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Efile 2011 Tax

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Efile 2011 Tax

Efile 2011 tax Publication 463 - Introductory Material Table of Contents Future Developments What's New Reminder IntroductionUsers of employer-provided vehicles. Efile 2011 tax Volunteers. Efile 2011 tax Ordering forms and publications. Efile 2011 tax Tax questions. Efile 2011 tax Useful Items - You may want to see: Future Developments For the latest information about developments related to Publication 463, such as legislation enacted after it was published, go to www. Efile 2011 tax irs. Efile 2011 tax gov/pub463. Efile 2011 tax What's New Standard mileage rate. Efile 2011 tax  For 2013, the standard mileage rate for the cost of operating your car for business use is 56½ cents per mile. Efile 2011 tax Car expenses and use of the standard mileage rate are explained in chapter 4. Efile 2011 tax Depreciation limits on cars, trucks, and vans. Efile 2011 tax  For 2013, the first-year limit on the total depreciation deduction for cars remains at $11,160 ($3,160 if you elect not to claim the special depreciation allowance). Efile 2011 tax For trucks and vans the first-year limit remains at $11,360 ($3,360 if you elect not to claim the special depreciation allowance). Efile 2011 tax Depreciation limits are explained in chapter 4. Efile 2011 tax Section 179 deduction. Efile 2011 tax  For 2013, the section 179 deduction limit on qualifying property purchases (including cars, trucks, and vans) is a total of $500,000 and the limit on those purchases at which the deduction begins to be phased out is $2,000,000. Efile 2011 tax Section 179 Deduction is explained in chapter 4. Efile 2011 tax Special depreciation allowance. Efile 2011 tax  For 2013, the special (“bonus”) depreciation allowance on qualified property (including cars, trucks, and vans) remains at 50%. Efile 2011 tax Special Depreciation Allowance is explained in chapter 4. Efile 2011 tax Reminder Photographs of missing children. Efile 2011 tax  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Efile 2011 tax Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Efile 2011 tax You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Efile 2011 tax Per diem rates. Efile 2011 tax  The IRS no longer updates Publication 1542, Per Diem Rates (For Travel Within the Continental United States). Efile 2011 tax Instead, current per diem rates may be found on the U. Efile 2011 tax S. Efile 2011 tax General Services Administration (GSA) website at www. Efile 2011 tax gsa. Efile 2011 tax gov/perdiem. Efile 2011 tax Introduction You may be able to deduct the ordinary and necessary business-related expenses you have for: Travel, Entertainment, Gifts, or Transportation. Efile 2011 tax An ordinary expense is one that is common and accepted in your trade or business. Efile 2011 tax A necessary expense is one that is helpful and appropriate for your business. Efile 2011 tax An expense does not have to be required to be considered necessary. Efile 2011 tax This publication explains: What expenses are deductible, How to report them on your return, What records you need to prove your expenses, and How to treat any expense reimbursements you may receive. Efile 2011 tax Who should use this publication. Efile 2011 tax   You should read this publication if you are an employee or a sole proprietor who has business-related travel, entertainment, gift, or transportation expenses. Efile 2011 tax Users of employer-provided vehicles. Efile 2011 tax   If an employer-provided vehicle was available for your use, you received a fringe benefit. Efile 2011 tax Generally, your employer must include the value of the use or availability of the vehicle in your income. Efile 2011 tax However, there are exceptions if the use of the vehicle qualifies as a working condition fringe benefit (such as the use of a qualified nonpersonal use vehicle). Efile 2011 tax   A working condition fringe benefit is any property or service provided to you by your employer for which you could deduct the cost as an employee business expense if you had paid for it. Efile 2011 tax   A qualified nonpersonal use vehicle is one that is not likely to be used more than minimally for personal purposes because of its design. Efile 2011 tax See Qualified nonpersonal use vehicles under Actual Car Expenses in chapter 4. Efile 2011 tax   For information on how to report your car expenses that your employer did not provide or reimburse you for (such as when you pay for gas and maintenance for a car your employer provides), see Vehicle Provided by Your Employer in chapter 6. Efile 2011 tax Who does not need to use this publication. Efile 2011 tax   Partnerships, corporations, trusts, and employers who reimburse their employees for business expenses should refer to their tax form instructions and chapter 11 of Publication 535, Business Expenses, for information on deducting travel, meals, and entertainment expenses. Efile 2011 tax   If you are an employee, you will not need to read this publication if all of the following are true. Efile 2011 tax You fully accounted to your employer for your work-related expenses. Efile 2011 tax You received full reimbursement for your expenses. Efile 2011 tax Your employer required you to return any excess reimbursement and you did so. Efile 2011 tax There is no amount shown with a code “L” in box 12 of your Form W-2, Wage and Tax Statement. Efile 2011 tax If you meet all of these conditions, there is no need to show the expenses or the reimbursements on your return. Efile 2011 tax If you would like more information on reimbursements and accounting to your employer, see chapter 6 . Efile 2011 tax    If you meet these conditions and your employer included reimbursements on your Form W-2 in error, ask your employer for a corrected Form W-2. Efile 2011 tax Volunteers. Efile 2011 tax   If you perform services as a volunteer worker for a qualified charity, you may be able to deduct some of your costs as a charitable contribution. Efile 2011 tax See Out-of-Pocket Expenses in Giving Services in Publication 526, Charitable Contributions, for information on the expenses you can deduct. Efile 2011 tax Comments and suggestions. Efile 2011 tax   We welcome your comments about this publication and your suggestions for future editions. Efile 2011 tax   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Efile 2011 tax NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Efile 2011 tax Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Efile 2011 tax   You can send your comments from www. Efile 2011 tax irs. Efile 2011 tax gov/formspubs/. Efile 2011 tax Click on “More Information” and then on “Comment on Tax Forms and Publications. Efile 2011 tax ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Efile 2011 tax Ordering forms and publications. Efile 2011 tax   Visit www. Efile 2011 tax irs. Efile 2011 tax gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Efile 2011 tax Internal Revenue Service 1201 N. Efile 2011 tax Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Efile 2011 tax   If you have a tax question, check the information available on IRS. Efile 2011 tax gov or call 1-800-829-1040. Efile 2011 tax We cannot answer tax questions sent to either of the above addresses. Efile 2011 tax Useful Items - You may want to see: Publication 225 Farmer's Tax Guide 529 Miscellaneous Deductions 535 Business Expenses 946 How To Depreciate Property Form (and Instructions) Schedule A (Form 1040) Itemized Deductions Schedule C (Form 1040) Profit or Loss From Business Schedule C-EZ (Form 1040) Net Profit From Business Schedule F (Form 1040) Profit or Loss From Farming 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses 4562 Depreciation and Amortization See chapter 7, How To Get Tax Help , for information about getting these publications and forms. Efile 2011 tax Prev  Up  Next   Home   More Online Publications
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The Efile 2011 Tax

Efile 2011 tax 3. Efile 2011 tax   Reporting Rental Income, Expenses, and Losses Table of Contents Which Forms To UseSchedule E (Form 1040) Schedule C (Form 1040), Profit or Loss From Business Qualified Joint Venture Limits on Rental LossesAt-Risk Rules Passive Activity Limits Casualties and Thefts Example Figuring the net income or loss for a residential rental activity may involve more than just listing the income and deductions on Schedule E (Form 1040). Efile 2011 tax There are activities which do not qualify to use Schedule E, such as when the activity is not engaged in to make a profit or when you provide substantial services in conjunction with the property. Efile 2011 tax There are also the limitations which may need to be applied if you have a net loss on Schedule E. Efile 2011 tax There are two: (1) the limitation based on the amount of investment you have at risk in your rental activity, and (2) the special limits imposed on passive activities. Efile 2011 tax You may also have a gain or loss related to your rental property from a casualty or theft. Efile 2011 tax This is considered separately from the income and expense information you report on Schedule E. Efile 2011 tax Which Forms To Use The basic form for reporting residential rental income and expenses is Schedule E (Form 1040). Efile 2011 tax However, do not use that schedule to report a not-for-profit activity. Efile 2011 tax See Not Rented for Profit , in chapter 4. Efile 2011 tax There are also other rental situations in which forms other than Schedule E would be used. Efile 2011 tax Schedule E (Form 1040) If you rent buildings, rooms, or apartments, and provide basic services such as heat and light, trash collection, etc. Efile 2011 tax , you normally report your rental income and expenses on Schedule E, Part I. Efile 2011 tax List your total income, expenses, and depreciation for each rental property. Efile 2011 tax Be sure to enter the number of fair rental and personal use days on line 2. Efile 2011 tax If you have more than three rental or royalty properties, complete and attach as many Schedules E as are needed to list the properties. Efile 2011 tax Complete lines 1 and 2 for each property. Efile 2011 tax However, fill in lines 23a through 26 on only one Schedule E. Efile 2011 tax On Schedule E, page 1, line 18, enter the depreciation you are claiming for each property. Efile 2011 tax To find out if you need to attach Form 4562, see Form 4562 , later. Efile 2011 tax If you have a loss from your rental real estate activity, you also may need to complete one or both of the following forms. Efile 2011 tax Form 6198, At-Risk Limitations. Efile 2011 tax See At-Risk Rules , later. Efile 2011 tax Also see Publication 925. Efile 2011 tax Form 8582, Passive Activity Loss Limitations. Efile 2011 tax See Passive Activity Limits , later. Efile 2011 tax Page 2 of Schedule E is used to report income or loss from partnerships, S corporations, estates, trusts, and real estate mortgage investment conduits. Efile 2011 tax If you need to use page 2 of Schedule E, be sure to use page 2 of the same Schedule E you used to enter your rental activity on page 1. Efile 2011 tax Also, include the amount from line 26 (Part I) in the “Total income or (loss)” on line 41 (Part V). Efile 2011 tax Form 4562. Efile 2011 tax   You must complete and attach Form 4562 for rental activities only if you are claiming: Depreciation, including the special depreciation allowance, on property placed in service during 2013; Depreciation on listed property (such as a car), regardless of when it was placed in service; or Any other car expenses, including the standard mileage rate or lease expenses. Efile 2011 tax Otherwise, figure your depreciation on your own worksheet. Efile 2011 tax You do not have to attach these computations to your return, but you should keep them in your records for future reference. Efile 2011 tax   See Publication 946 for information on preparing Form 4562. Efile 2011 tax Schedule C (Form 1040), Profit or Loss From Business Generally, Schedule C is used when you provide substantial services in conjunction with the property or the rental is part of a trade or business as a real estate dealer. Efile 2011 tax Providing substantial services. Efile 2011 tax   If you provide substantial services that are primarily for your tenant's convenience, such as regular cleaning, changing linen, or maid service, you report your rental income and expenses on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business. Efile 2011 tax Use Form 1065, U. Efile 2011 tax S. Efile 2011 tax Return of Partnership Income, if your rental activity is a partnership (including a partnership with your spouse unless it is a qualified joint venture). Efile 2011 tax Substantial services do not include the furnishing of heat and light, cleaning of public areas, trash collection, etc. Efile 2011 tax For information, see Publication 334, Tax Guide for Small Business. Efile 2011 tax Also, you may have to pay self-employment tax on your rental income using Schedule SE (Form 1040), Self-Employment Tax. Efile 2011 tax For a discussion of “substantial services,” see Real Estate Rents in Publication 334, chapter 5. Efile 2011 tax Qualified Joint Venture If you and your spouse each materially participate (see Material participation under Passive Activity Limits, later) as the only members of a jointly owned and operated real estate business, and you file a joint return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership. Efile 2011 tax This election, in most cases, will not increase the total tax owed on the joint return, but it does give each of you credit for social security earnings on which retirement benefits are based and for Medicare coverage if your rental income is subject to self-employment tax. Efile 2011 tax If you make this election, you must report rental real estate income on Schedule E (or Schedule C if you provide substantial services). Efile 2011 tax You will not be required to file Form 1065 for any year the election is in effect. Efile 2011 tax Rental real estate income generally is not included in net earnings from self-employment subject to self-employment tax and generally is subject to the passive activity limits. Efile 2011 tax If you and your spouse filed a Form 1065 for the year prior to the election, the partnership terminates at the end of the tax year immediately preceding the year the election takes effect. Efile 2011 tax For more information on qualified joint ventures, go to IRS. Efile 2011 tax gov and enter “qualified joint venture” in the search box. Efile 2011 tax Limits on Rental Losses If you have a loss from your rental real estate activity, two sets of rules may limit the amount of loss you can deduct. Efile 2011 tax You must consider these rules in the order shown below. Efile 2011 tax Both are discussed in this section. Efile 2011 tax At-risk rules. Efile 2011 tax These rules are applied first if there is investment in your rental real estate activity for which you are not at risk. Efile 2011 tax This applies only if the real property was placed in service after 1986. Efile 2011 tax Passive activity limits. Efile 2011 tax Generally, rental real estate activities are considered passive activities and losses are not deductible unless you have income from other passive activities to offset them. Efile 2011 tax However, there are exceptions. Efile 2011 tax At-Risk Rules You may be subject to the at-risk rules if you have: A loss from an activity carried on as a trade or business or for the production of income, and Amounts invested in the activity for which you are not fully at risk. Efile 2011 tax Losses from holding real property (other than mineral property) placed in service before 1987 are not subject to the at-risk rules. Efile 2011 tax In most cases, any loss from an activity subject to the at-risk rules is allowed only to the extent of the total amount you have at risk in the activity at the end of the tax year. Efile 2011 tax You are considered at risk in an activity to the extent of cash and the adjusted basis of other property you contributed to the activity and certain amounts borrowed for use in the activity. Efile 2011 tax Any loss that is disallowed because of the at-risk limits is treated as a deduction from the same activity in the next tax year. Efile 2011 tax See Publication 925 for a discussion of the at-risk rules. Efile 2011 tax Form 6198. Efile 2011 tax   If you are subject to the at-risk rules, file Form 6198, At-Risk Limitations, with your tax return. Efile 2011 tax Passive Activity Limits In most cases, all rental real estate activities (except those of certain real estate professionals, discussed later) are passive activities. Efile 2011 tax For this purpose, a rental activity is an activity from which you receive income mainly for the use of tangible property, rather than for services. Efile 2011 tax For a discussion of activities that are not considered rental activities, see Rental Activities in Publication 925. Efile 2011 tax Deductions or losses from passive activities are limited. Efile 2011 tax You generally cannot offset income, other than passive income, with losses from passive activities. Efile 2011 tax Nor can you offset taxes on income, other than passive income, with credits resulting from passive activities. Efile 2011 tax Any excess loss or credit is carried forward to the next tax year. Efile 2011 tax Exceptions to the rules for figuring passive activity limits for personal use of a dwelling unit and for rental real estate with active participation are discussed later. Efile 2011 tax For a detailed discussion of these rules, see Publication 925. Efile 2011 tax Real estate professionals. Efile 2011 tax   If you are a real estate professional, complete line 43 of Schedule E. Efile 2011 tax      You qualify as a real estate professional for the tax year if you meet both of the following requirements. Efile 2011 tax More than half of the personal services you perform in all trades or businesses during the tax year are performed in real property trades or businesses in which you materially participate. Efile 2011 tax You perform more than 750 hours of services during the tax year in real property trades or businesses in which you materially participate. Efile 2011 tax If you qualify as a real estate professional, rental real estate activities in which you materially participated are not passive activities. Efile 2011 tax For purposes of determining whether you materially participated in your rental real estate activities, each interest in rental real estate is a separate activity unless you elect to treat all your interests in rental real estate as one activity. Efile 2011 tax   Do not count personal services you perform as an employee in real property trades or businesses unless you are a 5% owner of your employer. Efile 2011 tax You are a 5% owner if you own (or are considered to own) more than 5% of your employer's outstanding stock, or capital or profits interest. Efile 2011 tax   Do not count your spouse's personal services to determine whether you met the requirements listed earlier to qualify as a real estate professional. Efile 2011 tax However, you can count your spouse's participation in an activity in determining if you materially participated. Efile 2011 tax Real property trades or businesses. Efile 2011 tax   A real property trade or business is a trade or business that does any of the following with real property. Efile 2011 tax Develops or redevelops it. Efile 2011 tax Constructs or reconstructs it. Efile 2011 tax Acquires it. Efile 2011 tax Converts it. Efile 2011 tax Rents or leases it. Efile 2011 tax Operates or manages it. Efile 2011 tax Brokers it. Efile 2011 tax Choice to treat all interests as one activity. Efile 2011 tax   If you were a real estate professional and had more than one rental real estate interest during the year, you can choose to treat all the interests as one activity. Efile 2011 tax You can make this choice for any year that you qualify as a real estate professional. Efile 2011 tax If you forgo making the choice for one year, you can still make it for a later year. Efile 2011 tax   If you make the choice, it is binding for the tax year you make it and for any later year that you are a real estate professional. Efile 2011 tax This is true even if you are not a real estate professional in any intervening year. Efile 2011 tax (For that year, the exception for real estate professionals will not apply in determining whether your activity is subject to the passive activity rules. Efile 2011 tax )   See the Instructions for Schedule E for information about making this choice. Efile 2011 tax Material participation. Efile 2011 tax   Generally, you materially participated in an activity for the tax year if you were involved in its operations on a regular, continuous, and substantial basis during the year. Efile 2011 tax For details, see Publication 925 or the Instructions for Schedule C. Efile 2011 tax Participating spouse. Efile 2011 tax   If you are married, determine whether you materially participated in an activity by also counting any participation in the activity by your spouse during the year. Efile 2011 tax Do this even if your spouse owns no interest in the activity or files a separate return for the year. Efile 2011 tax Form 8582. Efile 2011 tax    You may have to complete Form 8582 to figure the amount of any passive activity loss for the current tax year for all activities and the amount of the passive activity loss allowed on your tax return. Efile 2011 tax See Form 8582 not required , later in this chapter, to determine if you must complete Form 8582. Efile 2011 tax   If you are required to complete Form 8582 and are also subject to the at-risk rules, include the amount from Form 6198, line 21 (deductible loss) in column (b) of Form 8582, Worksheet 1 or 3, as required. Efile 2011 tax Exception for Personal Use of Dwelling Unit If you used the rental property as a home during the year, any income, deductions, gain, or loss allocable to such use shall not be taken into account for purposes of the passive activity loss limitation. Efile 2011 tax Instead, follow the rules explained in chapter 5, Personal Use of Dwelling Unit (Including Vacation Home). Efile 2011 tax Exception for Rental Real Estate With Active Participation If you or your spouse actively participated in a passive rental real estate activity, you may be able to deduct up to $25,000 of loss from the activity from your nonpassive income. Efile 2011 tax This special allowance is an exception to the general rule disallowing losses in excess of income from passive activities. Efile 2011 tax Similarly, you may be able to offset credits from the activity against the tax on up to $25,000 of nonpassive income after taking into account any losses allowed under this exception. Efile 2011 tax Example. Efile 2011 tax Jane is single and has $40,000 in wages, $2,000 of passive income from a limited partnership, and $3,500 of passive loss from a rental real estate activity in which she actively participated. Efile 2011 tax $2,000 of Jane's $3,500 loss offsets her passive income. Efile 2011 tax The remaining $1,500 loss can be deducted from her $40,000 wages. Efile 2011 tax The special allowance is not available if you were married, lived with your spouse at any time during the year, and are filing a separate return. Efile 2011 tax Active participation. Efile 2011 tax   You actively participated in a rental real estate activity if you (and your spouse) owned at least 10% of the rental property and you made management decisions or arranged for others to provide services (such as repairs) in a significant and bona fide sense. Efile 2011 tax Management decisions that may count as active participation include approving new tenants, deciding on rental terms, approving expenditures, and other similar decisions. Efile 2011 tax Example. Efile 2011 tax Mike is single and had the following income and losses during the tax year:   Salary $42,300     Dividends 300     Interest 1,400     Rental loss (4,000)   The rental loss was from the rental of a house Mike owned. Efile 2011 tax Mike had advertised and rented the house to the current tenant himself. Efile 2011 tax He also collected the rents, which usually came by mail. Efile 2011 tax All repairs were either made or contracted out by Mike. Efile 2011 tax Although the rental loss is from a passive activity, because Mike actively participated in the rental property management he can use the entire $4,000 loss to offset his other income. Efile 2011 tax Maximum special allowance. Efile 2011 tax   The maximum special allowance is: $25,000 for single individuals and married individuals filing a joint return for the tax year, $12,500 for married individuals who file separate returns for the tax year and lived apart from their spouses at all times during the tax year, and $25,000 for a qualifying estate reduced by the special allowance for which the surviving spouse qualified. Efile 2011 tax   If your modified adjusted gross income (MAGI) is $100,000 or less ($50,000 or less if married filing separately), you can deduct your loss up to the amount specified above. Efile 2011 tax If your MAGI is more than $100,000 (more than $50,000 if married filing separately), your special allowance is limited to 50% of the difference between $150,000 ($75,000 if married filing separately) and your MAGI. Efile 2011 tax   Generally, if your MAGI is $150,000 or more ($75,000 or more if you are married filing separately), there is no special allowance. Efile 2011 tax Modified adjusted gross income (MAGI). Efile 2011 tax   This is your adjusted gross income from Form 1040, U. Efile 2011 tax S. Efile 2011 tax Individual Income Tax Return, line 38, or Form 1040NR, U. Efile 2011 tax S. Efile 2011 tax Nonresident Alien Income Tax Return, line 37, figured without taking into account: The taxable amount of social security or equivalent tier 1 railroad retirement benefits, The deductible contributions to traditional individual retirement accounts (IRAs) and section 501(c)(18) pension plans, The exclusion from income of interest from Series EE and I U. Efile 2011 tax S. Efile 2011 tax savings bonds used to pay higher educational expenses, The exclusion of amounts received under an employer's adoption assistance program, Any passive activity income or loss included on Form 8582, Any rental real estate loss allowed to real estate professionals, Any overall loss from a publicly traded partnership (see Publicly Traded Partnerships (PTPs) in the Instructions for Form 8582), The deduction allowed for one-half of self-employment tax, The deduction allowed for interest paid on student loans, The deduction for qualified tuition and related fees, and The domestic production activities deduction (see the Instructions for Form 8903). Efile 2011 tax Form 8582 not required. Efile 2011 tax   Do not complete Form 8582 if you meet all of the following conditions. Efile 2011 tax Your only passive activities were rental real estate activities in which you actively participated. Efile 2011 tax Your overall net loss from these activities is $25,000 or less ($12,500 or less if married filing separately and you lived apart from your spouse all year). Efile 2011 tax If married filing separately, you lived apart from your spouse all year. Efile 2011 tax You have no prior year unallowed losses from these (or any other passive) activities. Efile 2011 tax You have no current or prior year unallowed credits from passive activities. Efile 2011 tax Your MAGI is $100,000 or less ($50,000 or less if married filing separately and you lived apart from your spouse all year). Efile 2011 tax You do not hold any interest in a rental real estate activity as a limited partner or as a beneficiary of an estate or a trust. Efile 2011 tax   If you meet all of the conditions listed above, your rental real estate activities are not limited by the passive activity rules and you do not have to complete Form 8582. Efile 2011 tax On lines 23a through 23e of your Schedule E, enter the applicable amounts. Efile 2011 tax Casualties and Thefts As a result of a casualty or theft, you may have a loss related to your rental property. Efile 2011 tax You may be able to deduct the loss on your income tax return. Efile 2011 tax Casualty. Efile 2011 tax   This is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual. Efile 2011 tax Such events include a storm, fire, or earthquake. Efile 2011 tax Theft. Efile 2011 tax   This is defined as the unlawful taking and removing of your money or property with the intent to deprive you of it. Efile 2011 tax Gain from casualty or theft. Efile 2011 tax   It is also possible to have a gain from a casualty or theft if you receive money, including insurance, that is more than your adjusted basis in the property. Efile 2011 tax Generally, you must report this gain. Efile 2011 tax However, under certain circumstances, you may defer paying tax by choosing to postpone reporting the gain. Efile 2011 tax To do this, you generally must buy replacement property within 2 years after the close of the first tax year in which any part of your gain is realized. Efile 2011 tax In certain circumstances, the replacement period can be greater than 2 years; see Replacement Period in Publication 547 for more information. Efile 2011 tax The cost of the replacement property must be equal to or more than the net insurance or other payment you received. Efile 2011 tax More information. Efile 2011 tax   For information on business and nonbusiness casualty and theft losses, see Publication 547. Efile 2011 tax How to report. Efile 2011 tax    If you had a casualty or theft that involved property used in your rental activity, figure the net gain or loss in Section B of Form 4684, Casualties and Thefts. Efile 2011 tax Follow the Instructions for Form 4684 for where to carry your net gain or loss. Efile 2011 tax Example In February 2008, Marie Pfister bought a rental house for $135,000 (house $120,000 and land $15,000) and immediately began renting it out. Efile 2011 tax In 2013, she rented it all 12 months for a monthly rental fee of $1,125. Efile 2011 tax In addition to her rental income of $13,500 (12 x $1,125), Marie had the following expenses. Efile 2011 tax Mortgage interest $8,000 Fire insurance (1-year policy) 250 Miscellaneous repairs 400 Real estate taxes imposed and paid 500 Maintenance 200 Marie depreciates the residential rental property under MACRS GDS. Efile 2011 tax This means using the straight line method over a recovery period of 27. Efile 2011 tax 5 years. Efile 2011 tax She uses Table 2-2d to find her depreciation percentage. Efile 2011 tax Because she placed the property in service in February 2008, she continues to use that row of Table 2-2d. Efile 2011 tax For year 6, the rate is 3. Efile 2011 tax 636%. Efile 2011 tax Marie figures her net rental income or loss for the house as follows: Total rental income received  ($1,125 × 12) $13,500 Minus: Expenses     Mortgage interest $8,000   Fire insurance 250   Miscellaneous repairs 400   Real estate taxes 500   Maintenance 200   Total expenses 9,350 Balance $4,150 Minus: Depreciation ($120,000 x 3. Efile 2011 tax 636%) 4,363 Net rental (loss) for house ($213)       Marie had a net loss for the year. Efile 2011 tax Because she actively participated in her passive rental real estate activity and her loss was less than $25,000, she can deduct the loss on her return. Efile 2011 tax Marie also meets all of the requirements for not having to file Form 8582. Efile 2011 tax She uses Schedule E, Part I, to report her rental income and expenses. Efile 2011 tax She enters her income, expenses, and depreciation for the house in the column for Property A and enters her loss on line 22. Efile 2011 tax Form 4562 is not required. Efile 2011 tax Prev  Up  Next   Home   More Online Publications