ACRS deduction for the year of disposition on the number of months in use. Turbo tax form 1040x For 18-year property placed in service before June 23, 1984, use a full-month convention on a disposition. Turbo tax form 1040x For 18-year property placed in service after June 22, 1984, and for 19-year property, determine the number of months in use by using the mid-month convention. Turbo tax form 1040x Under the mid-month convention,treat real property disposed of any time during a month as disposed of in the middle of that month. Turbo tax form 1040x Count the month of disposition as half a month of use. Turbo tax form 1040x Example. Turbo tax form 1040x You purchased and placed in service a rental house on July 2, 1984, for $100,000 (not including the cost of land). Turbo tax form 1040x You file your return based on a calendar year. Turbo tax form 1040x Your rate from Table 4 for the seventh month is 4%. Turbo tax form 1040x You figured your ACRS deduction for 1984 was $4,000 ($100,000 ÷ 4%). Turbo tax form 1040x In 1985 through 1994, your ACRS deductions were 9%, 8%, 8%, 7%, 6%, 6%, 5%, 5%, and 5% ÷ $100,000. Turbo tax form 1040x You sell the house on September 24, 1995. Turbo tax form 1040x Figure your ACRS deduction for 1995 for the months of use. Turbo tax form 1040x The full ACRS deduction for 1995 is $5,000 ($100,000 ÷ 5%). Turbo tax form 1040x Prorate this amount for the 8. Turbo tax form 1040x 5 months in 1995 that you held the property. Turbo tax form 1040x Under the mid-month convention, you count September as half a month. Turbo tax form 1040x Your ACRS deduction for 1995 is $3,542 ($5,000 ÷ 8. Turbo tax form 1040x 5/12). Turbo tax form 1040x Depreciation Recapture If you dispose of property depreciated under ACRS that is section 1245 recovery property, you will generally recognize gain or loss. Turbo tax form 1040x Gain recognized on a disposition is ordinary income to the extent of prior depreciation deductions taken. Turbo tax form 1040x This recapture rule applies to all personal property in the 3-year, 5-year, and 10-year classes. Turbo tax form 1040x You recapture gain on manufactured homes and theme park structures in the 10-year class as section 1245 property. Turbo tax form 1040x Section 1245 property generally includes all personal property. Turbo tax form 1040x See Section 1245 property in chapter 4 of Publication 544 for more information. Turbo tax form 1040x You treat dispositions of section 1250 real property on which you have a gain as section 1245 recovery property. Turbo tax form 1040x You recognize gain on this property as ordinary income to the extent of prior depreciation deductions taken. Turbo tax form 1040x Section 1250 property includes most real property. Turbo tax form 1040x See Section 1250 property in chapter 4 of Publication 544 for more information. Turbo tax form 1040x This rule applies to all section 1250 real property except the following property: Any 15-, 18-, or 19-year real property that is residential rental property. Turbo tax form 1040x Any 15-, 18-, or 19-year real property that you elected to depreciate using the alternate ACRS method. Turbo tax form 1040x Any 15-, 18-, or 19-year real property that is subsidized low-income housing. Turbo tax form 1040x For these recapture rules, you treat the section 179 deduction and 50% of the investment credit that reduced your basis as depreciation. Turbo tax form 1040x See Publication 544 for further discussion of dispositions of section 1245 and 1250 property. 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