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2012 Irs Form 1040 Ez

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2012 Irs Form 1040 Ez

2012 irs form 1040 ez 5. 2012 irs form 1040 ez   Manufacturers Taxes Table of Contents Importer. 2012 irs form 1040 ez Use considered sale. 2012 irs form 1040 ez Lease considered sale. 2012 irs form 1040 ez Bonus goods. 2012 irs form 1040 ez Taxable Event ExemptionsRequirements for Exempt Sales Credits or Refunds Sport Fishing EquipmentRelated person. 2012 irs form 1040 ez Bows, Quivers, Broadheads, and Points Arrow ShaftsExemption for certain wooden arrows. 2012 irs form 1040 ez CoalExported. 2012 irs form 1040 ez Taxable TiresQualifying intercity or local bus. 2012 irs form 1040 ez Qualifying school bus. 2012 irs form 1040 ez Gas Guzzler TaxVehicles not subject to tax. 2012 irs form 1040 ez Imported automobiles. 2012 irs form 1040 ez VaccinesConditions to allowance. 2012 irs form 1040 ez Taxable Medical Devices The following discussion of manufacturers taxes applies to the tax on: Sport fishing equipment; Fishing rods and fishing poles; Electric outboard motors; Fishing tackle boxes; Bows, quivers, broadheads, and points; Arrow shafts; Coal; Taxable tires; Gas guzzler automobiles; and Vaccines. 2012 irs form 1040 ez Manufacturer. 2012 irs form 1040 ez   The term “manufacturer” includes a producer or importer. 2012 irs form 1040 ez A manufacturer is any person who produces a taxable article from new or raw material, or from scrap, salvage, or junk material, by processing or changing the form of an article or by combining or assembling two or more articles. 2012 irs form 1040 ez If you furnish the materials and keep title to those materials and to the finished article, you are considered the manufacturer even though another person actually manufactures the taxable article. 2012 irs form 1040 ez   A manufacturer who sells a taxable article in knockdown (unassembled) condition is liable for the tax. 2012 irs form 1040 ez The person who buys these component parts and assembles a taxable article may also be liable for tax as a further manufacturer depending on the labor, material, and overhead required to assemble the completed article if the article is assembled for business use. 2012 irs form 1040 ez Importer. 2012 irs form 1040 ez   An importer is a person who brings a taxable article into the United States, or withdraws a taxable article from a customs bonded warehouse for sale or use in the United States. 2012 irs form 1040 ez Sale. 2012 irs form 1040 ez   A sale is the transfer of the title to, or the substantial incidents of ownership in, an article to a buyer for consideration that may consist of money, services, or other things. 2012 irs form 1040 ez Use considered sale. 2012 irs form 1040 ez   A manufacturer who uses a taxable article is liable for the tax in the same manner as if it were sold. 2012 irs form 1040 ez Lease considered sale. 2012 irs form 1040 ez   The lease of an article (including any renewal or extension of the lease) by the manufacturer is generally considered a taxable sale. 2012 irs form 1040 ez However, for the gas guzzler tax, only the first lease (excluding any renewal or extension) of the automobile by the manufacturer is considered a sale. 2012 irs form 1040 ez Manufacturers taxes based on sale price. 2012 irs form 1040 ez   The manufacturers taxes imposed on the sale of sport fishing equipment, electric outboard motors, and bows are based on the sale price of the article. 2012 irs form 1040 ez The taxes imposed on coal are based either on the sale price or the weight. 2012 irs form 1040 ez   The price for which an article is sold includes the total consideration paid for the article, whether that consideration is in the form of money, services, or other things. 2012 irs form 1040 ez However, you include certain charges made when a taxable article is sold and you exclude others. 2012 irs form 1040 ez To figure the price on which you base the tax, use the following rules. 2012 irs form 1040 ez Include both the following charges in the price. 2012 irs form 1040 ez Any charge for coverings or containers (regardless of their nature). 2012 irs form 1040 ez Any charge incident to placing the article in a condition packed ready for shipment. 2012 irs form 1040 ez Exclude all the following amounts from the price. 2012 irs form 1040 ez The manufacturers excise tax, whether or not it is stated as a separate charge. 2012 irs form 1040 ez The transportation charges pursuant to the sale. 2012 irs form 1040 ez The cost of transportation of goods to a warehouse before their bona fide sale is not excludable. 2012 irs form 1040 ez Delivery, insurance, installation, retail dealer preparation charges, and other charges you incur in placing the article in the hands of the purchaser under a bona fide sale. 2012 irs form 1040 ez Discounts, rebates, and similar allowances actually granted to the purchaser. 2012 irs form 1040 ez Local advertising charges. 2012 irs form 1040 ez A charge made separately when the article is sold and that qualifies as a charge for “local advertising” may, within certain limits, be excluded from the sale price. 2012 irs form 1040 ez Charges for warranty paid at the purchaser's option. 2012 irs form 1040 ez However, a charge for a warranty of an article that the manufacturer requires the purchaser to pay to obtain the article is included in the sale price on which the tax is figured. 2012 irs form 1040 ez Bonus goods. 2012 irs form 1040 ez   Allocate the sale price if you give free nontaxable goods with the purchase of taxable merchandise. 2012 irs form 1040 ez Figure the tax only on the sale price attributable to the taxable articles. 2012 irs form 1040 ez Example. 2012 irs form 1040 ez A manufacturer sells a quantity of taxable articles and gives the purchaser certain nontaxable articles as a bonus. 2012 irs form 1040 ez The sale price of the shipment is $1,500. 2012 irs form 1040 ez The normal sale price is $2,000: $1,500 for the taxable articles and $500 for the nontaxable articles. 2012 irs form 1040 ez Since the taxable items represent 75% of the normal sale price, the tax is based on 75% of the actual sale price, or $1,125 (75% of $1,500). 2012 irs form 1040 ez The remaining $375 is allocated to the nontaxable articles. 2012 irs form 1040 ez Taxable Event Tax attaches when the title to the article sold passes from the manufacturer to the buyer. 2012 irs form 1040 ez When the title passes depends on the intention of the parties as gathered from the contract of sale. 2012 irs form 1040 ez In the absence of expressed intention, the legal rules of presumption followed in the jurisdiction where the sale occurs determine when title passes. 2012 irs form 1040 ez If the taxable article is used by the manufacturer, the tax attaches at the time use begins. 2012 irs form 1040 ez The manufacturer is liable for the tax. 2012 irs form 1040 ez Partial payments. 2012 irs form 1040 ez   The tax applies to each partial payment received when taxable articles are: Leased, Sold conditionally, Sold on installment with chattel mortgage, or Sold on installment with title to pass in the future. 2012 irs form 1040 ez To figure the tax, multiply the partial payment by the tax rate in effect at the time of the payment. 2012 irs form 1040 ez Exemptions The following sales by the manufacturer are exempt from the manufacturers tax. 2012 irs form 1040 ez Sale of an article to a state or local government for the exclusive use of the state or local government. 2012 irs form 1040 ez This exemption does not apply to the taxes on coal, gas guzzlers, and vaccines. 2012 irs form 1040 ez State is defined in Definitions in chapter 1. 2012 irs form 1040 ez Sale of an article to a nonprofit educational organization for its exclusive use. 2012 irs form 1040 ez This exemption does not apply to the taxes on coal, gas guzzlers, and vaccines. 2012 irs form 1040 ez Nonprofit educational organization is defined under Communications Tax in chapter 4. 2012 irs form 1040 ez Sale of an article to a qualified blood collector organization. 2012 irs form 1040 ez This exemption does not apply to gas guzzlers, recreational equipment, and vaccines. 2012 irs form 1040 ez Qualified blood collector organizations are defined under Communications Tax in chapter 4. 2012 irs form 1040 ez Sale of an article for use by the purchaser as supplies for vessels. 2012 irs form 1040 ez This exemption does not apply to the taxes on coal and vaccines. 2012 irs form 1040 ez Supplies for vessels means ships' stores, sea stores, or legitimate equipment on vessels of war of the United States or any foreign nation, vessels employed in the fisheries or whaling business, or vessels actually engaged in foreign trade. 2012 irs form 1040 ez Sale of an article for use by the purchaser for further manufacture, or for resale by the purchaser to a second purchaser for use by the second purchaser for further manufacture. 2012 irs form 1040 ez This exemption does not apply to the tax on coal and tires. 2012 irs form 1040 ez Use for further manufacture means use in the manufacture or production of an article subject to the manufacturers excise taxes. 2012 irs form 1040 ez If you buy articles tax free and resell or use them other than in the manufacture of another article, you are liable for the tax on their resale or use just as if you had manufactured and sold them. 2012 irs form 1040 ez Sale of an article for export or for resale by the purchaser to a second purchaser for export. 2012 irs form 1040 ez The article may be exported to a foreign country or to a possession of the United States. 2012 irs form 1040 ez A vaccine shipped to a possession of the United States is not considered to be exported. 2012 irs form 1040 ez If an article is sold tax free for export and the manufacturer does not receive proof of export, described later, the manufacturer is liable for the tax. 2012 irs form 1040 ez Sales of articles of native Indian handicraft, such as bows and arrow shafts, manufactured by Indians on reservations, in Indian schools, or under U. 2012 irs form 1040 ez S. 2012 irs form 1040 ez jurisdiction in Alaska. 2012 irs form 1040 ez For tire exemptions, see section 4221(e)(2). 2012 irs form 1040 ez Requirements for Exempt Sales The following requirements must be met for a sale to be exempt from the manufacturers tax. 2012 irs form 1040 ez Registration requirements. 2012 irs form 1040 ez   The manufacturer, first purchaser, and second purchaser in the case of resales must be registered. 2012 irs form 1040 ez See the Form 637 instructions for more information. 2012 irs form 1040 ez Exceptions to registration requirements. 2012 irs form 1040 ez   Registration is not required for: State or local governments, Foreign purchasers of articles sold or resold for export, The United States, or Parties to a sale of supplies for vessels and aircraft. 2012 irs form 1040 ez Certification requirement. 2012 irs form 1040 ez   If the purchaser is required to be registered, the purchaser must give the manufacturer its registration number and certify the exempt purpose for which the article will be used. 2012 irs form 1040 ez The information must be in writing and may be noted on the purchase order or other document furnished by the purchaser to the seller in connection with the sale. 2012 irs form 1040 ez   For a sale to a state or local government, an exemption certificate must be signed by an officer or employee authorized by the state or local government. 2012 irs form 1040 ez See Regulations section 48. 2012 irs form 1040 ez 4221-5(c) for the certificate requirements. 2012 irs form 1040 ez   For sales for use as supplies for vessels and aircraft, if the manufacturer and purchaser are not registered, the owner or agent of the vessel must provide an exemption certificate to the manufacturer before or at the time of sale. 2012 irs form 1040 ez See Regulations section 48. 2012 irs form 1040 ez 4221-4(d) for the certificate requirements. 2012 irs form 1040 ez Proof of export requirement. 2012 irs form 1040 ez   Within 6 months of the date of sale or shipment by the manufacturer, whichever is earlier, the manufacturer must receive proof of exportation. 2012 irs form 1040 ez See Regulations section 48. 2012 irs form 1040 ez 4221-3(d) for evidence that qualifies as proof of exportation. 2012 irs form 1040 ez Proof of resale for further manufacture requirement. 2012 irs form 1040 ez   Within 6 months of the date of sale or shipment by the manufacturer, whichever is earlier, the manufacturer must receive proof that the article has been resold for use in further manufacture. 2012 irs form 1040 ez See Regulations section 48. 2012 irs form 1040 ez 4221-2(c) for evidence that qualifies as proof of resale. 2012 irs form 1040 ez Information to be furnished to purchaser. 2012 irs form 1040 ez   The manufacturer must indicate to the purchaser that the articles normally would be subject to tax and are being sold tax free for an exempt purpose because the purchaser has provided the required certificate. 2012 irs form 1040 ez Credits or Refunds The manufacturer may be eligible to obtain a credit or refund of the manufacturers tax for certain uses, sales, exports, and price readjustments. 2012 irs form 1040 ez The claim must set forth in detail the facts upon which the claim is based. 2012 irs form 1040 ez Uses, sales, and exports. 2012 irs form 1040 ez   A credit or refund (without interest) of the manufacturers taxes may be allowable if a tax-paid article is, by any person: Exported, Used or sold for use as supplies for vessels (except for coal and vaccines), Sold to a state or local government for its exclusive use (except for coal, gas guzzlers, and vaccines), Sold to a nonprofit educational organization for its exclusive use (except for coal, gas guzzlers, and vaccines), Sold to a qualified blood collector organization for its exclusive use (except for gas guzzlers, recreational equipment, and vaccines), or Used for further manufacture of another article subject to the manufacturers taxes (except for coal). 2012 irs form 1040 ez Export. 2012 irs form 1040 ez   If a tax-paid article is exported, the exporter or shipper may claim a credit or refund if the manufacturer waives its right to claim the credit or refund. 2012 irs form 1040 ez In the case of a tax-paid article used to make another taxable article, the subsequent manufacturer may claim the credit or refund. 2012 irs form 1040 ez Price readjustments. 2012 irs form 1040 ez   In addition, a credit or refund (without interest) may be allowable for a tax-paid article for which the price is readjusted by reason of return or repossession of the article or a bona fide discount, rebate, or allowance for taxes based on price. 2012 irs form 1040 ez Conditions to allowance. 2012 irs form 1040 ez   To claim a credit or refund in the case of export; supplies for vessels; or sales to a state or local government, nonprofit educational organization, or qualified blood collector organization; the person who paid the tax must certify on the claim that one of the following applies and that the claimant has the required supporting information. 2012 irs form 1040 ez The claimant sold the article at a tax-excluded price. 2012 irs form 1040 ez The person has repaid, or agreed to repay, the tax to the ultimate vendor of the article. 2012 irs form 1040 ez The person has obtained the written consent of the ultimate vendor to make the claim. 2012 irs form 1040 ez The ultimate vendor generally is the seller making the sale that gives rise to the overpayment of tax. 2012 irs form 1040 ez Claim for further manufacture. 2012 irs form 1040 ez   To claim a credit or refund for further manufacture, the claimant must include a statement that contains the following. 2012 irs form 1040 ez The name and address of the manufacturer and the date of payment. 2012 irs form 1040 ez An identification of the article for which the credit or refund is claimed. 2012 irs form 1040 ez The amount of tax paid on the article and the date on which it was paid. 2012 irs form 1040 ez Information indicating that the article was used as material in the manufacture or production of, or as a component part of, a second article manufactured or produced by the manufacturer, or was sold on or in connection with, or with the sale of a second article manufactured or produced by the manufacturer. 2012 irs form 1040 ez An identification of the second article. 2012 irs form 1040 ez   For claims by the exporter or shipper, the claim must contain the proof of export and a statement signed by the person that paid the tax waiving the right to claim a credit or refund. 2012 irs form 1040 ez The statement must include the amount of tax paid, the date of payment, and the office to which it was paid. 2012 irs form 1040 ez Claim for price readjustment. 2012 irs form 1040 ez   To claim a credit or refund for a price readjustment, the person who paid the tax must include with the claim, a statement that contains the following. 2012 irs form 1040 ez A description of the circumstances that gave rise to the price readjustment. 2012 irs form 1040 ez An identification of the article whose price was readjusted. 2012 irs form 1040 ez The price at which the article was sold. 2012 irs form 1040 ez The amount of tax paid on the article and the date on which it was paid. 2012 irs form 1040 ez The name and address of the purchaser. 2012 irs form 1040 ez The amount repaid to the purchaser or credited to the purchaser's account. 2012 irs form 1040 ez Sport Fishing Equipment A tax of 10% of the sale price is imposed on many articles of sport fishing equipment sold by the manufacturer. 2012 irs form 1040 ez This includes any parts or accessories sold on or in connection with the sale of those articles. 2012 irs form 1040 ez Pay this tax with Form 720. 2012 irs form 1040 ez No tax deposits are required. 2012 irs form 1040 ez Sport fishing equipment includes all the following items. 2012 irs form 1040 ez Fishing rods and poles (and component parts), fishing reels, fly fishing lines, and other fishing lines not over 130 pounds test, fishing spears, spear guns, and spear tips. 2012 irs form 1040 ez Items of terminal tackle, including leaders, artificial lures, artificial baits, artificial flies, fishing hooks, bobbers, sinkers, snaps, drayles, and swivels (but not including natural bait or any item of terminal tackle designed for use and ordinarily used on fishing lines not described in (1)). 2012 irs form 1040 ez The following items of fishing supplies and accessories: fish stringers, creels, bags, baskets, and other containers designed to hold fish, portable bait containers, fishing vests, landing nets, gaff hooks, fishing hook disgorgers, and dressing for fishing lines and artificial flies. 2012 irs form 1040 ez Fishing tip-ups and tilts. 2012 irs form 1040 ez Fishing rod belts, fishing rodholders, fishing harnesses, fish fighting chairs, fishing outriggers, and fishing downriggers. 2012 irs form 1040 ez See Revenue Ruling 88-52 in Cumulative Bulletin 1988-1 for a more complete description of the items of taxable equipment. 2012 irs form 1040 ez Fishing rods and fishing poles. 2012 irs form 1040 ez   The tax on fishing rods and fishing poles (and component parts) is 10% of the sales price not to exceed $10 per article. 2012 irs form 1040 ez The tax is paid by the manufacturer, producer, or importer. 2012 irs form 1040 ez Fishing tackle boxes. 2012 irs form 1040 ez   The tax on fishing tackle boxes is 3% of the sales price. 2012 irs form 1040 ez The tax is paid by the manufacturer, producer, or importer. 2012 irs form 1040 ez Electric outboard boat motors. 2012 irs form 1040 ez   A tax of 3% of the sale price is imposed on the sale by the manufacturer of electric outboard motors. 2012 irs form 1040 ez This includes any parts or accessories sold on or in connection with the sale of those articles. 2012 irs form 1040 ez Certain equipment resale. 2012 irs form 1040 ez   The tax on the sale of sport fishing equipment is imposed a second time under the following circumstances. 2012 irs form 1040 ez If the manufacturer sells a taxable article to any person, the manufacturer is liable for the tax. 2012 irs form 1040 ez If the purchaser or any other person then sells it to a person who is related (discussed next) to the manufacturer, that related person is liable for a second tax on any subsequent sale of the article. 2012 irs form 1040 ez The second tax, however, is not imposed if the constructive sale price rules under section 4216(b) apply to the sale by the manufacturer. 2012 irs form 1040 ez   If the second tax is imposed, a credit for tax previously paid by the manufacturer is available provided the related person can document the tax paid. 2012 irs form 1040 ez The documentation requirement is generally satisfied only through submission of copies of actual records of the person that previously paid the tax. 2012 irs form 1040 ez Related person. 2012 irs form 1040 ez   For the tax on sport fishing equipment, a person is a related person of the manufacturer if that person and the manufacturer have a relationship described in section 465(b)(3)(C). 2012 irs form 1040 ez Bows, Quivers, Broadheads, and Points The tax on bows is 11% (. 2012 irs form 1040 ez 11) of the sales price. 2012 irs form 1040 ez The tax is paid by the manufacturer, producer, or importer. 2012 irs form 1040 ez It applies to bows having a peak draw weight of 30 pounds or more. 2012 irs form 1040 ez The tax is also imposed on the sale of any part or accessory suitable for inclusion in or attachment to a taxable bow and any quiver, broadhead, or point suitable for use with arrows described below. 2012 irs form 1040 ez Pay this tax with Form 720. 2012 irs form 1040 ez No tax deposits are required. 2012 irs form 1040 ez Arrow Shafts The tax on arrow shafts is listed on Form 720. 2012 irs form 1040 ez The tax is paid by the manufacturer, producer, or importer of any arrow shaft (whether sold separately or incorporated as part of a finished or unfinished product) of a type used in the manufacture of any arrow that after its assembly meets either of the following conditions. 2012 irs form 1040 ez It measures 18 inches or more in overall length. 2012 irs form 1040 ez It measures less than 18 inches in overall length but is suitable for use with a taxable bow, described earlier. 2012 irs form 1040 ez Exemption for certain wooden arrows. 2012 irs form 1040 ez   After October 3, 2008, the tax does not apply to any shaft made of all natural wood with no laminations or artificial means of enhancing the spine of such shaft (whether sold separately or incorporated as part of a finished or unfinished product) and used in the manufacture of any arrow that after its assembly meets both of the following conditions. 2012 irs form 1040 ez It measures 5/16 of an inch or less in diameter. 2012 irs form 1040 ez It is not suitable for use with a taxable bow, described earlier. 2012 irs form 1040 ez Pay this tax with Form 720. 2012 irs form 1040 ez No tax deposits are required. 2012 irs form 1040 ez Coal A tax is imposed on the first sale of coal mined in the United States. 2012 irs form 1040 ez The producer of the coal is liable for the tax. 2012 irs form 1040 ez The producer is the person who has vested ownership of the coal under state law immediately after the coal is severed from the ground. 2012 irs form 1040 ez Determine vested ownership without regard to any contractual arrangement for the sale or other disposition of the coal or the payment of any royalties between the producer and third parties. 2012 irs form 1040 ez A producer includes any person who extracts coal from coal waste refuse piles (or from the silt waste product that results from the wet washing of coal). 2012 irs form 1040 ez The tax is not imposed on coal extracted from a riverbed by dredging if it can be shown that the coal has been taxed previously. 2012 irs form 1040 ez Tax rates. 2012 irs form 1040 ez   The tax on underground-mined coal is the lower of: $1. 2012 irs form 1040 ez 10 a ton, or 4. 2012 irs form 1040 ez 4% of the sale price. 2012 irs form 1040 ez   The tax on surface-mined coal is the lower of: 55 cents a ton, or 4. 2012 irs form 1040 ez 4% of the sale price. 2012 irs form 1040 ez   Coal will be taxed at the 4. 2012 irs form 1040 ez 4% rate if the selling price is less than $25 a ton for underground-mined coal and less than $12. 2012 irs form 1040 ez 50 a ton for surface-mined coal. 2012 irs form 1040 ez Apply the tax proportionately if a sale or use includes a portion of a ton. 2012 irs form 1040 ez Example. 2012 irs form 1040 ez If you sell 21,000 pounds (10. 2012 irs form 1040 ez 5 tons) of coal from an underground mine for $525, the price per ton is $50. 2012 irs form 1040 ez The tax is $1. 2012 irs form 1040 ez 10 × 10. 2012 irs form 1040 ez 5 tons ($11. 2012 irs form 1040 ez 55). 2012 irs form 1040 ez Coal production. 2012 irs form 1040 ez   Coal is produced from surface mines if all geological matter (trees, earth, rock) above the coal is removed before the coal is mined. 2012 irs form 1040 ez Treat coal removed by auger and coal reclaimed from coal waste refuse piles as produced from a surface mine. 2012 irs form 1040 ez   Treat coal as produced from an underground mine when the coal is not produced from a surface mine. 2012 irs form 1040 ez In some cases, a single mine may yield coal from both surface mining and underground mining. 2012 irs form 1040 ez Determine if the coal is from a surface mine or an underground mine for each ton of coal produced and not on a mine-by-mine basis. 2012 irs form 1040 ez Determining tonnage or selling price. 2012 irs form 1040 ez   The producer pays the tax on coal at the time of sale or use. 2012 irs form 1040 ez In figuring the selling price for applying the tax, the point of sale is f. 2012 irs form 1040 ez o. 2012 irs form 1040 ez b. 2012 irs form 1040 ez (free on board) mine or f. 2012 irs form 1040 ez o. 2012 irs form 1040 ez b. 2012 irs form 1040 ez cleaning plant if you clean the coal before selling it. 2012 irs form 1040 ez This applies even if you sell the coal for a delivered price. 2012 irs form 1040 ez The f. 2012 irs form 1040 ez o. 2012 irs form 1040 ez b. 2012 irs form 1040 ez mine or f. 2012 irs form 1040 ez o. 2012 irs form 1040 ez b. 2012 irs form 1040 ez cleaning plant is the point at which you figure the number of tons sold for applying the applicable tonnage rate, and the point at which you figure the sale price for applying the 4. 2012 irs form 1040 ez 4% rate. 2012 irs form 1040 ez   The tax applies to the full amount of coal sold. 2012 irs form 1040 ez However, the IRS allows a calculated reduction of the taxable weight of the coal for the weight of the moisture in excess of the coal's inherent moisture content. 2012 irs form 1040 ez Include in the sale price any additional charge for a freeze-conditioning additive in figuring the tax. 2012 irs form 1040 ez   Do not include in the sales price the excise tax imposed on coal. 2012 irs form 1040 ez Coal used by the producer. 2012 irs form 1040 ez   The tax on coal applies if the coal is used by the producer in other than a mining process. 2012 irs form 1040 ez A mining process means the same for this purpose as for percentage depletion. 2012 irs form 1040 ez For example, the tax does not apply if, before selling the coal, you break it, clean it, size it, or apply any other process considered mining under the rules for depletion. 2012 irs form 1040 ez In this case, the tax applies only when you sell the coal. 2012 irs form 1040 ez The tax does not apply to coal used as fuel in the coal drying process since it is considered to be used in a mining process. 2012 irs form 1040 ez However, the tax does apply when you use the coal as fuel or as an ingredient in making coke since the coal is not used in a mining process. 2012 irs form 1040 ez   You must use a constructive sale price to figure the tax under the 4. 2012 irs form 1040 ez 4% rate if you use the coal in other than a mining process. 2012 irs form 1040 ez Base your constructive sale price on sales of a like kind and grade of coal by you or other producers made f. 2012 irs form 1040 ez o. 2012 irs form 1040 ez b. 2012 irs form 1040 ez mine or cleaning plant. 2012 irs form 1040 ez Normally, you use the same constructive price used to figure your percentage depletion deduction. 2012 irs form 1040 ez Blending. 2012 irs form 1040 ez   If you blend surface-mined coal with underground-mined coal during the cleaning process, you must figure the excise tax on the sale of the blended, cleaned coal. 2012 irs form 1040 ez Figure the tax separately for each type of coal in the blend. 2012 irs form 1040 ez Base the tax on the amount of each type in the blend if you can determine the proportion of each type of coal contained in the final blend. 2012 irs form 1040 ez Base the tax on the ratio of each type originally put into the cleaning process if you cannot determine the proportion of each type of coal in the blend. 2012 irs form 1040 ez However, the tax is limited to 4. 2012 irs form 1040 ez 4% of the sale price per ton of the blended coal. 2012 irs form 1040 ez Exemption from tax. 2012 irs form 1040 ez   The tax does not apply to sales of lignite and imported coal. 2012 irs form 1040 ez The only other exemption from the tax on the sale of coal is for coal exported as discussed next. 2012 irs form 1040 ez Exported. 2012 irs form 1040 ez   The tax does not apply to the sale of coal if the coal is in the stream of export when sold by the producer and the coal is actually exported. 2012 irs form 1040 ez   Coal is in the stream of export when sold by the producer if the sale is a step in the exportation of the coal to its ultimate destination in a foreign country. 2012 irs form 1040 ez For example, coal is in the stream of export when: The coal is loaded on an export vessel and title is transferred from the producer to a foreign purchaser, or The producer sells the coal to an export broker in the United States under terms of a contract showing that the coal is to be shipped to a foreign country. 2012 irs form 1040 ez   Proof of export includes any of the following items. 2012 irs form 1040 ez A copy of the export bill of lading issued by the delivering carrier. 2012 irs form 1040 ez A certificate signed by the export carrier's agent or representative showing actual exportation of the coal. 2012 irs form 1040 ez A certificate of landing signed by a customs officer of the foreign country to which the coal is exported. 2012 irs form 1040 ez If the foreign country does not have a customs administrator, a statement of the foreign consignee showing receipt of the coal. 2012 irs form 1040 ez Taxable Tires Taxable tires are divided into three categories for reporting and figuring the tax as described below. 2012 irs form 1040 ez A tax is imposed on taxable tires sold by the manufacturer, producer, or importer at the rate of $. 2012 irs form 1040 ez 0945 ($. 2012 irs form 1040 ez 04725 in the case of a biasply tire or super single tire) for each 10 pounds of the maximum rated load capacity over 3,500 pounds. 2012 irs form 1040 ez The three categories for reporting the tax and the tax rate are listed below. 2012 irs form 1040 ez Taxable tires other than biasply or super single tires at $. 2012 irs form 1040 ez 0945. 2012 irs form 1040 ez Taxable tires, biasply or super single tires (other than super single tires designed for steering) at $. 2012 irs form 1040 ez 04725. 2012 irs form 1040 ez Taxable tires, super single tires designed for steering at $. 2012 irs form 1040 ez 0945. 2012 irs form 1040 ez A taxable tire is any tire of the type used on highway vehicles if wholly or partially made of rubber and if marked according to federal regulations for highway use. 2012 irs form 1040 ez A biasply tire is a pneumatic tire on which the ply cords that extend to the beads are laid at alternate angles substantially less than 90 degrees to the centerline of the tread. 2012 irs form 1040 ez A super single tire is a tire greater than 13 inches in cross section width designed to replace 2 tires in a dual fitment. 2012 irs form 1040 ez Special rule, manufacturer's retail stores. 2012 irs form 1040 ez   The excise tax on taxable tires is imposed at the time the taxable tires are delivered to the manufacturer-owned retail stores, not at the time of sale. 2012 irs form 1040 ez Tires on imported articles. 2012 irs form 1040 ez   The importer of an article equipped with taxable tires is treated as the manufacturer of the tires and is liable for the taxable tire excise tax when the article is sold (except in the case of an automobile bus chassis or body with tires). 2012 irs form 1040 ez Tires exempt from tax. 2012 irs form 1040 ez   The tax on taxable tires does not apply to the following items. 2012 irs form 1040 ez Domestically recapped or retreaded tires if the tires have been sold previously in the United States and were taxable tires at the time of sale. 2012 irs form 1040 ez Tire carcasses not suitable for commercial use. 2012 irs form 1040 ez Tires for use on qualifying intercity, local, and school buses. 2012 irs form 1040 ez For tax-free treatment, the registration requirements discussed earlier under Requirements for Exempt Sales apply. 2012 irs form 1040 ez Tires sold for the exclusive use of the Department of Defense or the Coast Guard. 2012 irs form 1040 ez Tires of a type used exclusively on mobile machinery. 2012 irs form 1040 ez A taxable tire used on mobile machinery is not exempt from tax. 2012 irs form 1040 ez Qualifying intercity or local bus. 2012 irs form 1040 ez   This is any bus used mainly (more than 50%) to transport the general public for a fee and that either operates on a schedule along regular routes or seats at least 20 adults (excluding the driver). 2012 irs form 1040 ez Qualifying school bus. 2012 irs form 1040 ez   This is any bus substantially all the use (85% or more) of which is to transport students and employees of schools. 2012 irs form 1040 ez Credit or refund. 2012 irs form 1040 ez   A credit or refund (without interest) is allowable on tax-paid tires if the tires have been: Exported; Sold to a state or local government for its exclusive use; Sold to a nonprofit educational organization for its exclusive use (as defined under Communications Tax in chapter 4); Sold to a qualified blood collector organization (as defined under Communications Tax in chapter 4) for its exclusive use in connection with a vehicle the organization certifies will be primarily used in the collection, storage, or transportation of blood; Used or sold for use as supplies for vessels; or Sold in connection with qualified intercity, local, or school buses. 2012 irs form 1040 ez   Also, a credit or refund (without interest) is allowable on tax-paid tires sold by any person on, or in connection with, any other article that is sold or used in an activity listed above. 2012 irs form 1040 ez   The person who paid the tax is eligible to make the claim. 2012 irs form 1040 ez Gas Guzzler Tax Tax is imposed on the sale by the manufacturer of automobiles of a model type that has a fuel economy standard as measured by the Environmental Protection Agency (EPA) of less than 22. 2012 irs form 1040 ez 5 miles per gallon. 2012 irs form 1040 ez If you import an automobile for personal use, you may be liable for this tax. 2012 irs form 1040 ez Figure the tax on Form 6197, as discussed later. 2012 irs form 1040 ez The tax rate is based on fuel economy rating. 2012 irs form 1040 ez The tax rates for the gas guzzler tax are shown on Form 6197. 2012 irs form 1040 ez A person that lengthens an existing automobile is the manufacturer of an automobile. 2012 irs form 1040 ez Automobiles. 2012 irs form 1040 ez   An automobile (including limousines) means any four-wheeled vehicle that is: Rated at an unloaded gross vehicle weight of 6,000 pounds or less, Propelled by an engine powered by gasoline or diesel fuel, and Intended for use mainly on public streets, roads, and highways. 2012 irs form 1040 ez Vehicles not subject to tax. 2012 irs form 1040 ez   For the gas guzzler tax, the following vehicles are not considered automobiles. 2012 irs form 1040 ez Limousines with a gross unloaded vehicle weight of more than 6,000 pounds. 2012 irs form 1040 ez Vehicles operated exclusively on a rail or rails. 2012 irs form 1040 ez Vehicles sold for use and used primarily: As ambulances or combination ambulance-hearses, For police or other law enforcement purposes by federal, state, or local governments, or For firefighting purposes. 2012 irs form 1040 ez Vehicles treated under 49 U. 2012 irs form 1040 ez S. 2012 irs form 1040 ez C. 2012 irs form 1040 ez 32901 (1978) as non-passenger automobiles. 2012 irs form 1040 ez This includes limousines manufactured primarily to transport more than 10 persons. 2012 irs form 1040 ez   The manufacturer can sell a vehicle described in item (3) tax free only when the sale is made directly to a purchaser for the described emergency use and the manufacturer and purchaser (other than a state or local government) are registered. 2012 irs form 1040 ez   Treat an Indian tribal government as a state only if the police or other law enforcement purposes are an essential tribal government function. 2012 irs form 1040 ez Model type. 2012 irs form 1040 ez   Model type is a particular class of automobile as determined by EPA regulations. 2012 irs form 1040 ez Fuel economy. 2012 irs form 1040 ez   Fuel economy is the average number of miles an automobile travels on a gallon of gasoline (or diesel fuel) rounded to the nearest 0. 2012 irs form 1040 ez 1 mile as figured by the EPA. 2012 irs form 1040 ez Imported automobiles. 2012 irs form 1040 ez   The tax also applies to automobiles that do not have a prototype-based fuel economy rating assigned by the EPA. 2012 irs form 1040 ez An automobile imported into the United States without a certificate of conformity to United States emission standards and that has no assigned fuel economy rating must be either: Converted by installation of emission controls to conform in all material respects to an automobile already certified for sale in the United States, or Modified by installation of emission control components and individually tested to demonstrate emission compliance. 2012 irs form 1040 ez   An imported automobile that has been converted to conform to an automobile already certified for sale in the United States may use the fuel economy rating assigned to that certified automobile. 2012 irs form 1040 ez   A fuel economy rating is not generally available for modified imported automobiles because the EPA does not require a highway fuel economy test on them. 2012 irs form 1040 ez A separate highway fuel economy test would be required to devise a fuel economy rating (otherwise the automobile is presumed to fall within the lowest fuel economy rating category). 2012 irs form 1040 ez   For more information about fuel economy ratings for imported automobiles, see Revenue Ruling 86-20 and Revenue Procedure 86-9 in Cumulative Bulletin 1986-1, and Revenue Procedure 87-10 in Cumulative Bulletin 1987-1. 2012 irs form 1040 ez Exemptions. 2012 irs form 1040 ez   No one is exempt from the gas guzzler tax, including the federal government, state and local governments, qualified blood collector organizations, and nonprofit educational organizations. 2012 irs form 1040 ez However, see Vehicles not subject to tax, earlier. 2012 irs form 1040 ez Form 6197. 2012 irs form 1040 ez   Use Form 6197 to figure your tax liability for each quarter. 2012 irs form 1040 ez Attach Form 6197 to your Form 720 for the quarter. 2012 irs form 1040 ez See the Form 6197 instructions for more information and the one-time filing rules. 2012 irs form 1040 ez Credit or refund. 2012 irs form 1040 ez   If the manufacturer paid the tax on a vehicle that is used or resold for an emergency use (see item (3) under Vehicles not subject to tax), the manufacturer can claim a credit or refund. 2012 irs form 1040 ez For information about how to file for credits or refunds, see the Instructions for Form 720 or Form 8849. 2012 irs form 1040 ez Vaccines Tax is imposed on certain vaccines sold by the manufacturer in the United States. 2012 irs form 1040 ez A taxable vaccine means any of the following vaccines. 2012 irs form 1040 ez Any vaccine containing diphtheria toxoid. 2012 irs form 1040 ez Any vaccine containing tetanus toxoid. 2012 irs form 1040 ez Any vaccine containing pertussis bacteria, extracted or partial cell bacteria, or specific pertussis antigens. 2012 irs form 1040 ez Any vaccine containing polio virus. 2012 irs form 1040 ez Any vaccine against measles. 2012 irs form 1040 ez Any vaccine against mumps. 2012 irs form 1040 ez Any vaccine against rubella. 2012 irs form 1040 ez Any vaccine against hepatitis A. 2012 irs form 1040 ez Any vaccine against hepatitis B. 2012 irs form 1040 ez Any vaccine against chicken pox. 2012 irs form 1040 ez Any vaccine against rotavirus gastroenteritis. 2012 irs form 1040 ez Any HIB vaccine. 2012 irs form 1040 ez Any conjugate vaccine against streptococcus pneumoniae. 2012 irs form 1040 ez Any trivalent vaccine against influenza or any other vaccine against influenza. 2012 irs form 1040 ez Any meningococcal vaccine. 2012 irs form 1040 ez Any vaccine against the human papillomavirus. 2012 irs form 1040 ez The effective date for the tax on any vaccine against influenza, other than trivalent influenza vaccines, is the later of August 1, 2013, or the date the Secretary of Health and Human Services lists a vaccine against seasonal influenza for purposes of compensation for any vaccine-related injury or death through the Vaccine Injury Compensation Trust Fund. 2012 irs form 1040 ez The tax is $. 2012 irs form 1040 ez 75 per dose of each taxable vaccine. 2012 irs form 1040 ez The tax per dose on a vaccine that contains more than one taxable vaccine is $. 2012 irs form 1040 ez 75 times the number of taxable vaccines. 2012 irs form 1040 ez Taxable use. 2012 irs form 1040 ez   Any manufacturer (including a governmental entity) that uses a taxable vaccine before it is sold will be liable for the tax in the same manner as if the vaccine was sold by the manufacturer. 2012 irs form 1040 ez Credit or refund. 2012 irs form 1040 ez   A credit or refund (without interest) is available if the vaccine is: Returned to the person who paid the tax (other than for resale), or Destroyed. 2012 irs form 1040 ez The claim for a credit or refund must be filed within 6 months after the vaccine is returned or destroyed. 2012 irs form 1040 ez Conditions to allowance. 2012 irs form 1040 ez   To claim a credit or refund, the person who paid the tax must have repaid or agreed to repay the tax to the ultimate purchaser of the vaccine or obtained the written consent of such purchaser to allowance of the credit or refund. 2012 irs form 1040 ez Taxable Medical Devices Taxable medical devices. 2012 irs form 1040 ez   The tax on the sale of certain medical devices by the manufacturer, producer, or importer of the device is 2. 2012 irs form 1040 ez 3% (. 2012 irs form 1040 ez 023) of the sales price. 2012 irs form 1040 ez A taxable medical device is a device that is listed as a device with the Food and Drug Administration (FDA) under section 510(j) of the Federal Food, Drug, and Cosmetic Act and 21 CFR part 807, pursuant to FDA requirements. 2012 irs form 1040 ez There are specific exemptions for eyeglasses, contact lenses, and hearing aids. 2012 irs form 1040 ez There is also an exemption for devices that are determined by the Secretary to be of a type that are generally purchased by the general public at retail for individual use (this exemption is known as the retail exemption). 2012 irs form 1040 ez See T. 2012 irs form 1040 ez D. 2012 irs form 1040 ez 9604 for information on how to determine whether a device falls within the retail exemption, and examples of how a taxpayer might evaluate a given device. 2012 irs form 1040 ez More information. 2012 irs form 1040 ez   For more information on the medical device tax, see section 4191, T. 2012 irs form 1040 ez D. 2012 irs form 1040 ez 9604, and Notice 2012-77. 2012 irs form 1040 ez You can find T. 2012 irs form 1040 ez D. 2012 irs form 1040 ez 9604 and Notice 2012-77 on pages 730 and 781, respectively, of I. 2012 irs form 1040 ez R. 2012 irs form 1040 ez B. 2012 irs form 1040 ez 2012-52 at www. 2012 irs form 1040 ez irs. 2012 irs form 1040 ez gov/pub/irs-irbs/irb12-52. 2012 irs form 1040 ez pdf. 2012 irs form 1040 ez Prev  Up  Next   Home   More Online Publications
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The 2012 Irs Form 1040 Ez

2012 irs form 1040 ez 2. 2012 irs form 1040 ez   Accounting Methods Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Accounting MethodsCash Method Accrual Method Farm Inventory Cash Versus Accrual Method Special Methods of Accounting Combination Method Changes in Methods of Accounting Introduction You must use an accounting method that clearly shows your income and expenses. 2012 irs form 1040 ez You must also figure your taxable income and file an income tax return for an annual accounting period called a tax year. 2012 irs form 1040 ez This chapter discusses accounting methods. 2012 irs form 1040 ez For information on accounting periods, see Publication 538, Accounting Periods and Methods, and the Instructions for Form 1128, Application To Adopt, Change, or Retain a Tax Year. 2012 irs form 1040 ez Topics - This chapter discusses: Cash method Accrual method Farm inventory Special methods of accounting Changes in methods of accounting Useful Items - You may want to see: Publication 538 Accounting Periods and Methods 535 Business Expenses Form (and Instructions) 1128 Application To Adopt, Change, or Retain a Tax Year 3115 Application for Change in Accounting Method See chapter 16 for information about getting publications and forms. 2012 irs form 1040 ez Accounting Methods An accounting method is a set of rules used to determine when and how your income and expenses are reported on your tax return. 2012 irs form 1040 ez Your accounting method includes not only your overall method of accounting, but also the accounting treatment you use for any material item. 2012 irs form 1040 ez A material item is one that affects the proper time for inclusion of income or allowance of a deduction. 2012 irs form 1040 ez An item considered material for financial statement purposes is generally also considered material for income tax purposes. 2012 irs form 1040 ez See Publication 538 for more information. 2012 irs form 1040 ez You generally choose an accounting method for your farm business when you file your first income tax return that includes a Schedule F (Form 1040), Profit or Loss From Farming. 2012 irs form 1040 ez If you later want to change your accounting method, you generally must get IRS approval. 2012 irs form 1040 ez How to obtain IRS approval is discussed later under Changes in Methods of Accounting . 2012 irs form 1040 ez Types of accounting methods. 2012 irs form 1040 ez   Generally, you can use any of the following accounting methods. 2012 irs form 1040 ez Each method is discussed in detail below. 2012 irs form 1040 ez Cash method. 2012 irs form 1040 ez Accrual method. 2012 irs form 1040 ez Special methods of accounting for certain items of income and expenses. 2012 irs form 1040 ez Combination (hybrid) method using elements of two or more of the above. 2012 irs form 1040 ez Business and other items. 2012 irs form 1040 ez   You can account for business and personal items using different accounting methods. 2012 irs form 1040 ez For example, you can figure your business income under an accrual method, even if you use the cash method to figure personal items. 2012 irs form 1040 ez Two or more businesses. 2012 irs form 1040 ez   If you operate two or more separate and distinct businesses, you can use a different accounting method for each business. 2012 irs form 1040 ez Generally, no business is separate and distinct unless a complete and separate set of books and records is maintained for each business. 2012 irs form 1040 ez Cash Method Most farmers use the cash method because they find it easier to keep records using the cash method. 2012 irs form 1040 ez However, certain farm corporations and partnerships and all tax shelters must use an accrual method of accounting. 2012 irs form 1040 ez See Accrual Method Required , later. 2012 irs form 1040 ez Income Under the cash method, include in your gross income all items of income you actually or constructively received during the tax year. 2012 irs form 1040 ez Items of income include money received as well as property or services received. 2012 irs form 1040 ez If you receive property or services, you must include the fair market value (FMV) of the property or services in income. 2012 irs form 1040 ez See chapter 3 for information on how to report farm income on your income tax return. 2012 irs form 1040 ez Constructive receipt. 2012 irs form 1040 ez   Income is constructively received when an amount is credited to your account or made available to you without restriction. 2012 irs form 1040 ez You do not need to have possession of the income for it to be treated as income for the tax year. 2012 irs form 1040 ez If you authorize someone to be your agent and receive income for you, you are considered to have received the income when your agent receives it. 2012 irs form 1040 ez Income is not constructively received if your receipt of the income is subject to substantial restrictions or limitations. 2012 irs form 1040 ez Direct payments and counter-cyclical payments. 2012 irs form 1040 ez   If you received direct payments or counter-cyclical payments under Subtitle A or C of the Farm Security and Rural Investment Act of 2002, you will not be considered to have constructively received a payment merely because you had the option to receive it in the year before it is required to be paid. 2012 irs form 1040 ez Delaying receipt of income. 2012 irs form 1040 ez   You cannot hold checks or postpone taking possession of similar property from one tax year to another to avoid paying tax on the income. 2012 irs form 1040 ez You must report the income in the year the money or property is received or made available to you without restriction. 2012 irs form 1040 ez Example. 2012 irs form 1040 ez Frances Jones, a farmer, was entitled to receive a $10,000 payment on a grain contract in December 2013. 2012 irs form 1040 ez She was told in December that her payment was available. 2012 irs form 1040 ez She requested not to be paid until January 2014. 2012 irs form 1040 ez However, she must still include this payment in her 2013 income because it was made available to her in 2013. 2012 irs form 1040 ez Debts paid by another person or canceled. 2012 irs form 1040 ez   If your debts are paid by another person or are canceled by your creditors, you may have to report part or all of this debt relief as income. 2012 irs form 1040 ez If you receive income in this way, you constructively receive the income when the debt is canceled or paid. 2012 irs form 1040 ez See Cancellation of Debt in chapter 3. 2012 irs form 1040 ez Deferred payment contract. 2012 irs form 1040 ez   If you sell an item under a deferred payment contract that calls for payment in a future year, there is no constructive receipt in the year of sale. 2012 irs form 1040 ez However, if the sales contract states that you have the right to the proceeds of the sale from the buyer at any time after delivery of the item, then you must include the sales price in income in the year of the sale, regardless of when you actually receive payment. 2012 irs form 1040 ez Example. 2012 irs form 1040 ez You are a farmer who uses the cash method and a calendar tax year. 2012 irs form 1040 ez You sell grain in December 2013 under a bona fide arm's-length contract that calls for payment in 2014. 2012 irs form 1040 ez You include the proceeds from the sale in your 2014 gross income since that is the year payment is received. 2012 irs form 1040 ez However, if the contract states that you have the right to the proceeds from the buyer at any time after the grain is delivered, you must include the sales price in your 2013 income, regardless of when you actually receive payment. 2012 irs form 1040 ez Repayment of income. 2012 irs form 1040 ez   If you include an amount in income and in a later year you have to repay all or part of it, then you can usually deduct the repayment in the year repaid. 2012 irs form 1040 ez If the repayment is more than $3,000, a special rule applies. 2012 irs form 1040 ez For details, see Repayments in chapter 11 of Publication 535, Business Expenses. 2012 irs form 1040 ez Expenses Under the cash method, generally you deduct expenses in the tax year you pay them. 2012 irs form 1040 ez This includes business expenses for which you contest liability. 2012 irs form 1040 ez However, you may not be able to deduct an expense paid in advance or you may be required to capitalize certain costs, as explained under Uniform Capitalization Rules in chapter 6. 2012 irs form 1040 ez See chapter 4 for information on how to deduct farm business expenses on your income tax return. 2012 irs form 1040 ez Prepayment. 2012 irs form 1040 ez   Generally, you cannot deduct expenses paid in advance. 2012 irs form 1040 ez This rule applies to any expense paid far enough in advance to, in effect, create an asset with a useful life extending substantially beyond the end of the current tax year. 2012 irs form 1040 ez Example. 2012 irs form 1040 ez On November 1, 2013, you signed and paid $3,600 for a 3-year (36-month) insurance contract for equipment. 2012 irs form 1040 ez In 2013, you are allowed to deduct only $200 (2/36 x $3,600) of the cost of the policy that is attributable to 2013. 2012 irs form 1040 ez In 2014, you'll be able to deduct $1,200 (12/36 x $3,600); in 2015, you'll be able to deduct $1,200 (12/36 x $3,600); and in 2016 you'll be able to deduct the remaining balance of $1,000. 2012 irs form 1040 ez An exception applies if the expense qualifies for the 12-month rule. 2012 irs form 1040 ez See Publication 538 for more information and examples. 2012 irs form 1040 ez See chapter 4 for special rules for prepaid farm supplies and prepaid livestock feed. 2012 irs form 1040 ez Accrual Method Under an accrual method of accounting, you generally report income in the year earned and deduct or capitalize expenses in the year incurred. 2012 irs form 1040 ez The purpose of an accrual method of accounting is to correctly match income and expenses. 2012 irs form 1040 ez Certain businesses engaged in farming must use an accrual method of accounting for its farm business and for sales and purchases of inventory items. 2012 irs form 1040 ez See Accrual Method Required and Farm Inventory , later. 2012 irs form 1040 ez Income Generally, you include an amount in income for the tax year in which all events that fix your right to receive the income have occurred, and you can determine the amount with reasonable accuracy. 2012 irs form 1040 ez Under this rule, include an amount in income on the earliest of the following dates. 2012 irs form 1040 ez When you receive payment. 2012 irs form 1040 ez When the income amount is due to you. 2012 irs form 1040 ez When you earn the income. 2012 irs form 1040 ez When title passes. 2012 irs form 1040 ez If you use an accrual method of accounting, complete Part III of Schedule F (Form 1040) to report your income. 2012 irs form 1040 ez Inventory. 2012 irs form 1040 ez   If you keep an inventory, generally you must use an accrual method of accounting to determine your gross income. 2012 irs form 1040 ez An inventory is necessary to clearly show income when the production, purchase, or sale of merchandise is an income-producing factor. 2012 irs form 1040 ez See Publication 538 for more information. 2012 irs form 1040 ez Also see Farm Inventory , later, for more information on items that must be included in inventory by farmers and inventory valuation methods for farmers. 2012 irs form 1040 ez Expenses Under an accrual method of accounting, you generally deduct or capitalize a business expense when both of the following apply. 2012 irs form 1040 ez The all-events test has been met. 2012 irs form 1040 ez This test is met when: All events have occurred that fix the fact that you have a liability, and The amount of the liability can be determined with reasonable accuracy. 2012 irs form 1040 ez Economic performance has occurred. 2012 irs form 1040 ez Economic performance. 2012 irs form 1040 ez   Generally, you cannot deduct or capitalize a business expense until economic performance occurs. 2012 irs form 1040 ez If your expense is for property or services provided to you, or for your use of property, economic performance occurs as the property or services are provided or as the property is used. 2012 irs form 1040 ez If your expense is for property or services you provide to others, economic performance occurs as you provide the property or services. 2012 irs form 1040 ez Example. 2012 irs form 1040 ez Jane, who is a farmer, uses a calendar tax year and an accrual method of accounting. 2012 irs form 1040 ez She entered into a contract with ABC Farm Consulting in 2012. 2012 irs form 1040 ez The contract stated that Jane pay ABC Farm Consulting $2,000 in December 2012. 2012 irs form 1040 ez It further stipulates that ABC Farm Consulting will develop a plan for integrating her farm with a larger farm operation based in a neighboring state by March 1, 2013. 2012 irs form 1040 ez Jane paid ABC Farm Consulting $2,000 in December 2012. 2012 irs form 1040 ez Integration of operations according to the plan began in May 2013 and they completed the integration in December 2013. 2012 irs form 1040 ez Economic performance for Jane's liability in the contract occurs as the services are provided. 2012 irs form 1040 ez Jane incurs the $2,000 cost in 2013. 2012 irs form 1040 ez An exception to the economic performance rule allows certain recurring items to be treated as incurred during a tax year even though economic performance has not occurred. 2012 irs form 1040 ez For more information, see Economic Performance in Publication 538. 2012 irs form 1040 ez Special rule for related persons. 2012 irs form 1040 ez   Business expenses and interest owed to a related person who uses the cash method of accounting are not deductible until you make the payment and the corresponding amount is includible in the related person's gross income. 2012 irs form 1040 ez Determine the relationship for this rule as of the end of the tax year for which the expense or interest would otherwise be deductible. 2012 irs form 1040 ez For more information, see Internal Revenue Code section 267. 2012 irs form 1040 ez Accrual Method Required Generally, the following businesses, if engaged in farming, must use an accrual method of accounting. 2012 irs form 1040 ez A corporation (other than a family corporation) that had gross receipts of more than $1,000,000 for any tax year beginning after 1975. 2012 irs form 1040 ez A family corporation that had gross receipts of more than $25,000,000 for any tax year beginning after 1985. 2012 irs form 1040 ez A partnership with a corporation as a partner, if that corporation meets the requirements of (1) or (2) above. 2012 irs form 1040 ez A tax shelter. 2012 irs form 1040 ez Note. 2012 irs form 1040 ez Items (1), (2), and (3) above do not apply to an S corporation or a business operating a nursery or sod farm, or the raising or harvesting of trees (other than fruit and nut trees). 2012 irs form 1040 ez Family corporation. 2012 irs form 1040 ez   A family corporation is generally a corporation that meets one of the following ownership requirements. 2012 irs form 1040 ez Members of the same family own at least 50% of the total combined voting power of all classes of stock entitled to vote and at least 50% of the total shares of all other classes of stock of the corporation. 2012 irs form 1040 ez Members of two families have owned, directly or indirectly, since October 4, 1976, at least 65% of the total combined voting power of all classes of voting stock and at least 65% of the total shares of all other classes of the corporation's stock. 2012 irs form 1040 ez Members of three families have owned, directly or indirectly, since October 4, 1976, at least 50% of the total combined voting power of all classes of voting stock and at least 50% of the total shares of all other classes of the corporation's stock. 2012 irs form 1040 ez For more information on family corporations, see Internal Revenue Code section 447. 2012 irs form 1040 ez Tax shelter. 2012 irs form 1040 ez   A tax shelter is a partnership, noncorporate enterprise, or S corporation that meets either of the following tests. 2012 irs form 1040 ez Its principal purpose is the avoidance or evasion of federal income tax. 2012 irs form 1040 ez It is a farming syndicate. 2012 irs form 1040 ez A farming syndicate is an entity that meets either of the following tests. 2012 irs form 1040 ez Interests in the activity have been offered for sale in an offering required to be registered with a federal or state agency with the authority to regulate the offering of securities for sale. 2012 irs form 1040 ez More than 35% of the losses during the tax year are allocable to limited partners or limited entrepreneurs. 2012 irs form 1040 ez   A “limited partner” is one whose personal liability for partnership debts is limited to the money or other property the partner contributed or is required to contribute to the partnership. 2012 irs form 1040 ez   A “limited entrepreneur” is one who has an interest in an enterprise other than as a limited partner and does not actively participate in the management of the enterprise. 2012 irs form 1040 ez Farm Inventory If you are required to keep an inventory, you should keep a complete record of your inventory as part of your farm records. 2012 irs form 1040 ez This record should show the actual count or measurement of the inventory. 2012 irs form 1040 ez It should also show all factors that enter into its valuation, including quality and weight, if applicable. 2012 irs form 1040 ez Hatchery business. 2012 irs form 1040 ez   If you are in the hatchery business, and use an accrual method of accounting, you must include in inventory eggs in the process of incubation. 2012 irs form 1040 ez Products held for sale. 2012 irs form 1040 ez   All harvested and purchased farm products held for sale or for feed or seed, such as grain, hay, silage, concentrates, cotton, tobacco, etc. 2012 irs form 1040 ez , must be included in inventory. 2012 irs form 1040 ez Supplies. 2012 irs form 1040 ez   Supplies acquired for sale or that become a physical part of items held for sale must be included in inventory. 2012 irs form 1040 ez Deduct the cost of supplies in the year used or consumed in operations. 2012 irs form 1040 ez Do not include incidental supplies in inventory as these are deductible in the year of purchase. 2012 irs form 1040 ez Livestock. 2012 irs form 1040 ez   Livestock held primarily for sale must be included in inventory. 2012 irs form 1040 ez Livestock held for draft, breeding, or dairy purposes can either be depreciated or included in inventory. 2012 irs form 1040 ez See also Unit-livestock-price method , later. 2012 irs form 1040 ez If you are in the business of breeding and raising chinchillas, mink, foxes, or other fur-bearing animals, these animals are livestock for inventory purposes. 2012 irs form 1040 ez Growing crops. 2012 irs form 1040 ez   Generally, growing crops are not required to be included in inventory. 2012 irs form 1040 ez However, if the crop has a preproductive period of more than 2 years, you may have to capitalize (or include in inventory) costs associated with the crop. 2012 irs form 1040 ez See Uniform capitalization rules below. 2012 irs form 1040 ez Also see Uniform Capitalization Rules in  chapter 6. 2012 irs form 1040 ez Items to include in inventory. 2012 irs form 1040 ez   Your inventory should include all items held for sale, or for use as feed, seed, etc. 2012 irs form 1040 ez , whether raised or purchased, that are unsold at the end of the year. 2012 irs form 1040 ez Uniform capitalization rules. 2012 irs form 1040 ez   The following applies if you are required to use an accrual method of accounting. 2012 irs form 1040 ez The uniform capitalization rules apply to all costs of raising a plant, even if the preproductive period of raising a plant is 2 years or less. 2012 irs form 1040 ez The costs of animals are subject to the uniform capitalization rules. 2012 irs form 1040 ez Inventory valuation methods. 2012 irs form 1040 ez   The following methods, described below, are those generally available for valuing inventory. 2012 irs form 1040 ez The method you use must conform to generally accepted accounting principles for similar businesses and must clearly reflect income. 2012 irs form 1040 ez Cost. 2012 irs form 1040 ez Lower of cost or market. 2012 irs form 1040 ez Farm-price method. 2012 irs form 1040 ez Unit-livestock-price method. 2012 irs form 1040 ez Cost and lower of cost or market methods. 2012 irs form 1040 ez   See Publication 538 for information on these valuation methods. 2012 irs form 1040 ez If you value your livestock inventory at cost or the lower of cost or market, you do not need IRS approval to change to the unit-livestock-price method. 2012 irs form 1040 ez However, if you value your livestock inventory using the farm-price method, then you must obtain permission from the IRS to change to the unit-livestock-price method. 2012 irs form 1040 ez Farm-price method. 2012 irs form 1040 ez   Under this method, each item, whether raised or purchased, is valued at its market price less the direct cost of disposition. 2012 irs form 1040 ez Market price is the current price at the nearest market in the quantities you usually sell. 2012 irs form 1040 ez Cost of disposition includes broker's commissions, freight, hauling to market, and other marketing costs. 2012 irs form 1040 ez If you use this method, you must use it for your entire inventory, except that livestock can be inventoried under the unit-livestock-price method. 2012 irs form 1040 ez Unit-livestock-price method. 2012 irs form 1040 ez   This method recognizes the difficulty of establishing the exact costs of producing and raising each animal. 2012 irs form 1040 ez You group or classify livestock according to type and age and use a standard unit price for each animal within a class or group. 2012 irs form 1040 ez The unit price you assign should reasonably approximate the normal costs incurred in producing the animals in such classes. 2012 irs form 1040 ez Unit prices and classifications are subject to approval by the IRS on examination of your return. 2012 irs form 1040 ez You must annually reevaluate your unit livestock prices and adjust the prices upward or downward to reflect increases or decreases in the costs of raising livestock. 2012 irs form 1040 ez IRS approval is not required for these adjustments. 2012 irs form 1040 ez Any other changes in unit prices or classifications do require IRS approval. 2012 irs form 1040 ez   If you use this method, include all raised livestock in inventory, regardless of whether they are held for sale or for draft, breeding, sport, or dairy purposes. 2012 irs form 1040 ez This method accounts only for the increase in cost of raising an animal to maturity. 2012 irs form 1040 ez It does not provide for any decrease in the animal's market value after it reaches maturity. 2012 irs form 1040 ez Also, if you raise cattle, you are not required to inventory hay you grow to feed your herd. 2012 irs form 1040 ez   Do not include sold or lost animals in the year-end inventory. 2012 irs form 1040 ez If your records do not show which animals were sold or lost, treat the first animals acquired as sold or lost. 2012 irs form 1040 ez The animals on hand at the end of the year are considered those most recently acquired. 2012 irs form 1040 ez   You must include in inventory all livestock purchased primarily for sale. 2012 irs form 1040 ez You can choose either to include in inventory or depreciate livestock purchased for draft, breeding, sport or dairy purposes. 2012 irs form 1040 ez However, you must be consistent from year to year, regardless of the method you have chosen. 2012 irs form 1040 ez You cannot change your method without obtaining approval from the IRS. 2012 irs form 1040 ez   You must include in inventory animals purchased after maturity or capitalize them at their purchase price. 2012 irs form 1040 ez If the animals are not mature at purchase, increase the cost at the end of each tax year according to the established unit price. 2012 irs form 1040 ez However, in the year of purchase, do not increase the cost of any animal purchased during the last 6 months of the year. 2012 irs form 1040 ez This “no increase” rule does not apply to tax shelters which must make an adjustment for any animal purchased during the year. 2012 irs form 1040 ez It also does not apply to taxpayers that must make an adjustment to reasonably reflect the particular period in the year in which animals are purchased, if necessary to avoid significant distortions in income. 2012 irs form 1040 ez Uniform capitalization rules. 2012 irs form 1040 ez   A farmer can determine costs required to be allocated under the uniform capitalization rules by using the farm-price or unit-livestock-price inventory method. 2012 irs form 1040 ez This applies to any plant or animal, even if the farmer does not hold or treat the plant or animal as inventory property. 2012 irs form 1040 ez Cash Versus Accrual Method The following examples compare the cash and accrual methods of accounting. 2012 irs form 1040 ez Example 1. 2012 irs form 1040 ez You are a farmer who uses an accrual method of accounting. 2012 irs form 1040 ez You keep your books on the calendar year basis. 2012 irs form 1040 ez You sell grain in December 2013 but you are not paid until January 2014. 2012 irs form 1040 ez Because the accrual method was used and 2013 was the tax year in which the grain was sold, you must both include the sales proceeds and deduct the costs incurred in producing the grain on your 2013 tax return. 2012 irs form 1040 ez Example 2. 2012 irs form 1040 ez Assume the same facts as in Example 1 except that you use the cash method and there was no constructive receipt of the sales proceeds in 2013. 2012 irs form 1040 ez Under this method, you include the sales proceeds in income for 2014, the year you receive payment. 2012 irs form 1040 ez Deduct the costs of producing the grain in the year you pay for them. 2012 irs form 1040 ez Special Methods of Accounting There are special methods of accounting for certain items of income and expense. 2012 irs form 1040 ez Crop method. 2012 irs form 1040 ez   If you do not harvest and dispose of your crop in the same tax year that you plant it, you can, with IRS approval, use the crop method of accounting. 2012 irs form 1040 ez You cannot use the crop method for any tax return, including your first tax return, unless you receive approval from the IRS. 2012 irs form 1040 ez Under this method, you deduct the entire cost of producing the crop, including the expense of seed or young plants, in the year you realize income from the crop. 2012 irs form 1040 ez    See chapter 4 for details on deducting the costs of operating a farm. 2012 irs form 1040 ez Also see Regulations section 1. 2012 irs form 1040 ez 162-12. 2012 irs form 1040 ez Other special methods. 2012 irs form 1040 ez   Other special methods of accounting apply to the following items. 2012 irs form 1040 ez Amortization, see chapter 7. 2012 irs form 1040 ez Casualties, see chapter 11. 2012 irs form 1040 ez Condemnations, see chapter 11. 2012 irs form 1040 ez Depletion, see chapter 7. 2012 irs form 1040 ez Depreciation, see chapter 7. 2012 irs form 1040 ez Farm business expenses, see chapter 4. 2012 irs form 1040 ez Farm income, see chapter 3. 2012 irs form 1040 ez Installment sales, see chapter 10. 2012 irs form 1040 ez Soil and water conservation expenses, see chapter 5. 2012 irs form 1040 ez Thefts, see chapter 11. 2012 irs form 1040 ez Combination Method Generally, you can use any combination of cash, accrual, and special methods of accounting if the combination clearly shows your income and expenses and you use it consistently. 2012 irs form 1040 ez However, the following restrictions apply. 2012 irs form 1040 ez If you use the cash method for figuring your income, you must use the cash method for reporting your expenses. 2012 irs form 1040 ez If you use an accrual method for reporting your expenses, you must use an accrual method for figuring your income. 2012 irs form 1040 ez Changes in Methods of Accounting A change in your method of accounting includes a change in: Your overall method, such as from the cash method to an accrual method, and Your treatment of any material item, such as a change in your method of valuing inventory (for example, a change from the farm-price method to the unit-livestock-price method, discussed earlier). 2012 irs form 1040 ez Generally, once you have set up your accounting method, you must receive approval from the IRS before you can change to another method of accounting. 2012 irs form 1040 ez You may also have to pay a fee. 2012 irs form 1040 ez To obtain approval, you must generally file Form 3115. 2012 irs form 1040 ez There are instances when you can obtain automatic consent to change certain methods of accounting. 2012 irs form 1040 ez See the List of Automatic Accounting Method Changes located in the Instructions for Form 3115. 2012 irs form 1040 ez For more information on changes in methods of accounting, see Form 3115 and the Instructions for Form 3115. 2012 irs form 1040 ez Also see Publication 538. 2012 irs form 1040 ez Prev  Up  Next   Home   More Online Publications