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Federal Tax Form 2011

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Federal Tax Form 2011

Federal tax form 2011 Part Five -   Deducción Estándar y Deducciones Detalladas Después de calcular su ingreso bruto ajustado, entonces puede restar las deducciones utilizadas para calcular los ingresos tributables. Federal tax form 2011 Puede restar la deducción estándar o las deducciones detalladas. Federal tax form 2011 Las deducciones detalladas son deducciones por determinados gastos enumerados en el Anexo A (Formulario 1040). Federal tax form 2011 Los diez capítulos de esta sección tratan sobre la deducción estándar, cada deducción detallada y el límite sobre algunas de sus deducciones detalladas si su ingreso bruto ajustado es mayor que ciertas cantidades. Federal tax form 2011 Vea el capítulo 20 para saber qué factores debe tener en cuenta al decidir si debe restar o no la deducción estándar o las deducciones detalladas. Federal tax form 2011 Table of Contents 20. Federal tax form 2011   Deducción EstándarQué Hay de Nuevo Introduction Cantidad de la Deducción Estándar Deducción Estándar para DependientesDefinición del ingreso del trabajo. Federal tax form 2011 Quién Debe Detallar las DeduccionesCuándo detallar las deducciones. Federal tax form 2011 Personas casadas que presentan la declaración por separado. Federal tax form 2011 21. Federal tax form 2011   Gastos Médicos y DentalesQué Hay de Nuevo Introduction Useful Items - You may want to see: ¿Qué Son Gastos Médicos? ¿Qué Gastos Puede Incluir Este Año?Estados donde rige la ley de los bienes gananciales. Federal tax form 2011 ¿Qué Cantidad de los Gastos Puede Deducir? ¿De Qué Personas Puede Incluir Gastos Médicos?Usted Cónyuge Dependiente Difuntos ¿Qué Gastos Médicos se Pueden Incluir?Primas de Seguros Comidas y Alojamiento Transporte Gastos del Cuidado de un Dependiente Incapacitado ¿Cómo se Tratan los Reembolsos?Reembolso de Seguros Indemnizaciones por Lesiones Personales Cómo Calcular y Reclamar la Deducción en su Declaración de Impuestos¿Qué Formulario Debe Usar para la Declaración? Gastos de Trabajo Relacionados con un Impedimento Costos del Seguro Médico para Personas que Trabajan por Cuenta Propia 22. Federal tax form 2011   ImpuestosIntroductionGobierno tribal de indios estadounidenses. Federal tax form 2011 Useful Items - You may want to see: Requisitos para Deducir Todo Impuesto Impuestos sobre los IngresosImpuestos Estatales y Locales sobre los Ingresos Impuestos Extranjeros sobre los Ingresos Impuestos Generales sobre las VentasVehículos de motor. Federal tax form 2011 Impuestos sobre Bienes RaícesImpuestos sobre bienes raíces de años anteriores. Federal tax form 2011 Ejemplos. Federal tax form 2011 Formulario 1099-S. Federal tax form 2011 Cantidades Relacionadas con Bienes Raíces que no Puede Deducir Impuestos sobre Bienes Muebles Impuestos y Cargos que no Puede Deducir Dónde se Anotan las Deducciones 23. Federal tax form 2011   Gastos de InteresesIntroduction Useful Items - You may want to see: Intereses Hipotecarios de ViviendaCantidad Deducible Puntos Primas de Seguro Hipotecario Formulario 1098, Estado de Cuenta de los Intereses Hipotecarios Intereses Procedentes de InversionesBienes de Inversión Asignación de Gastos de Intereses Límite sobre la Deducción Cantidades que No Puede DeducirIntereses Personales Asignación de Intereses Cómo Hacer la DeclaraciónMás de un prestatario. Federal tax form 2011 Fondos procedentes de una hipoteca utilizados para negocios o inversiones. Federal tax form 2011 24. Federal tax form 2011   DonacionesIntroduction Useful Items - You may want to see: Organizaciones que Reúnen los Requisitos para Recibir Donaciones DeduciblesTipos de Organizaciones Calificadas Donaciones que Puede DeducirDonaciones de las Cuales Usted se Beneficia Gastos Pagados a Nombre de un Estudiante que Vive con Usted Gastos de Bolsillo al Prestar Servicios Donaciones que no Puede DeducirDonaciones Hechas a Personas Físicas Donaciones Hechas a Organizaciones no Calificadas Donaciones de las Cuales Usted se Beneficia Valor de Tiempo o Servicios Gastos Personales Cargos de Tasación Donaciones de BienesExcepción. Federal tax form 2011 Artículos domésticos. Federal tax form 2011 Deducción de más de $500. Federal tax form 2011 Formulario 1098-C. Federal tax form 2011 Se acerca el plazo para la presentación de la declaración y aún no tiene el Formulario 1098-C. Federal tax form 2011 Excepción 1: vehículo usado o mejorado por la organización. Federal tax form 2011 Excepción 2: vehículo donado o vendido a una persona necesitada. Federal tax form 2011 Deducción de $500 o menos. Federal tax form 2011 Derecho al uso de los bienes. Federal tax form 2011 Bienes muebles tangibles. Federal tax form 2011 Intereses futuros. Federal tax form 2011 Determinación del Valor Justo de Mercado Donación de Bienes Cuyo Valor ha Disminuido Donación de Bienes Cuyo Valor ha Aumentado Cuándo Puede Deducir sus DonacionesCheques. Federal tax form 2011 Mensaje de texto. Federal tax form 2011 Tarjeta de crédito. Federal tax form 2011 Pago telefónico. Federal tax form 2011 Título de acciones. Federal tax form 2011 Pagaré. Federal tax form 2011 Opción. Federal tax form 2011 Fondos de un préstamo. Federal tax form 2011 Límites sobre DeduccionesCantidades Trasladadas al Año Siguiente Documentación que se Debe MantenerDonaciones en Efectivo Donaciones que no Sean en Efectivo Gastos de Bolsillo Cómo Declarar las Donaciones Caritativas 25. Federal tax form 2011   Pérdidas por Hecho Fortuito y Robo no Relacionadas con los NegociosQué Hay de Nuevo Introduction Useful Items - You may want to see: Hecho FortuitoMascota de la familia. Federal tax form 2011 Deterioro progresivo. Federal tax form 2011 Daños ocasionados por paneles de yeso (drywall) corrosivos. Federal tax form 2011 Robo Pérdidas de Depósitos Comprobación de las Pérdidas Cómo Calcular una PérdidaDisminución del Valor Justo de Mercado Base Ajustada Seguro y Otros Reembolsos Un Solo Hecho Fortuito en Bienes Múltiples Límites de la DeducciónRegla de los $100 Regla del 10% Cuándo Declarar Ganancias y PérdidasPérdidas en Zonas de Desastre Cómo Declarar Ganancias y Pérdidas 26. Federal tax form 2011   Gastos de Automóvil y Otros Gastos de Negocio del EmpleadoQué Hay de Nuevo Introduction Useful Items - You may want to see: Gastos de ViajeViajes Lejos de Su Domicilio Domicilio Tributario Trabajo o Asignación Temporal ¿Qué Gastos de Viaje se Pueden Deducir? Viajes en los Estados Unidos Viajes Fuera de los Estados Unidos Convenciones Gastos de EntretenimientoLímite del 50% ¿Qué Gastos de Entretenimiento se Pueden Deducir? ¿Qué Gastos de Entretenimiento no se Pueden Deducir? Gastos por Regalos Gastos de TransportePersonal en Reserva de las Fuerzas Armadas. Federal tax form 2011 Cargos de estacionamiento. Federal tax form 2011 Publicidad en el automóvil. Federal tax form 2011 Uso compartido de automóviles. Federal tax form 2011 Transporte de herramientas o instrumentos. Federal tax form 2011 Gastos de desplazamiento de sindicalistas desde el centro del sindicato. Federal tax form 2011 Gastos de Automóvil Mantenimiento de DocumentaciónCómo Demostrar los Gastos Cuánto Tiempo Tiene que Guardar Documentación y Recibos Cómo Hacer la DeclaraciónRegalos. Federal tax form 2011 Empleados estatutarios. Federal tax form 2011 Reembolsos Cómo Llenar los Formularios 2106 y 2106-EZ Reglas Especiales 27. Federal tax form 2011   Beneficios Tributarios para Estudios Relacionados con el TrabajoQué Hay de Nuevo Introduction Useful Items - You may want to see: Estudios Relacionados con el Trabajo que Reúnen los Requisitos de la DeducciónEstudios Requeridos por el Empleador o por Ley Estudios para Mantener o Mejorar Destrezas Estudios para Satisfacer los Requisitos Mínimos Estudios que lo Capacitan para un Nuevo Oficio o Negocio Qué Gastos se Pueden Deducir Reembolso no reclamado. Federal tax form 2011 Gastos de Transporte Gastos de Viaje No se Permiten Beneficios Dobles Reembolsos Cómo Deducir Gastos de NegociosPersonas que Trabajan por Cuenta Propia Empleados Artistas del Espectáculo y Funcionarios a los que se les Pagan Honorarios Gastos de Trabajo Relacionados con un Impedimento Documentación 28. Federal tax form 2011   Deducciones MisceláneasQué Hay de Nuevo Introduction Useful Items - You may want to see: Deducciones Sujetas al Límite del 2%Gastos del Empleado no Reembolsados (Línea 21) Costos de la Preparación de la Declaración de Impuestos (Línea 22) Otros Gastos (Línea 23) Deducciones no Sujetas al Límite del 2%Lista de Deducciones Gastos no DeduciblesLista de Gastos no Deducibles 29. Federal tax form 2011   Límite sobre Deducciones DetalladasIntroduction Useful Items - You may want to see: ¿Está Usted Sujeto al Límite? ¿Qué Deducciones Detalladas Están Limitadas? ¿Qué Deducciones Detalladas no Están Limitadas? ¿Cómo se Calcula el Límite?Ejemplo Prev  Up  Next   Home   More Online Publications
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General Car Tips

Whether you are buying or leasing a vehicle, these tips will help you get the best deal and avoid problems.

  • Decide what kind of vehicle best suits your needs and budget. Read our tips for choosing a safe vehicle. To compare models and get car buying tips, visit Edmunds.com or InternetAutoGuide.com.
  • Consider fuel economy. A vehicle that gets more miles per gallon is good for your wallet as well as for the environment.
  • Check out the seller. For car dealers, check with your local consumer protection office and Better Business Bureau. If you're buying from an individual, check the title to make sure you're dealing with the vehicle owner.
  • Take a test drive. Drive at different speeds and check for smooth right and left turns. On a straight stretch, make sure the vehicle doesn't pull to one side.
  • Handle trade-ins and financing separately from your purchase to get the best deal on each. Get a written price quote before you talk about a trade-in or dealer financing.
  • Shop in advance for the best finance deal at your credit union, bank or finance company. Look at the total finance charges and the Annual Percentage Rate (APR), not just the monthly payment.
  • Read and understand every document you are asked to sign.
  • Don't take possession of the car until all paperwork is final.
  • Choose an auto insurance policy that is right for you.

Vehicle Financing

Most car buyers today need some form of financing to purchase a new vehicle. Many use direct lending, that is, a loan from a finance company, bank, or credit union. In direct lending, a buyer agrees to pay the amount financed, plus an agreed-upon finance charge, over a specified period. Once a buyer and a vehicle dealership enter into a contract to purchase a vehicle, the buyer uses the loan proceeds from the direct lender to pay the dealership for the vehicle.

Another common form is dealership financing, which offers convenience, financing options, and sometimes special, manufacturer-sponsored, low-rate deals. Before you make a financing decision, it’s important to do your research:

  • Decide in advance how much you can afford to spend and stick to your limit.
  • Get a copy of your credit report and correct any errors before applying for a loan.
  • Check buying guides to identify price ranges and best available deals.

The Federal Trade Commission has more information about vehicle financing, deciding what you can afford, and consumer protections. If you need to file a complaint about your auto loan, contact the Consumer Financial Protection Bureau.

The Federal Tax Form 2011

Federal tax form 2011 Other Methods of Depreciation Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: How To Figure the DeductionBasis Useful Life Salvage Value Methods To UseStraight Line Method Declining Balance Method Income Forecast Method How To Change Methods DispositionsSale or exchange. Federal tax form 2011 Property not disposed of or abandoned. Federal tax form 2011 Special rule for normal retirements from item accounts. Federal tax form 2011 Abandoned property. Federal tax form 2011 Single item accounts. Federal tax form 2011 Multiple property account. Federal tax form 2011 Topics - This chapter discusses: How to figure the deduction Methods to use How to change methods Dispositions Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets 551 Basis of Assets 583 Starting a Business and Keeping Records 946 How To Depreciate Property Form (and Instructions) 3115 Application for Change in Accounting Method 4562 Depreciation and Amortization Schedule C (Form 1040) Profit or Loss From Business If your property is being depreciated under ACRS, you must continue to use rules for depreciation that applied when you placed the property in service. Federal tax form 2011 If your property qualified for MACRS, you must depreciate it under MACRS. Federal tax form 2011 See Publication 946. Federal tax form 2011 However, you cannot use MACRS for certain property because of special rules that exclude it from MACRS. Federal tax form 2011 Also, you can elect to exclude certain property from being depreciated under MACRS. Federal tax form 2011 Property that you cannot depreciate using MACRS includes: Intangible property, Property you can elect to exclude from MACRS that you properly depreciate under a method that is not based on a term of years, Certain public utility property, Any motion picture film or video tape, Any sound recording, and Certain real and personal property placed in service before 1987. Federal tax form 2011 Intangible property. Federal tax form 2011   You cannot depreciate intangible property under ACRS or MACRS. Federal tax form 2011 You depreciate intangible property using any other reasonable method, usually, the straight line method. Federal tax form 2011 Note. Federal tax form 2011 The cost of certain intangible property that you acquire after August 10, 1993, must be amortized over a 15-year period. Federal tax form 2011 For more information, see chapter 12 of Publication 535. Federal tax form 2011 Public utility property. Federal tax form 2011   The law excludes from MACRS any public utility property for which the taxpayer does not use a normalization method of accounting. Federal tax form 2011 This type of property is subject to depreciation under a special rule. Federal tax form 2011 Videocassettes. Federal tax form 2011   If you are in the videocassette rental business, you can depreciate those videocassettes purchased for rental. Federal tax form 2011 You can depreciate the cost less salvage value of those videocassettes that have a useful life over one year using either: The straight line method, or The income forecast method. Federal tax form 2011 The straight line method, salvage value, and useful life are discussed later under Methods To Use. Federal tax form 2011 You can deduct in the year of purchase as a business expense the cost of any cassette that has a useful life of one year or less. Federal tax form 2011 How To Figure the Deduction Two other reasonable methods can be used to figure your deduction for property not covered under ACRS or MACRS. Federal tax form 2011 These methods are straight line and declining balance. Federal tax form 2011 To figure depreciation using these methods, you must generally determine three things about the property you intend to depreciate. Federal tax form 2011 They are: The basis, The useful life, and The estimated salvage value at the end of its useful life. Federal tax form 2011 The amount of the deduction in any year also depends on which method of depreciation you choose. Federal tax form 2011 Basis To deduct the proper amount of depreciation each year, first determine your basis in the property you intend to depreciate. Federal tax form 2011 The basis used for figuring depreciation is the same as the basis that would be used for figuring the gain on a sale. Federal tax form 2011 Your original basis is usually the purchase price. Federal tax form 2011 However, if you acquire property in some other way, such as inheriting it, getting it as a gift, or building it yourself, you have to figure your original basis in a different way. Federal tax form 2011 Adjusted basis. Federal tax form 2011   Events will often change the basis of property. Federal tax form 2011 When this occurs, the changed basis is called the adjusted basis. Federal tax form 2011 Some events, such as improvements you make, increase basis. Federal tax form 2011 Events such as deducting casualty losses and depreciation decrease basis. Federal tax form 2011 If basis is adjusted, the depreciation deduction may also have to be changed, depending on the reason for the adjustment and the method of depreciation you are using. Federal tax form 2011   Publication 551 explains how to figure basis for property acquired in different ways. Federal tax form 2011 It also discusses what items increase and decrease basis, how to figure adjusted basis, and how to allocate cost if you buy several pieces of property at one time. Federal tax form 2011 Useful Life The useful life of a piece of property is an estimate of how long you can expect to use it in your trade or business, or to produce income. Federal tax form 2011 It is the length of time over which you will make yearly depreciation deductions of your basis in the property. Federal tax form 2011 It is how long it will continue to be useful to you, not how long the property will last. Federal tax form 2011 Many things affect the useful life of property, such as: Frequency of use, Age when acquired, Your repair policy, and Environmental conditions. Federal tax form 2011 The useful life can also be affected by technological improvements, progress in the arts, reasonably foreseeable economic changes, shifting of business centers, prohibitory laws, and other causes. Federal tax form 2011 Consider all these factors before you arrive at a useful life for your property. Federal tax form 2011 The useful life of the same type of property varies from user to user. Federal tax form 2011 When you determine the useful life of your property, keep in mind your own experience with similar property. Federal tax form 2011 You can use the general experience of the industry you are in until you are able to determine a useful life of your property from your own experience. Federal tax form 2011 Change in useful life. Federal tax form 2011   You base your estimate of useful life on certain facts. Federal tax form 2011 If these facts change significantly, you can adjust your estimate of the remaining useful life. Federal tax form 2011 However, you redetermine the estimated useful life only when the change is substantial and there is a clear reason for making the change. Federal tax form 2011 Salvage Value It is important for you to accurately determine the correct salvage value of the property you want to depreciate. Federal tax form 2011 You generally cannot depreciate property below a reasonable salvage value. Federal tax form 2011 Determining salvage value. Federal tax form 2011   Salvage value is the estimated value of property at the end of its useful life. Federal tax form 2011 It is what you expect to get for the property if you sell it after you can no longer use it productively. Federal tax form 2011 You must estimate the salvage value of a piece of property when you first acquire it. Federal tax form 2011   Salvage value is affected both by how you use the property and how long you use it. Federal tax form 2011 If it is your policy to dispose of property that is still in good operating condition, the salvage value can be relatively large. Federal tax form 2011 However, if your policy is to use property until it is no longer usable, its salvage value can be its junk value. Federal tax form 2011 Changing salvage value. Federal tax form 2011   Once you determine the salvage value for property, you should not change it merely because prices have changed. Federal tax form 2011 However, if you redetermine the useful life of property, as discussed earlier under Change in useful life, you can also redetermine the salvage value. Federal tax form 2011 When you redetermine the salvage value, take into account the facts that exist at the time. Federal tax form 2011 Net salvage. Federal tax form 2011   Net salvage is the salvage value of property minus what it costs to remove it when you dispose of it. Federal tax form 2011 You can choose either salvage value or net salvage when you figure depreciation. Federal tax form 2011 You must consistently use the one you choose and the treatment of the costs of removal must be consistent with the practice adopted. Federal tax form 2011 However, if the cost to remove the property is more than the estimated salvage value, then net salvage is zero. Federal tax form 2011 Your salvage value can never be less than zero. Federal tax form 2011 Ten percent rule. Federal tax form 2011   If you acquire personal property that has a useful life of 3 years or more, you can use an amount for salvage value that is less than your actual estimate. Federal tax form 2011 You can subtract from your estimate of salvage value an amount equal to 10% of your basis in the property. Federal tax form 2011 If salvage value is less than 10% of basis, you can ignore salvage value when you figure depreciation. Federal tax form 2011 Methods To Use Two methods of depreciation are the straight line and declining balance methods. Federal tax form 2011 If ACRS or MACRS does not apply, you can use one of these methods. Federal tax form 2011 The straight line and declining balance methods discussed in this section are not figured in the same way as straight line or declining balance methods under MACRS. Federal tax form 2011 Straight Line Method Before 1981, you could use any reasonable method for every kind of depreciable property. Federal tax form 2011 One of these methods was the straight line method. Federal tax form 2011 This method was also used for intangible property. Federal tax form 2011 It lets you deduct the same amount of depreciation each year. Federal tax form 2011 To figure your deduction, determine the adjusted basis of your property, its salvage value, and its estimated useful life. Federal tax form 2011 Subtract the salvage value, if any, from the adjusted basis. Federal tax form 2011 The balance is the total amount of depreciation you can take over the useful life of the property. Federal tax form 2011 Divide the balance by the number of years remaining in the useful life. Federal tax form 2011 This gives you the amount of your yearly depreciation deduction. Federal tax form 2011 Unless there is a big change in adjusted basis, or useful life, this amount will stay the same throughout the time you depreciate the property. Federal tax form 2011 If, in the first year, you use the property for less than a full year, you must prorate your depreciation deduction for the number of months in use. Federal tax form 2011 Example. Federal tax form 2011 In April 1994, Frank bought a franchise for $5,600. Federal tax form 2011 It expires in 10 years. Federal tax form 2011 This property is intangible property that cannot be depreciated under MACRS. Federal tax form 2011 Frank depreciates the franchise under the straight line method, using a 10-year useful life and no salvage value. Federal tax form 2011 He takes the $5,600 basis and divides that amount by 10 years ($5,600 ÷ 10 = $560, a full year's use). Federal tax form 2011 He must prorate the $560 for his 9 months of use in 1994. Federal tax form 2011 This gives him a deduction of $420 ($560 ÷ 9/12). Federal tax form 2011 In 1995, Frank can deduct $560 for the full year. Federal tax form 2011 Declining Balance Method The declining balance method allows you to recover a larger amount of the cost of the property in the early years of your use of the property. Federal tax form 2011 The rate cannot be more than twice the straight line rate. Federal tax form 2011 Rate of depreciation. Federal tax form 2011   Under this method, you must determine your declining balance rate of depreciation. Federal tax form 2011 The initial step is to: Divide the number 1 by the useful life of your property to get a straight line rate. Federal tax form 2011 (For example, if property has a useful life of 5 years, its normal straight line rate of depreciation is ⅕, or 20%. Federal tax form 2011 ) Multiply this straight line rate by a number that is more than 1 but not more than 2 to determine the declining balance rate. Federal tax form 2011 Unless there is a change in the useful life during the time you depreciate the property, the rate of depreciation generally will not change. Federal tax form 2011 Depreciation deductions. Federal tax form 2011   After you determine the rate of depreciation, multiply the adjusted basis of the property by it. Federal tax form 2011 This gives you the amount of your deduction. Federal tax form 2011 For example, if your adjusted basis at the beginning of the first year is $10,000, and your declining balance rate is 20%, your depreciation deduction for the first year is $2,000 ($10,000 ÷ 20%). Federal tax form 2011 To figure your depreciation deduction in the second year, you must first adjust the basis for the amount of depreciation you deducted in the first year. Federal tax form 2011 Subtract the previous year's depreciation from your basis ($10,000 - $2,000 = $8,000). Federal tax form 2011 Multiply this amount by the rate of depreciation ($8,000 ÷ 20% = $1,600). Federal tax form 2011 Your depreciation deduction for the second year is $1,600. Federal tax form 2011   As you can see from this example, your adjusted basis in the property gets smaller each year. Federal tax form 2011 Also, under this method, deductions are larger in the earlier years and smaller in the later years. Federal tax form 2011 You can make a change to the straight line method without consent. Federal tax form 2011 Salvage value. Federal tax form 2011   Do not subtract salvage value when you figure your yearly depreciation deductions under the declining balance method. Federal tax form 2011 However, you cannot depreciate the property below its reasonable salvage value. Federal tax form 2011 Determine salvage value using the rules discussed earlier, including the special 10% rule. Federal tax form 2011 Example. Federal tax form 2011 If your adjusted basis has been decreased to $1,000 and the rate of depreciation is 20%, your depreciation deduction should be $200. Federal tax form 2011 But if your estimate of salvage value was $900, you can only deduct $100. Federal tax form 2011 This is because $100 is the amount that would lower your adjusted basis to equal salvage value. Federal tax form 2011 Income Forecast Method The income forecast method requires income projections for each videocassette or group of videocassettes. Federal tax form 2011 You can group the videocassettes by title for making this projection. Federal tax form 2011 You determine the depreciation by applying a fraction to the cost less salvage value of the cassette. Federal tax form 2011 The numerator is the income from the videocassette for the tax year and the denominator is the total projected income for the cassette. Federal tax form 2011 For more information on the income forecast method, see Revenue Ruling 60-358 in Cumulative Bulletin 1960, Volume 2, on page 68. Federal tax form 2011 How To Change Methods In some cases, you may change your method of depreciation for property depreciated under a reasonable method. Federal tax form 2011 If you change your method of depreciation, it is generally a change in your method of accounting. Federal tax form 2011 You must get IRS consent before making the change. Federal tax form 2011 However, you do not need permission for certain changes in your method of depreciation. Federal tax form 2011 The rules discussed in this section do not apply to property depreciated under ACRS or MACRS. Federal tax form 2011 For information on ACRS elections,see Revocation of election, in chapter 1 under Alternate ACRS Method. Federal tax form 2011 Change to the straight line method. Federal tax form 2011   You can change from the declining balance method to the straight line method at any time during the useful life of your property without IRS consent. Federal tax form 2011 However, if you have a written agreement with the IRS that prohibits a change, you must first get IRS permission. Federal tax form 2011 When the change is made, figure depreciation based on your adjusted basis in the property at that time. Federal tax form 2011 Your adjusted basis takes into account all previous depreciation deductions. Federal tax form 2011 Use the estimated remaining useful life of your property at the time of change and its estimated salvage value. Federal tax form 2011   You can change from the declining balance method to straight line only on the original tax return for the year you first use the straight line method. Federal tax form 2011 You cannot make the change on an amended return filed after the due date of the original return (including extensions). Federal tax form 2011   When you make the change, attach a statement to your tax return showing: When you acquired the property, Its original cost or other original basis, The total amount claimed for depreciation and other allowances since you acquired it, Its salvage value and remaining useful life, and A description of the property and its use. Federal tax form 2011   After you change to straight line, you cannot change back to the declining balance method or to any other method for a period of 10 years without written permission from the IRS. Federal tax form 2011 Changes that require permission. Federal tax form 2011   For most other changes in method of depreciation, you must get permission from the IRS. Federal tax form 2011 To request a change in method of depreciation, file Form 3115. Federal tax form 2011 File the application within the first 180 days of the tax year the change is to become effective. Federal tax form 2011 In most cases, there is a user fee that must accompany Form 3115. Federal tax form 2011 See the instructions for Form 3115 to determine if a fee is required. Federal tax form 2011 Changes granted automatically. Federal tax form 2011   The IRS automatically approves certain changes of a method of depreciation. Federal tax form 2011 But, you must file Form 3115 for these automatic changes. Federal tax form 2011   However, IRS can deny permission if Form 3115 is not filed on time. Federal tax form 2011 For more information on automatic changes, see Revenue Procedure 74-11, 1974-1 C. Federal tax form 2011 B. Federal tax form 2011 420. Federal tax form 2011 Changes for which approval is not automatic. Federal tax form 2011   The automatic change procedures do not apply to: Property or an account where you made a change in depreciation within the last 10 tax years (unless the change was made under the Class Life System), Class Life Asset Depreciation Range System, and Public utility property. Federal tax form 2011   You must request and receive permission for these changes. Federal tax form 2011 To make the request, file Form 3115 during the first 180 days of the tax year for which you want the change to be effective. Federal tax form 2011 Change from an improper method. Federal tax form 2011   If the IRS disallows the method you are using, you do not need permission to change to a proper method. Federal tax form 2011 You can adopt the straight line method, or any other method that would have been permitted if you had used it from the beginning. Federal tax form 2011 If you file your tax return using an improper method, but later file an amended return, you can use a proper method on the amended return without getting IRS permission. Federal tax form 2011 However, you must file the amended return before the filing date for the next tax year. Federal tax form 2011 Dispositions Retirement is the permanent withdrawal of depreciable property from use in your trade or business or for the production of income. Federal tax form 2011 You can do this by selling, exchanging, or abandoning the item of property. Federal tax form 2011 You can also withdraw it from use without disposing of it. Federal tax form 2011 For example, you could place it in a supplies or scrap account. Federal tax form 2011 Retirements can be either normal or abnormal depending on all facts and circumstances. Federal tax form 2011 The rules discussed next do not apply to MACRS and ACRS property. Federal tax form 2011 Normal retirement. Federal tax form 2011   A normal retirement is a permanent withdrawal of depreciable property from use if the following apply: The retirement is made within the useful life you estimated originally, and The property has reached a condition at which you customarily retire or would retire similar property from use. Federal tax form 2011 A retirement is generally considered normal unless you can show that you retired the property because of a reason you did not consider when you originally estimated the useful life of the property. Federal tax form 2011 Abnormal retirement. Federal tax form 2011   A retirement can be abnormal if you withdraw the property early or under other circumstances. Federal tax form 2011 For example, if the property is damaged by a fire or suddenly becomes obsolete and is now useless. Federal tax form 2011 Gain or loss on retirement. Federal tax form 2011   There are special rules for figuring the gain or loss on retirement of property. Federal tax form 2011 The gain or loss will depend on several factors. Federal tax form 2011 These include the type of withdrawal, if the withdrawal was from a single property or multiple property account, and if the retirement was normal or abnormal. Federal tax form 2011 A single property account contains only one item of property. Federal tax form 2011 A multiple property account is one in which several items have been combined with a single rate of depreciation assigned to the entire account. Federal tax form 2011 Sale or exchange. Federal tax form 2011   If property is retired by sale or exchange, you figure gain or loss by the usual rules that apply to sales or other dispositions of property. Federal tax form 2011 See Publication 544. Federal tax form 2011 Property not disposed of or abandoned. Federal tax form 2011   If property is retired permanently, but not disposed of or physically abandoned, you do not recognize gain. Federal tax form 2011 You are allowed a loss in such a case, but only if the retirement is: An abnormal retirement, A normal retirement from a single property account in which you determined the life of each item of property separately, or A normal retirement from a multiple property account in which the depreciation rate is based on the maximum expected life of the longest lived item of property and the loss occurs before the expiration of the full useful life. Federal tax form 2011 However, you are not allowed a loss if the depreciation rate is based on the average useful life of the items of property in the account. Federal tax form 2011   To figure your loss, subtract the estimated salvage or fair market value of the property at the date of retirement, whichever is more, from its adjusted basis. Federal tax form 2011 Special rule for normal retirements from item accounts. Federal tax form 2011   You can generally deduct losses upon retirement of a few depreciable items of property with similar useful lives, if: You account for each one in a separate account, and You use the average useful life to figure depreciation. Federal tax form 2011 However, you cannot deduct losses if you use the average useful life to figure depreciation and they have a wide range of useful lives. Federal tax form 2011   If you have a large number of depreciable property items and use average useful lives to figure depreciation, you cannot deduct the losses upon normal retirements from these accounts. Federal tax form 2011 Abandoned property. Federal tax form 2011   If you physically abandon property, you can deduct as a loss the adjusted basis of the property at the time of its abandonment. Federal tax form 2011 However, your intent must be to discard the property so that you will not use it again or retrieve it for sale, exchange, or other disposition. Federal tax form 2011 Basis of property retired. Federal tax form 2011   The basis for figuring gain or loss on the retirement of property is its adjusted basis at the time of retirement, as determined in the following discussions. Federal tax form 2011 Single item accounts. Federal tax form 2011   If an item of property is accounted for in a single item account, the adjusted basis is the basis you would use to figure gain or loss for a sale or exchange of the property. Federal tax form 2011 This is generally the cost or other basis of the item of property less depreciation. Federal tax form 2011 See Publication 551. Federal tax form 2011 Multiple property account. Federal tax form 2011   For a normal retirement from a multiple property account, if you figured depreciation using the average expected useful life, the adjusted basis is the salvage value estimated for the item of property when it was originally acquired. Federal tax form 2011 If you figured depreciation using the maximum expected useful life of the longest lived item of property in the account, you must use the depreciation method used for the multiple property account and a rate based on the maximum expected useful life of the item of property retired. Federal tax form 2011   You make the adjustment for depreciation for an abnormal retirement from a multiple property account at the rate that would be proper if the item of property was depreciated in a single property account. Federal tax form 2011 The method of depreciation used for the multiple property account is used. Federal tax form 2011 You base the rate on either the average expected useful life or the maximum expected useful life of the retired item of property, depending on the method used to determine the depreciation rate for the multiple property account. Federal tax form 2011 Prev  Up  Next   Home   More Online Publications