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Turbotax Amended Return

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Turbotax Amended Return

Turbotax amended return 1. Turbotax amended return   Deducting Business Expenses Table of Contents What's New Introduction Topics - This chapter discusses: Useful Items - You may want to see: What Can I Deduct?Cost of Goods Sold Capital Expenses Capital versus Deductible Expenses Personal versus Business Expenses How Much Can I Deduct?Not-for-profit limits. Turbotax amended return At-risk limits. Turbotax amended return Passive activities. Turbotax amended return Net operating loss. Turbotax amended return When Can I Deduct an Expense?Economic performance. Turbotax amended return Not-for-Profit ActivitiesGross Income Limit on Deductions What's New Optional safe harbor method to determine the business use of a home deduction. Turbotax amended return  Beginning in 2013, you can use the optional safe harbor method to determine the deduction for the business use of your home. Turbotax amended return See Optional safe harbor method under Business use of your home , later. Turbotax amended return Introduction This chapter covers the general rules for deducting business expenses. Turbotax amended return Business expenses are the costs of carrying on a trade or business, and they are usually deductible if the business is operated to make a profit. Turbotax amended return Topics - This chapter discusses: What you can deduct How much you can deduct When you can deduct Not-for-profit activities Useful Items - You may want to see: Publication 334 Tax Guide for Small Business 463 Travel, Entertainment, Gift, and Car Expenses 525 Taxable and Nontaxable Income 529 Miscellaneous Deductions 536 Net Operating Losses (NOLs) for Individuals, Estates, and Trusts 538 Accounting Periods and Methods 542 Corporations 547 Casualties, Disasters, and Thefts 587 Business Use of Your Home 925 Passive Activity and At-Risk Rules 936 Home Mortgage Interest Deduction 946 How To Depreciate Property Form (and Instructions) Sch A (Form 1040) Itemized Deductions 5213 Election To Postpone Determination as To Whether the Presumption Applies That an Activity Is Engaged in for Profit See chapter 12 for information about getting publications and forms. Turbotax amended return What Can I Deduct? To be deductible, a business expense must be both ordinary and necessary. Turbotax amended return An ordinary expense is one that is common and accepted in your industry. Turbotax amended return A necessary expense is one that is helpful and appropriate for your trade or business. Turbotax amended return An expense does not have to be indispensable to be considered necessary. Turbotax amended return Even though an expense may be ordinary and necessary, you may not be allowed to deduct the expense in the year you paid or incurred it. Turbotax amended return In some cases you may not be allowed to deduct the expense at all. Turbotax amended return Therefore, it is important to distinguish usual business expenses from expenses that include the following. Turbotax amended return The expenses used to figure cost of goods sold, Capital expenses, and Personal expenses. Turbotax amended return Cost of Goods Sold If your business manufactures products or purchases them for resale, you generally must value inventory at the beginning and end of each tax year to determine your cost of goods sold. Turbotax amended return Some of your business expenses may be included in figuring cost of goods sold. Turbotax amended return Cost of goods sold is deducted from your gross receipts to figure your gross profit for the year. Turbotax amended return If you include an expense in the cost of goods sold, you cannot deduct it again as a business expense. Turbotax amended return The following are types of expenses that go into figuring cost of goods sold. Turbotax amended return The cost of products or raw materials, including freight. Turbotax amended return Storage. Turbotax amended return Direct labor (including contributions to pension or annuity plans) for workers who produce the products. Turbotax amended return Factory overhead. Turbotax amended return Under the uniform capitalization rules, you must capitalize the direct costs and part of the indirect costs for certain production or resale activities. Turbotax amended return Indirect costs include rent, interest, taxes, storage, purchasing, processing, repackaging, handling, and administrative costs. Turbotax amended return This rule does not apply to personal property you acquire for resale if your average annual gross receipts (or those of your predecessor) for the preceding 3 tax years are not more than $10 million. Turbotax amended return For more information, see the following sources. Turbotax amended return Cost of goods sold—chapter 6 of Publication 334. Turbotax amended return Inventories—Publication 538. Turbotax amended return Uniform capitalization rules—Publication 538 and section 263A of the Internal Revenue Code and the related regulations. Turbotax amended return Capital Expenses You must capitalize, rather than deduct, some costs. Turbotax amended return These costs are a part of your investment in your business and are called “capital expenses. Turbotax amended return ” Capital expenses are considered assets in your business. Turbotax amended return In general, you capitalize three types of costs. Turbotax amended return Business start-up costs (See Tip below). Turbotax amended return Business assets. Turbotax amended return Improvements. Turbotax amended return You can elect to deduct or amortize certain business start-up costs. Turbotax amended return See chapters 7 and 8. Turbotax amended return Cost recovery. Turbotax amended return   Although you generally cannot take a current deduction for a capital expense, you may be able to recover the amount you spend through depreciation, amortization, or depletion. Turbotax amended return These recovery methods allow you to deduct part of your cost each year. Turbotax amended return In this way, you are able to recover your capital expense. Turbotax amended return See Amortization (chapter 8) and Depletion (chapter 9) in this publication. Turbotax amended return A taxpayer can elect to deduct a portion of the costs of certain depreciable property as a section 179 deduction. Turbotax amended return A greater portion of these costs can be deducted if the property is qualified disaster assistance property. Turbotax amended return See Publication 946 for details. Turbotax amended return Going Into Business The costs of getting started in business, before you actually begin business operations, are capital expenses. Turbotax amended return These costs may include expenses for advertising, travel, or wages for training employees. Turbotax amended return If you go into business. Turbotax amended return   When you go into business, treat all costs you had to get your business started as capital expenses. Turbotax amended return   Usually you recover costs for a particular asset through depreciation. Turbotax amended return Generally, you cannot recover other costs until you sell the business or otherwise go out of business. Turbotax amended return However, you can choose to amortize certain costs for setting up your business. Turbotax amended return See Starting a Business in chapter 8 for more information on business start-up costs. Turbotax amended return If your attempt to go into business is unsuccessful. Turbotax amended return   If you are an individual and your attempt to go into business is not successful, the expenses you had in trying to establish yourself in business fall into two categories. Turbotax amended return The costs you had before making a decision to acquire or begin a specific business. Turbotax amended return These costs are personal and nondeductible. Turbotax amended return They include any costs incurred during a general search for, or preliminary investigation of, a business or investment possibility. Turbotax amended return The costs you had in your attempt to acquire or begin a specific business. Turbotax amended return These costs are capital expenses and you can deduct them as a capital loss. Turbotax amended return   If you are a corporation and your attempt to go into a new trade or business is not successful, you may be able to deduct all investigatory costs as a loss. Turbotax amended return   The costs of any assets acquired during your unsuccessful attempt to go into business are a part of your basis in the assets. Turbotax amended return You cannot take a deduction for these costs. Turbotax amended return You will recover the costs of these assets when you dispose of them. Turbotax amended return Business Assets There are many different kinds of business assets; for example, land, buildings, machinery, furniture, trucks, patents, and franchise rights. Turbotax amended return You must fully capitalize the cost of these assets, including freight and installation charges. Turbotax amended return Certain property you produce for use in your trade or business must be capitalized under the uniform capitalization rules. Turbotax amended return See Regulations section 1. Turbotax amended return 263A-2 for information on these rules. Turbotax amended return Improvements Improvements are generally major expenditures. Turbotax amended return Some examples are: new electric wiring, a new roof, a new floor, new plumbing, bricking up windows to strengthen a wall, and lighting improvements. Turbotax amended return The costs of making improvements to a business asset are capital expenses if the improvements add to the value of the asset, appreciably lengthen the time you can use it, or adapt it to a different use. Turbotax amended return Beginning in 2014, you must capitalize as improvements costs that are for the betterment of a unit of property, restore the unit of property, or adapt the unit of property to a new or different use. Turbotax amended return Temporary regulations allow you to capitalize costs meeting the above criteria for tax years beginning after 2011. Turbotax amended return However, you can currently deduct repairs that keep your property in a normal efficient operating condition as a business expense. Turbotax amended return Treat as repairs amounts paid to replace parts of a machine that only keep it in a normal operating condition. Turbotax amended return Restoration plan. Turbotax amended return   Capitalize the cost of reconditioning, improving, or altering your property as part of a general restoration plan to make it suitable for your business. Turbotax amended return This applies even if some of the work would by itself be classified as repairs. Turbotax amended return Capital versus Deductible Expenses To help you distinguish between capital and deductible expenses, different examples are given below. Turbotax amended return Motor vehicles. Turbotax amended return   You usually capitalize the cost of a motor vehicle you use in your business. Turbotax amended return You can recover its cost through annual deductions for depreciation. Turbotax amended return   There are dollar limits on the depreciation you can claim each year on passenger automobiles used in your business. Turbotax amended return See Publication 463. Turbotax amended return   Generally, repairs you make to your business vehicle are currently deductible. Turbotax amended return However, amounts you pay to recondition and overhaul a business vehicle are capital expenses and are recovered through depreciation. Turbotax amended return Roads and driveways. Turbotax amended return    The cost of building a private road on your business property and the cost of replacing a gravel driveway with a concrete one are capital expenses you may be able to depreciate. Turbotax amended return The cost of maintaining a private road on your business property is a deductible expense. Turbotax amended return Tools. Turbotax amended return   Unless the uniform capitalization rules apply, amounts spent for tools used in your business are deductible expenses if the tools have a life expectancy of less than 1 year or their cost is minor. Turbotax amended return Machinery parts. Turbotax amended return   Unless the uniform capitalization rules apply, the cost of replacing short-lived parts of a machine to keep it in good working condition, but not add to its life, is a deductible expense. Turbotax amended return Heating equipment. Turbotax amended return   The cost of changing from one heating system to another is a capital expense. Turbotax amended return Personal versus Business Expenses Generally, you cannot deduct personal, living, or family expenses. Turbotax amended return However, if you have an expense for something that is used partly for business and partly for personal purposes, divide the total cost between the business and personal parts. Turbotax amended return You can deduct the business part. Turbotax amended return For example, if you borrow money and use 70% of it for business and the other 30% for a family vacation, you generally can deduct 70% of the interest as a business expense. Turbotax amended return The remaining 30% is personal interest and generally is not deductible. Turbotax amended return See chapter 4 for information on deducting interest and the allocation rules. Turbotax amended return Business use of your home. Turbotax amended return   If you use part of your home for business, you may be able to deduct expenses for the business use of your home. Turbotax amended return These expenses may include mortgage interest, insurance, utilities, repairs, and depreciation. Turbotax amended return   To qualify to claim expenses for the business use of your home, you must meet both of the following tests. Turbotax amended return The business part of your home must be used exclusively and regularly for your trade or business. Turbotax amended return The business part of your home must be: Your principal place of business, or A place where you meet or deal with patients, clients, or customers in the normal course of your trade or business, or A separate structure (not attached to your home) used in connection with your trade or business. Turbotax amended return   You generally do not have to meet the exclusive use test for the part of your home that you regularly use either for the storage of inventory or product samples, or as a daycare facility. Turbotax amended return   Your home office qualifies as your principal place of business if you meet the following requirements. Turbotax amended return You use the office exclusively and regularly for administrative or management activities of your trade or business. Turbotax amended return You have no other fixed location where you conduct substantial administrative or management activities of your trade or business. Turbotax amended return   If you have more than one business location, determine your principal place of business based on the following factors. Turbotax amended return The relative importance of the activities performed at each location. Turbotax amended return If the relative importance factor does not determine your principal place of business, consider the time spent at each location. Turbotax amended return Optional safe harbor method. Turbotax amended return   Beginning in 2013, individual taxpayers can use the optional safe harbor method to determine the amount of deductible expenses attributable to certain business use of a residence during the tax year. Turbotax amended return This method is an alternative to the calculation, allocation, and substantiation of actual expenses. Turbotax amended return   The deduction under the optional method is limited to $1,500 per year based on $5 a square foot for up to 300 square feet. Turbotax amended return Under this method, you claim your allowable mortgage interest, real estate taxes, and casualty losses on the home as itemized deductions on Schedule A (Form 1040). Turbotax amended return You are not required to allocate these deductions between personal and business use, as is required under the regular method. Turbotax amended return If you use the optional method, you cannot depreciate the portion of your home used in a trade or business. Turbotax amended return   Business expenses unrelated to the home, such as advertising, supplies, and wages paid to employees, are still fully deductible. Turbotax amended return All of the requirements discussed earlier under Business use of your home still apply. Turbotax amended return   For more information on the deduction for business use of your home, including the optional safe harbor method, see Publication 587. Turbotax amended return    If you were entitled to deduct depreciation on the part of your home used for business, you cannot exclude the part of the gain from the sale of your home that equals any depreciation you deducted (or could have deducted) for periods after May 6, 1997. Turbotax amended return Business use of your car. Turbotax amended return   If you use your car exclusively in your business, you can deduct car expenses. Turbotax amended return If you use your car for both business and personal purposes, you must divide your expenses based on actual mileage. Turbotax amended return Generally, commuting expenses between your home and your business location, within the area of your tax home, are not deductible. Turbotax amended return   You can deduct actual car expenses, which include depreciation (or lease payments), gas and oil, tires, repairs, tune-ups, insurance, and registration fees. Turbotax amended return Or, instead of figuring the business part of these actual expenses, you may be able to use the standard mileage rate to figure your deduction. Turbotax amended return Beginning in 2013, the standard mileage rate is 56. Turbotax amended return 5 cents per mile. Turbotax amended return   If you are self-employed, you can also deduct the business part of interest on your car loan, state and local personal property tax on the car, parking fees, and tolls, whether or not you claim the standard mileage rate. Turbotax amended return   For more information on car expenses and the rules for using the standard mileage rate, see Publication 463. Turbotax amended return How Much Can I Deduct? Generally, you can deduct the full amount of a business expense if it meets the criteria of ordinary and necessary and it is not a capital expense. Turbotax amended return Recovery of amount deducted (tax benefit rule). Turbotax amended return   If you recover part of an expense in the same tax year in which you would have claimed a deduction, reduce your current year expense by the amount of the recovery. Turbotax amended return If you have a recovery in a later year, include the recovered amount in income in that year. Turbotax amended return However, if part of the deduction for the expense did not reduce your tax, you do not have to include that part of the recovered amount in income. Turbotax amended return   For more information on recoveries and the tax benefit rule, see Publication 525. Turbotax amended return Payments in kind. Turbotax amended return   If you provide services to pay a business expense, the amount you can deduct is limited to your out-of-pocket costs. Turbotax amended return You cannot deduct the cost of your own labor. Turbotax amended return   Similarly, if you pay a business expense in goods or other property, you can deduct only what the property costs you. Turbotax amended return If these costs are included in the cost of goods sold, do not deduct them again as a business expense. Turbotax amended return Limits on losses. Turbotax amended return   If your deductions for an investment or business activity are more than the income it brings in, you have a loss. Turbotax amended return There may be limits on how much of the loss you can deduct. Turbotax amended return Not-for-profit limits. Turbotax amended return   If you carry on your business activity without the intention of making a profit, you cannot use a loss from it to offset other income. Turbotax amended return See Not-for-Profit Activities , later. Turbotax amended return At-risk limits. Turbotax amended return   Generally, a deductible loss from a trade or business or other income-producing activity is limited to the investment you have “at risk” in the activity. Turbotax amended return You are at risk in any activity for the following. Turbotax amended return The money and adjusted basis of property you contribute to the activity. Turbotax amended return Amounts you borrow for use in the activity if: You are personally liable for repayment, or You pledge property (other than property used in the activity) as security for the loan. Turbotax amended return For more information, see Publication 925. Turbotax amended return Passive activities. Turbotax amended return   Generally, you are in a passive activity if you have a trade or business activity in which you do not materially participate, or a rental activity. Turbotax amended return In general, deductions for losses from passive activities only offset income from passive activities. Turbotax amended return You cannot use any excess deductions to offset other income. Turbotax amended return In addition, passive activity credits can only offset the tax on net passive income. Turbotax amended return Any excess loss or credits are carried over to later years. Turbotax amended return Suspended passive losses are fully deductible in the year you completely dispose of the activity. Turbotax amended return For more information, see Publication 925. Turbotax amended return Net operating loss. Turbotax amended return   If your deductions are more than your income for the year, you may have a “net operating loss. Turbotax amended return ” You can use a net operating loss to lower your taxes in other years. Turbotax amended return See Publication 536 for more information. Turbotax amended return   See Publication 542 for information about net operating losses of corporations. Turbotax amended return When Can I Deduct an Expense? When you can deduct an expense depends on your accounting method. Turbotax amended return An accounting method is a set of rules used to determine when and how income and expenses are reported. Turbotax amended return The two basic methods are the cash method and the accrual method. Turbotax amended return Whichever method you choose must clearly reflect income. Turbotax amended return For more information on accounting methods, see Publication 538. Turbotax amended return Cash method. Turbotax amended return   Under the cash method of accounting, you generally deduct business expenses in the tax year you pay them. Turbotax amended return Accrual method. Turbotax amended return   Under an accrual method of accounting, you generally deduct business expenses when both of the following apply. Turbotax amended return The all-events test has been met. Turbotax amended return The test is met when: All events have occurred that fix the fact of liability, and The liability can be determined with reasonable accuracy. Turbotax amended return Economic performance has occurred. Turbotax amended return Economic performance. Turbotax amended return   You generally cannot deduct or capitalize a business expense until economic performance occurs. Turbotax amended return If your expense is for property or services provided to you, or for your use of property, economic performance occurs as the property or services are provided, or the property is used. Turbotax amended return If your expense is for property or services you provide to others, economic performance occurs as you provide the property or services. Turbotax amended return Example. Turbotax amended return Your tax year is the calendar year. Turbotax amended return In December 2013, the Field Plumbing Company did some repair work at your place of business and sent you a bill for $600. Turbotax amended return You paid it by check in January 2014. Turbotax amended return If you use the accrual method of accounting, deduct the $600 on your tax return for 2013 because all events have occurred to “fix” the fact of liability (in this case the work was completed), the liability can be determined, and economic performance occurred in that year. Turbotax amended return If you use the cash method of accounting, deduct the expense on your 2014 return. Turbotax amended return Prepayment. Turbotax amended return   You generally cannot deduct expenses in advance, even if you pay them in advance. Turbotax amended return This rule applies to both the cash and accrual methods. Turbotax amended return It applies to prepaid interest, prepaid insurance premiums, and any other expense paid far enough in advance to, in effect, create an asset with a useful life extending substantially beyond the end of the current tax year. Turbotax amended return Example. Turbotax amended return In 2013, you sign a 10-year lease and immediately pay your rent for the first 3 years. Turbotax amended return Even though you paid the rent for 2013, 2014, and 2015, you can only deduct the rent for 2013 on your 2013 tax return. Turbotax amended return You can deduct the rent for 2014 and 2015 on your tax returns for those years. Turbotax amended return Contested liability. Turbotax amended return   Under the cash method, you can deduct a contested liability only in the year you pay the liability. Turbotax amended return Under the accrual method, you can deduct contested liabilities such as taxes (except foreign or U. Turbotax amended return S. Turbotax amended return possession income, war profits, and excess profits taxes) either in the tax year you pay the liability (or transfer money or other property to satisfy the obligation) or in the tax year you settle the contest. Turbotax amended return However, to take the deduction in the year of payment or transfer, you must meet certain conditions. Turbotax amended return See Regulations section 1. Turbotax amended return 461-2. Turbotax amended return Related person. Turbotax amended return   Under an accrual method of accounting, you generally deduct expenses when you incur them, even if you have not yet paid them. Turbotax amended return However, if you and the person you owe are related and that person uses the cash method of accounting, you must pay the expense before you can deduct it. Turbotax amended return Your deduction is allowed when the amount is includible in income by the related cash method payee. Turbotax amended return See Related Persons in Publication 538. Turbotax amended return Not-for-Profit Activities If you do not carry on your business or investment activity to make a profit, you cannot use a loss from the activity to offset other income. Turbotax amended return Activities you do as a hobby, or mainly for sport or recreation, are often not entered into for profit. Turbotax amended return The limit on not-for-profit losses applies to individuals, partnerships, estates, trusts, and S corporations. Turbotax amended return It does not apply to corporations other than S corporations. Turbotax amended return In determining whether you are carrying on an activity for profit, several factors are taken into account. Turbotax amended return No one factor alone is decisive. Turbotax amended return Among the factors to consider are whether: You carry on the activity in a businesslike manner, The time and effort you put into the activity indicate you intend to make it profitable, You depend on the income for your livelihood, Your losses are due to circumstances beyond your control (or are normal in the start-up phase of your type of business), You change your methods of operation in an attempt to improve profitability, You (or your advisors) have the knowledge needed to carry on the activity as a successful business, You were successful in making a profit in similar activities in the past, The activity makes a profit in some years, and You can expect to make a future profit from the appreciation of the assets used in the activity. Turbotax amended return Presumption of profit. Turbotax amended return   An activity is presumed carried on for profit if it produced a profit in at least 3 of the last 5 tax years, including the current year. Turbotax amended return Activities that consist primarily of breeding, training, showing, or racing horses are presumed carried on for profit if they produced a profit in at least 2 of the last 7 tax years, including the current year. Turbotax amended return The activity must be substantially the same for each year within this period. Turbotax amended return You have a profit when the gross income from an activity exceeds the deductions. Turbotax amended return   If a taxpayer dies before the end of the 5-year (or 7-year) period, the “test” period ends on the date of the taxpayer's death. Turbotax amended return   If your business or investment activity passes this 3- (or 2-) years-of-profit test, the IRS will presume it is carried on for profit. Turbotax amended return This means the limits discussed here will not apply. Turbotax amended return You can take all your business deductions from the activity, even for the years that you have a loss. Turbotax amended return You can rely on this presumption unless the IRS later shows it to be invalid. Turbotax amended return Using the presumption later. Turbotax amended return   If you are starting an activity and do not have 3 (or 2) years showing a profit, you can elect to have the presumption made after you have the 5 (or 7) years of experience allowed by the test. Turbotax amended return   You can elect to do this by filing Form 5213. Turbotax amended return Filing this form postpones any determination that your activity is not carried on for profit until 5 (or 7) years have passed since you started the activity. Turbotax amended return   The benefit gained by making this election is that the IRS will not immediately question whether your activity is engaged in for profit. Turbotax amended return Accordingly, it will not restrict your deductions. Turbotax amended return Rather, you will gain time to earn a profit in the required number of years. Turbotax amended return If you show 3 (or 2) years of profit at the end of this period, your deductions are not limited under these rules. Turbotax amended return If you do not have 3 (or 2) years of profit, the limit can be applied retroactively to any year with a loss in the 5-year (or 7-year) period. Turbotax amended return   Filing Form 5213 automatically extends the period of limitations on any year in the 5-year (or 7-year) period to 2 years after the due date of the return for the last year of the period. Turbotax amended return The period is extended only for deductions of the activity and any related deductions that might be affected. Turbotax amended return    You must file Form 5213 within 3 years after the due date of your return (determined without extensions) for the year in which you first carried on the activity, or, if earlier, within 60 days after receiving written notice from the Internal Revenue Service proposing to disallow deductions attributable to the activity. Turbotax amended return Gross Income Gross income from a not-for-profit activity includes the total of all gains from the sale, exchange, or other disposition of property, and all other gross receipts derived from the activity. Turbotax amended return Gross income from the activity also includes capital gains and rents received for the use of property which is held in connection with the activity. Turbotax amended return You can determine gross income from any not-for-profit activity by subtracting the cost of goods sold from your gross receipts. Turbotax amended return However, if you determine gross income by subtracting cost of goods sold from gross receipts, you must do so consistently, and in a manner that follows generally accepted methods of accounting. Turbotax amended return Limit on Deductions If your activity is not carried on for profit, take deductions in the following order and only to the extent stated in the three categories. Turbotax amended return If you are an individual, these deductions may be taken only if you itemize. Turbotax amended return These deductions may be taken on Schedule A (Form 1040). Turbotax amended return Category 1. Turbotax amended return   Deductions you can take for personal as well as for business activities are allowed in full. Turbotax amended return For individuals, all nonbusiness deductions, such as those for home mortgage interest, taxes, and casualty losses, belong in this category. Turbotax amended return Deduct them on the appropriate lines of Schedule A (Form 1040). Turbotax amended return For tax years beginning after December 31, 2008, you can deduct a casualty loss on property you own for personal use only to the extent it is more than $500 and exceeds 10% of your adjusted gross income (AGI). Turbotax amended return The 10% AGI limitation does not apply to net disaster losses resulting from federally declared disasters in 2008 and 2009, and individuals are allowed to claim the net disaster losses even if they do not itemize their deductions. Turbotax amended return The reduction amount returns to $100 for tax years beginning after December 31, 2009. Turbotax amended return See Publication 547 for more information on casualty losses. Turbotax amended return For the limits that apply to home mortgage interest, see Publication 936. Turbotax amended return Category 2. Turbotax amended return   Deductions that do not result in an adjustment to the basis of property are allowed next, but only to the extent your gross income from the activity is more than your deductions under the first category. Turbotax amended return Most business deductions, such as those for advertising, insurance premiums, interest, utilities, and wages, belong in this category. Turbotax amended return Category 3. Turbotax amended return   Business deductions that decrease the basis of property are allowed last, but only to the extent the gross income from the activity exceeds the deductions you take under the first two categories. Turbotax amended return Deductions for depreciation, amortization, and the part of a casualty loss an individual could not deduct in category (1) belong in this category. Turbotax amended return Where more than one asset is involved, allocate depreciation and these other deductions proportionally. Turbotax amended return    Individuals must claim the amounts in categories (2) and (3) as miscellaneous deductions on Schedule A (Form 1040). Turbotax amended return They are subject to the 2%-of-adjusted-gross-income limit. Turbotax amended return See Publication 529 for information on this limit. Turbotax amended return Example. Turbotax amended return Adriana is engaged in a not-for-profit activity. Turbotax amended return The income and expenses of the activity are as follows. Turbotax amended return Gross income $3,200 Subtract:     Real estate taxes $700   Home mortgage interest 900   Insurance 400   Utilities 700   Maintenance 200   Depreciation on an automobile 600   Depreciation on a machine 200 3,700 Loss $(500)   Adriana must limit her deductions to $3,200, the gross income she earned from the activity. Turbotax amended return The limit is reached in category (3), as follows. Turbotax amended return Limit on deduction $3,200 Category 1: Taxes and interest $1,600   Category 2: Insurance, utilities, and maintenance 1,300 2,900 Available for Category 3 $ 300   The $800 of depreciation is allocated between the automobile and machine as follows. Turbotax amended return $600 $800 x $300 = $225 depreciation for the automobile             $200 $800 x $300 = $75 depreciation for the machine The basis of each asset is reduced accordingly. Turbotax amended return Adriana includes the $3,200 of gross income on line 21 (other income) of Form 1040. Turbotax amended return The $1,600 for category (1) is deductible in full on the appropriate lines for taxes and interest on Schedule A (Form 1040). Turbotax amended return Adriana deducts the remaining $1,600 ($1,300 for category (2) and $300 for category (3)) as other miscellaneous deductions on Schedule A (Form 1040) subject to the 2%-of-adjusted-gross-income limit. Turbotax amended return Partnerships and S corporations. Turbotax amended return   If a partnership or S corporation carries on a not-for-profit activity, these limits apply at the partnership or S corporation level. Turbotax amended return They are reflected in the individual shareholder's or partner's distributive shares. Turbotax amended return More than one activity. Turbotax amended return   If you have several undertakings, each may be a separate activity or several undertakings may be combined. Turbotax amended return The following are the most significant facts and circumstances in making this determination. Turbotax amended return The degree of organizational and economic interrelationship of various undertakings. Turbotax amended return The business purpose that is (or might be) served by carrying on the various undertakings separately or together in a business or investment setting. Turbotax amended return The similarity of the undertakings. Turbotax amended return   The IRS will generally accept your characterization if it is supported by facts and circumstances. Turbotax amended return    If you are carrying on two or more different activities, keep the deductions and income from each one separate. Turbotax amended return Figure separately whether each is a not-for-profit activity. Turbotax amended return Then figure the limit on deductions and losses separately for each activity that is not for profit. 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Page Last Reviewed or Updated: 21-Mar-2013

The Turbotax Amended Return

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