File your Taxes for Free!
  • Get your maximum refund*
  • 100% accurate calculations guaranteed*

TurboTax Federal Free Edition - File Taxes Online

Don't let filing your taxes get you down! We'll help make it as easy as possible. With e-file and direct deposit, there's no faster way to get your refund!

Approved TurboTax Affiliate Site. TurboTax and TurboTax Online, among others, are registered trademarks and/or service marks of Intuit Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.


© 2012 - 2018 All rights reserved.

This is an Approved TurboTax Affiliate site. TurboTax and TurboTax Online, among other are registered trademarks and/or service marks of Intuit, Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.
When discussing "Free e-file", note that state e-file is an additional fee. E-file fees do not apply to New York state returns. Prices are subject to change without notice. E-file and get your refund faster
*If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
*Maximum Refund Guarantee - or Your Money Back: If you get a larger refund or smaller tax due from another tax preparation method, we'll refund the applicable TurboTax federal and/or state purchase price paid. TurboTax Federal Free Edition customers are entitled to payment of $14.99 and a refund of your state purchase price paid. Claims must be submitted within sixty (60) days of your TurboTax filing date and no later than 6/15/14. E-file, Audit Defense, Professional Review, Refund Transfer and technical support fees are excluded. This guarantee cannot be combined with the TurboTax Satisfaction (Easy) Guarantee. *We're so confident your return will be done right, we guarantee it. Accurate calculations guaranteed. If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
https://turbotax.intuit.com/corp/guarantees.jsp

Amending Your Tax Return

Amended Tax ReturnsEfile 1040ez2011 Income Tax Forms IndividualIrs Free E File 2011E File 2012 Federal TaxesHow To File State Taxes FreeFind State Tax FormsFree Ez Tax FormSearch FreetaxusaTax Software ComparisonHow To File Your State Taxes For Free1040ez Tax Forms To PrintState Income Tax1040File My Taxes OnlineIrs Website For For 1040ezFederal Income Tax Rates 2012Free Tax PreparationFree E File State Tax ReturnWww Freefile Irs GovHow Do I File A 2012 Tax ReturnCan I Efile My 2011 Tax ReturnFederal1040x AmendmentH&r Block Taxcut Free FileIrs Form 1040xFile My 2011 Tax Return For FreeAmending 2011 TaxesFile 2007 Fed Income TaxHow Do I Complete A 1040x Forms2006 Tax FormsAmended Return FormHow Can I File My 2010 Taxes For FreeHow Do I Efile My State TaxesFile Your State Taxes Online For FreeIrs Amendment FormsAmmend TaxFiling 1040x OnlineAmended Tax FormAmending Tax Returns1040x Irs

Amending Your Tax Return

Amending your tax return 5. Amending your tax return   Additional Rules for Listed Property Table of Contents Introduction Useful Items - You may want to see: What Is Listed Property?Passenger Automobiles Other Property Used for Transportation Computers and Related Peripheral Equipment Can Employees Claim a Deduction? What Is the Business-Use Requirement?How To Allocate Use Qualified Business Use Recapture of Excess Depreciation Lessee's Inclusion Amount Do the Passenger Automobile Limits Apply?Maximum Depreciation Deduction Deductions After the Recovery Period Deductions For Passenger Automobiles Acquired in a Trade-in What Records Must Be Kept?Adequate Records How Is Listed Property Information Reported? Introduction This chapter discusses the deduction limits and other special rules that apply to certain listed property. Amending your tax return Listed property includes cars and other property used for transportation, property used for entertainment, and certain computers. Amending your tax return Deductions for listed property (other than certain leased property) are subject to the following special rules and limits. Amending your tax return Deduction for employees. Amending your tax return If your use of the property is not for your employer's convenience or is not required as a condition of your employment, you cannot deduct depreciation or rent expenses for your use of the property as an employee. Amending your tax return Business-use requirement. Amending your tax return If the property is not used predominantly (more than 50%) for qualified business use, you cannot claim the section 179 deduction or a special depreciation allowance. Amending your tax return In addition, you must figure any depreciation deduction under the Modified Accelerated Cost Recovery System (MACRS) using the straight line method over the ADS recovery period. Amending your tax return You may also have to recapture (include in income) any excess depreciation claimed in previous years. Amending your tax return A similar inclusion amount applies to certain leased property. Amending your tax return Passenger automobile limits and rules. Amending your tax return Annual limits apply to depreciation deductions (including section 179 deductions and any special depreciation allowance) for certain passenger automobiles. Amending your tax return You can continue to deduct depreciation for the unrecovered basis resulting from these limits after the end of the recovery period. Amending your tax return This chapter defines listed property and explains the special rules and depreciation deduction limits that apply, including the special inclusion amount rule for leased property. Amending your tax return It also discusses the recordkeeping rules for listed property and explains how to report information about the property on your tax return. Amending your tax return Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 535 Business Expenses 587 Business Use of Your Home (Including Use by Daycare Providers) Form (and Instructions) 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses 4562 Depreciation and Amortization 4797 Sales of Business Property See chapter 6 for information about getting publications and forms. Amending your tax return What Is Listed Property? Listed property is any of the following. Amending your tax return Passenger automobiles (as defined later). Amending your tax return Any other property used for transportation, unless it is an excepted vehicle. Amending your tax return Property generally used for entertainment, recreation, or amusement (including photographic, phonographic, communication, and video-recording equipment). Amending your tax return Computers and related peripheral equipment, unless used only at a regular business establishment and owned or leased by the person operating the establishment. Amending your tax return A regular business establishment includes a portion of a dwelling unit that is used both regularly and exclusively for business as discussed in Publication 587. Amending your tax return Improvements to listed property. Amending your tax return   An improvement made to listed property that must be capitalized is treated as a new item of depreciable property. Amending your tax return The recovery period and method of depreciation that apply to the listed property as a whole also apply to the improvement. Amending your tax return For example, if you must depreciate the listed property using the straight line method, you also must depreciate the improvement using the straight line method. Amending your tax return Passenger Automobiles A passenger automobile is any four-wheeled vehicle made primarily for use on public streets, roads, and highways and rated at 6,000 pounds or less of unloaded gross vehicle weight (6,000 pounds or less of gross vehicle weight for trucks and vans). Amending your tax return It includes any part, component, or other item physically attached to the automobile at the time of purchase or usually included in the purchase price of an automobile. Amending your tax return The following vehicles are not considered passenger automobiles for these purposes. Amending your tax return An ambulance, hearse, or combination ambulance-hearse used directly in a trade or business. Amending your tax return A vehicle used directly in the trade or business of transporting persons or property for pay or hire. Amending your tax return A truck or van that is a qualified nonpersonal use vehicle. Amending your tax return Qualified nonpersonal use vehicles. Amending your tax return   Qualified nonpersonal use vehicles are vehicles that by their nature are not likely to be used more than a minimal amount for personal purposes. Amending your tax return They include the trucks and vans listed as excepted vehicles under Other Property Used for Transportation , next. Amending your tax return They also include trucks and vans that have been specially modified so that they are not likely to be used more than a minimal amount for personal purposes, such as by installation of permanent shelving and painting the vehicle to display advertising or the company's name. Amending your tax return For a detailed discussion of passenger automobiles, including leased passenger automobiles, see  Publication 463. Amending your tax return Other Property Used for Transportation Although vehicles used to transport persons or property for pay or hire and vehicles rated at more than the 6,000-pound threshold are not passenger automobiles, they are still “other property used for transportation” and are subject to the special rules for listed property. Amending your tax return Other property used for transportation includes trucks, buses, boats, airplanes, motorcycles, and any other vehicles used to transport persons or goods. Amending your tax return Excepted vehicles. Amending your tax return   Other property used for transportation does not include the following qualified nonpersonal use vehicles (defined earlier under Passenger Automobiles ). Amending your tax return Clearly marked police and fire vehicles. Amending your tax return Unmarked vehicles used by law enforcement officers if the use is officially authorized. Amending your tax return Ambulances used as such and hearses used as such. Amending your tax return Any vehicle with a loaded gross vehicle weight of over 14,000 pounds that is designed to carry cargo. Amending your tax return Bucket trucks (cherry pickers), cement mixers, dump trucks (including garbage trucks), flatbed trucks, and refrigerated trucks. Amending your tax return Combines, cranes and derricks, and forklifts. Amending your tax return Delivery trucks with seating only for the driver, or only for the driver plus a folding jump seat. Amending your tax return Qualified moving vans. Amending your tax return Qualified specialized utility repair trucks. Amending your tax return School buses used in transporting students and employees of schools. Amending your tax return Other buses with a capacity of at least 20 passengers that are used as passenger buses. Amending your tax return Tractors and other special purpose farm vehicles. Amending your tax return Clearly marked police and fire vehicle. Amending your tax return   A clearly marked police or fire vehicle is a vehicle that meets all the following requirements. Amending your tax return It is owned or leased by a governmental unit or an agency or instrumentality of a governmental unit. Amending your tax return It is required to be used for commuting by a police officer or fire fighter who, when not on a regular shift, is on call at all times. Amending your tax return It is prohibited from being used for personal use (other than commuting) outside the limit of the police officer's arrest powers or the fire fighter's obligation to respond to an emergency. Amending your tax return It is clearly marked with painted insignia or words that make it readily apparent that it is a police or fire vehicle. Amending your tax return A marking on a license plate is not a clear marking for these purposes. Amending your tax return Qualified moving van. Amending your tax return   A qualified moving van is any truck or van used by a professional moving company for moving household or business goods if the following requirements are met. Amending your tax return No personal use of the van is allowed other than for travel to and from a move site or for minor personal use, such as a stop for lunch on the way from one move site to another. Amending your tax return Personal use for travel to and from a move site happens no more than five times a month on average. Amending your tax return Personal use is limited to situations in which it is more convenient to the employer, because of the location of the employee's residence in relation to the location of the move site, for the van not to be returned to the employer's business location. Amending your tax return Qualified specialized utility repair truck. Amending your tax return   A truck is a qualified specialized utility repair truck if it is not a van or pickup truck and all the following apply. Amending your tax return The truck was specifically designed for and is used to carry heavy tools, testing equipment, or parts. Amending your tax return Shelves, racks, or other permanent interior construction has been installed to carry and store the tools, equipment, or parts and would make it unlikely that the truck would be used, other than minimally, for personal purposes. Amending your tax return The employer requires the employee to drive the truck home in order to be able to respond in emergency situations for purposes of restoring or maintaining electricity, gas, telephone, water, sewer, or steam utility services. Amending your tax return Computers and Related Peripheral Equipment A computer is a programmable, electronically activated device capable of accepting information, applying prescribed processes to the information, and supplying the results of those processes with or without human intervention. Amending your tax return It consists of a central processing unit with extensive storage, logic, arithmetic, and control capabilities. Amending your tax return Related peripheral equipment is any auxiliary machine which is designed to be controlled by the central processing unit of a computer. Amending your tax return The following are neither computers nor related peripheral equipment. Amending your tax return Any equipment that is an integral part of other property that is not a computer. Amending your tax return Typewriters, calculators, adding and accounting machines, copiers, duplicating equipment, and similar equipment. Amending your tax return Equipment of a kind used primarily for the user's amusement or entertainment, such as video games. Amending your tax return Can Employees Claim a Deduction? If you are an employee, you can claim a depreciation deduction for the use of your listed property (whether owned or rented) in performing services as an employee only if your use is a business use. Amending your tax return The use of your property in performing services as an employee is a business use only if both the following requirements are met. Amending your tax return The use is for your employer's convenience. Amending your tax return The use is required as a condition of your employment. Amending your tax return If these requirements are not met, you cannot deduct depreciation (including the section 179 deduction) or rent expenses for your use of the property as an employee. Amending your tax return Employer's convenience. Amending your tax return   Whether the use of listed property is for your employer's convenience must be determined from all the facts. Amending your tax return The use is for your employer's convenience if it is for a substantial business reason of the employer. Amending your tax return The use of listed property during your regular working hours to carry on your employer's business generally is for the employer's convenience. Amending your tax return Condition of employment. Amending your tax return   Whether the use of listed property is a condition of your employment depends on all the facts and circumstances. Amending your tax return The use of property must be required for you to perform your duties properly. Amending your tax return Your employer does not have to require explicitly that you use the property. Amending your tax return However, a mere statement by the employer that the use of the property is a condition of your employment is not sufficient. Amending your tax return Example 1. Amending your tax return Virginia Sycamore is employed as a courier with We Deliver, which provides local courier services. Amending your tax return She owns and uses a motorcycle to deliver packages to downtown offices. Amending your tax return We Deliver explicitly requires all delivery persons to own a car or motorcycle for use in their employment. Amending your tax return Virginia's use of the motorcycle is for the convenience of We Deliver and is required as a condition of employment. Amending your tax return Example 2. Amending your tax return Bill Nelson is an inspector for Uplift, a construction company with many sites in the local area. Amending your tax return He must travel to these sites on a regular basis. Amending your tax return Uplift does not furnish an automobile or explicitly require him to use his own automobile. Amending your tax return However, it pays him for any costs he incurs in traveling to the various sites. Amending your tax return The use of his own automobile or a rental automobile is for the convenience of Uplift and is required as a condition of employment. Amending your tax return Example 3. Amending your tax return Assume the same facts as in Example 2 except that Uplift furnishes a car to Bill, who chooses to use his own car and receive payment for using it. Amending your tax return The use of his own car is neither for the convenience of Uplift nor required as a condition of employment. Amending your tax return Example 4. Amending your tax return Marilyn Lee is a pilot for Y Company, a small charter airline. Amending your tax return Y requires pilots to obtain 80 hours of flight time annually in addition to flight time spent with the airline. Amending your tax return Pilots usually can obtain these hours by flying with the Air Force Reserve or by flying part-time with another airline. Amending your tax return Marilyn owns her own airplane. Amending your tax return The use of her airplane to obtain the required flight hours is neither for the convenience of the employer nor required as a condition of employment. Amending your tax return Example 5. Amending your tax return David Rule is employed as an engineer with Zip, an engineering contracting firm. Amending your tax return He occasionally takes work home at night rather than work late in the office. Amending your tax return He owns and uses a home computer which is virtually identical to the office model. Amending your tax return His use of the computer is neither for the convenience of his employer nor required as a condition of employment. Amending your tax return What Is the Business-Use Requirement? You can claim the section 179 deduction and a special depreciation allowance for listed property and depreciate listed property using GDS and a declining balance method if the property meets the business-use requirement. Amending your tax return To meet this requirement, listed property must be used predominantly (more than 50% of its total use) for qualified business use. Amending your tax return If this requirement is not met, the following rules apply. Amending your tax return Property not used predominantly for qualified business use during the year it is placed in service does not qualify for the section 179 deduction. Amending your tax return Property not used predominantly for qualified business use during the year it is placed in service does not qualify for a special depreciation allowance. Amending your tax return Any depreciation deduction under MACRS for property not used predominantly for qualified business use during any year must be figured using the straight line method over the ADS recovery period. Amending your tax return This rule applies each year of the recovery period. Amending your tax return Excess depreciation on property previously used predominantly for qualified business use must be recaptured (included in income) in the first year in which it is no longer used predominantly for qualified business use. Amending your tax return A lessee must add an inclusion amount to income in the first year in which the leased property is not used predominantly for qualified business use. Amending your tax return Being required to use the straight line method for an item of listed property not used predominantly for qualified business use is not the same as electing the straight line method. Amending your tax return It does not mean that you have to use the straight line method for other property in the same class as the item of listed property. Amending your tax return Exception for leased property. Amending your tax return   The business-use requirement generally does not apply to any listed property leased or held for leasing by anyone regularly engaged in the business of leasing listed property. Amending your tax return   You are considered regularly engaged in the business of leasing listed property only if you enter into contracts for the leasing of listed property with some frequency over a continuous period of time. Amending your tax return This determination is made on the basis of the facts and circumstances in each case and takes into account the nature of your business in its entirety. Amending your tax return Occasional or incidental leasing activity is insufficient. Amending your tax return For example, if you lease only one passenger automobile during a tax year, you are not regularly engaged in the business of leasing automobiles. Amending your tax return An employer who allows an employee to use the employer's property for personal purposes and charges the employee for the use is not regularly engaged in the business of leasing the property used by the employee. Amending your tax return How To Allocate Use To determine whether the business-use requirement is met, you must allocate the use of any item of listed property used for more than one purpose during the year among its various uses. Amending your tax return For passenger automobiles and other means of transportation, allocate the property's use on the basis of mileage. Amending your tax return You determine the percentage of qualified business use by dividing the number of miles you drove the vehicle for business purposes during the year by the total number of miles you drove the vehicle for all purposes (including business miles) during the year. Amending your tax return For other listed property, allocate the property's use on the basis of the most appropriate unit of time the property is actually used (rather than merely being available for use). Amending your tax return For example, you can determine the percentage of business use of a computer by dividing the number of hours you used the computer for business purposes during the year by the total number of hours you used the computer for all purposes (including business use) during the year. Amending your tax return Entertainment use. Amending your tax return   Treat the use of listed property for entertainment, recreation, or amusement purposes as a business use only to the extent you can deduct expenses (other than interest and property tax expenses) due to its use as an ordinary and necessary business expense. Amending your tax return Commuting use. Amending your tax return   The use of an automobile for commuting is not business use, regardless of whether work is performed during the trip. Amending your tax return For example, a business telephone call made on a car telephone while commuting to work does not change the character of the trip from commuting to business. Amending your tax return This is also true for a business meeting held in a car while commuting to work. Amending your tax return Similarly, a business call made on an otherwise personal trip does not change the character of a trip from personal to business. Amending your tax return The fact that an automobile is used to display material that advertises the owner's or user's trade or business does not convert an otherwise personal use into business use. Amending your tax return Use of your automobile by another person. Amending your tax return   If someone else uses your automobile, do not treat that use as business use unless one of the following conditions applies. Amending your tax return That use is directly connected with your business. Amending your tax return You properly report the value of the use as income to the other person and withhold tax on the income where required. Amending your tax return You are paid a fair market rent. Amending your tax return Treat any payment to you for the use of the automobile as a rent payment for purposes of item (3). Amending your tax return Employee deductions. Amending your tax return   If you are an employee, do not treat your use of listed property as business use unless it is for your employer's convenience and is required as a condition of your employment. Amending your tax return See Can Employees Claim a Deduction , earlier. Amending your tax return Qualified Business Use Qualified business use of listed property is any use of the property in your trade or business. Amending your tax return However, it does not include the following uses. Amending your tax return The leasing of property to any 5% owner or related person (to the extent the property is used by a 5% owner or person related to the owner or lessee of the property). Amending your tax return The use of property as pay for the services of a 5% owner or related person. Amending your tax return The use of property as pay for services of any person (other than a 5% owner or related person), unless the value of the use is included in that person's gross income and income tax is withheld on that amount where required. Amending your tax return Property does not stop being used predominantly for qualified business use because of a transfer at death. Amending your tax return Exception for leasing or compensatory use of aircraft. Amending your tax return   Treat the leasing of any aircraft by a 5% owner or related person, or the compensatory use of any aircraft, as a qualified business use if at least 25% of the total use of the aircraft during the year is for a qualified business use. Amending your tax return 5% owner. Amending your tax return   For a business entity that is not a corporation, a 5% owner is any person who owns more than 5% of the capital or profits interest in the business. Amending your tax return   For a corporation, a 5% owner is any person who owns, or is considered to own, either of the following. Amending your tax return More than 5% of the outstanding stock of the corporation. Amending your tax return Stock possessing more than 5% of the total combined voting power of all stock in the corporation. Amending your tax return Related persons. Amending your tax return   For a description of related persons, see Related persons in the discussion on property owned or used in 1986 under What Method Can You Use To Depreciate Your Property in chapter 1 . Amending your tax return For this purpose, however, treat as related persons only the relationships listed in items (1) through (10) of that discussion and substitute “50%” for “10%” each place it appears. Amending your tax return Examples. Amending your tax return   The following examples illustrate whether the use of business property is qualified business use. Amending your tax return Example 1. Amending your tax return John Maple is the sole proprietor of a plumbing contracting business. Amending your tax return John employs his brother, Richard, in the business. Amending your tax return As part of Richard's pay, he is allowed to use one of the company automobiles for personal use. Amending your tax return The company includes the value of the personal use of the automobile in Richard's gross income and properly withholds tax on it. Amending your tax return The use of the automobile is pay for the performance of services by a related person, so it is not a qualified business use. Amending your tax return Example 2. Amending your tax return John, in Example 1, allows unrelated employees to use company automobiles for personal purposes. Amending your tax return He does not include the value of the personal use of the company automobiles as part of their compensation and he does not withhold tax on the value of the use of the automobiles. Amending your tax return This use of company automobiles by employees is not a qualified business use. Amending your tax return Example 3. Amending your tax return James Company Inc. Amending your tax return owns several automobiles that its employees use for business purposes. Amending your tax return The employees also are allowed to take the automobiles home at night. Amending your tax return The fair market value of each employee's use of an automobile for any personal purpose, such as commuting to and from work, is reported as income to the employee and James Company withholds tax on it. Amending your tax return This use of company automobiles by employees, even for personal purposes, is a qualified business use for the company. Amending your tax return Investment Use The use of property to produce income in a nonbusiness activity (investment use) is not a qualified business use. Amending your tax return However, you can treat the investment use as business use to figure the depreciation deduction for the property in a given year. Amending your tax return Example 1. Amending your tax return Sarah Bradley uses a home computer 50% of the time to manage her investments. Amending your tax return She also uses the computer 40% of the time in her part-time consumer research business. Amending your tax return Sarah's home computer is listed property because it is not used at a regular business establishment. Amending your tax return She does not use the computer predominantly for qualified business use. Amending your tax return Therefore, she cannot elect a section 179 deduction or claim a special depreciation allowance for the computer. Amending your tax return She must depreciate it using the straight line method over the ADS recovery period. Amending your tax return Her combined business/investment use for determining her depreciation deduction is 90%. Amending your tax return Example 2. Amending your tax return If Sarah uses her computer 30% of the time to manage her investments and 60% of the time in her consumer research business, it is used predominantly for qualified business use. Amending your tax return She can elect a section 179 deduction and, if she does not deduct all the computer's cost, she can claim a special depreciation allowance and depreciate the computer using the 200% declining balance method over the GDS recovery period. Amending your tax return Her combined business/investment use for determining her depreciation deduction is 90%. Amending your tax return Recapture of Excess Depreciation If you used listed property more than 50% in a qualified business use in the year you placed it in service, you must recapture (include in income) excess depreciation in the first year you use it 50% or less. Amending your tax return You also increase the adjusted basis of your property by the same amount. Amending your tax return Excess depreciation is: The depreciation allowable for the property (including any section 179 deduction and special depreciation allowance claimed) for years before the first year you do not use the property predominantly for qualified business use, minus The depreciation that would have been allowable for those years if you had not used the property predominantly for qualified business use in the year you placed it in service. Amending your tax return To determine the amount in (2) above, you must refigure the depreciation using the straight line method and the ADS recovery period. Amending your tax return Example. Amending your tax return In June 2009, Ellen Rye purchased and placed in service a pickup truck that cost $18,000. Amending your tax return She used it only for qualified business use for 2009 through 2012. Amending your tax return Ellen claimed a section 179 deduction of $10,000 based on the purchase of the truck. Amending your tax return She began depreciating it using the 200% DB method over a 5-year GDS recovery period. Amending your tax return The pickup truck's gross vehicle weight was over 6,000 pounds, so it was not subject to the passenger automobile limits discussed later under Do the Passenger Automobile Limits Apply. Amending your tax return During 2013, she used the truck 50% for business and 50% for personal purposes. Amending your tax return She includes $4,018 excess depreciation in her gross income for 2013. Amending your tax return The excess depreciation is determined as follows. Amending your tax return Total section 179 deduction ($10,000) and depreciation claimed ($6,618) for 2009 through 2012. Amending your tax return (Depreciation is from Table A-1. Amending your tax return ) $16,618 Minus: Depreciation allowable (Table A-8):     2009 – 10% of $18,000 $1,800   2010 – 20% of $18,000 3,600   2011 – 20% of $18,000 3,600   2012 – 20% of $18,000 3,600 12,600 Excess depreciation $4,018 If Ellen's use of the truck does not change to 50% for business and 50% for personal purposes until 2015, there will be no excess depreciation. Amending your tax return The total depreciation allowable using Table A-8 through 2015 will be $18,000, which equals the total of the section 179 deduction and depreciation she will have claimed. Amending your tax return Where to figure and report recapture. Amending your tax return   Use Form 4797, Part IV, to figure the recapture amount. Amending your tax return Report the recapture amount as other income on the same form or schedule on which you took the depreciation deduction. Amending your tax return For example, report the recapture amount as other income on Schedule C (Form 1040) if you took the depreciation deduction on Schedule C. Amending your tax return If you took the depreciation deduction on Form 2106, report the recapture amount as other income on Form 1040, line 21. Amending your tax return Lessee's Inclusion Amount If you use leased listed property other than a passenger automobile for business/investment use, you must include an amount in your income in the first year your qualified business-use percentage is 50% or less. Amending your tax return Your qualified business-use percentage is the part of the property's total use that is qualified business use (defined earlier). Amending your tax return For the inclusion amount rules for a leased passenger automobile, see Leasing a Car in chapter 4 of Publication 463. Amending your tax return The inclusion amount is the sum of Amount A and Amount B, described next. Amending your tax return However, see the special rules for the inclusion amount, later, if your lease begins in the last 9 months of your tax year or is for less than one year. Amending your tax return Amount A. Amending your tax return   Amount A is: The fair market value of the property, multiplied by The business/investment use for the first tax year the qualified business-use percentage is 50% or less, multiplied by The applicable percentage from Table A-19 in Appendix A . Amending your tax return   The fair market value of the property is the value on the first day of the lease term. Amending your tax return If the capitalized cost of an item of listed property is specified in the lease agreement, you must treat that amount as the fair market value. Amending your tax return Amount B. Amending your tax return   Amount B is: The fair market value of the property, multiplied by The average of the business/investment use for all tax years the property was leased that precede the first tax year the qualified business-use percentage is 50% or less, multiplied by The applicable percentage from Table A–20 in Appendix A . Amending your tax return Maximum inclusion amount. Amending your tax return   The inclusion amount cannot be more than the sum of the deductible amounts of rent for the tax year in which the lessee must include the amount in gross income. Amending your tax return Inclusion amount worksheet. Amending your tax return   The following worksheet is provided to help you figure the inclusion amount for leased listed property. Amending your tax return Inclusion Amount Worksheet for Leased Listed Property 1. Amending your tax return Fair market value   2. Amending your tax return Business/investment use for first year business use is 50% or less   3. Amending your tax return Multiply line 1 by line 2. Amending your tax return   4. Amending your tax return Rate (%) from Table A-19   5. Amending your tax return Multiply line 3 by line 4. Amending your tax return This is Amount A. Amending your tax return   6. Amending your tax return Fair market value   7. Amending your tax return Average business/investment use for years property leased before the first year business use is 50% or less . Amending your tax return . Amending your tax return . Amending your tax return . Amending your tax return . Amending your tax return . Amending your tax return . Amending your tax return . Amending your tax return . Amending your tax return . Amending your tax return . Amending your tax return . Amending your tax return . Amending your tax return   8. Amending your tax return Multiply line 6 by line 7   9. Amending your tax return Rate (%) from Table A-20   10. Amending your tax return Multiply line 8 by line 9. Amending your tax return This is Amount B. Amending your tax return   11. Amending your tax return Add line 5 and line 10. Amending your tax return This is your inclusion amount. Amending your tax return Enter here and as other income on the form or schedule on which you originally took the deduction (for example, Schedule C or F (Form 1040), Form 1040, Form 1120, etc. Amending your tax return )         Example. Amending your tax return On February 1, 2011, Larry House, a calendar year taxpayer, leased and placed in service a computer with a fair market value of $3,000. Amending your tax return The lease is for a period of 5 years. Amending your tax return Larry does not use the computer at a regular business establishment, so it is listed property. Amending your tax return His business use of the property (all of which is qualified business use) is 80% in 2011, 60% in 2012, and 40% in 2013. Amending your tax return He must add an inclusion amount to gross income for 2013, the first tax year his qualified business-use percentage is 50% or less. Amending your tax return The computer has a 5-year recovery period under both GDS and ADS. Amending your tax return 2013 is the third tax year of the lease, so the applicable percentage from Table A-19 is −19. Amending your tax return 8%. Amending your tax return The applicable percentage from Table A-20 is 22. Amending your tax return 0%. Amending your tax return Larry's deductible rent for the computer for 2013 is $800. Amending your tax return Larry uses the Inclusion amount worksheet. Amending your tax return to figure the amount he must include in income for 2013. Amending your tax return His inclusion amount is $224, which is the sum of −$238 (Amount A) and $462 (Amount B). Amending your tax return Inclusion Amount Worksheet for Leased Listed Property 1. Amending your tax return Fair market value $3,000   2. Amending your tax return Business/investment use for first year business use is 50% or less 40 % 3. Amending your tax return Multiply line 1 by line 2. Amending your tax return 1,200   4. Amending your tax return Rate (%) from Table A-19 −19. Amending your tax return 8 % 5. Amending your tax return Multiply line 3 by line 4. Amending your tax return This is Amount A. Amending your tax return −238   6. Amending your tax return Fair market value 3,000   7. Amending your tax return Average business/investment use for years property leased before the first year business use is 50% or less 70 % 8. Amending your tax return Multiply line 6 by line 7 2,100   9. Amending your tax return Rate (%) from Table A-20 22. Amending your tax return 0 % 10. Amending your tax return Multiply line 8 by line 9. Amending your tax return This is Amount B. Amending your tax return 462   11. Amending your tax return Add line 5 and line 10. Amending your tax return This is your inclusion amount. Amending your tax return Enter here and as other income on the form or schedule on which you originally took the deduction (for example, Schedule C or F (Form 1040), Form 1040, Form 1120, etc. Amending your tax return ) $224           Lease beginning in the last 9 months of your tax year. Amending your tax return    The inclusion amount is subject to a special rule if all the following apply. Amending your tax return The lease term begins within 9 months before the close of your tax year. Amending your tax return You do not use the property predominantly (more than 50%) for qualified business use during that part of the tax year. Amending your tax return The lease term continues into your next tax year. Amending your tax return Under this special rule, add the inclusion amount to income in the next tax year. Amending your tax return Figure the inclusion amount by taking into account the average of the business/investment use for both tax years (line 2 of the Inclusion Amount Worksheet for Leased Listed Property) and the applicable percentage for the tax year the lease term begins. Amending your tax return Skip lines 6 through 9 of the worksheet and enter zero on line 10. Amending your tax return Example 1. Amending your tax return On August 1, 2012, Julie Rule, a calendar year taxpayer, leased and placed in service an item of listed property. Amending your tax return The property is 5-year property with a fair market value of $10,000. Amending your tax return Her property has a recovery period of 5 years under ADS. Amending your tax return The lease is for 5 years. Amending your tax return Her business use of the property was 50% in 2012 and 90% in 2013. Amending your tax return She paid rent of $3,600 for 2012, of which $3,240 is deductible. Amending your tax return She must include $147 in income in 2013. Amending your tax return The $147 is the sum of Amount A and Amount B. Amending your tax return Amount A is $147 ($10,000 × 70% × 2. Amending your tax return 1%), the product of the fair market value, the average business use for 2012 and 2013, and the applicable percentage for year one from Table A-19 . Amending your tax return Amount B is zero. Amending your tax return Lease for less than one year. Amending your tax return   A special rule for the inclusion amount applies if the lease term is less than one year and you do not use the property predominantly (more than 50%) for qualified business use. Amending your tax return The amount included in income is the inclusion amount (figured as described in the preceding discussions) multiplied by a fraction. Amending your tax return The numerator of the fraction is the number of days in the lease term and the denominator is 365 (or 366 for leap years). Amending your tax return   The lease term for listed property other than residential rental or nonresidential real property includes options to renew. Amending your tax return If you have two or more successive leases that are part of the same transaction (or a series of related transactions) for the same or substantially similar property, treat them as one lease. Amending your tax return Example 2. Amending your tax return On October 1, 2012, John Joyce, a calendar year taxpayer, leased and placed in service an item of listed property that is 3-year property. Amending your tax return This property had a fair market value of $15,000 and a recovery period of 5 years under ADS. Amending your tax return The lease term was 6 months (ending on March 31, 2013), during which he used the property 45% in business. Amending your tax return He must include $71 in income in 2013. Amending your tax return The $71 is the sum of Amount A and Amount B. Amending your tax return Amount A is $71 ($15,000 × 45% × 2. Amending your tax return 1% × 183/365), the product of the fair market value, the average business use for both years, and the applicable percentage for year one from Table A-19 , prorated for the length of the lease. Amending your tax return Amount B is zero. Amending your tax return Where to report inclusion amount. Amending your tax return   Report the inclusion amount figured as described in the preceding discussions as other income on the same form or schedule on which you took the deduction for your rental costs. Amending your tax return For example, report the inclusion amount as other income on Schedule C (Form 1040) if you took the deduction on Schedule C. Amending your tax return If you took the deduction for rental costs on Form 2106, report the inclusion amount as other income on Form 1040, line 21. Amending your tax return Do the Passenger Automobile Limits Apply? The depreciation deduction, including the section 179 deduction and special depreciation allowance, you can claim for a passenger automobile (defined earlier) each year is limited. Amending your tax return This section describes the maximum depreciation deduction amounts for 2013 and explains how to deduct, after the recovery period, the unrecovered basis of your property that results from applying the passenger automobile limit. Amending your tax return Exception for leased cars. Amending your tax return   The passenger automobile limits generally do not apply to passenger automobiles leased or held for leasing by anyone regularly engaged in the business of leasing passenger automobiles. Amending your tax return For information on when you are considered regularly engaged in the business of leasing listed property, including passenger automobiles, see Exception for leased property , earlier, under What Is the Business-Use Requirement . Amending your tax return Maximum Depreciation Deduction The passenger automobile limits are the maximum depreciation amounts you can deduct for a passenger automobile. Amending your tax return They are based on the date you placed the automobile in service. Amending your tax return Passenger Automobiles The maximum deduction amounts for most passenger automobiles are shown in the following table. Amending your tax return Maximum Depreciation Deduction for Passenger Automobiles Date       4th & Placed 1st 2nd 3rd Later In Service Year Year Year Years 2013 $11,1601 $5,100 $3,050 $1,875 2012 11,1601 5,100 3,050 1,875 2011 11,0602 4,900 2,950 1,775 2010 11,0602  4,900 2,950 1,775 2009 10,9603 4,800 2,850 1,775 2008 10,9603  4,800 2,850 1,775 2007 3,060 4,900 2,850 1,775 2006 2,960 4,800 2,850 1,775 2005 2,960 4,700 2,850 1,675 2004 10,6104 4,800 2,850 1,675 5/06/2003– 12/31/2003 10,7105 4,900 2,950 1,775 1/01/2003– 5/05/2003 7,6606 4,900 2,950 1,775 1If you elected not to claim any special depreciation allowance or the vehicle is not qualified property, the maximum deduction is $3,160. Amending your tax return 2If you elected not to claim any special depreciation allowance or the vehicle is not qualified property, the maximum deduction is $3,060. Amending your tax return 3If you elected not to claim any special depreciation allowance for the vehicle or the vehicle is not qualified property, the maximum deduction is $2,960. Amending your tax return 4If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $2,960. Amending your tax return 5If you acquired the vehicle before 5/06/03, the maximum deduction is $7,660. Amending your tax return If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $3,060. Amending your tax return 6If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $3,060. Amending your tax return If your business/investment use of the automobile is less than 100%, you must reduce the maximum deduction amount by multiplying the maximum amount by the percentage of business/investment use determined on an annual basis during the tax year. Amending your tax return If you have a short tax year, you must reduce the maximum deduction amount by multiplying the maximum amount by a fraction. Amending your tax return The numerator of the fraction is the number of months and partial months in the short tax year and the denominator is 12. Amending your tax return Example. Amending your tax return On April 15, 2013, Virginia Hart bought and placed in service a new car for $14,500. Amending your tax return She used the car only in her business. Amending your tax return She files her tax return based on the calendar year. Amending your tax return She does not elect a section 179 deduction and elected not to claim any special depreciation allowance for the car. Amending your tax return Under MACRS, a car is 5-year property. Amending your tax return Since she placed her car in service on April 15 and used it only for business, she uses the percentages in Table A-1 to figure her MACRS depreciation on the car. Amending your tax return Virginia multiplies the $14,500 unadjusted basis of her car by 0. Amending your tax return 20 to get her MACRS depreciation of $2,900 for 2013. Amending your tax return This $2,900 is below the maximum depreciation deduction of $3,160 for passenger automobiles placed in service in 2013. Amending your tax return She can deduct the full $2,900. Amending your tax return Electric Vehicles The maximum depreciation deductions for passenger automobiles that are produced to run primarily on electricity are higher than those for other automobiles. Amending your tax return The maximum deduction amounts for electric vehicles placed in service after August 5, 1997, and before January 1, 2007, are shown in the following table. Amending your tax return Owners of electric vehicles placed in service after December 31, 2006, should use the table of maximum deduction amounts later for electric vehicles classified as passenger automobiles or use the table of maximum deduction amounts for trucks and vans later, for electric vehicles classified as trucks and vans. Amending your tax return Maximum Depreciation Deduction For Electric Vehicles Date       4th & Placed 1st 2nd 3rd Later In Service Year Year Year Years 2006 $8,980 $14,400 $8,650 $5,225 2005 8,880 14,200 8,450 5,125 2004 31,8301 14,300 8,550 5,125 5/06/2003– 12/31/2003 32,0302 14,600 8,750 5,225 1/01/2003– 5/05/2003 22,8803 14,600 8,750 5,225 1If you elected not to claim any special depreciation allowance for the vehicle or the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $8,880. Amending your tax return 2If you acquired the vehicle before 5/06/03, the maximum deduction is $22,880. Amending your tax return If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $9,080. Amending your tax return 3 If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $9,080. Amending your tax return Trucks and Vans The maximum depreciation deductions for trucks and vans placed in service after 2002 are higher than those for other passenger automobiles. Amending your tax return The maximum deduction amounts for trucks and vans are shown in the following table. Amending your tax return Maximum Depreciation Deduction For Trucks and Vans Date       4th & Placed 1st 2nd 3rd Later In Service Year Year Year Years 2013 $11,3601 $5,400 $3,250 $1,975 2012 11,3601 5,300 3,150 1,875 2011 11,2602 5,200 3,150 1,875 2010 11,1603 5,100 3,050 1,875 2009 11,0604 4,900 2,950 1,775 2008 11,1605 5,100 3,050 1,875 2007 3,260 5,200 3,050 1,875 2006 3,260 5,200 3,150 1,875 2005 3,260 5,200 3,150 1,875 2004 10,9106 5,300 3,150 1,875 5/06/2003– 12/31/2003 11,0107 5,400 3,250 1,975 1/01/2003– 5/05/2003 7,9608 5,400 3,250 1,975 1 If you elected not to claim any special depreciation allowance or the vehicle is not qualified property, the maximum deduction is $3,360. Amending your tax return 2 If you elected not to claim any special depreciation allowance or the vehicle is not qualified property, the maximum deduction is $3,260. Amending your tax return 3 If you elected not to claim any special depreciation allowance or the vehicle is not qualified property, the maximum deduction is $3,160. Amending your tax return 4 If you elect not to claim any special depreciation allowance for the vehicle or the vehicle is not qualified property, the maximum deduction is $3,060. Amending your tax return 5If you elected not to claim any special depreciation allowance for the vehicle or the vehicle is not qualified property, the maximum deduction is $3,160. Amending your tax return 6If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, or the maximum deduction is $3,260. Amending your tax return 7 If you acquired the vehicle before 5/06/03, the maximum deduction is $7,960. Amending your tax return If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $3,360. Amending your tax return 8 If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $3,360. Amending your tax return Depreciation Worksheet for Passenger Automobiles You can use the following worksheet to figure your depreciation deduction using the percentage tables. Amending your tax return Then use the information from this worksheet to prepare Form 4562. Amending your tax return Depreciation Worksheet for Passenger Automobiles   Part I   1. Amending your tax return MACRS system (GDS or ADS)     2. Amending your tax return Property class     3. Amending your tax return Date placed in service     4. Amending your tax return Recovery period     5. Amending your tax return Method and convention     6. Amending your tax return Depreciation rate (from tables)     7. Amending your tax return Maximum depreciation deduction for this year from the appropriate table       8. Amending your tax return Business/investment-use percentage       9. Amending your tax return Multiply line 7 by line 8. Amending your tax return This is your adjusted maximum depreciation deduction       10. Amending your tax return Section 179 deduction claimed this year (not more than line 9). Amending your tax return Enter -0- if this is not the year you placed the car in service. Amending your tax return         Note. Amending your tax return  1) If line 10 is equal to line 9, stop here. Amending your tax return Your combined section 179 and depreciation deduction (including your special depreciation allowance) is limited to the amount on line 9. Amending your tax return  2) If line 10 is less than line 9, complete Part II. Amending your tax return   Part II   11. Amending your tax return Subtract line 10 from line 9. Amending your tax return This is the limit on the amount you can deduct for depreciation (including any special depreciation allowance )       12. Amending your tax return Cost or other basis (reduced by any alternative motor vehicle credit 1or credit for electric vehicles 2)       13. Amending your tax return Multiply line 12 by line 8. Amending your tax return This is your business/investment cost       14. Amending your tax return Section 179 deduction claimed in the year you placed the car in service       15. Amending your tax return Subtract line 14 from line 13. Amending your tax return This is your tentative basis for depreciation       16. Amending your tax return Multiply line 15 by . Amending your tax return 50 if the 50% special depreciation allowance applies. Amending your tax return This is your special depreciation allowance. Amending your tax return Enter -0- if this is not the year you placed the car in service, the car is not qualified property, or you elected not to claim a special depreciation allowance       Note 1) If line 16 is equal to line 11, stop here. Amending your tax return Your depreciation deduction (including your special depreciation allowance) is limited to the amount on line 11. Amending your tax return  2) If line 16 is less than line 11, complete Part III. Amending your tax return   Part III   17. Amending your tax return Subtract line 16 from 11. Amending your tax return This is the limit on the amount you can deduct for MACRS depreciation       18. Amending your tax return Subtract line 16 from line 15. Amending your tax return This is your basis for depreciation. Amending your tax return       19. Amending your tax return Multiply line 18 by line 6. Amending your tax return This is your tentative MACRS depreciation deduction. Amending your tax return       20. Amending your tax return Enter the lesser of line 17 or line 19. Amending your tax return This is your MACRS depreciation deduction. Amending your tax return     1 When figuring the amount to enter on line 12, do not reduce your cost or other basis by any section 179 deduction you claimed for your car. Amending your tax return 2 Reduce the basis by the lesser of $4,000 or 10% of the cost of the vehicle even if the credit is less than that amount. Amending your tax return             Deductions After the Recovery Period If the depreciation deductions for your automobile are reduced under the passenger automobile limits, you will have unrecovered basis in your automobile at the end of the recovery period. Amending your tax return If you continue to use the automobile for business, you can deduct that unrecovered basis after the recovery period ends. Amending your tax return You can claim a depreciation deduction in each succeeding tax year until you recover your full basis in the car. Amending your tax return The maximum amount you can deduct each year is determined by the date you placed the car in service and your business/investment-use percentage. Amending your tax return See Maximum Depreciation Deduction , earlier. Amending your tax return Unrecovered basis is the cost or other basis of the passenger automobile reduced by any clean-fuel vehicle deduction, electric vehicle credit, depreciation, and section 179 deductions that would have been allowable if you had used the car 100% for business and investment use and the passenger automobile limits had not applied. Amending your tax return You cannot claim a depreciation deduction for listed property other than passenger automobiles after the recovery period ends. Amending your tax return There is no unrecovered basis at the end of the recovery period because you are considered to have used this property 100% for business and investment purposes during all of the recovery period. Amending your tax return Example. Amending your tax return In May 2007, you bought and placed in service a car costing $31,500. Amending your tax return The car was 5-year property under GDS (MACRS). Amending your tax return You did not elect a section 179 deduction and elected not to claim any special depreciation allowance for the car. Amending your tax return You used the car exclusively for business during the recovery period (2007 through 2012). Amending your tax return You figured your depreciation as shown below. Amending your tax return Year Percentage Amount Limit   Allowed 2007 20. Amending your tax return 0% $6,300 $2,960   $2,960 2008 32. Amending your tax return 0 10,080 4,800   4,800 2009 19. Amending your tax return 2 6,048 2,850   2,850 2010 11. Amending your tax return 52 3,629 1,675   1,675 2011 11. Amending your tax return 52 3,629 1,675   1,675 2012 5. Amending your tax return 76 1,814 1,675   1,675 Total   $15,635 At the end of 2012, you had an unrecovered basis of $15,865 ($31,500 − $15,635). Amending your tax return If in 2013 and later years you continue to use the car 100% for business, you can deduct each year the lesser of $1,675 or your remaining unrecovered basis. Amending your tax return If your business use of the car had been less than 100% during any year, your depreciation deduction would have been less than the maximum amount allowable for that year. Amending your tax return However, in figuring your unrecovered basis in the car, you would still reduce your basis by the maximum amount allowable as if the business use had been 100%. Amending your tax return For example, if you had used your car 60% for business instead of 100%, your allowable depreciation deductions would have been $9,519 ($15,865 × 60%), but you still would have to reduce your basis by $15,865 to determine your unrecovered basis. Amending your tax return Deductions For Passenger Automobiles Acquired in a Trade-in If you acquire a passenger automobile in a trade-in, depreciate the carryover basis separately as if the trade-in did not occur. Amending your tax return Depreciate the part of the new automobile's basis that exceeds its carryover basis (excess basis) as if it were newly placed in service property. Amending your tax return This excess basis is the additional cash paid for the new automobile in the trade-in. Amending your tax return The depreciation figured for the two components of the basis (carryover basis and excess basis) is subject to a single passenger automobile limit. Amending your tax return Special rules apply in determining the passenger automobile limits. Amending your tax return These rules and examples are discussed in section 1. Amending your tax return 168(i)-6(d)(3) of the regulations. Amending your tax return Instead of figuring depreciation for the carryover basis and the excess basis separately, you can elect to treat the old automobile as disposed of and both of the basis components for the new automobile as if placed in service at the time of the trade-in. Amending your tax return For more information, including how to make this election, see Election out under Property Acquired in a Like-kind Exchange or Involuntary Conversion in chapter 4 and sections 1. Amending your tax return 168(i)-6(i) and 1. Amending your tax return 168(i)-6(j) of the regulations. Amending your tax return What Records Must Be Kept? You cannot take any depreciation or section 179 deduction for the use of listed property unless you can prove your business/investment use with adequate records or with sufficient evidence to support your own statements. Amending your tax return For listed property, you must keep records for as long as any recapture can still occur. Amending your tax return Recapture can occur in any tax year of the recovery period. Amending your tax return Adequate Records To meet the adequate records requirement, you must maintain an account book, diary, log, statement of expense, trip sheet, or similar record or other documentary evidence that, together with the receipt, is sufficient to establish each element of an expenditure or use. Amending your tax return You do not have to record information in an account book, diary, or similar record if the information is already shown on the receipt. Amending your tax return However, your records should back up your receipts in an orderly manner. Amending your tax return Elements of expenditure or use. Amending your tax return   Your records or other documentary evidence must support all the following. Amending your tax return The amount of each separate expenditure, such as the cost of acquiring the item, maintenance and repair costs, capital improvement costs, lease payments, and any other expenses. Amending your tax return The amount of each business and investment use (based on an appropriate measure, such as mileage for vehicles and time for other listed property), and the total use of the property for the tax year. Amending your tax return The date of the expenditure or use. Amending your tax return The business or investment purpose for the expenditure or use. Amending your tax return   Written documents of your expenditure or use are generally better evidence than oral statements alone. Amending your tax return You do not have to keep a daily log. Amending your tax return However, some type of record containing the elements of an expenditure or the business or investment use of listed property made at or near the time of the expenditure or use and backed up by other documents is preferable to a statement you prepare later. Amending your tax return Timeliness. Amending your tax return   You must record the elements of an expenditure or use at the time you have full knowledge of the elements. Amending your tax return An expense account statement made from an account book, diary, or similar record prepared or maintained at or near the time of the expenditure or use generally is considered a timely record if, in the regular course of business: The statement is given by an employee to the employer, or The statement is given by an independent contractor to the client or customer. Amending your tax return   For example, a log maintained on a weekly basis, that accounts for use during the week, will be considered a record made at or near the time of use. Amending your tax return Business purpose supported. Amending your tax return   Generally, an adequate record of business purpose must be in the form of a written statement. Amending your tax return However, the amount of detail necessary to establish a business purpose depends on the facts and circumstances of each case. Amending your tax return A written explanation of the business purpose will not be required if the purpose can be determined from the surrounding facts and circumstances. Amending your tax return For example, a salesperson visiting customers on an established sales route will not normally need a written explanation of the business purpose of his or her travel. Amending your tax return Business use supported. Amending your tax return   An adequate record contains enough information on each element of every business or investment use. Amending your tax return The amount of detail required to support the use depends on the facts and circumstances. Amending your tax return For example, a taxpayer who uses a truck for both business and personal purposes and whose only business use of the truck is to make customer deliveries on an established route can satisfy the requirement by recording the length of the route, including the total number of miles driven during the tax year and the date of each trip at or near the time of the trips. Amending your tax return   Although you generally must prepare an adequate written record, you can prepare a record of the business use of listed property in a computer memory device that uses a logging program. Amending your tax return Separate or combined expenditures or uses. Amending your tax return   Each use by you normally is considered a separate use. Amending your tax return However, you can combine repeated uses as a single item. Amending your tax return   Record each expenditure as a separate item. Amending your tax return Do not combine it with other expenditures. Amending your tax return If you choose, however, you can combine amounts you spent for the use of listed property during a tax year, such as for gasoline or automobile repairs. Amending your tax return If you combine these expenses, you do not need to support the business purpose of each expense. Amending your tax return Instead, you can divide the expenses based on the total business use of the listed property. Amending your tax return   You can account for uses that can be considered part of a single use, such as a round trip or uninterrupted business use, by a single record. Amending your tax return For example, you can account for the use of a truck to make deliveries at several locations that begin and end at the business premises and can include a stop at the business in between deliveries by a single record of miles driven. Amending your tax return You can account for the use of a passenger automobile by a salesperson for a business trip away from home over a period of time by a single record of miles traveled. Amending your tax return Minimal personal use (such as a stop for lunch between two business stops) is not an interruption of business use. Amending your tax return Confidential information. Amending your tax return   If any of the information on the elements of an expenditure or use is confidential, you do not need to include it in the account book or similar record if you record it at or near the time of the expenditure or use. Amending your tax return You must keep it elsewhere and make it available as support to the IRS director for your area on request. Amending your tax return Substantial compliance. Amending your tax return   If you have not fully supported a particular element of an expenditure or use, but have complied with the adequate records requirement for the expenditure or use to the satisfaction of the IRS director for your area, you can establish this element by any evidence the IRS director for your area deems adequate. Amending your tax return   If you fail to establish to the satisfaction of the IRS director for your area that you have substantially complied with the adequate records requirement for an element of an expenditure or use, you must establish the element as follows. Amending your tax return By your own oral or written statement containing detailed information as to the element. Amending your tax return By other evidence sufficient to establish the element. Amending your tax return   If the element is the cost or amount, time, place, or date of an expenditure or use, its supporting evidence must be direct evidence, such as oral testimony by witnesses or a written statement setting forth detailed information about the element or the documentary evidence. Amending your tax return If the element is the business purpose of an expenditure, its supporting evidence can be circumstantial evidence. Amending your tax return Sampling. Amending your tax return   You can maintain an adequate record for part of a tax year and use that record to support your business and investment use of listed property for the entire tax year if it can be shown by other evidence that the periods for which you maintain an adequate record are representative of the use throughout the year. Amending your tax return Example 1. Amending your tax return Denise Williams, a sole proprietor and calendar year taxpayer, operates an interior decorating business out of her home. Amending your tax return She uses her automobile for local business visits to the homes or offices of clients, for meetings with suppliers and subcontractors, and to pick up and deliver items to clients. Amending your tax return There is no other business use of the automobile, but she and family members also use it for personal purposes. Amending your tax return She maintains adequate records for the first 3 months of the year showing that 75% of the automobile use was for business. Amending your tax return Subcontractor invoices and paid bills show that her business continued at approximately the same rate for the rest of the year. Amending your tax return If there is no change in circumstances, such as the purchase of a second car for exclusive use in her business, the determination that her combined business/investment use of the automobile for the tax year is 75% rests on sufficient supporting evidence. Amending your tax return Example 2. Amending your tax return Assume the same facts as in Example 1, except that Denise maintains adequate records during the first week of every month showing that 75% of her use of the automobile is for business. Amending your tax return Her business invoices show that her business continued at the same rate during the later weeks of each month so that her weekly records are representative of the automobile's business use throughout the month. Amending your tax return The determination that her business/investment use of the automobile for the tax year is 75% rests on sufficient supporting evidence. Amending your tax return Example 3. Amending your tax return Bill Baker, a sole proprietor and calendar year taxpayer, is a salesman in a large metropolitan area for a company that manufactures household products. Amending your tax return For the first 3 weeks of each month, he occasionally uses his own automobile for business travel within the metropolitan area. Amending your tax return During these weeks, his business use of the automobile does not follow a consistent pattern. Amending your tax return During the fourth week of each month, he delivers all business orders taken during the previous month. Amending your tax return The business use of his automobile, as supported by adequate records, is 70% of its total use during that fourth week. Amending your tax return The determination based on the record maintained during the fourth week of the month that his business/investment use of the automobile for the tax year is 70% does not rest on sufficient supporting evidence because his use during that week is not representative of use during other periods. Amending your tax return Loss of records. Amending your tax return   When you establish that failure to produce adequate records is due to loss of the records through circumstances beyond your control, such as through fire, flood, earthquake, or other casualty, you have the right to support a deduction by reasonable reconstruction of your expenditures and use. Amending your tax return How Is Listed Property Information Reported? You must provide the information about your listed property requested in Part V of Form 4562, Section A, if you claim either of the following deductions. Amending your tax return Any deduction for a vehicle. Amending your tax return A depreciation deduction for any other listed property. Amending your tax return If you claim any deduction for a vehicle, you also must provide the information requested in Section B. Amending your tax return If you provide the vehicle for your employee's use, the employee must give you this information. Amending your tax return If you provide any vehicle for use by an employee, you must first answer the questions in Section C to see if you meet an exception to completing Section B for that vehicle. Amending your tax return Vehicles used by your employees. Amending your tax return   You do not have to complete Section B, Part V, for vehicles used by your employees who are not more-than-5% owners or related persons if you meet at least one of the following requirements. Amending your tax return You maintain a written policy statement that prohibits one of the following uses of the vehicles. Amending your tax return All personal use including commuting. Amending your tax return Personal use, other than commuting, by employees who are not officers, directors, or 1%-or-more owners. Amending your tax return You treat all use of the vehicles by your employees as personal use. Amending your tax return You provide more than five vehicles for use by your employees, and you keep in your records the information on their use given to you by the employees. Amending your tax return For demonstrator automobiles provided to full-time salespersons, you maintain a written policy statement that limits the total mileage outside the salesperson's normal working hours and prohibits use of the automobile by anyone else, for vacation trips, or to store personal possessions. Amending your tax return Exceptions. Amending your tax return   If you file Form 2106, 2106-EZ, or Schedule C-EZ (Form 1040), and you are not required to file Form 4562, report information about listed property on that form and not on Form 4562. Amending your tax return Also, if you file Schedule C (Form 1040) and are claiming the standard mileage rate or actual vehicle expenses (except depreciation) and you are not required to file Form 4562 for any other reason, report vehicle information in Part IV of Schedule C and not on Form 4562. Amending your tax return Prev  Up  Next   Home   More Online Publications
Español

Supreme Court of the United States

The U.S. Supreme Court is the final appellate court of the U.S. judicial system, having the power to review and overturn the decisions of lower courts. The Supreme Court also has original jurisdiction (being the first and final court to hear a case) in certain cases involving public officials, ambassadors, or disputes between states.

Contact the Agency or Department

Website: Supreme Court of the United States

Address: 1 First St NE
Washington, DC 20543

Phone Number: (202) 479-3000(202) 479-3030 (Visitor Information)

TTY: (202) 479-3472

The Amending Your Tax Return

Amending your tax return 16. Amending your tax return   Reporting Gains and Losses Table of Contents What's New Introduction Useful Items - You may want to see: Reporting Capital Gains and Losses Exception 1. Amending your tax return Exception 2. Amending your tax return File Form 1099-B or Form 1099-S with the IRS. Amending your tax return Capital Losses Capital Gain Tax Rates What's New Maximum capital gain rates. Amending your tax return . Amending your tax return  For 2013, the maximum capital gain rates are 0%, 15%, 20%, 25%, and 28%. Amending your tax return Introduction This chapter discusses how to report capital gains and losses from sales, exchanges, and other dispositions of investment property on Form 8949 and Schedule D (Form 1040). Amending your tax return The discussion includes the following topics. Amending your tax return How to report short-term gains and losses. Amending your tax return How to report long-term gains and losses. Amending your tax return How to figure capital loss carryovers. Amending your tax return How to figure your tax on a net capital gain. Amending your tax return If you sell or otherwise dispose of property used in a trade or business or for the production of income, see Publication 544, Sales and Other Dispositions of Assets, before completing Schedule D (Form 1040). Amending your tax return Useful Items - You may want to see: Publication 537 Installment Sales 544 Sales and Other Dispositions of Assets 550 Investment Income and Expenses Form (and Instructions) 4797 Sales of Business Property 6252 Installment Sale Income 8582 Passive Activity Loss Limitations 8949 Sales and Other Dispositions of Capital Assets Schedule D (Form 1040) Capital Gains and Losses Reporting Capital Gains and Losses Generally, report capital gains and losses on Form 8949. Amending your tax return Complete Form 8949 before you complete line 1b, 2, 3, 8b, 9, or 10 of Schedule D (Form 1040). Amending your tax return Use Form 8949 to report: The sale or exchange of a capital asset not reported on another form or schedule; Gains from involuntary conversions (other than from casualty or theft) of capital assets not held for business or profit; and Nonbusiness bad debts. Amending your tax return Use Schedule D (Form 1040): To figure the overall gain or loss from transactions reported on Form 8949; To report a gain from Form 6252 or Part I of Form 4797; To report a gain or loss from Form 4684, 6781, or 8824; To report capital gain distributions not reported directly on Form 1040 or Form 1040A; To report a capital loss carryover from the previous tax year to the current tax year; To report your share of a gain or (loss) from a partnership, S corporation, estate, or trust; To report transactions reported to you on a Form 1099-B (or substitute statement) showing basis was reported to the IRS and to which none of the Form 8949 adjustments or codes apply; and To report undistributed long-term capital gains from Form 2439. Amending your tax return On Form 8949, enter all sales and exchanges of capital assets, including stocks, bonds, etc. Amending your tax return , and real estate (if not reported on Form 4684, 4797, 6252, 6781, 8824, or line 1a or 8a of Schedule D). Amending your tax return Include these transactions even if you did not receive a Form 1099-B or 1099-S (or substitute statement) for the transaction. Amending your tax return Report short-term gains or losses in Part I. Amending your tax return Report long-term gains or losses in Part II. Amending your tax return Use as many Forms 8949 as you need. Amending your tax return Exceptions to filing Form 8949 and Schedule D (Form 1040). Amending your tax return   There are certain situations where you may not have to file Form 8949 and/or Schedule D (Form 1040). Amending your tax return Exception 1. Amending your tax return   You do not have to file Form 8949 or Schedule D (Form 1040) if you have no capital losses and your only capital gains are capital gain distributions from Form(s) 1099-DIV, box 2a (or substitute statements). Amending your tax return (If any Form(s) 1099-DIV (or substitute statements) you receive have an amount in box 2b (unrecaptured section 1250 gain), box 2c (section 1202 gain), or box 2d (collectibles (28%) gain), you do not qualify for this exception. Amending your tax return ) If you qualify for this exception, report your capital gain distributions directly on line 13 of Form 1040 (and check the box on line 13). Amending your tax return Also use the Qualified Dividends and Capital Gain Tax Worksheet in the Form 1040 instructions to figure your tax. Amending your tax return You can report your capital gain distributions on line 10 of Form 1040A, instead of on Form 1040, if none of the Forms 1099-DIV (or substitute statements) you received have an amount in box 2b, 2c, or 2d, and you do not have to file Form 1040. Amending your tax return Exception 2. Amending your tax return   You must file Schedule D (Form 1040), but generally do not have to file Form 8949, if Exception 1 does not apply and your only capital gains and losses are: Capital gain distributions; A capital loss carryover; A gain from Form 2439 or 6252 or Part I of Form 4797; A gain or loss from Form 4684, 6781, or 8824; A gain or loss from a partnership, S corporation, estate, or trust; or Gains and losses from transactions for which you received a Form 1099-B (or substitute statement) that shows the basis was reported to the IRS and for which you do not need to make any adjustments in column (g) of Form 8949 or enter any codes in column (f) of Form 8949. Amending your tax return Installment sales. Amending your tax return   You cannot use the installment method to report a gain from the sale of stock or securities traded on an established securities market. Amending your tax return You must report the entire gain in the year of sale (the year in which the trade date occurs). Amending your tax return Passive activity gains and losses. Amending your tax return    If you have gains or losses from a passive activity, you may also have to report them on Form 8582. Amending your tax return In some cases, the loss may be limited under the passive activity rules. Amending your tax return Refer to Form 8582 and its instructions for more information about reporting capital gains and losses from a passive activity. Amending your tax return Form 1099-B transactions. Amending your tax return   If you sold property, such as stocks, bonds, or certain commodities, through a broker, you should receive Form 1099-B or substitute statement from the broker. Amending your tax return Use the Form 1099-B or the substitute statement to complete Form 8949. Amending your tax return If you sold a covered security in 2013, your broker should send you a Form 1099-B (or substitute statement) that shows your basis. Amending your tax return This will help you complete Form 8949. Amending your tax return Generally, a covered security is a security you acquired after 2010. Amending your tax return   Report the gross proceeds shown in box 2a of Form 1099-B as the sales price in column (d) of either Part I or Part II of Form 8949, whichever applies. Amending your tax return However, if the broker advises you, in box 2a of Form 1099-B, that gross proceeds (sales price) less commissions and option premiums were reported to the IRS, enter that net sales price in column (d) of either Part I or Part II of Form 8949, whichever applies. Amending your tax return    Include in column (g) any expense of sale, such as broker's fees, commissions, state and local transfer taxes, and option premiums, unless you reported the net sales price in column (d). Amending your tax return If you include an expense of sale in column (g), enter “E” in column (f). Amending your tax return Form 1099-CAP transactions. Amending your tax return   If a corporation in which you own stock has had a change in control or a substantial change in capital structure, you should receive Form 1099-CAP or a substitute statement from the corporation. Amending your tax return Use the Form 1099-CAP or substitute statement to fill in Form 8949. Amending your tax return If your computations show that you would have a loss because of the change, do not enter any amounts on Form 8949 or Schedule D (Form 1040). Amending your tax return You cannot claim a loss on Schedule D (Form 1040) as a result of this transaction. Amending your tax return   Report the aggregate amount received shown in box 2 of Form 1099-CAP as the sales price in column (d) of either Part I or Part II of Form 8949, whichever applies. Amending your tax return Form 1099-S transactions. Amending your tax return   If you sold or traded reportable real estate, you generally should receive from the real estate reporting person a Form 1099-S showing the gross proceeds. Amending your tax return    “Reportable real estate” is defined as any present or future ownership interest in any of the following: Improved or unimproved land, including air space; Inherently permanent structures, including any residential, commercial, or industrial building; A condominium unit and its accessory fixtures and common elements, including land; and Stock in a cooperative housing corporation (as defined in section 216 of the Internal Revenue Code). Amending your tax return   A “real estate reporting person” could include the buyer's attorney, your attorney, the title or escrow company, a mortgage lender, your broker, the buyer's broker, or the person acquiring the biggest interest in the property. Amending your tax return   Your Form 1099-S will show the gross proceeds from the sale or exchange in box 2. Amending your tax return See the Instructions for Form 8949 and the Instructions for Schedule D (Form 1040) for how to report these transactions and include them in Part I or Part II of Form 8949 as appropriate. Amending your tax return However, report like-kind exchanges on Form 8824 instead. Amending your tax return   It is unlawful for any real estate reporting person to separately charge you for complying with the requirement to file Form 1099-S. Amending your tax return Nominees. Amending your tax return   If you receive gross proceeds as a nominee (that is, the gross proceeds are in your name but actually belong to someone else), see the Instructions for Form 8949 for how to report these amounts on Form 8949. Amending your tax return File Form 1099-B or Form 1099-S with the IRS. Amending your tax return   If you received gross proceeds as a nominee in 2013, you must file a Form 1099-B or Form 1099-S for those proceeds with the IRS. Amending your tax return Send the Form 1099-B or Form 1099-S with a Form 1096, Annual Summary and Transmittal of U. Amending your tax return S. Amending your tax return Information Returns, to your Internal Revenue Service Center by February 28, 2014 (March 31, 2014, if you file Form 1099-B or Form 1099-S electronically). Amending your tax return Give the actual owner of the proceeds Copy B of the Form 1099-B or Form 1099-S by February 18, 2014. Amending your tax return On Form 1099-B, you should be listed as the “Payer. Amending your tax return ” The other owner should be listed as the “Recipient. Amending your tax return ” On Form 1099-S, you should be listed as the “Filer. Amending your tax return ” The other owner should be listed as the “Transferor. Amending your tax return ” You do not have to file a Form 1099-B or Form 1099-S to show proceeds for your spouse. Amending your tax return For more information about the reporting requirements and the penalties for failure to file (or furnish) certain information returns, see the General Instructions for Certain Information Returns. Amending your tax return If you are filing electronically see Publication 1220. Amending your tax return Sale of property bought at various times. Amending your tax return   If you sell a block of stock or other property that you bought at various times, report the short-term gain or loss from the sale on one row in Part I of Form 8949, and the long-term gain or loss on one row in Part II of Form 8949. Amending your tax return Write “Various” in column (b) for the “Date acquired. Amending your tax return ” Sale expenses. Amending your tax return    On Form 8949, include in column (g) any expense of sale, such as broker's fees, commissions, state and local transfer taxes, and option premiums, unless you reported the net sales price in column (d). Amending your tax return If you include an expense of sale in column (g), enter “E” in column (f). Amending your tax return   For more information about adjustments to basis, see chapter 13. Amending your tax return Short-term gains and losses. Amending your tax return   Capital gain or loss on the sale or trade of investment property held 1 year or less is a short-term capital gain or loss. Amending your tax return You report it in Part I of Form 8949. Amending your tax return   You combine your share of short-term capital gain or loss from partnerships, S corporations, estates, and trusts, and any short-term capital loss carryover, with your other short-term capital gains and losses to figure your net short-term capital gain or loss on line 7 of Schedule D (Form 1040). Amending your tax return Long-term gains and losses. Amending your tax return    A capital gain or loss on the sale or trade of investment property held more than 1 year is a long-term capital gain or loss. Amending your tax return You report it in Part II of Form 8949. Amending your tax return   You report the following in Part II of Schedule D (Form 1040): Undistributed long-term capital gains from a mutual fund (or other regulated investment company) or real estate investment trust (REIT); Your share of long-term capital gains or losses from partnerships, S corporations, estates, and trusts; All capital gain distributions from mutual funds and REITs not reported directly on line 10 of Form 1040A or line 13 of Form 1040; and Long-term capital loss carryovers. Amending your tax return    The result after combining these items with your other long-term capital gains and losses is your net long-term capital gain or loss (Schedule D (Form 1040), line 15). Amending your tax return Total net gain or loss. Amending your tax return   To figure your total net gain or loss, combine your net short-term capital gain or loss (Schedule D (Form 1040), line 7) with your net long-term capital gain or loss (Schedule D (Form 1040), line 15). Amending your tax return Enter the result on Schedule D (Form 1040), Part III, line 16. Amending your tax return If your losses are more than your gains, see Capital Losses , next. Amending your tax return If both lines 15 and 16 of your Schedule D (Form 1040) are gains and your taxable income on your Form 1040 is more than zero, see Capital Gain Tax Rates , later. Amending your tax return Capital Losses If your capital losses are more than your capital gains, you can claim a capital loss deduction. Amending your tax return Report the amount of the deduction on line 13 of Form 1040, in parentheses. Amending your tax return Limit on deduction. Amending your tax return   Your allowable capital loss deduction, figured on Schedule D (Form 1040), is the lesser of: $3,000 ($1,500 if you are married and file a separate return); or Your total net loss as shown on line 16 of Schedule D (Form 1040). Amending your tax return   You can use your total net loss to reduce your income dollar for dollar, up to the $3,000 limit. Amending your tax return Capital loss carryover. Amending your tax return   If you have a total net loss on line 16 of Schedule D (Form 1040) that is more than the yearly limit on capital loss deductions, you can carry over the unused part to the next year and treat it as if you had incurred it in that next year. Amending your tax return If part of the loss is still unused, you can carry it over to later years until it is completely used up. Amending your tax return   When you figure the amount of any capital loss carryover to the next year, you must take the current year's allowable deduction into account, whether or not you claimed it and whether or not you filed a return for the current year. Amending your tax return   When you carry over a loss, it remains long term or short term. Amending your tax return A long-term capital loss you carry over to the next tax year will reduce that year's long-term capital gains before it reduces that year's short-term capital gains. Amending your tax return Figuring your carryover. Amending your tax return   The amount of your capital loss carryover is the amount of your total net loss that is more than the lesser of: Your allowable capital loss deduction for the year; or Your taxable income increased by your allowable capital loss deduction for the year and your deduction for personal exemptions. Amending your tax return   If your deductions are more than your gross income for the tax year, use your negative taxable income in computing the amount in item (2). Amending your tax return    Complete the Capital Loss Carryover Worksheet in the Instructions for Schedule D or Publication 550 to determine the part of your capital loss that you can carry over. Amending your tax return Example. Amending your tax return Bob and Gloria sold securities in 2013. Amending your tax return The sales resulted in a capital loss of $7,000. Amending your tax return They had no other capital transactions. Amending your tax return Their taxable income was $26,000. Amending your tax return On their joint 2013 return, they can deduct $3,000. Amending your tax return The unused part of the loss, $4,000 ($7,000 − $3,000), can be carried over to 2014. Amending your tax return If their capital loss had been $2,000, their capital loss deduction would have been $2,000. Amending your tax return They would have no carryover. Amending your tax return Use short-term losses first. Amending your tax return   When you figure your capital loss carryover, use your short-term capital losses first, even if you incurred them after a long-term capital loss. Amending your tax return If you have not reached the limit on the capital loss deduction after using the short-term capital losses, use the long-term capital losses until you reach the limit. Amending your tax return Decedent's capital loss. Amending your tax return    A capital loss sustained by a decedent during his or her last tax year (or carried over to that year from an earlier year) can be deducted only on the final income tax return filed for the decedent. Amending your tax return The capital loss limits discussed earlier still apply in this situation. Amending your tax return The decedent's estate cannot deduct any of the loss or carry it over to following years. Amending your tax return Joint and separate returns. Amending your tax return   If you and your spouse once filed separate returns and are now filing a joint return, combine your separate capital loss carryovers. Amending your tax return However, if you and your spouse once filed a joint return and are now filing separate returns, any capital loss carryover from the joint return can be deducted only on the return of the spouse who actually had the loss. Amending your tax return Capital Gain Tax Rates The tax rates that apply to a net capital gain are generally lower than the tax rates that apply to other income. Amending your tax return These lower rates are called the maximum capital gain rates. Amending your tax return The term “net capital gain” means the amount by which your net long-term capital gain for the year is more than your net short-term capital loss. Amending your tax return For 2013, the maximum capital gain rates are 0%, 15%, 20%, 25%, and 28%. Amending your tax return See Table 16-1 for details. Amending your tax return If you figure your tax using the maximum capital gain rate and the regular tax computation results in a lower tax, the regular tax computation applies. Amending your tax return Example. Amending your tax return All of your net capital gain is from selling collectibles, so the capital gain rate would be 28%. Amending your tax return If you are otherwise subject to a rate lower than 28%, the 28% rate does not apply. Amending your tax return Investment interest deducted. Amending your tax return   If you claim a deduction for investment interest, you may have to reduce the amount of your net capital gain that is eligible for the capital gain tax rates. Amending your tax return Reduce it by the amount of the net capital gain you choose to include in investment income when figuring the limit on your investment interest deduction. Amending your tax return This is done on the Schedule D Tax Worksheet or the Qualified Dividends and Capital Gain Tax Worksheet. Amending your tax return For more information about the limit on investment interest, see Interest Expenses in chapter 3 of Publication 550. Amending your tax return Table 16-1. Amending your tax return What Is Your Maximum Capital Gain Rate? IF your net capital gain is from . Amending your tax return . Amending your tax return . Amending your tax return THEN your  maximum capital gain rate is . Amending your tax return . Amending your tax return . Amending your tax return a collectibles gain 28% an eligible gain on qualified small business stock minus the section 1202 exclusion 28% an unrecaptured section 1250 gain 25% other gain1 and the regular tax rate that would apply is 39. Amending your tax return 6% 20% other gain1 and the regular tax rate that would apply is 25%, 28%, 33%, or 35% 15% other gain1 and the regular tax rate that would apply is 10% or 15% 0% 1 Other gain means any gain that is not collectibles gain, gain on qualified small business stock, or unrecaptured section 1250 gain. Amending your tax return     Collectibles gain or loss. Amending your tax return   This is gain or loss from the sale or trade of a work of art, rug, antique, metal (such as gold, silver, and platinum bullion), gem, stamp, coin, or alcoholic beverage held more than 1 year. Amending your tax return   Collectibles gain includes gain from sale of an interest in a partnership, S corporation, or trust due to unrealized appreciation of collectibles. Amending your tax return Gain on qualified small business stock. Amending your tax return    If you realized a gain from qualified small business stock that you held more than 5 years, you generally can exclude some or all of your gain under section 1202. Amending your tax return The eligible gain minus your section 1202 exclusion is a 28% rate gain. Amending your tax return See Gains on Qualified Small Business Stock in chapter 4 of Publication 550. Amending your tax return Unrecaptured section 1250 gain. Amending your tax return    Generally, this is any part of your capital gain from selling section 1250 property (real property) that is due to depreciation (but not more than your net section 1231 gain), reduced by any net loss in the 28% group. Amending your tax return Use the Unrecaptured Section 1250 Gain Worksheet in the Schedule D (Form 1040) instructions to figure your unrecaptured section 1250 gain. Amending your tax return For more information about section 1250 property and section 1231 gain, see chapter 3 of Publication 544. Amending your tax return Tax computation using maximum capital gain rates. Amending your tax return   Use the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet (whichever applies) to figure your tax if you have qualified dividends or net capital gain. Amending your tax return You have net capital gain if Schedule D (Form 1040), lines 15 and 16, are both gains. Amending your tax return Schedule D Tax Worksheet. Amending your tax return   Use the Schedule D Tax Worksheet in the Schedule D (Form 1040) instructions to figure your tax if: You have to file Schedule D (Form 1040); and Schedule D (Form 1040), line 18 (28% rate gain) or line 19 (unrecaptured section 1250 gain), is more than zero. Amending your tax return Qualified Dividends and Capital Gain Tax Worksheet. Amending your tax return   If you do not have to use the Schedule D Tax Worksheet (as explained above) and any of the following apply, use the Qualified Dividends and Capital Gain Tax Worksheet in the instructions for Form 1040 or Form 1040A (whichever you file) to figure your tax. Amending your tax return You received qualified dividends. Amending your tax return (See Qualified Dividends in chapter 8. Amending your tax return ) You do not have to file Schedule D (Form 1040) and you received capital gain distributions. Amending your tax return (See Exceptions to filing Form 8949 and Schedule D (Form 1040) , earlier. Amending your tax return ) Schedule D (Form 1040), lines 15 and 16, are both more than zero. Amending your tax return Alternative minimum tax. Amending your tax return   These capital gain rates are also used in figuring alternative minimum tax. Amending your tax return Prev  Up  Next   Home   More Online Publications