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Turbotax deluxe federal e file 2012 for pc download Publication 530 - Main Content Table of Contents What You Can and Cannot DeductHardest Hit Fund and Emergency Homeowners' Loan Programs Real Estate Taxes Sales Taxes Home Mortgage Interest Mortgage Insurance Premiums Mortgage Interest CreditFiguring the Credit BasisFiguring Your Basis Adjusted Basis Keeping Records How To Get Tax HelpLow Income Taxpayer Clinics What You Can and Cannot Deduct To deduct expenses of owning a home, you must file Form 1040, U. Turbotax deluxe federal e file 2012 for pc download S. Turbotax deluxe federal e file 2012 for pc download Individual Income Tax Return, and itemize your deductions on Schedule A (Form 1040). Turbotax deluxe federal e file 2012 for pc download If you itemize, you cannot take the standard deduction. Turbotax deluxe federal e file 2012 for pc download This section explains what expenses you can deduct as a homeowner. Turbotax deluxe federal e file 2012 for pc download It also points out expenses that you cannot deduct. Turbotax deluxe federal e file 2012 for pc download There are four primary discussions: real estate taxes, sales taxes, home mortgage interest, and mortgage insurance premiums. Turbotax deluxe federal e file 2012 for pc download Generally, your real estate taxes, home mortgage interest, and mortgage insurance premiums are included in your house payment. Turbotax deluxe federal e file 2012 for pc download Your house payment. Turbotax deluxe federal e file 2012 for pc download   If you took out a mortgage (loan) to finance the purchase of your home, you probably have to make monthly house payments. Turbotax deluxe federal e file 2012 for pc download Your house payment may include several costs of owning a home. Turbotax deluxe federal e file 2012 for pc download The only costs you can deduct are real estate taxes actually paid to the taxing authority, interest that qualifies as home mortgage interest, and mortgage insurance premiums. Turbotax deluxe federal e file 2012 for pc download These are discussed in more detail later. Turbotax deluxe federal e file 2012 for pc download   Some nondeductible expenses that may be included in your house payment include: Fire or homeowner's insurance premiums, and The amount applied to reduce the principal of the mortgage. Turbotax deluxe federal e file 2012 for pc download Minister's or military housing allowance. Turbotax deluxe federal e file 2012 for pc download   If you are a minister or a member of the uniformed services and receive a housing allowance that is not taxable, you still can deduct your real estate taxes and your home mortgage interest. Turbotax deluxe federal e file 2012 for pc download You do not have to reduce your deductions by your nontaxable allowance. Turbotax deluxe federal e file 2012 for pc download For more information see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers, and Publication 3, Armed Forces' Tax Guide. Turbotax deluxe federal e file 2012 for pc download Nondeductible payments. Turbotax deluxe federal e file 2012 for pc download   You cannot deduct any of the following items. Turbotax deluxe federal e file 2012 for pc download Insurance (other than mortgage insurance premiums), including fire and comprehensive coverage, and title insurance. Turbotax deluxe federal e file 2012 for pc download Wages you pay for domestic help. Turbotax deluxe federal e file 2012 for pc download Depreciation. Turbotax deluxe federal e file 2012 for pc download The cost of utilities, such as gas, electricity, or water. Turbotax deluxe federal e file 2012 for pc download Most settlement costs. Turbotax deluxe federal e file 2012 for pc download See Settlement or closing costs under Cost as Basis, later, for more information. Turbotax deluxe federal e file 2012 for pc download Forfeited deposits, down payments, or earnest money. Turbotax deluxe federal e file 2012 for pc download Hardest Hit Fund and Emergency Homeowners' Loan Programs You can use a special method to compute your deduction for mortgage interest and real estate taxes on your main home if you meet the following two conditions. Turbotax deluxe federal e file 2012 for pc download You received assistance under: A State Housing Finance Agency (State HFA) Hardest Hit Fund program in which program payments could be used to pay mortgage interest, or An Emergency Homeowners' Loan Program administered by the Department of Housing and Urban Development (HUD) or a state. Turbotax deluxe federal e file 2012 for pc download You meet the rules to deduct all of the mortgage interest on your loan and all of the real estate taxes on your main home. Turbotax deluxe federal e file 2012 for pc download If you meet these tests, then you can deduct all of the payments you actually made during the year to your mortgage servicer, the State HFA, or HUD on the home mortgage (including the amount shown on box 3 of Form 1098-MA, Mortgage Assistance Payments), but not more than the sum of the amounts shown on Form 1098, Mortgage Interest Statement, in box 1 (mortgage interest received), box 4 (mortgage insurance premiums) and box 5 (real property taxes). Turbotax deluxe federal e file 2012 for pc download However, you are not required to use this special method to compute your deduction for mortgage interest and real estate taxes on your main home. Turbotax deluxe federal e file 2012 for pc download Real Estate Taxes Most state and local governments charge an annual tax on the value of real property. Turbotax deluxe federal e file 2012 for pc download This is called a real estate tax. Turbotax deluxe federal e file 2012 for pc download You can deduct the tax if it is assessed uniformly at a like rate on all real property throughout the community. Turbotax deluxe federal e file 2012 for pc download The proceeds must be for general community or governmental purposes and not be a payment for a special privilege granted or service rendered to you. Turbotax deluxe federal e file 2012 for pc download Deductible Real Estate Taxes You can deduct real estate taxes imposed on you. Turbotax deluxe federal e file 2012 for pc download You must have paid them either at settlement or closing, or to a taxing authority (either directly or through an escrow account) during the year. Turbotax deluxe federal e file 2012 for pc download If you own a cooperative apartment, see Special Rules for Cooperatives , later. Turbotax deluxe federal e file 2012 for pc download Where to deduct real estate taxes. Turbotax deluxe federal e file 2012 for pc download   Enter the amount of your deductible real estate taxes on Schedule A (Form 1040), line 6. Turbotax deluxe federal e file 2012 for pc download Real estate taxes paid at settlement or closing. Turbotax deluxe federal e file 2012 for pc download   Real estate taxes are generally divided so that you and the seller each pay taxes for the part of the property tax year you owned the home. Turbotax deluxe federal e file 2012 for pc download Your share of these taxes is fully deductible if you itemize your deductions. Turbotax deluxe federal e file 2012 for pc download Division of real estate taxes. Turbotax deluxe federal e file 2012 for pc download   For federal income tax purposes, the seller is treated as paying the property taxes up to, but not including, the date of sale. Turbotax deluxe federal e file 2012 for pc download You (the buyer) are treated as paying the taxes beginning with the date of sale. Turbotax deluxe federal e file 2012 for pc download This applies regardless of the lien dates under local law. Turbotax deluxe federal e file 2012 for pc download Generally, this information is included on the settlement statement you get at closing. Turbotax deluxe federal e file 2012 for pc download   You and the seller each are considered to have paid your own share of the taxes, even if one or the other paid the entire amount. Turbotax deluxe federal e file 2012 for pc download You each can deduct your own share, if you itemize deductions, for the year the property is sold. Turbotax deluxe federal e file 2012 for pc download Example. 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Turbotax deluxe federal e file 2012 for pc download Divide line 2 by 365 . Turbotax deluxe federal e file 2012 for pc download 3342 4. Turbotax deluxe federal e file 2012 for pc download Multiply line 1 by line 3. Turbotax deluxe federal e file 2012 for pc download This is your deduction. Turbotax deluxe federal e file 2012 for pc download Enter it on Schedule A (Form 1040), line 6 $244   You can deduct $244 on your return for the year if you itemize your deductions. Turbotax deluxe federal e file 2012 for pc download You are considered to have paid this amount and can deduct it on your return even if, under the contract, you did not have to reimburse the seller. Turbotax deluxe federal e file 2012 for pc download Delinquent taxes. Turbotax deluxe federal e file 2012 for pc download   Delinquent taxes are unpaid taxes that were imposed on the seller for an earlier tax year. Turbotax deluxe federal e file 2012 for pc download If you agree to pay delinquent taxes when you buy your home, you cannot deduct them. Turbotax deluxe federal e file 2012 for pc download You treat them as part of the cost of your home. Turbotax deluxe federal e file 2012 for pc download See Real estate taxes , later, under Basis. Turbotax deluxe federal e file 2012 for pc download Escrow accounts. Turbotax deluxe federal e file 2012 for pc download   Many monthly house payments include an amount placed in escrow (put in the care of a third party) for real estate taxes. Turbotax deluxe federal e file 2012 for pc download You may not be able to deduct the total you pay into the escrow account. Turbotax deluxe federal e file 2012 for pc download You can deduct only the real estate taxes that the lender actually paid from escrow to the taxing authority. Turbotax deluxe federal e file 2012 for pc download Your real estate tax bill will show this amount. Turbotax deluxe federal e file 2012 for pc download Refund or rebate of real estate taxes. Turbotax deluxe federal e file 2012 for pc download   If you receive a refund or rebate of real estate taxes this year for amounts you paid this year, you must reduce your real estate tax deduction by the amount refunded to you. Turbotax deluxe federal e file 2012 for pc download If the refund or rebate was for real estate taxes paid for a prior year, you may have to include some or all of the refund in your income. Turbotax deluxe federal e file 2012 for pc download For more information, see Recoveries in Publication 525, Taxable and Nontaxable Income. Turbotax deluxe federal e file 2012 for pc download Items You Cannot Deduct as Real Estate Taxes The following items are not deductible as real estate taxes. Turbotax deluxe federal e file 2012 for pc download Charges for services. Turbotax deluxe federal e file 2012 for pc download   An itemized charge for services to specific property or people is not a tax, even if the charge is paid to the taxing authority. Turbotax deluxe federal e file 2012 for pc download You cannot deduct the charge as a real estate tax if it is: A unit fee for the delivery of a service (such as a $5 fee charged for every 1,000 gallons of water you use), A periodic charge for a residential service (such as a $20 per month or $240 annual fee charged for trash collection), or A flat fee charged for a single service provided by your local government (such as a $30 charge for mowing your lawn because it had grown higher than permitted under a local ordinance). Turbotax deluxe federal e file 2012 for pc download    You must look at your real estate tax bill to decide if any nondeductible itemized charges, such as those listed above, are included in the bill. Turbotax deluxe federal e file 2012 for pc download If your taxing authority (or lender) does not furnish you a copy of your real estate tax bill, ask for it. Turbotax deluxe federal e file 2012 for pc download Contact the taxing authority if you need additional information about a specific charge on your real estate tax bill. Turbotax deluxe federal e file 2012 for pc download Assessments for local benefits. Turbotax deluxe federal e file 2012 for pc download   You cannot deduct amounts you pay for local benefits that tend to increase the value of your property. Turbotax deluxe federal e file 2012 for pc download Local benefits include the construction of streets, sidewalks, or water and sewer systems. Turbotax deluxe federal e file 2012 for pc download You must add these amounts to the basis of your property. Turbotax deluxe federal e file 2012 for pc download   You can, however, deduct assessments (or taxes) for local benefits if they are for maintenance, repair, or interest charges related to those benefits. Turbotax deluxe federal e file 2012 for pc download An example is a charge to repair an existing sidewalk and any interest included in that charge. Turbotax deluxe federal e file 2012 for pc download   If only a part of the assessment is for maintenance, repair, or interest charges, you must be able to show the amount of that part to claim the deduction. Turbotax deluxe federal e file 2012 for pc download If you cannot show what part of the assessment is for maintenance, repair, or interest charges, you cannot deduct any of it. Turbotax deluxe federal e file 2012 for pc download   An assessment for a local benefit may be listed as an item in your real estate tax bill. Turbotax deluxe federal e file 2012 for pc download If so, use the rules in this section to find how much of it, if any, you can deduct. Turbotax deluxe federal e file 2012 for pc download Transfer taxes (or stamp taxes). Turbotax deluxe federal e file 2012 for pc download   You cannot deduct transfer taxes and similar taxes and charges on the sale of a personal home. Turbotax deluxe federal e file 2012 for pc download If you are the buyer and you pay them, include them in the cost basis of the property. Turbotax deluxe federal e file 2012 for pc download If you are the seller and you pay them, they are expenses of the sale and reduce the amount realized on the sale. Turbotax deluxe federal e file 2012 for pc download Homeowners association assessments. Turbotax deluxe federal e file 2012 for pc download   You cannot deduct these assessments because the homeowners association, rather than a state or local government, imposes them. Turbotax deluxe federal e file 2012 for pc download Special Rules for Cooperatives If you own a cooperative apartment, some special rules apply to you, though you generally receive the same tax treatment as other homeowners. Turbotax deluxe federal e file 2012 for pc download As an owner of a cooperative apartment, you own shares of stock in a corporation that owns or leases housing facilities. Turbotax deluxe federal e file 2012 for pc download You can deduct your share of the corporation's deductible real estate taxes if the cooperative housing corporation meets the following conditions: The corporation has only one class of stock outstanding, Each stockholder, solely because of ownership of the stock, can live in a house, apartment, or house trailer owned or leased by the corporation, No stockholder can receive any distribution out of capital, except on a partial or complete liquidation of the corporation, and At least one of the following: At least 80% of the corporation's gross income for the tax year was paid by the tenant-stockholders. Turbotax deluxe federal e file 2012 for pc download For this purpose, gross income means all income received during the entire tax year, including any received before the corporation changed to cooperative ownership. Turbotax deluxe federal e file 2012 for pc download At least 80% of the total square footage of the corporation's property must be available for use by the tenant-stockholders during the entire tax year. Turbotax deluxe federal e file 2012 for pc download At least 90% of the expenditures paid or incurred by the corporation were used for the acquisition, construction, management, maintenance, or care of the property for the benefit of the tenant-shareholders during the entire tax year. Turbotax deluxe federal e file 2012 for pc download Tenant-stockholders. Turbotax deluxe federal e file 2012 for pc download   A tenant-stockholder can be any entity (such as a corporation, trust, estate, partnership, or association) as well as an individual. Turbotax deluxe federal e file 2012 for pc download The tenant-stockholder does not have to live in any of the cooperative's dwelling units. Turbotax deluxe federal e file 2012 for pc download The units that the tenant-stockholder has the right to occupy can be rented to others. Turbotax deluxe federal e file 2012 for pc download Deductible taxes. Turbotax deluxe federal e file 2012 for pc download   You figure your share of real estate taxes in the following way. Turbotax deluxe federal e file 2012 for pc download Divide the number of your shares of stock by the total number of shares outstanding, including any shares held by the corporation. Turbotax deluxe federal e file 2012 for pc download Multiply the corporation's deductible real estate taxes by the number you figured in (1). Turbotax deluxe federal e file 2012 for pc download This is your share of the real estate taxes. Turbotax deluxe federal e file 2012 for pc download   Generally, the corporation will tell you your share of its real estate tax. Turbotax deluxe federal e file 2012 for pc download This is the amount you can deduct if it reasonably reflects the cost of real estate taxes for your dwelling unit. Turbotax deluxe federal e file 2012 for pc download Refund of real estate taxes. Turbotax deluxe federal e file 2012 for pc download   If the corporation receives a refund of real estate taxes it paid in an earlier year, it must reduce the amount of real estate taxes paid this year when it allocates the tax expense to you. Turbotax deluxe federal e file 2012 for pc download Your deduction for real estate taxes the corporation paid this year is reduced by your share of the refund the corporation received. Turbotax deluxe federal e file 2012 for pc download Sales Taxes Generally, you can elect to deduct state and local general sales taxes instead of state and local income taxes as an itemized deduction on Schedule A (Form 1040). 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Turbotax deluxe federal e file 2012 for pc download They then make monthly payments to either the mortgage holder or someone collecting the payments for the mortgage holder. Turbotax deluxe federal e file 2012 for pc download Usually, you can deduct the entire part of your payment that is for mortgage interest, if you itemize your deductions on Schedule A (Form 1040). Turbotax deluxe federal e file 2012 for pc download However, your deduction may be limited if: Your total mortgage balance is more than $1 million ($500,000 if married filing separately), or You took out a mortgage for reasons other than to buy, build, or improve your home. Turbotax deluxe federal e file 2012 for pc download If either of these situations applies to you, see Publication 936 for more information. Turbotax deluxe federal e file 2012 for pc download Also see Publication 936 if you later refinance your mortgage or buy a second home. Turbotax deluxe federal e file 2012 for pc download Refund of home mortgage interest. Turbotax deluxe federal e file 2012 for pc download   If you receive a refund of home mortgage interest that you deducted in an earlier year and that reduced your tax, you generally must include the refund in income in the year you receive it. Turbotax deluxe federal e file 2012 for pc download For more information, see Recoveries in Publication 525. Turbotax deluxe federal e file 2012 for pc download The amount of the refund will usually be shown on the mortgage interest statement you receive from your mortgage lender. Turbotax deluxe federal e file 2012 for pc download See Mortgage Interest Statement , later. Turbotax deluxe federal e file 2012 for pc download Deductible Mortgage Interest To be deductible, the interest you pay must be on a loan secured by your main home or a second home. Turbotax deluxe federal e file 2012 for pc download The loan can be a first or second mortgage, a home improvement loan, or a home equity loan. Turbotax deluxe federal e file 2012 for pc download Prepaid interest. Turbotax deluxe federal e file 2012 for pc download   If you pay interest in advance for a period that goes beyond the end of the tax year, you must spread this interest over the tax years to which it applies. Turbotax deluxe federal e file 2012 for pc download Generally, you can deduct in each year only the interest that qualifies as home mortgage interest for that year. Turbotax deluxe federal e file 2012 for pc download An exception (discussed later) applies to points. Turbotax deluxe federal e file 2012 for pc download Late payment charge on mortgage payment. Turbotax deluxe federal e file 2012 for pc download   You can deduct as home mortgage interest a late payment charge if it was not for a specific service in connection with your mortgage loan. Turbotax deluxe federal e file 2012 for pc download Mortgage prepayment penalty. Turbotax deluxe federal e file 2012 for pc download   If you pay off your home mortgage early, you may have to pay a penalty. Turbotax deluxe federal e file 2012 for pc download You can deduct that penalty as home mortgage interest provided the penalty is not for a specific service performed or cost incurred in connection with your mortgage loan. Turbotax deluxe federal e file 2012 for pc download Ground rent. Turbotax deluxe federal e file 2012 for pc download   In some states (such as Maryland), you may buy your home subject to a ground rent. Turbotax deluxe federal e file 2012 for pc download A ground rent is an obligation you assume to pay a fixed amount per year on the property. Turbotax deluxe federal e file 2012 for pc download Under this arrangement, you are leasing (rather than buying) the land on which your home is located. Turbotax deluxe federal e file 2012 for pc download Redeemable ground rents. Turbotax deluxe federal e file 2012 for pc download   If you make annual or periodic rental payments on a redeemable ground rent, you can deduct the payments as mortgage interest. Turbotax deluxe federal e file 2012 for pc download The ground rent is a redeemable ground rent only if all of the following are true. Turbotax deluxe federal e file 2012 for pc download Your lease, including renewal periods, is for more than 15 years. Turbotax deluxe federal e file 2012 for pc download You can freely assign the lease. Turbotax deluxe federal e file 2012 for pc download You have a present or future right (under state or local law) to end the lease and buy the lessor's entire interest in the land by paying a specified amount. Turbotax deluxe federal e file 2012 for pc download The lessor's interest in the land is primarily a security interest to protect the rental payments to which he or she is entitled. Turbotax deluxe federal e file 2012 for pc download   Payments made to end the lease and buy the lessor's entire interest in the land are not redeemable ground rents. Turbotax deluxe federal e file 2012 for pc download You cannot deduct them. Turbotax deluxe federal e file 2012 for pc download Nonredeemable ground rents. Turbotax deluxe federal e file 2012 for pc download   Payments on a nonredeemable ground rent are not mortgage interest. Turbotax deluxe federal e file 2012 for pc download You can deduct them as rent only if they are a business expense or if they are for rental property. Turbotax deluxe federal e file 2012 for pc download Cooperative apartment. 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Turbotax deluxe federal e file 2012 for pc download Refund of cooperative's mortgage interest. Turbotax deluxe federal e file 2012 for pc download   You must reduce your mortgage interest deduction by your share of any cash portion of a patronage dividend that the cooperative receives. Turbotax deluxe federal e file 2012 for pc download The patronage dividend is a partial refund to the cooperative housing corporation of mortgage interest it paid in a prior year. Turbotax deluxe federal e file 2012 for pc download   If you receive a Form 1098 from the cooperative housing corporation, the form should show only the amount you can deduct. Turbotax deluxe federal e file 2012 for pc download Mortgage Interest Paid at Settlement One item that normally appears on a settlement or closing statement is home mortgage interest. Turbotax deluxe federal e file 2012 for pc download You can deduct the interest that you pay at settlement if you itemize your deductions on Schedule A (Form 1040). Turbotax deluxe federal e file 2012 for pc download This amount should be included in the mortgage interest statement provided by your lender. Turbotax deluxe federal e file 2012 for pc download See the discussion under Mortgage Interest Statement , later. Turbotax deluxe federal e file 2012 for pc download Also, if you pay interest in advance, see Prepaid interest , earlier, and Points , next. Turbotax deluxe federal e file 2012 for pc download Points The term “points” is used to describe certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. Turbotax deluxe federal e file 2012 for pc download Points also may be called loan origination fees, maximum loan charges, loan discount, or discount points. Turbotax deluxe federal e file 2012 for pc download A borrower is treated as paying any points that a home seller pays for the borrower's mortgage. Turbotax deluxe federal e file 2012 for pc download See Points paid by the seller , later. 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Turbotax deluxe federal e file 2012 for pc download The points paid were not more than the points generally charged in that area. Turbotax deluxe federal e file 2012 for pc download You use the cash method of accounting. Turbotax deluxe federal e file 2012 for pc download This means you report income in the year you receive it and deduct expenses in the year you pay them. Turbotax deluxe federal e file 2012 for pc download Most individuals use this method. Turbotax deluxe federal e file 2012 for pc download The points were not paid in place of amounts that ordinarily are stated separately on the settlement statement, such as appraisal fees, inspection fees, title fees, attorney fees, and property taxes. Turbotax deluxe federal e file 2012 for pc download The funds you provided at or before closing, plus any points the seller paid, were at least as much as the points charged. 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Turbotax deluxe federal e file 2012 for pc download Note. Turbotax deluxe federal e file 2012 for pc download If you meet all of the tests listed above and you itemize your deductions in the year you get the loan, you can either deduct the full amount of points in the year paid or deduct them over the life of the loan, beginning in the year you get the loan. Turbotax deluxe federal e file 2012 for pc download If you do not itemize your deductions in the year you get the loan, you can spread the points over the life of the loan and deduct the appropriate amount in each future year, if any, when you do itemize your deductions. Turbotax deluxe federal e file 2012 for pc download Home improvement loan. Turbotax deluxe federal e file 2012 for pc download   You can also fully deduct in the year paid points paid on a loan to improve your main home, if you meet the first six tests listed earlier. Turbotax deluxe federal e file 2012 for pc download Refinanced loan. Turbotax deluxe federal e file 2012 for pc download   If you use part of the refinanced mortgage proceeds to improve your main home and you meet the first six tests listed earlier, you can fully deduct the part of the points related to the improvement in the year you paid them with your own funds. Turbotax deluxe federal e file 2012 for pc download You can deduct the rest of the points over the life of the loan. Turbotax deluxe federal e file 2012 for pc download Points not fully deductible in year paid. Turbotax deluxe federal e file 2012 for pc download    If you do not qualify under the exception to deduct the full amount of points in the year paid (or choose not to do so), see Points in Publication 936 for the rules on when and how much you can deduct. Turbotax deluxe federal e file 2012 for pc download Figure A. Turbotax deluxe federal e file 2012 for pc download   You can use Figure A, next, as a quick guide to see whether your points are fully deductible in the year paid. Turbotax deluxe federal e file 2012 for pc download    Please click here for the text description of the image. Turbotax deluxe federal e file 2012 for pc download Figure A. Turbotax deluxe federal e file 2012 for pc download Are my points fully deductible this year? Amounts charged for services. Turbotax deluxe federal e file 2012 for pc download   Amounts charged by the lender for specific services connected to the loan are not interest. Turbotax deluxe federal e file 2012 for pc download Examples of these charges are: Appraisal fees, Notary fees, and Preparation costs for the mortgage note or deed of trust. Turbotax deluxe federal e file 2012 for pc download You cannot deduct these amounts as points either in the year paid or over the life of the mortgage. Turbotax deluxe federal e file 2012 for pc download For information about the tax treatment of these amounts and other settlement fees and closing costs, see Basis , later. Turbotax deluxe federal e file 2012 for pc download Points paid by the seller. Turbotax deluxe federal e file 2012 for pc download   The term “points” includes loan placement fees that the seller pays to the lender to arrange financing for the buyer. Turbotax deluxe federal e file 2012 for pc download Treatment by seller. Turbotax deluxe federal e file 2012 for pc download   The seller cannot deduct these fees as interest. Turbotax deluxe federal e file 2012 for pc download However, they are a selling expense that reduces the seller's amount realized. Turbotax deluxe federal e file 2012 for pc download See Publication 523 for more information. Turbotax deluxe federal e file 2012 for pc download Treatment by buyer. Turbotax deluxe federal e file 2012 for pc download   The buyer treats seller-paid points as if he or she had paid them. Turbotax deluxe federal e file 2012 for pc download If all the tests listed earlier under Exception are met, the buyer can deduct the points in the year paid. Turbotax deluxe federal e file 2012 for pc download If any of those tests are not met, the buyer must deduct the points over the life of the loan. Turbotax deluxe federal e file 2012 for pc download   The buyer must also reduce the basis of the home by the amount of the seller-paid points. Turbotax deluxe federal e file 2012 for pc download For more information about the basis of your home, see Basis , later. Turbotax deluxe federal e file 2012 for pc download Funds provided are less than points. Turbotax deluxe federal e file 2012 for pc download   If you meet all the tests listed earlier under Exception except that the funds you provided were less than the points charged to you (test 6), you can deduct the points in the year paid up to the amount of funds you provided. Turbotax deluxe federal e file 2012 for pc download In addition, you can deduct any points paid by the seller. Turbotax deluxe federal e file 2012 for pc download Example 1. Turbotax deluxe federal e file 2012 for pc download When you took out a $100,000 mortgage loan to buy your home in December, you were charged one point ($1,000). Turbotax deluxe federal e file 2012 for pc download You meet all the tests for deducting points in the year paid (see Exception , earlier), except the only funds you provided were a $750 down payment. Turbotax deluxe federal e file 2012 for pc download Of the $1,000 you were charged for points, you can deduct $750 in the year paid. Turbotax deluxe federal e file 2012 for pc download You spread the remaining $250 over the life of the mortgage. Turbotax deluxe federal e file 2012 for pc download Example 2. Turbotax deluxe federal e file 2012 for pc download The facts are the same as in Example 1 , except that the person who sold you your home also paid one point ($1,000) to help you get your mortgage. Turbotax deluxe federal e file 2012 for pc download In the year paid, you can deduct $1,750 ($750 of the amount you were charged plus the $1,000 paid by the seller). Turbotax deluxe federal e file 2012 for pc download You spread the remaining $250 over the life of the mortgage. Turbotax deluxe federal e file 2012 for pc download You must reduce the basis of your home by the $1,000 paid by the seller. Turbotax deluxe federal e file 2012 for pc download Excess points. Turbotax deluxe federal e file 2012 for pc download   If you meet all the tests under Exception , earlier, except that the points paid were more than are generally charged in your area (test 3), you can deduct in the year paid only the points that are generally charged. Turbotax deluxe federal e file 2012 for pc download You must spread any additional points over the life of the mortgage. Turbotax deluxe federal e file 2012 for pc download Mortgage ending early. Turbotax deluxe federal e file 2012 for pc download   If you spread your deduction for points over the life of the mortgage, you can deduct any remaining balance in the year the mortgage ends. Turbotax deluxe federal e file 2012 for pc download A mortgage may end early due to a prepayment, refinancing, foreclosure, or similar event. Turbotax deluxe federal e file 2012 for pc download Example. Turbotax deluxe federal e file 2012 for pc download Dan paid $3,000 in points in 2006 that he had to spread out over the 15-year life of the mortgage. Turbotax deluxe federal e file 2012 for pc download He had deducted $1,400 of these points through 2012. Turbotax deluxe federal e file 2012 for pc download Dan prepaid his mortgage in full in 2013. Turbotax deluxe federal e file 2012 for pc download He can deduct the remaining $1,600 of points in 2013. Turbotax deluxe federal e file 2012 for pc download Exception. Turbotax deluxe federal e file 2012 for pc download   If you refinance the mortgage with the same lender, you cannot deduct any remaining points for the year. Turbotax deluxe federal e file 2012 for pc download Instead, deduct them over the term of the new loan. Turbotax deluxe federal e file 2012 for pc download Form 1098. Turbotax deluxe federal e file 2012 for pc download   The mortgage interest statement you receive should show not only the total interest paid during the year, but also your deductible points paid during the year. Turbotax deluxe federal e file 2012 for pc download See Mortgage Interest Statement , later. Turbotax deluxe federal e file 2012 for pc download Where To Deduct Home Mortgage Interest Enter on Schedule A (Form 1040), line 10, the home mortgage interest and points reported to you on Form 1098 (discussed next). Turbotax deluxe federal e file 2012 for pc download If you did not receive a Form 1098, enter your deductible interest on line 11, and any deductible points on line 12. Turbotax deluxe federal e file 2012 for pc download See Table 1 below for a summary of where to deduct home mortgage interest and real estate taxes. Turbotax deluxe federal e file 2012 for pc download If you paid home mortgage interest to the person from whom you bought your home, show that person's name, address, and social security number (SSN) or employer identification number (EIN) on the dotted lines next to line 11. Turbotax deluxe federal e file 2012 for pc download The seller must give you this number and you must give the seller your SSN. Turbotax deluxe federal e file 2012 for pc download Form W-9, Request for Taxpayer Identification Number and Certification, can be used for this purpose. Turbotax deluxe federal e file 2012 for pc download Failure to meet either of these requirements may result in a $50 penalty for each failure. Turbotax deluxe federal e file 2012 for pc download Table 1. Turbotax deluxe federal e file 2012 for pc download Where To Deduct Interest and Taxes Paid on Your Home See the text for information on what expenses are eligible. Turbotax deluxe federal e file 2012 for pc download IF you are eligible to deduct . Turbotax deluxe federal e file 2012 for pc download . Turbotax deluxe federal e file 2012 for pc download . Turbotax deluxe federal e file 2012 for pc download THEN report the amount  on Schedule A (Form 1040) . Turbotax deluxe federal e file 2012 for pc download . Turbotax deluxe federal e file 2012 for pc download . Turbotax deluxe federal e file 2012 for pc download real estate taxes line 6. Turbotax deluxe federal e file 2012 for pc download home mortgage interest and points reported on Form 1098 line 10. Turbotax deluxe federal e file 2012 for pc download home mortgage interest not reported on  Form 1098 line 11. Turbotax deluxe federal e file 2012 for pc download points not reported on Form 1098 line 12. Turbotax deluxe federal e file 2012 for pc download qualified mortgage insurance premiums line 13. Turbotax deluxe federal e file 2012 for pc download Mortgage Interest Statement If you paid $600 or more of mortgage interest (including certain points and mortgage insurance premiums) during the year on any one mortgage to a mortgage holder in the course of that holder's trade or business, you should receive a Form 1098 or similar statement from the mortgage holder. Turbotax deluxe federal e file 2012 for pc download The statement will show the total interest paid on your mortgage during the year. Turbotax deluxe federal e file 2012 for pc download If you bought a main home during the year, it also will show the deductible points you paid and any points you can deduct that were paid by the person who sold you your home. Turbotax deluxe federal e file 2012 for pc download See Points , earlier. Turbotax deluxe federal e file 2012 for pc download The interest you paid at settlement should be included on the statement. Turbotax deluxe federal e file 2012 for pc download If it is not, add the interest from the settlement sheet that qualifies as home mortgage interest to the total shown on Form 1098 or similar statement. Turbotax deluxe federal e file 2012 for pc download Put the total on Schedule A (Form 1040), line 10, and attach a statement to your return explaining the difference. Turbotax deluxe federal e file 2012 for pc download Write “See attached” to the right of line 10. Turbotax deluxe federal e file 2012 for pc download A mortgage holder can be a financial institution, a governmental unit, or a cooperative housing corporation. Turbotax deluxe federal e file 2012 for pc download If a statement comes from a cooperative housing corporation, it generally will show your share of interest. Turbotax deluxe federal e file 2012 for pc download Your mortgage interest statement for 2013 should be provided or sent to you by January 31, 2014. Turbotax deluxe federal e file 2012 for pc download If it is mailed, you should allow adequate time to receive it before contacting the mortgage holder. Turbotax deluxe federal e file 2012 for pc download A copy of this form will be sent to the IRS also. Turbotax deluxe federal e file 2012 for pc download Example. Turbotax deluxe federal e file 2012 for pc download You bought a new home on May 3. Turbotax deluxe federal e file 2012 for pc download You paid no points on the purchase. Turbotax deluxe federal e file 2012 for pc download During the year, you made mortgage payments which included $4,480 deductible interest on your new home. Turbotax deluxe federal e file 2012 for pc download The settlement sheet for the purchase of the home included interest of $620 for 29 days in May. Turbotax deluxe federal e file 2012 for pc download The mortgage statement you receive from the lender includes total interest of $5,100 ($4,480 + $620). Turbotax deluxe federal e file 2012 for pc download You can deduct the $5,100 if you itemize your deductions. Turbotax deluxe federal e file 2012 for pc download Refund of overpaid interest. Turbotax deluxe federal e file 2012 for pc download   If you receive a refund of mortgage interest you overpaid in a prior year, you generally will receive a Form 1098 showing the refund in box 3. Turbotax deluxe federal e file 2012 for pc download Generally, you must include the refund in income in the year you receive it. Turbotax deluxe federal e file 2012 for pc download See Refund of home mortgage interest , earlier, under Home Mortgage Interest. Turbotax deluxe federal e file 2012 for pc download More than one borrower. Turbotax deluxe federal e file 2012 for pc download   If you and at least one other person (other than your spouse if you file a joint return) were liable for and paid interest on a mortgage that was for your home, and the other person received a Form 1098 showing the interest that was paid during the year, attach a statement to your return explaining this. Turbotax deluxe federal e file 2012 for pc download Show how much of the interest each of you paid, and give the name and address of the person who received the form. Turbotax deluxe federal e file 2012 for pc download Deduct your share of the interest on Schedule A (Form 1040), line 11, and write “See attached” to the right of that line. Turbotax deluxe federal e file 2012 for pc download Mortgage Insurance Premiums You may be able to take an itemized deduction on Schedule A (Form 1040), line 13, for premiums you pay or accrue during 2013 for qualified mortgage insurance in connection with home acquisition debt on your qualified home. Turbotax deluxe federal e file 2012 for pc download Mortgage insurance premiums you paid or accrued on any mortgage insurance contract issued before January 1, 2007, are not deductible as an itemized deduction. Turbotax deluxe federal e file 2012 for pc download Qualified Mortgage Insurance Qualified mortgage insurance is mortgage insurance provided by the Veterans Administration, the Federal Housing Administration, or the Rural Housing Administration, and private mortgage insurance (as defined in section 2 of the Homeowners Protection Act of 1998 as in effect on December 20, 2006). Turbotax deluxe federal e file 2012 for pc download Prepaid mortgage insurance premiums. Turbotax deluxe federal e file 2012 for pc download   If you paid premiums that are allocable to periods after 2013, you must allocate them over the shorter of: The stated term of the mortgage, or 84 months, beginning with the month the insurance was obtained. Turbotax deluxe federal e file 2012 for pc download The premiums are treated as paid in the year to which they were allocated. Turbotax deluxe federal e file 2012 for pc download If the mortgage is satisfied before its term, no deduction is allowed for the unamortized balance. Turbotax deluxe federal e file 2012 for pc download See Publication 936 for details. Turbotax deluxe federal e file 2012 for pc download Exception for certain mortgage insurance. Turbotax deluxe federal e file 2012 for pc download   The allocation rules, explained above, do not apply to qualified mortgage insurance provided by the Department of Veterans Affairs or Rural Housing Service. Turbotax deluxe federal e file 2012 for pc download Home Acquisition Debt Home acquisition debt is a mortgage you took out after October 13, 1987, to buy, build, or substantially improve a qualified home. Turbotax deluxe federal e file 2012 for pc download It also must be secured by that home. Turbotax deluxe federal e file 2012 for pc download If the amount of your mortgage is more than the cost of the home plus the cost of any substantial improvements, only the debt that is not more than the cost of the home plus improvements qualifies as home acquisition debt. Turbotax deluxe federal e file 2012 for pc download Home acquisition debt limit. Turbotax deluxe federal e file 2012 for pc download   The total amount you can treat as home acquisition debt at any time on your home cannot be more than $1 million ($500,000 if married filing separately). Turbotax deluxe federal e file 2012 for pc download Discharges of qualified principal residence indebtedness. Turbotax deluxe federal e file 2012 for pc download   You can exclude from gross income any discharges of qualified principal residence indebtedness made after 2006 and before 2014. Turbotax deluxe federal e file 2012 for pc download You must reduce the basis of your principal residence (but not below zero) by the amount you exclude. Turbotax deluxe federal e file 2012 for pc download Principal residence. Turbotax deluxe federal e file 2012 for pc download   Your principal residence is the home where you ordinarily live most of the time. Turbotax deluxe federal e file 2012 for pc download You can have only one principal residence at any one time. Turbotax deluxe federal e file 2012 for pc download Qualified principal residence indebtedness. Turbotax deluxe federal e file 2012 for pc download   This is a mortgage that you took out to buy, build, or substantially improve your principal residence and that is secured by that residence. Turbotax deluxe federal e file 2012 for pc download If the amount of your original mortgage is more than the cost of your principal residence plus the cost of substantial improvements, qualified principal residence indebtedness cannot be more than the cost of your principal residence plus improvements. Turbotax deluxe federal e file 2012 for pc download   Any debt secured by your principal residence that you use to refinance qualified principal residence indebtedness is qualified principal residence indebtedness up to the amount of your old mortgage principal just before the refinancing. Turbotax deluxe federal e file 2012 for pc download Additional debt incurred to substantially improve your principal residence is also qualified principal residence indebtedness. Turbotax deluxe federal e file 2012 for pc download Amount you can exclude. Turbotax deluxe federal e file 2012 for pc download   You can only exclude debt discharged after 2006 and before 2014. Turbotax deluxe federal e file 2012 for pc download The most you can exclude is $2 million ($1 million if married filing separately). Turbotax deluxe federal e file 2012 for pc download You cannot exclude any amount that was discharged because of services performed for the lender or on account of any other factor not directly related either to a decline in the value of your residence or to your financial condition. Turbotax deluxe federal e file 2012 for pc download Ordering rule. Turbotax deluxe federal e file 2012 for pc download   If only a part of a loan is qualified principal residence indebtedness, you can exclude only the amount of the discharge that is more than the amount of the loan (immediately before the discharge) that is not qualified principal residence indebtedness. Turbotax deluxe federal e file 2012 for pc download Qualified Home This means your main home or your second home. Turbotax deluxe federal e file 2012 for pc download A home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities. Turbotax deluxe federal e file 2012 for pc download Main home. Turbotax deluxe federal e file 2012 for pc download   You can have only one main home at any one time. Turbotax deluxe federal e file 2012 for pc download This is the home where you ordinarily live most of the time. Turbotax deluxe federal e file 2012 for pc download Second home and other special situations. Turbotax deluxe federal e file 2012 for pc download   If you have a second home, use part of your home for other than residential living (such as a home office), rent out part of your home, or are having your home constructed, see Qualified Home in Publication 936. Turbotax deluxe federal e file 2012 for pc download Limit on Deduction If your adjusted gross income (AGI) on Form 1040, line 38, is more than $100,000 ($50,000 if your filing status is married filing separately), the amount of your mortgage insurance premiums that are deductible is reduced and may be eliminated. Turbotax deluxe federal e file 2012 for pc download See Line 13 in the instructions for Schedule A (Form 1040) and complete the Mortgage Insurance Premiums Deduction Worksheet to figure the amount you can deduct. Turbotax deluxe federal e file 2012 for pc download If your AGI is more than $109,000 ($54,500 if married filing separately), you cannot deduct your mortgage insurance premiums. Turbotax deluxe federal e file 2012 for pc download Form 1098. Turbotax deluxe federal e file 2012 for pc download   The amount of mortgage insurance premiums you paid during 2013 should be reported in box 4. Turbotax deluxe federal e file 2012 for pc download See Form 1098, Mortgage Interest Statement in Publication 936. Turbotax deluxe federal e file 2012 for pc download Mortgage Interest Credit The mortgage interest credit is intended to help lower-income individuals afford home ownership. Turbotax deluxe federal e file 2012 for pc download If you qualify, you can claim the credit on Form 8396 each year for part of the home mortgage interest you pay. Turbotax deluxe federal e file 2012 for pc download Who qualifies. Turbotax deluxe federal e file 2012 for pc download   You may be eligible for the credit if you were issued a qualified Mortgage Credit Certificate (MCC) from your state or local government. Turbotax deluxe federal e file 2012 for pc download Generally, an MCC is issued only in connection with a new mortgage for the purchase of your main home. Turbotax deluxe federal e file 2012 for pc download The MCC will show the certificate credit rate you will use to figure your credit. Turbotax deluxe federal e file 2012 for pc download It also will show the certified indebtedness amount. Turbotax deluxe federal e file 2012 for pc download Only the interest on that amount qualifies for the credit. Turbotax deluxe federal e file 2012 for pc download See Figuring the Credit , later. Turbotax deluxe federal e file 2012 for pc download You must contact the appropriate government agency about getting an MCC before you get a mortgage and buy your home. Turbotax deluxe federal e file 2012 for pc download Contact your state or local housing finance agency for information about the availability of MCCs in your area. Turbotax deluxe federal e file 2012 for pc download How to claim the credit. Turbotax deluxe federal e file 2012 for pc download   To claim the credit, complete Form 8396 and attach it to your Form 1040 or Form 1040NR, U. Turbotax deluxe federal e file 2012 for pc download S. Turbotax deluxe federal e file 2012 for pc download Nonresident Alien Income Tax Return. Turbotax deluxe federal e file 2012 for pc download Include the credit in your total for Form 1040, line 53, or Form 1040NR, line 50; be sure to check box c and write “Form 8396” on that line. Turbotax deluxe federal e file 2012 for pc download Reducing your home mortgage interest deduction. Turbotax deluxe federal e file 2012 for pc download   If you itemize your deductions on Schedule A (Form 1040), you must reduce your home mortgage interest deduction by the amount of the mortgage interest credit shown on Form 8396, line 3. Turbotax deluxe federal e file 2012 for pc download You must do this even if part of that amount is to be carried forward to 2014. Turbotax deluxe federal e file 2012 for pc download Selling your home. Turbotax deluxe federal e file 2012 for pc download   If you purchase a home after 1990 using an MCC, and you sell that home within 9 years, you may have to recapture (repay) all or part of the benefit you received from the MCC program. Turbotax deluxe federal e file 2012 for pc download For additional information, see Recapturing (Paying Back) a Federal Mortgage Subsidy, in Publication 523. Turbotax deluxe federal e file 2012 for pc download Figuring the Credit Figure your credit on Form 8396. Turbotax deluxe federal e file 2012 for pc download Mortgage not more than certified indebtedness. Turbotax deluxe federal e file 2012 for pc download   If your mortgage loan amount is equal to (or smaller than) the certified indebtedness amount shown on your MCC, enter on Form 8396, line 1, all the interest you paid on your mortgage during the year. Turbotax deluxe federal e file 2012 for pc download Mortgage more than certified indebtedness. Turbotax deluxe federal e file 2012 for pc download   If your mortgage loan amount is larger than the certified indebtedness amount shown on your MCC, you can figure the credit on only part of the interest you paid. Turbotax deluxe federal e file 2012 for pc download To find the amount to enter on line 1, multiply the total interest you paid during the year on your mortgage by the following fraction. Turbotax deluxe federal e file 2012 for pc download Certified indebtedness amount on your MCC Original amount of your mortgage   The fraction will not change as long as you are entitled to take the mortgage interest credit. Turbotax deluxe federal e file 2012 for pc download Example. Turbotax deluxe federal e file 2012 for pc download Emily bought a home this year. Turbotax deluxe federal e file 2012 for pc download Her mortgage loan is $125,000. Turbotax deluxe federal e file 2012 for pc download The certified indebtedness amount on her MCC is $100,000. Turbotax deluxe federal e file 2012 for pc download She paid $7,500 interest this year. Turbotax deluxe federal e file 2012 for pc download Emily figures the interest to enter on Form 8396, line 1, as follows:   $100,000 = 80% (. Turbotax deluxe federal e file 2012 for pc download 80)       $125,000       $7,500 x . Turbotax deluxe federal e file 2012 for pc download 80 = $6,000   Emily enters $6,000 on Form 8396, line 1. Turbotax deluxe federal e file 2012 for pc download In each later year, she will figure her credit using only 80% of the interest she pays for that year. Turbotax deluxe federal e file 2012 for pc download Limits Two limits may apply to your credit. Turbotax deluxe federal e file 2012 for pc download A limit based on the credit rate, and A limit based on your tax. Turbotax deluxe federal e file 2012 for pc download Limit based on credit rate. Turbotax deluxe federal e file 2012 for pc download   If the certificate credit rate is higher than 20%, the credit you are allowed cannot be more than $2,000. Turbotax deluxe federal e file 2012 for pc download Limit based on tax. Turbotax deluxe federal e file 2012 for pc download   After applying the limit based on the credit rate, your credit generally cannot be more than your tax liability. Turbotax deluxe federal e file 2012 for pc download See the Credit Limit Worksheet in the Form 8396 instructions to calculate the limit based on tax. Turbotax deluxe federal e file 2012 for pc download Dividing the Credit If two or more persons (other than a married couple filing a joint return) hold an interest in the home to which the MCC relates, the credit must be divided based on the interest held by each person. Turbotax deluxe federal e file 2012 for pc download Example. Turbotax deluxe federal e file 2012 for pc download John and his brother, George, were issued an MCC. Turbotax deluxe federal e file 2012 for pc download They used it to get a mortgage on their main home. Turbotax deluxe federal e file 2012 for pc download John has a 60% ownership interest in the home, and George has a 40% ownership interest in the home. Turbotax deluxe federal e file 2012 for pc download John paid $5,400 mortgage interest this year and George paid $3,600. Turbotax deluxe federal e file 2012 for pc download The MCC shows a credit rate of 25% and a certified indebtedness amount of $130,000. Turbotax deluxe federal e file 2012 for pc download The loan amount (mortgage) on their home is $120,000. Turbotax deluxe federal e file 2012 for pc download The credit is limited to $2,000 because the credit rate is more than 20%. Turbotax deluxe federal e file 2012 for pc download John figures the credit by multiplying the mortgage interest he paid this year ($5,400) by the certificate credit rate (25%) for a total of $1,350. Turbotax deluxe federal e file 2012 for pc download His credit is limited to $1,200 ($2,000 × 60%). Turbotax deluxe federal e file 2012 for pc download George figures the credit by multiplying the mortgage interest he paid this year ($3,600) by the certificate credit rate (25%) for a total of $900. Turbotax deluxe federal e file 2012 for pc download His credit is limited to $800 ($2,000 × 40%). Turbotax deluxe federal e file 2012 for pc download Carryforward If your allowable credit is reduced because of the limit based on your tax, you can carry forward the unused portion of the credit to the next 3 years or until used, whichever comes first. Turbotax deluxe federal e file 2012 for pc download Example. Turbotax deluxe federal e file 2012 for pc download You receive a mortgage credit certificate from State X. Turbotax deluxe federal e file 2012 for pc download This year, your regular tax liability is $1,100, you owe no alternative minimum tax, and your mortgage interest credit is $1,700. Turbotax deluxe federal e file 2012 for pc download You claim no other credits. Turbotax deluxe federal e file 2012 for pc download Your unused mortgage interest credit for this year is $600 ($1,700 − $1,100). Turbotax deluxe federal e file 2012 for pc download You can carry forward this amount to the next 3 years or until used, whichever comes first. Turbotax deluxe federal e file 2012 for pc download Credit rate more than 20%. Turbotax deluxe federal e file 2012 for pc download   If you are subject to the $2,000 limit because your certificate credit rate is more than 20%, you cannot carry forward any amount more than $2,000 (or your share of the $2,000 if you must divide the credit). Turbotax deluxe federal e file 2012 for pc download Example. Turbotax deluxe federal e file 2012 for pc download In the earlier example under Dividing the Credit , John and George used the entire $2,000 credit. Turbotax deluxe federal e file 2012 for pc download The excess   John $1,350 − $1,200 = $150     George $900 − $800 = $100   $150 for John ($1,350 − $1,200) and $100 for George ($900 − $800) cannot be carried forward to future years, despite the respective tax liabilities for John and George. Turbotax deluxe federal e file 2012 for pc download Refinancing If you refinance your original mortgage loan on which you had been given an MCC, you must get a new MCC to be able to claim the credit on the new loan. Turbotax deluxe federal e file 2012 for pc download The amount of credit you can claim on the new loan may change. Turbotax deluxe federal e file 2012 for pc download Table 2 below summarizes how to figure your credit if you refinance your original mortgage loan. Turbotax deluxe federal e file 2012 for pc download Table 2. Turbotax deluxe federal e file 2012 for pc download Effect of Refinancing on Your Credit IF you get a new (reissued) MCC and the amount of your new mortgage is . Turbotax deluxe federal e file 2012 for pc download . Turbotax deluxe federal e file 2012 for pc download . Turbotax deluxe federal e file 2012 for pc download THEN the interest you claim on Form 8396, line 1, is* . Turbotax deluxe federal e file 2012 for pc download . Turbotax deluxe federal e file 2012 for pc download . Turbotax deluxe federal e file 2012 for pc download smaller than or equal to the certified indebtedness amount on the new MCC all the interest paid during the year on your new mortgage. Turbotax deluxe federal e file 2012 for pc download larger than the certified indebtedness amount on the new MCC interest paid during the year on your new mortgage multiplied by the following fraction. Turbotax deluxe federal e file 2012 for pc download         certified indebtedness  amount on your new MCC       original amount of your  mortgage   *The credit using the new MCC cannot be more than the credit using the old MCC. Turbotax deluxe federal e file 2012 for pc download  See New MCC cannot increase your credit above. Turbotax deluxe federal e file 2012 for pc download An issuer may reissue an MCC after you refinance your mortgage. Turbotax deluxe federal e file 2012 for pc download If you did not get a new MCC, you may want to contact the state or local housing finance agency that issued your original MCC for information about whether you can get a reissued MCC. Turbotax deluxe federal e file 2012 for pc download Year of refinancing. Turbotax deluxe federal e file 2012 for pc download   In the year of refinancing, add the applicable amount of interest paid on the old mortgage and the applicable amount of interest paid on the new mortgage, and enter the total on Form 8396, line 1. Turbotax deluxe federal e file 2012 for pc download   If your new MCC has a credit rate different from the rate on the old MCC, you must attach a statement to Form 8396. Turbotax deluxe federal e file 2012 for pc download The statement must show the calculation for lines 1, 2, and 3 for the part of the year when the old MCC was in effect. Turbotax deluxe federal e file 2012 for pc download It must show a separate calculation for the part of the year when the new MCC was in effect. Turbotax deluxe federal e file 2012 for pc download Combine the amounts from both calculations for line 3, enter the total on line 3 of the form, and write “See attached” on the dotted line next to line 2. Turbotax deluxe federal e file 2012 for pc download New MCC cannot increase your credit. Turbotax deluxe federal e file 2012 for pc download   The credit that you claim with your new MCC cannot be more than the credit that you could have claimed with your old MCC. Turbotax deluxe federal e file 2012 for pc download   In most cases, the agency that issues your new MCC will make sure that it does not increase your credit. Turbotax deluxe federal e file 2012 for pc download However, if either your old loan or your new loan has a variable (adjustable) interest rate, you will need to check this yourself. Turbotax deluxe federal e file 2012 for pc download In that case, you will need to know the amount of the credit you could have claimed using the old MCC. Turbotax deluxe federal e file 2012 for pc download   There are two methods for figuring the credit you could have claimed. Turbotax deluxe federal e file 2012 for pc download Under one method, you figure the actual credit that would have been allowed. Turbotax deluxe federal e file 2012 for pc download This means you use the credit rate on the old MCC and the interest you would have paid on the old loan. Turbotax deluxe federal e file 2012 for pc download   If your old loan was a variable rate mortgage, you can use another method to determine the credit that you could have claimed. Turbotax deluxe federal e file 2012 for pc download Under this method, you figure the credit using a payment schedule of a hypothetical self-amortizing mortgage with level payments projected to the final maturity date of the old mortgage. Turbotax deluxe federal e file 2012 for pc download The interest rate of the hypothetical mortgage is the annual percentage rate (APR) of the new mortgage for purposes of the Federal Truth in Lending Act. Turbotax deluxe federal e file 2012 for pc download The principal of the hypothetical mortgage is the remaining outstanding balance of the certified mortgage indebtedness shown on the old MCC. Turbotax deluxe federal e file 2012 for pc download    You must choose one method and use it consistently beginning with the first tax year for which you claim the credit based on the new MCC. Turbotax deluxe federal e file 2012 for pc download    As part of your tax records, you should keep your old MCC and the schedule of payments for your old mortgage. Turbotax deluxe federal e file 2012 for pc download Basis Basis is your starting point for figuring a gain or loss if you later sell your home, or for figuring depreciation if you later use part of your home for business purposes or for rent. Turbotax deluxe federal e file 2012 for pc download While you own your home, you may add certain items to your basis. Turbotax deluxe federal e file 2012 for pc download You may subtract certain other items from your basis. Turbotax deluxe federal e file 2012 for pc download These items are called adjustments to basis and are explained later under Adjusted Basis . Turbotax deluxe federal e file 2012 for pc download It is important that you understand these terms when you first acquire your home because you must keep track of your basis and adjusted basis during the period you own your home. Turbotax deluxe federal e file 2012 for pc download You also must keep records of the events that affect basis or adjusted basis. Turbotax deluxe federal e file 2012 for pc download See Keeping Records , below. Turbotax deluxe federal e file 2012 for pc download Figuring Your Basis How you figure your basis depends on how you acquire your home. Turbotax deluxe federal e file 2012 for pc download If you buy or build your home, your cost is your basis. Turbotax deluxe federal e file 2012 for pc download If you receive your home as a gift, your basis is usually the same as the adjusted basis of the person who gave you the property. Turbotax deluxe federal e file 2012 for pc download If you inherit your home from a decedent, different rules apply depending on the date of the decedent's death. Turbotax deluxe federal e file 2012 for pc download Each of these topics is discussed later. Turbotax deluxe federal e file 2012 for pc download Property transferred from a spouse. Turbotax deluxe federal e file 2012 for pc download   If your home is transferred to you from your spouse, or from your former spouse as a result of a divorce, your basis is the same as your spouse's (or former spouse's) adjusted basis just before the transfer. Turbotax deluxe federal e file 2012 for pc download Publication 504, Divorced or Separated Individuals, fully discusses transfers between spouses. Turbotax deluxe federal e file 2012 for pc download Cost as Basis The cost of your home, whether you purchased it or constructed it, is the amount you paid for it, including any debt you assumed. Turbotax deluxe federal e file 2012 for pc download The cost of your home includes most settlement or closing costs you paid when you bought the home. Turbotax deluxe federal e file 2012 for pc download If you built your home, your cost includes most closing costs paid when you bought the land or settled on your mortgage. Turbotax deluxe federal e file 2012 for pc download See Settlement or closing costs , later. Turbotax deluxe federal e file 2012 for pc download If you elect to deduct the sales taxes on the purchase or construction of your home as an itemized deduction on Schedule A (Form 1040), you cannot include the sales taxes as part of your cost basis in the home. Turbotax deluxe federal e file 2012 for pc download Purchase. Turbotax deluxe federal e file 2012 for pc download   The basis of a home you bought is the amount you paid for it. Turbotax deluxe federal e file 2012 for pc download This usually includes your down payment and any debt you assumed. Turbotax deluxe federal e file 2012 for pc download The basis of a cooperative apartment is the amount you paid for your shares in the corporation that owns or controls the property. Turbotax deluxe federal e file 2012 for pc download This amount includes any purchase commissions or other costs of acquiring the shares. Turbotax deluxe federal e file 2012 for pc download Construction. Turbotax deluxe federal e file 2012 for pc download   If you contracted to have your home built on land that you own, your basis in the home is your basis in the land plus the amount you paid to have the home built. Turbotax deluxe federal e file 2012 for pc download This includes the cost of labor and materials, the amount you paid the contractor, any architect's fees, building permit charges, utility meter and connection charges, and legal fees that are directly connected with building your home. Turbotax deluxe federal e file 2012 for pc download If you built all or part of your home yourself, your basis is the total amount it cost you to build it. Turbotax deluxe federal e file 2012 for pc download You cannot include in basis the value of your own labor or any other labor for which you did not pay. Turbotax deluxe federal e file 2012 for pc download Real estate taxes. Turbotax deluxe federal e file 2012 for pc download   Real estate taxes are usually divided so that you and the seller each pay taxes for the part of the property tax year that each owned the home. Turbotax deluxe federal e file 2012 for pc download See the earlier discussion of Real estate taxes paid at settlement or closing , under Real Estate Taxes, earlier, to figure the real estate taxes you paid or are considered to have paid. Turbotax deluxe federal e file 2012 for pc download   If you pay any part of the seller's share of the real estate taxes (the taxes up to the date of sale), and the seller did not reimburse you, add those taxes to your basis in the home. Turbotax deluxe federal e file 2012 for pc download You cannot deduct them as taxes paid. Turbotax deluxe federal e file 2012 for pc download   If the seller paid any of your share of the real estate taxes (the taxes beginning with the date of sale), you can still deduct those taxes. Turbotax deluxe federal e file 2012 for pc download Do not include those taxes in your basis. Turbotax deluxe federal e file 2012 for pc download If you did not reimburse the seller, you must reduce your basis by the amount of those taxes. Turbotax deluxe federal e file 2012 for pc download Example 1. Turbotax deluxe federal e file 2012 for pc download You bought your home on September 1. Turbotax deluxe federal e file 2012 for pc download The property tax year in your area is the calendar year, and the tax is due on August 15. Turbotax deluxe federal e file 2012 for pc download The real estate taxes on the home you bought were $1,275 for the year and had been paid by the seller on August 15. Turbotax deluxe federal e file 2012 for pc download You did not reimburse the seller for your share of the real estate taxes from September 1 through December 31. Turbotax deluxe federal e file 2012 for pc download You must reduce the basis of your home by the $426 [(122 ÷ 365) × $1,275] the seller paid for you. Turbotax deluxe federal e file 2012 for pc download You can deduct your $426 share of real estate taxes on your return for the year you purchased your home. Turbotax deluxe federal e file 2012 for pc download Example 2. Turbotax deluxe federal e file 2012 for pc download You bought your home on May 3, 2013. Turbotax deluxe federal e file 2012 for pc download The property tax year in your area is the calendar year. Turbotax deluxe federal e file 2012 for pc download The taxes for the previous year are assessed on January 2 and are due on May 31 and November 30. Turbotax deluxe federal e file 2012 for pc download Under state law, the taxes become a lien on May 31. Turbotax deluxe federal e file 2012 for pc download You agreed to pay all taxes due after the date of sale. Turbotax deluxe federal e file 2012 for pc download The taxes due in 2013 for 2012 were $1,375. Turbotax deluxe federal e file 2012 for pc download The taxes due in 2014 for 2013 will be $1,425. Turbotax deluxe federal e file 2012 for pc download You cannot deduct any of the taxes paid in 2013 because they relate to the 2012 property tax year and you did not own the home until 2013. Turbotax deluxe federal e file 2012 for pc download Instead, you add the $1,375 to the cost (basis) of your home. Turbotax deluxe federal e file 2012 for pc download You owned the home in 2013 for 243 days (May 3 to December 31), so you can take a tax deduction on your 2014 return of $949 [(243 ÷ 365) × $1,425] paid in 2014 for 2013. Turbotax deluxe federal e file 2012 for pc download You add the remaining $476 ($1,425 − $949) of taxes paid in 2014 to the cost (basis) of your home. Turbotax deluxe federal e file 2012 for pc download Settlement or closing costs. Turbotax deluxe federal e file 2012 for pc download   If you bought your home, you probably paid settlement or closing costs in addition to the contract price. Turbotax deluxe federal e file 2012 for pc download These costs are divided between you and the seller according to the sales contract, local custom, or understanding of the parties. Turbotax deluxe federal e file 2012 for pc download If you built your home, you probably paid these costs when you bought the land or settled on your mortgage. Turbotax deluxe federal e file 2012 for pc download   The only settlement or closing costs you can deduct are home mortgage interest and certain real estate taxes. Turbotax deluxe federal e file 2012 for pc download You deduct them in the year you buy your home if you itemize your deductions. Turbotax deluxe federal e file 2012 for pc download You can add certain other settlement or closing costs to the basis of your home. Turbotax deluxe federal e file 2012 for pc download Items added to basis. Turbotax deluxe federal e file 2012 for pc download   You can include in your basis the settlement fees and closing costs you paid for buying your home. Turbotax deluxe federal e file 2012 for pc download A fee is for buying the home if you would have had to pay it even if you paid cash for the home. Turbotax deluxe federal e file 2012 for pc download   The following are some of the settlement fees and closing costs that you can include in the original basis of your home. Turbotax deluxe federal e file 2012 for pc download Abstract fees (abstract of title fees). Turbotax deluxe federal e file 2012 for pc download Charges for installing utility services. Turbotax deluxe federal e file 2012 for pc download Legal fees (including fees for the title search and preparation of the sales contract and deed). Turbotax deluxe federal e file 2012 for pc download Recording fees. Turbotax deluxe federal e file 2012 for pc download Surveys. Turbotax deluxe federal e file 2012 for pc download Transfer or stamp taxes. Turbotax deluxe federal e file 2012 for pc download Owner's title insurance. Turbotax deluxe federal e file 2012 for pc download Any amount the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, cost for improvements or repairs, and sales commissions. Turbotax deluxe federal e file 2012 for pc download   If the seller actually paid for any item for which you are liable and for which you can take a deduction (such as your share of the real estate taxes for the year of sale), you must reduce your basis by that amount unless you are charged for it in the settlement. Turbotax deluxe federal e file 2012 for pc download Items not added to basis and not deductible. Turbotax deluxe federal e file 2012 for pc download   Here are some settlement and closing costs that you cannot deduct or add to your basis. Turbotax deluxe federal e file 2012 for pc download Fire insurance premiums. Turbotax deluxe federal e file 2012 for pc download Charges for using utilities or other services related to occupancy of the home before closing. Turbotax deluxe federal e file 2012 for pc download Rent for occupying the home before closing. Turbotax deluxe federal e file 2012 for pc download Charges connected with getting or refinancing a mortgage loan, such as: Loan assumption fees, Cost of a credit report, and Fee for an appraisal required by a lender. Turbotax deluxe federal e file 2012 for pc download Points paid by seller. Turbotax deluxe federal e file 2012 for pc download   If you bought your home after April 3, 1994, you must reduce your basis by any points paid for your mortgage by the person who sold you your home. Turbotax deluxe federal e file 2012 for pc download   If you bought your home after 1990 but before April 4, 1994, you must reduce your basis by seller-paid points only if you deducted them. Turbotax deluxe federal e file 2012 for pc download See Points , earlier, for the rules on deducting points. Turbotax deluxe federal e file 2012 for pc download Gift To figure the basis of property you receive as a gift, you must know its adjusted basis (defined later) to the donor just before it was given to you, its fair market value (FMV) at the time it was given to you, and any gift tax paid on it. Turbotax deluxe federal e file 2012 for pc download Fair market value. Turbotax deluxe federal e file 2012 for pc download   Fair market value (FMV) is the price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and who both have a reasonable knowledge of all the necessary facts. Turbotax deluxe federal e file 2012 for pc download Donor's adjusted basis is more than FMV. Turbotax deluxe federal e file 2012 for pc download   If someone gave you your home and the donor's adjusted basis, when it was given to you, was more than the FMV, your basis at the time of receipt is the same as the donor's adjusted basis. Turbotax deluxe federal e file 2012 for pc download Disposition basis. Turbotax deluxe federal e file 2012 for pc download   If the donor's adjusted basis at the time of the gift is more than the FMV, your basis (plus or minus any required adjustments, see Adjusted Basis , later) when you dispose of the property will depend on whether you have a gain or a loss. Turbotax deluxe federal e file 2012 for pc download Your basis for figuring a gain is the same as the donor's adjusted basis. Turbotax deluxe federal e file 2012 for pc download Your basis for figuring a loss is the FMV when you received the gift. Turbotax deluxe federal e file 2012 for pc download If you use the donor's adjusted basis to figure a gain and it results in a loss, then you must use the FMV (at the time of the gift) to refigure the loss. Turbotax deluxe federal e file 2012 for pc download However, if using the FMV results in a gain, then you neither have a gain nor a loss. Turbotax deluxe federal e file 2012 for pc download Example 1. Turbotax deluxe federal e file 2012 for pc download Andrew received a house as a gift from Ishmael (the donor). Turbotax deluxe federal e file 2012 for pc download At the time of the gift, the home had an FMV of $80,000. Turbotax deluxe federal e file 2012 for pc download Ishmael's adjusted basis was $100,000. Turbotax deluxe federal e file 2012 for pc download After he received the house, no events occurred to increase or decrease the basis. Turbotax deluxe federal e file 2012 for pc download If Andrew sells the house for $120,000, he will have a $20,000 gain because he must use the donor's adjusted basis ($100,000) at the time of the gift as his basis to figure the gain. Turbotax deluxe federal e file 2012 for pc download Example 2. Turbotax deluxe federal e file 2012 for pc download Same facts as Example 1 , except this time Andrew sells the house for $70,000. Turbotax deluxe federal e file 2012 for pc download He will have a loss of $10,000 because he must use the FMV ($80,000) at the time of the gift as his basis to figure the loss. Turbotax deluxe federal e file 2012 for pc download Example 3. Turbotax deluxe federal e file 2012 for pc download Same facts as Example 1 , except this time Andrew sells the house for $90,000. Turbotax deluxe federal e file 2012 for pc download Initially, he figures the gain using Ishmael's adjusted basis ($100,000), which results in a loss of $10,000. Turbotax deluxe federal e file 2012 for pc download Since it is a loss, Andrew must now recalculate the loss using the FMV ($80,000), which results in a gain of $10,000. Turbotax deluxe federal e file 2012 for pc download So in this situation, Andrew will neither have a gain nor a loss. Turbotax deluxe federal e file 2012 for pc download Donor's adjusted basis equal to or less than the FMV. Turbotax deluxe federal e file 2012 for pc download   If someone gave you your home after 1976 and the donor's adjusted basis, when it was given to you, was equal to or less than the FMV, your basis at the time of receipt is the same as the donor's adjusted basis, plus the part of any federal gift tax paid that is due to the net increase in value of the home. Turbotax deluxe federal e file 2012 for pc download Part of federal gift tax due to net increase in value. Turbotax deluxe federal e file 2012 for pc download   Figure the part of the federal gift tax paid that is due to the net increase in value of the home by multiplying the total federal gift tax paid by a fraction. Turbotax deluxe federal e file 2012 for pc download The numerator (top part) of the fraction is the net increase in the value of the home, and the denominator (bottom part) is the value of the home for gift tax purposes after reduction for any annual exclusion and marital or charitable deduction that applies to the gift. Turbotax deluxe federal e file 2012 for pc download The net increase in the value of the home is its FMV minus the adjusted basis of the donor. Turbotax deluxe federal e file 2012 for pc download Publication 551 gives more information, including examples, on figuring your basis when you receive property as a gift. Turbotax deluxe federal e file 2012 for pc download Inheritance Your basis in a home you inherited is generally the fair market value of the home on the date of the decedent's death or on the alternative valuation date if the personal representative for the estate chooses to use alternative valuation. Turbotax deluxe federal e file 2012 for pc download If an estate tax return was filed, your basis is generally the value of the home listed on the estate tax return. Turbotax deluxe federal e file 2012 for pc download If an estate tax return was not filed, your basis is the appraised value of the home at the decedent's date of death for state inheritance or transmission taxes. Turbotax deluxe federal e file 2012 for pc download Publication 551 and Publication 559, Survivors, Executors, and Administrators, have more information on the basis of inherited property. Turbotax deluxe federal e file 2012 for pc download If you inherited your home from someone who died in 2010, and the executor of the decedent's estate made the election to file Form 8939, Allocation of Increase in Basis for Property Acquired From a Decedent, refer to the information provided by the executor or see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010. Turbotax deluxe federal e file 2012 for pc download Adjusted Basis While you own your home, various events may take place that can change the original basis of your home. Turbotax deluxe federal e file 2012 for pc download These events can increase or decrease your original basis. Turbotax deluxe federal e file 2012 for pc download The result is called adjusted basis. Turbotax deluxe federal e file 2012 for pc download See Table 3, on this page, for a list of some of the items that can adjust your basis. Turbotax deluxe federal e file 2012 for pc download Table 3. Turbotax deluxe federal e file 2012 for pc download Adjusted Basis This table lists examples of some items that generally will increase or decrease your basis in your home. Turbotax deluxe federal e file 2012 for pc download It is not intended to be all-inclusive. Turbotax deluxe federal e file 2012 for pc download Increases to Basis Decreases to Basis Improvements: Putting an addition on your home Replacing an entire roof Paving your driveway Installing central air conditioning Rewiring your home Assessments for local improvements (see Assessments for local benefits , under What You Can and Cannot Deduct, earlier) Amounts spent to restore damaged property Insurance or other reimbursement for casualty losses Deductible casualty loss not covered by insurance Payments received for easement or right-of-way granted Depreciation allowed or allowable if home is used for business or rental purposes Value of subsidy for energy conservation measure excluded from income Improvements. Turbotax deluxe federal e file 2012 for pc download   An improvement materially adds to the value of your home, considerably prolongs its useful life, or adapts it to new uses. Turbotax deluxe federal e file 2012 for pc download You must add the cost of any improvements to the basis of your home. Turbotax deluxe federal e file 2012 for pc download You cannot deduct these costs. Turbotax deluxe federal e file 2012 for pc download   Improvements include putting a recreation room in your unfinished basement, adding another bathroom or bedroom, putting up a fence, putting in new plumbing or wiring, installing a new roof, and paving your driveway. Turbotax deluxe federal e file 2012 for pc download Amount added to basis. Turbotax deluxe federal e file 2012 for pc download   The amount you add to your basis for improvements is your actual cost. Turbotax deluxe federal e file 2012 for pc download This includes all costs for material and labor, except your own labor, and all expenses related to the improvement. Turbotax deluxe federal e file 2012 for pc download For example, if you had your lot surveyed to put up a fence, the cost of the survey is a part of the cost of the fence. Turbotax deluxe federal e file 2012 for pc download   You also must add to your basis state and local assessments for improvements such as streets and sidewalks if they increase the value of the property. Turbotax deluxe federal e file 2012 for pc download These assessments are discussed earlier under Real Estate Taxes . Turbotax deluxe federal e file 2012 for pc download Improvements no longer part of home. Turbotax deluxe federal e file 2012 for pc download    Your home's adjusted basis does not include the cost of any improvements that are replaced and are no longer part of the home. Turbotax deluxe federal e file 2012 for pc download Example. Turbotax deluxe federal e file 2012 for pc download You put wall-to-wall carpeting in your home 15 years ago. Turbotax deluxe federal e file 2012 for pc download Later, you replaced that carpeting with new wall-to-wall carpeting. Turbotax deluxe federal e file 2012 for pc download The cost of the old carpeting you replaced is no longer part of your home's adjusted basis. Turbotax deluxe federal e file 2012 for pc download Repairs versus improvements. Turbotax deluxe federal e file 2012 for pc download   A repair keeps your home in an ordinary, efficient operating condition. Turbotax deluxe federal e file 2012 for pc download It does not add to the value of your home or prolong its life. Turbotax deluxe federal e file 2012 for pc download Repairs include repainting your home inside or outside, fixing your gutters or floors, fixing leaks or plastering, and replacing broken window panes. Turbotax deluxe federal e file 2012 for pc download You cannot deduct repair costs and generally cannot add them to the basis of your home. Turbotax deluxe federal e file 2012 for pc download   However, repairs that are done as part of an extensive remodeling or restoration of your home are considered improvements. Turbotax deluxe federal e file 2012 for pc download You add them to the basis of your home. Turbotax deluxe federal e file 2012 for pc download Records to keep. Turbotax deluxe federal e file 2012 for pc download   You can use Table 4 (at the end of the publication) as a guide to help you keep track of improvements to your home. Turbotax deluxe federal e file 2012 for pc download Also see Keeping Records , below. Turbotax deluxe federal e file 2012 for pc download Energy conservation subsidy. Turbotax deluxe federal e file 2012 for pc download   If a public utility gives you (directly or indirectly) a subsidy for the purchase or installation of an energy conservation measure for your home, do not include the value of that subsidy in your income. Turbotax deluxe federal e file 2012 for pc download You must reduce the basis of your home by that value. Turbotax deluxe federal e file 2012 for pc download   An energy conservation measure is an installation or modification primarily designed to reduce consumption of electricity or natural gas or to improve the management of energy demand. Turbotax deluxe federal e file 2012 for pc download Keeping Records Keeping full and accurate records is vital to properly report your income and expenses, to support your deductions and credits, and to know the basis or adjusted basis of your home. Turbotax deluxe federal e file 2012 for pc download These records include your purchase contract and settlement papers if you bought the property, or other objective evidence if you acquired it by gift, inheritance, or similar means. Turbotax deluxe federal e file 2012 for pc download You should keep any receipts, canceled checks, and similar evidence for improvements or other additions to the basis. Turbotax deluxe federal e file 2012 for pc download In addition, you should keep track of any decreases to the basis such as those listed in Table 3, earlier. Turbotax deluxe federal e file 2012 for pc download How to keep records. Turbotax deluxe federal e file 2012 for pc download   How you keep records is up to you, but they must be clear and accurate and must be available to the IRS. Turbotax deluxe federal e file 2012 for pc download How long to keep records. Turbotax deluxe federal e file 2012 for pc download   You must keep your records for as long as they are important for meeting any provision of the federal tax law. Turbotax deluxe federal e file 2012 for pc download   Keep records that support an item of income, a deduction, or a credit appearing on a return until the period of limitations for the return runs out. Turbotax deluxe federal e file 2012 for pc download (A period of limitations is the period of time after which no legal action can be brought. Turbotax deluxe federal e file 2012 for pc download ) For assessment of tax you owe, this is generally 3 years from the date you filed the return. Turbotax deluxe federal e file 2012 for pc download For filing a claim for credit or refund, this is generally 3 years from the date you filed the original return, or 2 years from the date you paid the tax, whichever is later. Turbotax deluxe federal e file 2012 for pc download Returns filed before the due date are treated as filed on the due date. Turbotax deluxe federal e file 2012 for pc download   You may need to keep records relating to the basis of property (discussed earlier) for longer than the period of limitations. Turbotax deluxe federal e file 2012 for pc download Keep those records as long as they are important in figuring the basis of the original or replacement property. Turbotax deluxe federal e file 2012 for pc download Generally, this means for as long as you own the property and, after you dispose of it, for the period of limitations that applies to you. Turbotax deluxe federal e file 2012 for pc download Table 4. Turbotax deluxe federal e file 2012 for pc download Record of Home Improvements Keep this for your records. Turbotax deluxe federal e file 2012 for pc download Also, keep receipts or other proof of improvements. Turbotax deluxe federal e file 2012 for pc download Remove from this record any improvements that are no longer part of your main home. Turbotax deluxe federal e file 2012 for pc download For example, if you put wall-to-wall carpeting in your home and later replace it with new wall-to-wall carpeting, remove the cost of the first carpeting. Turbotax deluxe federal e file 2012 for pc download (a) Type of Improvement (b) Date (c) Amount   (a) Type of Improvement (b) Date (c) Amount Additions:       Heating & Air  Conditioning:     Bedroom       Heating system     Bathroom       Central air conditioning     Deck       Furnace     Garage       Duct work     Porch       Central humidifier     Patio       Filtration system     Storage shed       Other     Fireplace       Electrical:     Other           Lawn & Grounds:       Lighting fixtures           Wiring upgrades     Landscaping       Other     Driveway       Plumbing:     Walkway           Fences       Water heater     Retaining wall       Soft water system     Sprinkler system       Filtration system     Swimming pool       Other     Exterior lighting       Insulation:     Other           Communications:       Attic           Walls     Satellite dish       Floors     Intercom       Pipes and duct work     Security system       Other     Other             Miscellaneous:       Interior  Improvements:     Storm windows and doors       Built-in appliances     Roof       Kitchen modernization     Central vacuum       Bathroom modernization     Other       Flooring             Wall-to-wall carpeting             Other     How To
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The Turbotax Deluxe Federal E File 2012 For Pc Download

Turbotax deluxe federal e file 2012 for pc download 9. Turbotax deluxe federal e file 2012 for pc download   Depletion Table of Contents Introduction Topics - This chapter discusses: Who Can Claim Depletion? Mineral PropertyCost Depletion Percentage Depletion Oil and Gas Wells Mines and Geothermal Deposits Lessor's Gross Income TimberTimber units. Turbotax deluxe federal e file 2012 for pc download Depletion unit. Turbotax deluxe federal e file 2012 for pc download Introduction Depletion is the using up of natural resources by mining, drilling, quarrying stone, or cutting timber. Turbotax deluxe federal e file 2012 for pc download The depletion deduction allows an owner or operator to account for the reduction of a product's reserves. Turbotax deluxe federal e file 2012 for pc download There are two ways of figuring depletion: cost depletion and percentage depletion. Turbotax deluxe federal e file 2012 for pc download For mineral property, you generally must use the method that gives you the larger deduction. Turbotax deluxe federal e file 2012 for pc download For standing timber, you must use cost depletion. Turbotax deluxe federal e file 2012 for pc download Topics - This chapter discusses: Who can claim depletion Mineral property Timber Who Can Claim Depletion? If you have an economic interest in mineral property or standing timber, you can take a deduction for depletion. Turbotax deluxe federal e file 2012 for pc download More than one person can have an economic interest in the same mineral deposit or timber. Turbotax deluxe federal e file 2012 for pc download In the case of leased property, the depletion deduction is divided between the lessor and the lessee. Turbotax deluxe federal e file 2012 for pc download You have an economic interest if both the following apply. Turbotax deluxe federal e file 2012 for pc download You have acquired by investment any interest in mineral deposits or standing timber. Turbotax deluxe federal e file 2012 for pc download You have a legal right to income from the extraction of the mineral or cutting of the timber to which you must look for a return of your capital investment. Turbotax deluxe federal e file 2012 for pc download A contractual relationship that allows you an economic or monetary advantage from products of the mineral deposit or standing timber is not, in itself, an economic interest. Turbotax deluxe federal e file 2012 for pc download A production payment carved out of, or retained on the sale of, mineral property is not an economic interest. Turbotax deluxe federal e file 2012 for pc download Individuals, corporations, estates, and trusts who claim depletion deductions may be liable for alternative minimum tax. Turbotax deluxe federal e file 2012 for pc download Basis adjustment for depletion. Turbotax deluxe federal e file 2012 for pc download   You must reduce the basis of your property by the depletion allowed or allowable, whichever is greater. Turbotax deluxe federal e file 2012 for pc download Mineral Property Mineral property includes oil and gas wells, mines, and other natural deposits (including geothermal deposits). Turbotax deluxe federal e file 2012 for pc download For this purpose, the term “property” means each separate interest you own in each mineral deposit in each separate tract or parcel of land. Turbotax deluxe federal e file 2012 for pc download You can treat two or more separate interests as one property or as separate properties. Turbotax deluxe federal e file 2012 for pc download See section 614 of the Internal Revenue Code and the related regulations for rules on how to treat separate mineral interests. Turbotax deluxe federal e file 2012 for pc download There are two ways of figuring depletion on mineral property. Turbotax deluxe federal e file 2012 for pc download Cost depletion. Turbotax deluxe federal e file 2012 for pc download Percentage depletion. Turbotax deluxe federal e file 2012 for pc download Generally, you must use the method that gives you the larger deduction. Turbotax deluxe federal e file 2012 for pc download However, unless you are an independent producer or royalty owner, you generally cannot use percentage depletion for oil and gas wells. Turbotax deluxe federal e file 2012 for pc download See Oil and Gas Wells , later. Turbotax deluxe federal e file 2012 for pc download Cost Depletion To figure cost depletion you must first determine the following. Turbotax deluxe federal e file 2012 for pc download The property's basis for depletion. Turbotax deluxe federal e file 2012 for pc download The total recoverable units of mineral in the property's natural deposit. Turbotax deluxe federal e file 2012 for pc download The number of units of mineral sold during the tax year. Turbotax deluxe federal e file 2012 for pc download Basis for depletion. Turbotax deluxe federal e file 2012 for pc download   To figure the property's basis for depletion, subtract all the following from the property's adjusted basis. Turbotax deluxe federal e file 2012 for pc download Amounts recoverable through: Depreciation deductions, Deferred expenses (including deferred exploration and development costs), and Deductions other than depletion. Turbotax deluxe federal e file 2012 for pc download The residual value of land and improvements at the end of operations. Turbotax deluxe federal e file 2012 for pc download The cost or value of land acquired for purposes other than mineral production. Turbotax deluxe federal e file 2012 for pc download Adjusted basis. Turbotax deluxe federal e file 2012 for pc download   The adjusted basis of your property is your original cost or other basis, plus certain additions and improvements, and minus certain deductions such as depletion allowed or allowable and casualty losses. Turbotax deluxe federal e file 2012 for pc download Your adjusted basis can never be less than zero. Turbotax deluxe federal e file 2012 for pc download See Publication 551, Basis of Assets, for more information on adjusted basis. Turbotax deluxe federal e file 2012 for pc download Total recoverable units. Turbotax deluxe federal e file 2012 for pc download   The total recoverable units is the sum of the following. Turbotax deluxe federal e file 2012 for pc download The number of units of mineral remaining at the end of the year (including units recovered but not sold). Turbotax deluxe federal e file 2012 for pc download The number of units of mineral sold during the tax year (determined under your method of accounting, as explained next). Turbotax deluxe federal e file 2012 for pc download   You must estimate or determine recoverable units (tons, pounds, ounces, barrels, thousands of cubic feet, or other measure) of mineral products using the current industry method and the most accurate and reliable information you can obtain. Turbotax deluxe federal e file 2012 for pc download You must include ores and minerals that are developed, in sight, blocked out, or assured. Turbotax deluxe federal e file 2012 for pc download You must also include probable or prospective ores or minerals that are believed to exist based on good evidence. Turbotax deluxe federal e file 2012 for pc download But see Elective safe harbor for owners of oil and gas property , later. Turbotax deluxe federal e file 2012 for pc download Number of units sold. Turbotax deluxe federal e file 2012 for pc download   You determine the number of units sold during the tax year based on your method of accounting. Turbotax deluxe federal e file 2012 for pc download Use the following table to make this determination. Turbotax deluxe federal e file 2012 for pc download    IF you  use . Turbotax deluxe federal e file 2012 for pc download . Turbotax deluxe federal e file 2012 for pc download . Turbotax deluxe federal e file 2012 for pc download THEN the units sold during the year are . Turbotax deluxe federal e file 2012 for pc download . Turbotax deluxe federal e file 2012 for pc download . Turbotax deluxe federal e file 2012 for pc download The cash method of accounting The units sold for which you receive payment during the tax year (regardless of the year of sale). Turbotax deluxe federal e file 2012 for pc download An accrual method of accounting The units sold based on your inventories and method of accounting for inventory. Turbotax deluxe federal e file 2012 for pc download   The number of units sold during the tax year does not include any for which depletion deductions were allowed or allowable in earlier years. Turbotax deluxe federal e file 2012 for pc download Figuring the cost depletion deduction. Turbotax deluxe federal e file 2012 for pc download   Once you have figured your property's basis for depletion, the total recoverable units, and the number of units sold during the tax year, you can figure your cost depletion deduction by taking the following steps. Turbotax deluxe federal e file 2012 for pc download Step Action Result 1 Divide your property's basis for depletion by total recoverable units. Turbotax deluxe federal e file 2012 for pc download Rate per unit. Turbotax deluxe federal e file 2012 for pc download 2 Multiply the rate per unit by units sold during the tax year. Turbotax deluxe federal e file 2012 for pc download Cost depletion deduction. Turbotax deluxe federal e file 2012 for pc download You must keep accounts for the depletion of each property and adjust these accounts each year for units sold and depletion claimed. Turbotax deluxe federal e file 2012 for pc download Elective safe harbor for owners of oil and gas property. Turbotax deluxe federal e file 2012 for pc download   Instead of using the method described earlier to determine the total recoverable units, you can use an elective safe harbor. Turbotax deluxe federal e file 2012 for pc download If you choose the elective safe harbor, the total recoverable units equal 105% of a property's proven reserves (both developed and undeveloped). Turbotax deluxe federal e file 2012 for pc download For details, see Revenue Procedure 2004-19 on page 563 of Internal Revenue Bulletin 2004-10, available at www. Turbotax deluxe federal e file 2012 for pc download irs. Turbotax deluxe federal e file 2012 for pc download gov/pub/irs-irbs/irb04-10. Turbotax deluxe federal e file 2012 for pc download pdf. Turbotax deluxe federal e file 2012 for pc download   To make the election, attach a statement to your timely filed (including extensions) original return for the first tax year for which the safe harbor is elected. Turbotax deluxe federal e file 2012 for pc download The statement must indicate that you are electing the safe harbor provided by Revenue Procedure 2004-19. Turbotax deluxe federal e file 2012 for pc download The election, if made, is effective for the tax year in which it is made and all later years. Turbotax deluxe federal e file 2012 for pc download It cannot be revoked for the tax year in which it is elected, but may be revoked in a later year. Turbotax deluxe federal e file 2012 for pc download Once revoked, it cannot be re-elected for the next 5 years. Turbotax deluxe federal e file 2012 for pc download Percentage Depletion To figure percentage depletion, you multiply a certain percentage, specified for each mineral, by your gross income from the property during the tax year. Turbotax deluxe federal e file 2012 for pc download The rates to be used and other rules for oil and gas wells are discussed later under Independent Producers and Royalty Owners and under Natural Gas Wells . Turbotax deluxe federal e file 2012 for pc download Rates and other rules for percentage depletion of other specific minerals are found later in Mines and Geothermal Deposits . Turbotax deluxe federal e file 2012 for pc download Gross income. Turbotax deluxe federal e file 2012 for pc download   When figuring percentage depletion, subtract from your gross income from the property the following amounts. Turbotax deluxe federal e file 2012 for pc download Any rents or royalties you paid or incurred for the property. Turbotax deluxe federal e file 2012 for pc download The part of any bonus you paid for a lease on the property allocable to the product sold (or that otherwise gives rise to gross income) for the tax year. Turbotax deluxe federal e file 2012 for pc download A bonus payment includes amounts you paid as a lessee to satisfy a production payment retained by the lessor. Turbotax deluxe federal e file 2012 for pc download   Use the following fraction to figure the part of the bonus you must subtract. Turbotax deluxe federal e file 2012 for pc download No. Turbotax deluxe federal e file 2012 for pc download of units sold in the tax year Recoverable units from the property × Bonus Payments For oil and gas wells and geothermal deposits, more information about the definition of gross income from the property is under Oil and Gas Wells , later. Turbotax deluxe federal e file 2012 for pc download For other property, more information about the definition of gross income from the property is under Mines and Geothermal Deposits , later. Turbotax deluxe federal e file 2012 for pc download Taxable income limit. Turbotax deluxe federal e file 2012 for pc download   The percentage depletion deduction generally cannot be more than 50% (100% for oil and gas property) of your taxable income from the property figured without the depletion deduction and the domestic production activities deduction. Turbotax deluxe federal e file 2012 for pc download   Taxable income from the property means gross income from the property minus all allowable deductions (except any deduction for depletion or domestic production activities) attributable to mining processes, including mining transportation. Turbotax deluxe federal e file 2012 for pc download These deductible items include, but are not limited to, the following. Turbotax deluxe federal e file 2012 for pc download Operating expenses. Turbotax deluxe federal e file 2012 for pc download Certain selling expenses. Turbotax deluxe federal e file 2012 for pc download Administrative and financial overhead. Turbotax deluxe federal e file 2012 for pc download Depreciation. Turbotax deluxe federal e file 2012 for pc download Intangible drilling and development costs. Turbotax deluxe federal e file 2012 for pc download Exploration and development expenditures. Turbotax deluxe federal e file 2012 for pc download Deductible taxes (see chapter 5), but not taxes that you capitalize or take as a credit. Turbotax deluxe federal e file 2012 for pc download Losses sustained. Turbotax deluxe federal e file 2012 for pc download   The following rules apply when figuring your taxable income from the property for purposes of the taxable income limit. Turbotax deluxe federal e file 2012 for pc download Do not deduct any net operating loss deduction from the gross income from the property. Turbotax deluxe federal e file 2012 for pc download Corporations do not deduct charitable contributions from the gross income from the property. Turbotax deluxe federal e file 2012 for pc download If, during the year, you dispose of an item of section 1245 property that was used in connection with mineral property, reduce any allowable deduction for mining expenses by the part of any gain you must report as ordinary income that is allocable to the mineral property. Turbotax deluxe federal e file 2012 for pc download See section 1. Turbotax deluxe federal e file 2012 for pc download 613-5(b)(1) of the regulations for information on how to figure the ordinary gain allocable to the property. Turbotax deluxe federal e file 2012 for pc download Oil and Gas Wells You cannot claim percentage depletion for an oil or gas well unless at least one of the following applies. Turbotax deluxe federal e file 2012 for pc download You are either an independent producer or a royalty owner. Turbotax deluxe federal e file 2012 for pc download The well produces natural gas that is either sold under a fixed contract or produced from geopressured brine. Turbotax deluxe federal e file 2012 for pc download If you are an independent producer or royalty owner, see Independent Producers and Royalty Owners , next. Turbotax deluxe federal e file 2012 for pc download For information on the depletion deduction for wells that produce natural gas that is either sold under a fixed contract or produced from geopressured brine, see Natural Gas Wells , later. Turbotax deluxe federal e file 2012 for pc download Independent Producers and Royalty Owners If you are an independent producer or royalty owner, you figure percentage depletion using a rate of 15% of the gross income from the property based on your average daily production of domestic crude oil or domestic natural gas up to your depletable oil or natural gas quantity. Turbotax deluxe federal e file 2012 for pc download However, certain refiners, as explained next, and certain retailers and transferees of proven oil and gas properties, as explained next, cannot claim percentage depletion. Turbotax deluxe federal e file 2012 for pc download For information on figuring the deduction, see Figuring percentage depletion , later. Turbotax deluxe federal e file 2012 for pc download Refiners who cannot claim percentage depletion. Turbotax deluxe federal e file 2012 for pc download   You cannot claim percentage depletion if you or a related person refine crude oil and you and the related person refined more than 75,000 barrels on any day during the tax year based on average (rather than actual) daily refinery runs for the tax year. Turbotax deluxe federal e file 2012 for pc download The average daily refinery run is computed by dividing total refinery runs for the tax year by the total number of days in the tax year. Turbotax deluxe federal e file 2012 for pc download Related person. Turbotax deluxe federal e file 2012 for pc download   You and another person are related persons if either of you holds a significant ownership interest in the other person or if a third person holds a significant ownership interest in both of you. Turbotax deluxe federal e file 2012 for pc download For example, a corporation, partnership, estate, or trust and anyone who holds a significant ownership interest in it are related persons. Turbotax deluxe federal e file 2012 for pc download A partnership and a trust are related persons if one person holds a significant ownership interest in each of them. Turbotax deluxe federal e file 2012 for pc download For purposes of the related person rules, significant ownership interest means direct or indirect ownership of 5% or more in any one of the following. Turbotax deluxe federal e file 2012 for pc download The value of the outstanding stock of a corporation. Turbotax deluxe federal e file 2012 for pc download The interest in the profits or capital of a partnership. Turbotax deluxe federal e file 2012 for pc download The beneficial interests in an estate or trust. Turbotax deluxe federal e file 2012 for pc download Any interest owned by or for a corporation, partnership, trust, or estate is considered to be owned directly both by itself and proportionately by its shareholders, partners, or beneficiaries. Turbotax deluxe federal e file 2012 for pc download Retailers who cannot claim percentage depletion. Turbotax deluxe federal e file 2012 for pc download   You cannot claim percentage depletion if both the following apply. Turbotax deluxe federal e file 2012 for pc download You sell oil or natural gas or their by-products directly or through a related person in any of the following situations. Turbotax deluxe federal e file 2012 for pc download Through a retail outlet operated by you or a related person. Turbotax deluxe federal e file 2012 for pc download To any person who is required under an agreement with you or a related person to use a trademark, trade name, or service mark or name owned by you or a related person in marketing or distributing oil, natural gas, or their by-products. Turbotax deluxe federal e file 2012 for pc download To any person given authority under an agreement with you or a related person to occupy any retail outlet owned, leased, or controlled by you or a related person. Turbotax deluxe federal e file 2012 for pc download The combined gross receipts from sales (not counting resales) of oil, natural gas, or their by-products by all retail outlets taken into account in (1) are more than $5 million for the tax year. Turbotax deluxe federal e file 2012 for pc download   For the purpose of determining if this rule applies, do not count the following. Turbotax deluxe federal e file 2012 for pc download Bulk sales (sales in very large quantities) of oil or natural gas to commercial or industrial users. Turbotax deluxe federal e file 2012 for pc download Bulk sales of aviation fuels to the Department of Defense. Turbotax deluxe federal e file 2012 for pc download Sales of oil or natural gas or their by-products outside the United States if none of your domestic production or that of a related person is exported during the tax year or the prior tax year. Turbotax deluxe federal e file 2012 for pc download Related person. Turbotax deluxe federal e file 2012 for pc download   To determine if you and another person are related persons, see Related person under Refiners who cannot claim percentage depletion, earlier. Turbotax deluxe federal e file 2012 for pc download Sales through a related person. Turbotax deluxe federal e file 2012 for pc download   You are considered to be selling through a related person if any sale by the related person produces gross income from which you may benefit because of your direct or indirect ownership interest in the person. Turbotax deluxe federal e file 2012 for pc download   You are not considered to be selling through a related person who is a retailer if all the following apply. Turbotax deluxe federal e file 2012 for pc download You do not have a significant ownership interest in the retailer. Turbotax deluxe federal e file 2012 for pc download You sell your production to persons who are not related to either you or the retailer. Turbotax deluxe federal e file 2012 for pc download The retailer does not buy oil or natural gas from your customers or persons related to your customers. Turbotax deluxe federal e file 2012 for pc download There are no arrangements for the retailer to acquire oil or natural gas you produced for resale or made available for purchase by the retailer. Turbotax deluxe federal e file 2012 for pc download Neither you nor the retailer knows of or controls the final disposition of the oil or natural gas you sold or the original source of the petroleum products the retailer acquired for resale. Turbotax deluxe federal e file 2012 for pc download Transferees who cannot claim percentage depletion. Turbotax deluxe federal e file 2012 for pc download   You cannot claim percentage depletion if you received your interest in a proven oil or gas property by transfer after 1974 and before October 12, 1990. Turbotax deluxe federal e file 2012 for pc download For a definition of the term “transfer,” see section 1. Turbotax deluxe federal e file 2012 for pc download 613A-7(n) of the regulations. Turbotax deluxe federal e file 2012 for pc download For a definition of the term “interest in proven oil or gas property,” see section 1. Turbotax deluxe federal e file 2012 for pc download 613A-7(p) of the regulations. Turbotax deluxe federal e file 2012 for pc download Figuring percentage depletion. Turbotax deluxe federal e file 2012 for pc download   Generally, as an independent producer or royalty owner, you figure your percentage depletion by computing your average daily production of domestic oil or gas and comparing it to your depletable oil or gas quantity. Turbotax deluxe federal e file 2012 for pc download If your average daily production does not exceed your depletable oil or gas quantity, you figure your percentage depletion by multiplying the gross income from the oil or gas property (defined later) by 15%. Turbotax deluxe federal e file 2012 for pc download If your average daily production of domestic oil or gas exceeds your depletable oil or gas quantity, you must make an allocation as explained later under Average daily production. Turbotax deluxe federal e file 2012 for pc download   In addition, there is a limit on the percentage depletion deduction. Turbotax deluxe federal e file 2012 for pc download See Taxable income limit , later. Turbotax deluxe federal e file 2012 for pc download Average daily production. Turbotax deluxe federal e file 2012 for pc download   Figure your average daily production by dividing your total domestic production of oil or gas for the tax year by the number of days in your tax year. Turbotax deluxe federal e file 2012 for pc download Partial interest. Turbotax deluxe federal e file 2012 for pc download   If you have a partial interest in the production from a property, figure your share of the production by multiplying total production from the property by your percentage of interest in the revenues from the property. Turbotax deluxe federal e file 2012 for pc download   You have a partial interest in the production from a property if you have a net profits interest in the property. Turbotax deluxe federal e file 2012 for pc download To figure the share of production for your net profits interest, you must first determine your percentage participation (as measured by the net profits) in the gross revenue from the property. Turbotax deluxe federal e file 2012 for pc download To figure this percentage, you divide the income you receive for your net profits interest by the gross revenue from the property. Turbotax deluxe federal e file 2012 for pc download Then multiply the total production from the property by your percentage participation to figure your share of the production. Turbotax deluxe federal e file 2012 for pc download Example. Turbotax deluxe federal e file 2012 for pc download Javier Robles owns oil property in which Pablo Olmos owns a 20% net profits interest. Turbotax deluxe federal e file 2012 for pc download During the year, the property produced 10,000 barrels of oil, which Javier sold for $200,000. Turbotax deluxe federal e file 2012 for pc download Javier had expenses of $90,000 attributable to the property. Turbotax deluxe federal e file 2012 for pc download The property generated a net profit of $110,000 ($200,000 − $90,000). Turbotax deluxe federal e file 2012 for pc download Pablo received income of $22,000 ($110,000 × . Turbotax deluxe federal e file 2012 for pc download 20) for his net profits interest. Turbotax deluxe federal e file 2012 for pc download Pablo determined his percentage participation to be 11% by dividing $22,000 (the income he received) by $200,000 (the gross revenue from the property). Turbotax deluxe federal e file 2012 for pc download Pablo determined his share of the oil production to be 1,100 barrels (10,000 barrels × 11%). Turbotax deluxe federal e file 2012 for pc download Depletable oil or natural gas quantity. Turbotax deluxe federal e file 2012 for pc download   Generally, your depletable oil quantity is 1,000 barrels. Turbotax deluxe federal e file 2012 for pc download Your depletable natural gas quantity is 6,000 cubic feet multiplied by the number of barrels of your depletable oil quantity that you choose to apply. Turbotax deluxe federal e file 2012 for pc download If you claim depletion on both oil and natural gas, you must reduce your depletable oil quantity (1,000 barrels) by the number of barrels you use to figure your depletable natural gas quantity. Turbotax deluxe federal e file 2012 for pc download Example. Turbotax deluxe federal e file 2012 for pc download You have both oil and natural gas production. Turbotax deluxe federal e file 2012 for pc download To figure your depletable natural gas quantity, you choose to apply 360 barrels of your 1000-barrel depletable oil quantity. Turbotax deluxe federal e file 2012 for pc download Your depletable natural gas quantity is 2. Turbotax deluxe federal e file 2012 for pc download 16 million cubic feet of gas (360 × 6000). Turbotax deluxe federal e file 2012 for pc download You must reduce your depletable oil quantity to 640 barrels (1000 − 360). Turbotax deluxe federal e file 2012 for pc download If you have production from marginal wells, see section 613A(c)(6) of the Internal Revenue Code to figure your depletable oil or natural gas quantity. Turbotax deluxe federal e file 2012 for pc download Also, see Notice 2012-50, available at www. Turbotax deluxe federal e file 2012 for pc download irs. Turbotax deluxe federal e file 2012 for pc download gov/irb/2012–31_IRB/index. Turbotax deluxe federal e file 2012 for pc download html. Turbotax deluxe federal e file 2012 for pc download Business entities and family members. Turbotax deluxe federal e file 2012 for pc download   You must allocate the depletable oil or gas quantity among the following related persons in proportion to each entity's or family member's production of domestic oil or gas for the year. Turbotax deluxe federal e file 2012 for pc download Corporations, trusts, and estates if 50% or more of the beneficial interest is owned by the same or related persons (considering only persons that own at least 5% of the beneficial interest). Turbotax deluxe federal e file 2012 for pc download You and your spouse and minor children. Turbotax deluxe federal e file 2012 for pc download A related person is anyone mentioned in the related persons discussion under Nondeductible loss in chapter 2 of Publication 544, except that for purposes of this allocation, item (1) in that discussion includes only an individual, his or her spouse, and minor children. Turbotax deluxe federal e file 2012 for pc download Controlled group of corporations. Turbotax deluxe federal e file 2012 for pc download   Members of the same controlled group of corporations are treated as one taxpayer when figuring the depletable oil or natural gas quantity. Turbotax deluxe federal e file 2012 for pc download They share the depletable quantity. Turbotax deluxe federal e file 2012 for pc download A controlled group of corporations is defined in section 1563(a) of the Internal Revenue Code, except that, for this purpose, the stock ownership requirement in that definition is “more than 50%” rather than “at least 80%. Turbotax deluxe federal e file 2012 for pc download ” Gross income from the property. Turbotax deluxe federal e file 2012 for pc download   For purposes of percentage depletion, gross income from the property (in the case of oil and gas wells) is the amount you receive from the sale of the oil or gas in the immediate vicinity of the well. Turbotax deluxe federal e file 2012 for pc download If you do not sell the oil or gas on the property, but manufacture or convert it into a refined product before sale or transport it before sale, the gross income from the property is the representative market or field price (RMFP) of the oil or gas, before conversion or transportation. Turbotax deluxe federal e file 2012 for pc download   If you sold gas after you removed it from the premises for a price that is lower than the RMFP, determine gross income from the property for percentage depletion purposes without regard to the RMFP. Turbotax deluxe federal e file 2012 for pc download   Gross income from the property does not include lease bonuses, advance royalties, or other amounts payable without regard to production from the property. Turbotax deluxe federal e file 2012 for pc download Average daily production exceeds depletable quantities. Turbotax deluxe federal e file 2012 for pc download   If your average daily production for the year is more than your depletable oil or natural gas quantity, figure your allowance for depletion for each domestic oil or natural gas property as follows. Turbotax deluxe federal e file 2012 for pc download Figure your average daily production of oil or natural gas for the year. Turbotax deluxe federal e file 2012 for pc download Figure your depletable oil or natural gas quantity for the year. Turbotax deluxe federal e file 2012 for pc download Figure depletion for all oil or natural gas produced from the property using a percentage depletion rate of 15%. Turbotax deluxe federal e file 2012 for pc download Multiply the result figured in (3) by a fraction, the numerator of which is the result figured in (2) and the denominator of which is the result figured in (1). Turbotax deluxe federal e file 2012 for pc download This is your depletion allowance for that property for the year. Turbotax deluxe federal e file 2012 for pc download Taxable income limit. Turbotax deluxe federal e file 2012 for pc download   If you are an independent producer or royalty owner of oil and gas, your deduction for percentage depletion is limited to the smaller of the following. Turbotax deluxe federal e file 2012 for pc download 100% of your taxable income from the property figured without the deduction for depletion and the deduction for domestic production activities under section 199 of the Internal Revenue Code. Turbotax deluxe federal e file 2012 for pc download For a definition of taxable income from the property, see Taxable income limit , earlier, under Mineral Property. Turbotax deluxe federal e file 2012 for pc download 65% of your taxable income from all sources, figured without the depletion allowance, the deduction for domestic production activities, any net operating loss carryback, and any capital loss carryback. Turbotax deluxe federal e file 2012 for pc download You can carry over to the following year any amount you cannot deduct because of the 65%-of-taxable-income limit. Turbotax deluxe federal e file 2012 for pc download Add it to your depletion allowance (before applying any limits) for the following year. Turbotax deluxe federal e file 2012 for pc download Partnerships and S Corporations Generally, each partner or S corporation shareholder, and not the partnership or S corporation, figures the depletion allowance separately. Turbotax deluxe federal e file 2012 for pc download (However, see Electing large partnerships must figure depletion allowance , later. Turbotax deluxe federal e file 2012 for pc download ) Each partner or shareholder must decide whether to use cost or percentage depletion. Turbotax deluxe federal e file 2012 for pc download If a partner or shareholder uses percentage depletion, he or she must apply the 65%-of-taxable-income limit using his or her taxable income from all sources. Turbotax deluxe federal e file 2012 for pc download Partner's or shareholder's adjusted basis. Turbotax deluxe federal e file 2012 for pc download   The partnership or S corporation must allocate to each partner or shareholder his or her share of the adjusted basis of each oil or gas property held by the partnership or S corporation. Turbotax deluxe federal e file 2012 for pc download The partnership or S corporation makes the allocation as of the date it acquires the oil or gas property. Turbotax deluxe federal e file 2012 for pc download   Each partner's share of the adjusted basis of the oil or gas property generally is figured according to that partner's interest in partnership capital. Turbotax deluxe federal e file 2012 for pc download However, in some cases, it is figured according to the partner's interest in partnership income. Turbotax deluxe federal e file 2012 for pc download   The partnership or S corporation adjusts the partner's or shareholder's share of the adjusted basis of the oil and gas property for any capital expenditures made for the property and for any change in partnership or S corporation interests. Turbotax deluxe federal e file 2012 for pc download Recordkeeping. Turbotax deluxe federal e file 2012 for pc download Each partner or shareholder must separately keep records of his or her share of the adjusted basis in each oil and gas property of the partnership or S corporation. Turbotax deluxe federal e file 2012 for pc download The partner or shareholder must reduce his or her adjusted basis by the depletion allowed or allowable on the property each year. Turbotax deluxe federal e file 2012 for pc download The partner or shareholder must use that reduced adjusted basis to figure cost depletion or his or her gain or loss if the partnership or S corporation disposes of the property. Turbotax deluxe federal e file 2012 for pc download Reporting the deduction. Turbotax deluxe federal e file 2012 for pc download   Information that you, as a partner or shareholder, use to figure your depletion deduction on oil and gas properties is reported by the partnership or S corporation on Schedule K-1 (Form 1065) or on Schedule K-1 (Form 1120S). Turbotax deluxe federal e file 2012 for pc download Deduct oil and gas depletion for your partnership or S corporation interest on Schedule E (Form 1040). Turbotax deluxe federal e file 2012 for pc download The depletion deducted on Schedule E is included in figuring income or loss from rental real estate or royalty properties. Turbotax deluxe federal e file 2012 for pc download The instructions for Schedule E explain where to report this income or loss and whether you need to file either of the following forms. Turbotax deluxe federal e file 2012 for pc download Form 6198, At-Risk Limitations. Turbotax deluxe federal e file 2012 for pc download Form 8582, Passive Activity Loss Limitations. Turbotax deluxe federal e file 2012 for pc download Electing large partnerships must figure depletion allowance. Turbotax deluxe federal e file 2012 for pc download   An electing large partnership, rather than each partner, generally must figure the depletion allowance. Turbotax deluxe federal e file 2012 for pc download The partnership figures the depletion allowance without taking into account the 65-percent-of-taxable-income limit and the depletable oil or natural gas quantity. Turbotax deluxe federal e file 2012 for pc download Also, the adjusted basis of a partner's interest in the partnership is not affected by the depletion allowance. Turbotax deluxe federal e file 2012 for pc download   An electing large partnership is one that meets both the following requirements. Turbotax deluxe federal e file 2012 for pc download The partnership had 100 or more partners in the preceding year. Turbotax deluxe federal e file 2012 for pc download The partnership chooses to be an electing large partnership. Turbotax deluxe federal e file 2012 for pc download Disqualified persons. Turbotax deluxe federal e file 2012 for pc download   An electing large partnership does not figure the depletion allowance of its partners that are disqualified persons. Turbotax deluxe federal e file 2012 for pc download Disqualified persons must figure it themselves, as explained earlier. Turbotax deluxe federal e file 2012 for pc download   All the following are disqualified persons. Turbotax deluxe federal e file 2012 for pc download Refiners who cannot claim percentage depletion (discussed under Independent Producers and Royalty Owners , earlier). Turbotax deluxe federal e file 2012 for pc download Retailers who cannot claim percentage depletion (discussed under Independent Producers and Royalty Owners , earlier). Turbotax deluxe federal e file 2012 for pc download Any partner whose average daily production of domestic crude oil and natural gas is more than 500 barrels during the tax year in which the partnership tax year ends. Turbotax deluxe federal e file 2012 for pc download Average daily production is discussed earlier. Turbotax deluxe federal e file 2012 for pc download Natural Gas Wells You can use percentage depletion for a well that produces natural gas that is either Sold under a fixed contract, or Produced from geopressured brine. Turbotax deluxe federal e file 2012 for pc download Natural gas sold under a fixed contract. Turbotax deluxe federal e file 2012 for pc download   Natural gas sold under a fixed contract qualifies for a percentage depletion rate of 22%. Turbotax deluxe federal e file 2012 for pc download This is domestic natural gas sold by the producer under a contract that does not provide for a price increase to reflect any increase in the seller's tax liability because of the repeal of percentage depletion for gas. Turbotax deluxe federal e file 2012 for pc download The contract must have been in effect from February 1, 1975, until the date of sale of the gas. Turbotax deluxe federal e file 2012 for pc download Price increases after February 1, 1975, are presumed to take the increase in tax liability into account unless demonstrated otherwise by clear and convincing evidence. Turbotax deluxe federal e file 2012 for pc download Natural gas from geopressured brine. Turbotax deluxe federal e file 2012 for pc download   Qualified natural gas from geopressured brine is eligible for a percentage depletion rate of 10%. Turbotax deluxe federal e file 2012 for pc download This is natural gas that is both the following. Turbotax deluxe federal e file 2012 for pc download Produced from a well you began to drill after September 1978 and before 1984. Turbotax deluxe federal e file 2012 for pc download Determined in accordance with section 503 of the Natural Gas Policy Act of 1978 to be produced from geopressured brine. Turbotax deluxe federal e file 2012 for pc download Mines and Geothermal Deposits Certain mines, wells, and other natural deposits, including geothermal deposits, qualify for percentage depletion. Turbotax deluxe federal e file 2012 for pc download Mines and other natural deposits. Turbotax deluxe federal e file 2012 for pc download   For a natural deposit, the percentage of your gross income from the property that you can deduct as depletion depends on the type of deposit. Turbotax deluxe federal e file 2012 for pc download   The following is a list of the percentage depletion rates for the more common minerals. Turbotax deluxe federal e file 2012 for pc download DEPOSITS RATE Sulphur, uranium, and, if from deposits in the United States, asbestos, lead ore, zinc ore, nickel ore, and mica 22% Gold, silver, copper, iron ore, and certain oil shale, if from deposits in the United States 15% Borax, granite, limestone, marble, mollusk shells, potash, slate, soapstone, and carbon dioxide produced from a well 14% Coal, lignite, and sodium chloride 10% Clay and shale used or sold for use in making sewer pipe or bricks or used or sold for use as sintered or burned lightweight aggregates 7½% Clay used or sold for use in making drainage and roofing tile, flower pots, and kindred products, and gravel, sand, and stone (other than stone used or sold for use by a mine owner or operator as dimension or ornamental stone) 5%   You can find a complete list of minerals and their percentage depletion rates in section 613(b) of the Internal Revenue Code. Turbotax deluxe federal e file 2012 for pc download Corporate deduction for iron ore and coal. Turbotax deluxe federal e file 2012 for pc download   The percentage depletion deduction of a corporation for iron ore and coal (including lignite) is reduced by 20% of: The percentage depletion deduction for the tax year (figured without this reduction), minus The adjusted basis of the property at the close of the tax year (figured without the depletion deduction for the tax year). Turbotax deluxe federal e file 2012 for pc download Gross income from the property. Turbotax deluxe federal e file 2012 for pc download   For property other than a geothermal deposit or an oil or gas well, gross income from the property means the gross income from mining. Turbotax deluxe federal e file 2012 for pc download Mining includes all the following. Turbotax deluxe federal e file 2012 for pc download Extracting ores or minerals from the ground. Turbotax deluxe federal e file 2012 for pc download Applying certain treatment processes described later. Turbotax deluxe federal e file 2012 for pc download Transporting ores or minerals (generally, not more than 50 miles) from the point of extraction to the plants or mills in which the treatment processes are applied. Turbotax deluxe federal e file 2012 for pc download Excise tax. Turbotax deluxe federal e file 2012 for pc download   Gross income from mining includes the separately stated excise tax received by a mine operator from the sale of coal to compensate the operator for the excise tax the mine operator must pay to finance black lung benefits. Turbotax deluxe federal e file 2012 for pc download Extraction. Turbotax deluxe federal e file 2012 for pc download   Extracting ores or minerals from the ground includes extraction by mine owners or operators of ores or minerals from the waste or residue of prior mining. Turbotax deluxe federal e file 2012 for pc download This does not apply to extraction from waste or residue of prior mining by the purchaser of the waste or residue or the purchaser of the rights to extract ores or minerals from the waste or residue. Turbotax deluxe federal e file 2012 for pc download Treatment processes. Turbotax deluxe federal e file 2012 for pc download   The processes included as mining depend on the ore or mineral mined. Turbotax deluxe federal e file 2012 for pc download To qualify as mining, the treatment processes must be applied by the mine owner or operator. Turbotax deluxe federal e file 2012 for pc download For a listing of treatment processes considered as mining, see section 613(c)(4) of the Internal Revenue Code and the related regulations. Turbotax deluxe federal e file 2012 for pc download Transportation of more than 50 miles. Turbotax deluxe federal e file 2012 for pc download   If the IRS finds that the ore or mineral must be transported more than 50 miles to plants or mills to be treated because of physical and other requirements, the additional authorized transportation is considered mining and included in the computation of gross income from mining. Turbotax deluxe federal e file 2012 for pc download    If you wish to include transportation of more than 50 miles in the computation of gross income from mining, request an advance ruling from the IRS. Turbotax deluxe federal e file 2012 for pc download Include in the request the facts about the physical and other requirements that prevented the construction and operation of the plant within 50 miles of the point of extraction. Turbotax deluxe federal e file 2012 for pc download For more information about requesting an advance ruling, see Revenue Procedure 2013-1, available at www. Turbotax deluxe federal e file 2012 for pc download irs. Turbotax deluxe federal e file 2012 for pc download gov/irb/2013-01_IRB/ar11. Turbotax deluxe federal e file 2012 for pc download html. Turbotax deluxe federal e file 2012 for pc download Disposal of coal or iron ore. Turbotax deluxe federal e file 2012 for pc download   You cannot take a depletion deduction for coal (including lignite) or iron ore mined in the United States if both the following apply. Turbotax deluxe federal e file 2012 for pc download You disposed of it after holding it for more than 1 year. Turbotax deluxe federal e file 2012 for pc download You disposed of it under a contract under which you retain an economic interest in the coal or iron ore. Turbotax deluxe federal e file 2012 for pc download Treat any gain on the disposition as a capital gain. Turbotax deluxe federal e file 2012 for pc download Disposal to related person. Turbotax deluxe federal e file 2012 for pc download   This rule does not apply if you dispose of the coal or iron ore to one of the following persons. Turbotax deluxe federal e file 2012 for pc download A related person (as listed in chapter 2 of Publication 544). Turbotax deluxe federal e file 2012 for pc download A person owned or controlled by the same interests that own or control you. Turbotax deluxe federal e file 2012 for pc download Geothermal deposits. Turbotax deluxe federal e file 2012 for pc download   Geothermal deposits located in the United States or its possessions qualify for a percentage depletion rate of 15%. Turbotax deluxe federal e file 2012 for pc download A geothermal deposit is a geothermal reservoir of natural heat stored in rocks or in a watery liquid or vapor. Turbotax deluxe federal e file 2012 for pc download For percentage depletion purposes, a geothermal deposit is not considered a gas well. Turbotax deluxe federal e file 2012 for pc download   Figure gross income from the property for a geothermal steam well in the same way as for oil and gas wells. Turbotax deluxe federal e file 2012 for pc download See Gross income from the property , earlier, under Oil and Gas Wells. Turbotax deluxe federal e file 2012 for pc download Percentage depletion on a geothermal deposit cannot be more than 50% of your taxable income from the property. Turbotax deluxe federal e file 2012 for pc download Lessor's Gross Income In the case of leased property, the depletion deduction is divided between the lessor and the lessee. Turbotax deluxe federal e file 2012 for pc download A lessor's gross income from the property that qualifies for percentage depletion usually is the total of the royalties received from the lease. Turbotax deluxe federal e file 2012 for pc download Bonuses and advanced royalties. Turbotax deluxe federal e file 2012 for pc download   Bonuses and advanced royalties are payments a lessee makes before production to a lessor for the grant of rights in a lease or for minerals, gas, or oil to be extracted from leased property. Turbotax deluxe federal e file 2012 for pc download If you are the lessor, your income from bonuses and advanced royalties received is subject to an allowance for depletion, as explained in the next two paragraphs. Turbotax deluxe federal e file 2012 for pc download Figuring cost depletion. Turbotax deluxe federal e file 2012 for pc download   To figure cost depletion on a bonus, multiply your adjusted basis in the property by a fraction, the numerator of which is the bonus and the denominator of which is the total bonus and royalties expected to be received. Turbotax deluxe federal e file 2012 for pc download To figure cost depletion on advanced royalties, use the computation explained earlier under Cost Depletion , treating the number of units for which the advanced royalty is received as the number of units sold. Turbotax deluxe federal e file 2012 for pc download Figuring percentage depletion. Turbotax deluxe federal e file 2012 for pc download   In the case of mines, wells, and other natural deposits other than gas, oil, or geothermal property, you may use the percentage rates discussed earlier under Mines and Geothermal Deposits . Turbotax deluxe federal e file 2012 for pc download Any bonus or advanced royalty payments are generally part of the gross income from the property to which the rates are applied in making the calculation. Turbotax deluxe federal e file 2012 for pc download However, for oil, gas, or geothermal property, gross income does not include lease bonuses, advanced royalties, or other amounts payable without regard to production from the property. Turbotax deluxe federal e file 2012 for pc download Ending the lease. Turbotax deluxe federal e file 2012 for pc download   If you receive a bonus on a lease that ends or is abandoned before you derive any income from mineral extraction, include in income the depletion deduction you took. Turbotax deluxe federal e file 2012 for pc download Do this for the year the lease ends or is abandoned. Turbotax deluxe federal e file 2012 for pc download Also increase your adjusted basis in the property to restore the depletion deduction you previously subtracted. Turbotax deluxe federal e file 2012 for pc download   For advanced royalties, include in income the depletion claimed on minerals for which the advanced royalties were paid if the minerals were not produced before the lease ended. Turbotax deluxe federal e file 2012 for pc download Include this amount in income for the year the lease ends. Turbotax deluxe federal e file 2012 for pc download Increase your adjusted basis in the property by the amount you include in income. Turbotax deluxe federal e file 2012 for pc download Delay rentals. Turbotax deluxe federal e file 2012 for pc download   These are payments for deferring development of the property. Turbotax deluxe federal e file 2012 for pc download Since delay rentals are ordinary rent, they are ordinary income that is not subject to depletion. Turbotax deluxe federal e file 2012 for pc download These rentals can be avoided by either abandoning the lease, beginning development operations, or obtaining production. Turbotax deluxe federal e file 2012 for pc download Timber You can figure timber depletion only by the cost method. Turbotax deluxe federal e file 2012 for pc download Percentage depletion does not apply to timber. Turbotax deluxe federal e file 2012 for pc download Base your depletion on your cost or other basis in the timber. Turbotax deluxe federal e file 2012 for pc download Your cost does not include the cost of land or any amounts recoverable through depreciation. Turbotax deluxe federal e file 2012 for pc download Depletion takes place when you cut standing timber. Turbotax deluxe federal e file 2012 for pc download You can figure your depletion deduction when the quantity of cut timber is first accurately measured in the process of exploitation. Turbotax deluxe federal e file 2012 for pc download Figuring cost depletion. Turbotax deluxe federal e file 2012 for pc download   To figure your cost depletion allowance, you multiply the number of timber units cut by your depletion unit. Turbotax deluxe federal e file 2012 for pc download Timber units. Turbotax deluxe federal e file 2012 for pc download   When you acquire timber property, you must make an estimate of the quantity of marketable timber that exists on the property. Turbotax deluxe federal e file 2012 for pc download You measure the timber using board feet, log scale, cords, or other units. Turbotax deluxe federal e file 2012 for pc download If you later determine that you have more or less units of timber, you must adjust the original estimate. Turbotax deluxe federal e file 2012 for pc download   The term “timber property” means your economic interest in standing timber in each tract or block representing a separate timber account. Turbotax deluxe federal e file 2012 for pc download Depletion unit. Turbotax deluxe federal e file 2012 for pc download   You figure your depletion unit each year by taking the following steps. Turbotax deluxe federal e file 2012 for pc download Determine your cost or adjusted basis of the timber on hand at the beginning of the year. Turbotax deluxe federal e file 2012 for pc download Adjusted basis is defined under Cost Depletion in the discussion on Mineral Property. Turbotax deluxe federal e file 2012 for pc download Add to the amount determined in (1) the cost of any timber units acquired during the year and any additions to capital. Turbotax deluxe federal e file 2012 for pc download Figure the number of timber units to take into account by adding the number of timber units acquired during the year to the number of timber units on hand in the account at the beginning of the year and then adding (or subtracting) any correction to the estimate of the number of timber units remaining in the account. Turbotax deluxe federal e file 2012 for pc download Divide the result of (2) by the result of (3). Turbotax deluxe federal e file 2012 for pc download This is your depletion unit. Turbotax deluxe federal e file 2012 for pc download Example. Turbotax deluxe federal e file 2012 for pc download You bought a timber tract for $160,000 and the land was worth as much as the timber. Turbotax deluxe federal e file 2012 for pc download Your basis for the timber is $80,000. Turbotax deluxe federal e file 2012 for pc download Based on an estimated one million board feet (1,000 MBF) of standing timber, you figure your depletion unit to be $80 per MBF ($80,000 ÷ 1,000). Turbotax deluxe federal e file 2012 for pc download If you cut 500 MBF of timber, your depletion allowance would be $40,000 (500 MBF × $80). Turbotax deluxe federal e file 2012 for pc download When to claim depletion. Turbotax deluxe federal e file 2012 for pc download   Claim your depletion allowance as a deduction in the year of sale or other disposition of the products cut from the timber, unless you choose to treat the cutting of timber as a sale or exchange (explained below). Turbotax deluxe federal e file 2012 for pc download Include allowable depletion for timber products not sold during the tax year the timber is cut as a cost item in the closing inventory of timber products for the year. Turbotax deluxe federal e file 2012 for pc download The inventory is your basis for determining gain or loss in the tax year you sell the timber products. Turbotax deluxe federal e file 2012 for pc download Example. Turbotax deluxe federal e file 2012 for pc download The facts are the same as in the previous example except that you sold only half of the timber products in the cutting year. Turbotax deluxe federal e file 2012 for pc download You would deduct $20,000 of the $40,000 depletion that year. Turbotax deluxe federal e file 2012 for pc download You would add the remaining $20,000 depletion to your closing inventory of timber products. Turbotax deluxe federal e file 2012 for pc download Electing to treat the cutting of timber as a sale or exchange. Turbotax deluxe federal e file 2012 for pc download   You can elect, under certain circumstances, to treat the cutting of timber held for more than 1 year as a sale or exchange. Turbotax deluxe federal e file 2012 for pc download You must make the election on your income tax return for the tax year to which it applies. Turbotax deluxe federal e file 2012 for pc download If you make this election, subtract the adjusted basis for depletion from the fair market value of the timber on the first day of the tax year in which you cut it to figure the gain or loss on the cutting. Turbotax deluxe federal e file 2012 for pc download You generally report the gain as long-term capital gain. Turbotax deluxe federal e file 2012 for pc download The fair market value then becomes your basis for figuring your ordinary gain or loss on the sale or other disposition of the products cut from the timber. Turbotax deluxe federal e file 2012 for pc download For more information, see Timber in chapter 2 of Publication 544, Sales and Other Dispositions of Assets. Turbotax deluxe federal e file 2012 for pc download   You may revoke an election to treat the cutting of timber as a sale or exchange without IRS's consent. Turbotax deluxe federal e file 2012 for pc download The prior election (and revocation) is disregarded for purposes of making a subsequent election. Turbotax deluxe federal e file 2012 for pc download See Form T (Timber), Forest Activities Schedule, for more information. Turbotax deluxe federal e file 2012 for pc download Form T. Turbotax deluxe federal e file 2012 for pc download   Complete and attach Form T (Timber) to your income tax return if you claim a deduction for timber depletion, choose to treat the cutting of timber as a sale or exchange, or make an outright sale of timber. Turbotax deluxe federal e file 2012 for pc download Prev  Up  Next   Home   More Online Publications