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Free 2010 Tax Software

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Free 2010 Tax Software

Free 2010 tax software Index A Adjusted basis defined, Adjusted basis defined. Free 2010 tax software Administrative or management activities, Administrative or management activities. Free 2010 tax software Assistance (see Tax help) Attorneys, Place To Meet Patients, Clients, or Customers B Business expenses not for use of home, Business expenses not for use of your home. Free 2010 tax software Business furniture and equipment, Business Furniture and Equipment Business percentage, Business Percentage Business use of the home requirements (see Qualifying for a deduction) C Carryover of expenses, Carryover of unallowed expenses. Free 2010 tax software Casualty losses, Casualty losses. Free 2010 tax software Child and Adult Care Food Program reimbursements, Meals. Free 2010 tax software Computer Listed property, Listed Property D Daycare facilities, Daycare Facility, Standard meal and snack rates. Free 2010 tax software (see also Family daycare providers) Eligible children for standard meal and snack rates, Standard meal and snack rates. Free 2010 tax software Exceptions for regular use requirement, Daycare Facility Family daycare, Standard meal and snack rates. Free 2010 tax software Family daycare provider, Standard meal and snack rates. Free 2010 tax software Meals, Meals. Free 2010 tax software , Standard meal and snack rates. Free 2010 tax software Regular use, Daycare Facility Standard meal and snack rates, Meals. Free 2010 tax software , Standard meal and snack rates. Free 2010 tax software Deduction limit, Deduction Limit Deduction requirements Employee use, Additional tests for employee use. Free 2010 tax software Exceptions to exclusive use, Exceptions to Exclusive Use Exclusive use, Exclusive Use More than one trade or business, More Than One Trade or Business Place to meet clients, Place To Meet Patients, Clients, or Customers Principal place of business, Principal Place of Business Regular use, Regular Use Separate structure, Separate Structure Storage of inventory or product samples, Storage of inventory or product samples. Free 2010 tax software Trade or business use, Trade or Business Use Deductions Figuring, Figuring the Deduction, Part 2—Figure Your Allowable Deduction Limit, Deduction Limit Part-year use, Part-year use. Free 2010 tax software Qualifying for, Qualifying for a Deduction, Separate Structure Rental to employer, Rental to employer. Free 2010 tax software Unreimbursed partnership expenses, Deducting unreimbursed partnership expenses. Free 2010 tax software Using Actual Expenses, Using Actual Expenses Dentists, Place To Meet Patients, Clients, or Customers Depreciation, Property Bought for Business Use 5-year property, Depreciation 7-year property, Depreciation Adjusted basis, Adjusted basis defined. Free 2010 tax software Fair market value, Fair market value defined. Free 2010 tax software Figuring depreciation for the current year, Figuring the depreciation deduction for the current year. Free 2010 tax software Furniture and equipment, Business Furniture and Equipment, Depreciation Home, Depreciating Your Home Nonresidential real property, Figuring the depreciation deduction for the current year. Free 2010 tax software Percentage table for 39-year nonresidential real property, Depreciation table. Free 2010 tax software Permanent improvements, Permanent improvements. Free 2010 tax software , Depreciating permanent improvements. Free 2010 tax software Depreciation of home, Depreciating Your Home Basis adjustment, Basis Adjustment MACRS (Table 2), Depreciation table. Free 2010 tax software Property bought for business use, Depreciation Sale or exchange of home, Depreciation Doctors, Place To Meet Patients, Clients, or Customers E Employee use of home, Additional tests for employee use. Free 2010 tax software Employees Adequately accounting to employer, Adequately accounting to employer. Free 2010 tax software Casualty losses, Casualty losses. Free 2010 tax software Mortgage interest, Deductible mortgage interest. Free 2010 tax software Other expenses, Other expenses. Free 2010 tax software Real estate taxes, Real estate taxes. Free 2010 tax software Exclusive use, Exclusive Use Expenses Casualty losses, Casualty losses. Free 2010 tax software Direct, Actual Expenses Indirect, Actual Expenses Insurance, Insurance. Free 2010 tax software Mortgage interest, Deductible mortgage interest. Free 2010 tax software , Qualified mortgage insurance premiums. Free 2010 tax software Real estate taxes, Real estate taxes. Free 2010 tax software Related to tax-exempt income, Expenses related to tax-exempt income. Free 2010 tax software Rent, Rent. Free 2010 tax software Repairs, Repairs. Free 2010 tax software Security system, Security system. Free 2010 tax software Telephone, Telephone. Free 2010 tax software Types of, Actual Expenses Unrelated, Actual Expenses Utilities and services, Utilities and services. Free 2010 tax software Where to deduct, Where To Deduct F Fair market value, Fair market value defined. Free 2010 tax software Family daycare providers Meal and snack log (Exhibit A), Standard meal and snack rates. Free 2010 tax software Standard meal and snack rates, Standard meal and snack rates. Free 2010 tax software Standard meal and snack rates (Table 3), Standard meal and snack rates. Free 2010 tax software Figuring the deduction Business percentage, Business Percentage Deduction limit, Deduction Limit Form, Useful Items - You may want to see:, Self-Employed Persons, Real estate taxes. Free 2010 tax software 1040, Schedule F, Casualty losses. Free 2010 tax software 2106, Employees 4562, Reporting and recordkeeping requirements. Free 2010 tax software 4684, Casualty losses. Free 2010 tax software 8829, Actual Expenses, Casualty losses. Free 2010 tax software , Business Percentage, Daycare Facility W-2 Reimbursed expenses, Employees Free tax services, Free help with your tax return. Free 2010 tax software Furniture and equipment, Business Furniture and Equipment H Help (see Tax help) Home Business percentage, Business Percentage Depreciation, Depreciating Your Home Sale of, Sale or Exchange of Your Home Home expenses, Can you deduct business use of, Figure A, , Principal Place of Business I Improvements (see Permanent improvements) Insurance, Insurance. Free 2010 tax software Inventory, storage of, Storage of inventory or product samples. Free 2010 tax software L Listed property Computers, Listed Property Defined, Listed Property Employee requirements, Employee. Free 2010 tax software Reporting and recordkeeping requirements, Reporting and recordkeeping requirements. Free 2010 tax software Years following the year placed in service, Years following the year placed in service. Free 2010 tax software M MACRS percentage table 39-year nonresidential real property, Depreciation table. Free 2010 tax software Meals, Meals. Free 2010 tax software Meeting with patients, clients, or customers on premises, Place To Meet Patients, Clients, or Customers More than one place of business, More than one place of business. Free 2010 tax software More than one trade or business, More Than One Trade or Business More-than-50%-use test, More-than-50%-use test. Free 2010 tax software Mortgage interest, Deductible mortgage interest. Free 2010 tax software , Qualified mortgage insurance premiums. Free 2010 tax software P Partners, Partners Partnership expenses, unreimbursed, Deducting unreimbursed partnership expenses. Free 2010 tax software Permanent improvements, Permanent improvements. Free 2010 tax software , Depreciating permanent improvements. Free 2010 tax software Personal property converted to business use, Personal Property Converted to Business Use Place of business, more than one, More than one place of business. Free 2010 tax software Principal place of business, Principal Place of Business Product samples, Storage of inventory or product samples. Free 2010 tax software Property bought for business use Depreciation, Depreciation Section 179 deduction, Property Bought for Business Use, Section 179 Deduction Property converted to business use, Personal, Personal Property Converted to Business Use Publications, Useful Items - You may want to see: (see Tax help) Q Qualifying for a deduction, Qualifying for a Deduction R Real estate taxes, Real estate taxes. Free 2010 tax software Recordkeeping, Recordkeeping Recordkeeping requirements Business furniture and equipment, Reporting and recordkeeping requirements. Free 2010 tax software Family daycare provider meal and snack log (Exhibit A), Standard meal and snack rates. Free 2010 tax software Regular use, Regular Use Reminders, Reminders Rent, Rent. Free 2010 tax software Repairs, Repairs. Free 2010 tax software Reporting requirements Business furniture and equipment, Reporting and recordkeeping requirements. Free 2010 tax software S Sale or exchange of your home, Sale or Exchange of Your Home Basis adjustment, Basis Adjustment Depreciation taken, Depreciation Ownership and use tests, Ownership and use tests. Free 2010 tax software Section 179, Section 179 Deduction Furniture and equipment, Business Furniture and Equipment, Listed Property Listed property, Business Furniture and Equipment, Listed Property Personal property converted to business use, Personal Property Converted to Business Use Property bought for business use, Property Bought for Business Use Security system, Security system. Free 2010 tax software Self-employed persons Deduction of expenses, Self-Employed Persons Separate structure, Separate Structure Simplified Method Actual expenses and depreciation of your home, Actual expenses and depreciation of your home. Free 2010 tax software Allowable area, Allowable area. Free 2010 tax software Business expenses not related to use of the home, Business expenses not related to use of the home. Free 2010 tax software Electing the simplified method, Electing the Simplified Method More than one home, More than one home. Free 2010 tax software More than one qualified business use, More than one qualified business use. Free 2010 tax software Shared use, Shared use. Free 2010 tax software Expenses deductible without regard to business use, Expenses deductible without regard to business use. Free 2010 tax software No carryover of unallowed expenses, No deduction of carryover of actual expenses. Free 2010 tax software Simplified amount, Simplified Amount Space used regularly for daycare, Space used regularly for daycare. Free 2010 tax software Using the simplified method, Using the Simplified Method Standard meal and snack rates, Standard meal and snack rates. Free 2010 tax software Storage of inventory, Storage of inventory or product samples. Free 2010 tax software T Tables and figures MACRS Depreciation of home (Table 2), Depreciation table. Free 2010 tax software Qualifying for deduction (Figure A), Standard meal and snack rates (Table 3), Table 3. Free 2010 tax software Standard Meal and Snack Rates1 Types of expenses (Table 1), Actual Expenses Tax help, How To Get Tax Help Telephone, Telephone. Free 2010 tax software Trade or business use, Trade or Business Use TTY/TDD information, How To Get Tax Help Types of expenses, Actual Expenses U Utilities, Utilities and services. Free 2010 tax software W Where to deduct expenses, Where To Deduct Employees, Employees Self-employed, Self-Employed Persons Worksheets Area Adjustment Worksheet (for simplified method), Area Adjustment Worksheet (for simplified method) Worksheets to figure the deduction for business use of your home (simplified method), Worksheets To Figure the Deduction for Business Use of Your Home (Simplified Method) Daycare facility worksheet (for simplified method), Daycare Facility Worksheet (for simplified method) Simplified method worksheet, Simplified Method Worksheet Prev  Up     Home   More Online Publications
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The Free 2010 Tax Software

Free 2010 tax software 2. Free 2010 tax software   Accounting Periods and Methods Table of Contents Introduction Useful Items - You may want to see: Accounting Periods Accounting MethodsCash Method Accrual Method Combination Method Inventories Uniform Capitalization Rules Special Methods Change in Accounting Method Introduction You must figure your taxable income and file an income tax return for an annual accounting period called a tax year. Free 2010 tax software Also, you must consistently use an accounting method that clearly shows your income and expenses for the tax year. Free 2010 tax software Useful Items - You may want to see: Publication 538 Accounting Periods and Methods See chapter 12 for information about getting publications and forms. Free 2010 tax software Accounting Periods When preparing a statement of income and expenses (generally your income tax return), you must use your books and records for a specific interval of time called an accounting period. Free 2010 tax software The annual accounting period for your income tax return is called a tax year. Free 2010 tax software You can use one of the following tax years. Free 2010 tax software A calendar tax year. Free 2010 tax software A fiscal tax year. Free 2010 tax software Unless you have a required tax year, you adopt a tax year by filing your first income tax return using that tax year. Free 2010 tax software A required tax year is a tax year required under the Internal Revenue Code or the Income Tax Regulations. Free 2010 tax software Calendar tax year. Free 2010 tax software   A calendar tax year is 12 consecutive months beginning January 1 and ending December 31. Free 2010 tax software   You must adopt the calendar tax year if any of the following apply. Free 2010 tax software You do not keep books. Free 2010 tax software You have no annual accounting period. Free 2010 tax software Your present tax year does not qualify as a fiscal year. Free 2010 tax software Your use of the calendar tax year is required under the Internal Revenue Code or the Income Tax Regulations. Free 2010 tax software   If you filed your first income tax return using the calendar tax year and you later begin business as a sole proprietor, you must continue to use the calendar tax year unless you get IRS approval to change it or are otherwise allowed to change it without IRS approval. Free 2010 tax software For more information, see Change in tax year, later. Free 2010 tax software   If you adopt the calendar tax year, you must maintain your books and records and report your income and expenses for the period from January 1 through December 31 of each year. Free 2010 tax software Fiscal tax year. Free 2010 tax software   A fiscal tax year is 12 consecutive months ending on the last day of any month except December. Free 2010 tax software A 52-53-week tax year is a fiscal tax year that varies from 52 to 53 weeks but does not have to end on the last day of a month. Free 2010 tax software   If you adopt a fiscal tax year, you must maintain your books and records and report your income and expenses using the same tax year. Free 2010 tax software   For more information on a fiscal tax year, including a 52-53-week tax year, see Publication 538. Free 2010 tax software Change in tax year. Free 2010 tax software   Generally, you must file Form 1128, Application To Adopt, Change, or Retain a Tax Year, to request IRS approval to change your tax year. Free 2010 tax software See the Instructions for Form 1128 for exceptions. Free 2010 tax software If you qualify for an automatic approval request, a user fee is not required. Free 2010 tax software If you do not qualify for automatic approval, a ruling must be requested. Free 2010 tax software See the instructions for Form 1128 for information about user fees if you are requesting a ruling. Free 2010 tax software Accounting Methods An accounting method is a set of rules used to determine when and how income and expenses are reported. Free 2010 tax software Your accounting method includes not only the overall method of accounting you use, but also the accounting treatment you use for any material item. Free 2010 tax software You choose an accounting method for your business when you file your first income tax return that includes a Schedule C for the business. Free 2010 tax software After that, if you want to change your accounting method, you must generally get IRS approval. Free 2010 tax software See Change in Accounting Method, later. Free 2010 tax software Kinds of methods. Free 2010 tax software   Generally, you can use any of the following accounting methods. Free 2010 tax software Cash method. Free 2010 tax software An accrual method. Free 2010 tax software Special methods of accounting for certain items of income and expenses. Free 2010 tax software Combination method using elements of two or more of the above. Free 2010 tax software You must use the same accounting method to figure your taxable income and to keep your books. Free 2010 tax software Also, you must use an accounting method that clearly shows your income. Free 2010 tax software Business and personal items. Free 2010 tax software   You can account for business and personal items under different accounting methods. Free 2010 tax software For example, you can figure your business income under an accrual method, even if you use the cash method to figure personal items. Free 2010 tax software Two or more businesses. Free 2010 tax software   If you have two or more separate and distinct businesses, you can use a different accounting method for each if the method clearly reflects the income of each business. Free 2010 tax software They are separate and distinct only if you maintain complete and separate books and records for each business. Free 2010 tax software Cash Method Most individuals and many sole proprietors with no inventory use the cash method because they find it easier to keep cash method records. Free 2010 tax software However, if an inventory is necessary to account for your income, you must generally use an accrual method of accounting for sales and purchases. Free 2010 tax software For more information, see Inventories, later. Free 2010 tax software Income Under the cash method, include in your gross income all items of income you actually or constructively receive during your tax year. Free 2010 tax software If you receive property or services, you must include their fair market value in income. Free 2010 tax software Example. Free 2010 tax software On December 30, 2012, Mrs. Free 2010 tax software Sycamore sent you a check for interior decorating services you provided to her. Free 2010 tax software You received the check on January 2, 2013. Free 2010 tax software You must include the amount of the check in income for 2013. Free 2010 tax software Constructive receipt. Free 2010 tax software   You have constructive receipt of income when an amount is credited to your account or made available to you without restriction. Free 2010 tax software You do not need to have possession of it. Free 2010 tax software If you authorize someone to be your agent and receive income for you, you are treated as having received it when your agent received it. Free 2010 tax software Example. Free 2010 tax software Interest is credited to your bank account in December 2013. Free 2010 tax software You do not withdraw it or enter it into your passbook until 2014. Free 2010 tax software You must include it in your gross income for 2013. Free 2010 tax software Delaying receipt of income. Free 2010 tax software   You cannot hold checks or postpone taking possession of similar property from one tax year to another to avoid paying tax on the income. Free 2010 tax software You must report the income in the year the property is received or made available to you without restriction. Free 2010 tax software Example. Free 2010 tax software Frances Jones, a service contractor, was entitled to receive a $10,000 payment on a contract in December 2013. Free 2010 tax software She was told in December that her payment was available. Free 2010 tax software At her request, she was not paid until January 2014. Free 2010 tax software She must include this payment in her 2013 income because it was constructively received in 2013. Free 2010 tax software Checks. Free 2010 tax software   Receipt of a valid check by the end of the tax year is constructive receipt of income in that year, even if you cannot cash or deposit the check until the following year. Free 2010 tax software Example. Free 2010 tax software Dr. Free 2010 tax software Redd received a check for $500 on December 31, 2013, from a patient. Free 2010 tax software She could not deposit the check in her business account until January 2, 2014. Free 2010 tax software She must include this fee in her income for 2013. Free 2010 tax software Debts paid by another person or canceled. Free 2010 tax software   If your debts are paid by another person or are canceled by your creditors, you may have to report part or all of this debt relief as income. Free 2010 tax software If you receive income in this way, you constructively receive the income when the debt is canceled or paid. Free 2010 tax software For more information, see Canceled Debt under Kinds of Income in chapter 5. Free 2010 tax software Repayment of income. Free 2010 tax software   If you include an amount in income and in a later year you have to repay all or part of it, you can usually deduct the repayment in the year in which you make it. Free 2010 tax software If the amount you repay is over $3,000, a special rule applies. Free 2010 tax software For details about the special rule, see Repayments in chapter 11 of Publication 535, Business Expenses. Free 2010 tax software Expenses Under the cash method, you generally deduct expenses in the tax year in which you actually pay them. Free 2010 tax software This includes business expenses for which you contest liability. Free 2010 tax software However, you may not be able to deduct an expense paid in advance or you may be required to capitalize certain costs, as explained later under Uniform Capitalization Rules. Free 2010 tax software Expenses paid in advance. Free 2010 tax software   You can deduct an expense you pay in advance only in the year to which it applies. Free 2010 tax software Example. Free 2010 tax software You are a calendar year taxpayer and you pay $1,000 in 2013 for a business insurance policy effective for one year, beginning July 1. Free 2010 tax software You can deduct $500 in 2013 and $500 in 2014. Free 2010 tax software Accrual Method Under an accrual method of accounting, you generally report income in the year earned and deduct or capitalize expenses in the year incurred. Free 2010 tax software The purpose of an accrual method of accounting is to match income and expenses in the correct year. Free 2010 tax software Income—General Rule Under an accrual method, you generally include an amount in your gross income for the tax year in which all events that fix your right to receive the income have occurred and you can determine the amount with reasonable accuracy. Free 2010 tax software Example. Free 2010 tax software You are a calendar year accrual method taxpayer. Free 2010 tax software You sold a computer on December 28, 2013. Free 2010 tax software You billed the customer in the first week of January 2014, but you did not receive payment until February 2014. Free 2010 tax software You must include the amount received for the computer in your 2013 income. Free 2010 tax software Income—Special Rules The following are special rules that apply to advance payments, estimating income, and changing a payment schedule for services. Free 2010 tax software Estimated income. Free 2010 tax software   If you include a reasonably estimated amount in gross income, and later determine the exact amount is different, take the difference into account in the tax year in which you make the determination. Free 2010 tax software Change in payment schedule for services. Free 2010 tax software   If you perform services for a basic rate specified in a contract, you must accrue the income at the basic rate, even if you agree to receive payments at a lower rate until you complete the services and then receive the difference. Free 2010 tax software Advance payments for services. Free 2010 tax software   Generally, you report an advance payment for services to be performed in a later tax year as income in the year you receive the payment. Free 2010 tax software However, if you receive an advance payment for services you agree to perform by the end of the next tax year, you can elect to postpone including the advance payment in income until the next tax year. Free 2010 tax software However, you cannot postpone including any payment beyond that tax year. Free 2010 tax software   For more information, see Advance Payment for Services under Accrual Method in Publication 538. Free 2010 tax software That publication also explains special rules for reporting the following types of income. Free 2010 tax software Advance payments for service agreements. Free 2010 tax software Prepaid rent. Free 2010 tax software Advance payments for sales. Free 2010 tax software   Special rules apply to including income from advance payments on agreements for future sales or other dispositions of goods you hold primarily for sale to your customers in the ordinary course of your business. Free 2010 tax software If the advance payments are for contracts involving both the sale and service of goods, it may be necessary to treat them as two agreements. Free 2010 tax software An agreement includes a gift certificate that can be redeemed for goods. Free 2010 tax software Treat amounts that are due and payable as amounts you received. Free 2010 tax software   You generally include an advance payment in income for the tax year in which you receive it. Free 2010 tax software However, you can use an alternative method. Free 2010 tax software For information about the alternative method, see Publication 538. Free 2010 tax software Expenses Under an accrual method of accounting, you generally deduct or capitalize a business expense when both the following apply. Free 2010 tax software The all-events test has been met. Free 2010 tax software The test has been met when: All events have occurred that fix the fact of liability, and The liability can be determined with reasonable accuracy. Free 2010 tax software Economic performance has occurred. Free 2010 tax software Economic performance. Free 2010 tax software   You generally cannot deduct or capitalize a business expense until economic performance occurs. Free 2010 tax software If your expense is for property or services provided to you, or for your use of property, economic performance occurs as the property or services are provided or as the property is used. Free 2010 tax software If your expense is for property or services you provide to others, economic performance occurs as you provide the property or services. Free 2010 tax software An exception allows certain recurring items to be treated as incurred during a tax year even though economic performance has not occurred. Free 2010 tax software For more information on economic performance, see Economic Performance under Accrual Method in Publication 538. Free 2010 tax software Example. Free 2010 tax software You are a calendar year taxpayer and use an accrual method of accounting. Free 2010 tax software You buy office supplies in December 2013. Free 2010 tax software You receive the supplies and the bill in December, but you pay the bill in January 2014. Free 2010 tax software You can deduct the expense in 2013 because all events that fix the fact of liability have occurred, the amount of the liability could be reasonably determined, and economic performance occurred in that year. Free 2010 tax software Your office supplies may qualify as a recurring expense. Free 2010 tax software In that case, you can deduct them in 2013 even if the supplies are not delivered until 2014 (when economic performance occurs). Free 2010 tax software Keeping inventories. Free 2010 tax software   When the production, purchase, or sale of merchandise is an income-producing factor in your business, you must generally take inventories into account at the beginning and the end of your tax year. Free 2010 tax software If you must account for an inventory, you must generally use an accrual method of accounting for your purchases and sales. Free 2010 tax software For more information, see Inventories , later. Free 2010 tax software Special rule for related persons. Free 2010 tax software   You cannot deduct business expenses and interest owed to a related person who uses the cash method of accounting until you make the payment and the corresponding amount is includible in the related person's gross income. Free 2010 tax software Determine the relationship, for this rule, as of the end of the tax year for which the expense or interest would otherwise be deductible. Free 2010 tax software If a deduction is not allowed under this rule, the rule will continue to apply even if your relationship with the person ends before the expense or interest is includible in the gross income of that person. Free 2010 tax software   Related persons include members of your immediate family, including only brothers and sisters (either whole or half), your spouse, ancestors, and lineal descendants. Free 2010 tax software For a list of other related persons, see section 267 of the Internal Revenue Code. Free 2010 tax software Combination Method You can generally use any combination of cash, accrual, and special methods of accounting if the combination clearly shows your income and expenses and you use it consistently. Free 2010 tax software However, the following restrictions apply. Free 2010 tax software If an inventory is necessary to account for your income, you must generally use an accrual method for purchases and sales. Free 2010 tax software (See, however, Inventories, later. Free 2010 tax software ) You can use the cash method for all other items of income and expenses. Free 2010 tax software If you use the cash method for figuring your income, you must use the cash method for reporting your expenses. Free 2010 tax software If you use an accrual method for reporting your expenses, you must use an accrual method for figuring your income. Free 2010 tax software If you use a combination method that includes the cash method, treat that combination method as the cash method. Free 2010 tax software Inventories Generally, if you produce, purchase, or sell merchandise in your business, you must keep an inventory and use the accrual method for purchases and sales of merchandise. Free 2010 tax software However, the following taxpayers can use the cash method of accounting even if they produce, purchase, or sell merchandise. Free 2010 tax software These taxpayers can also account for inventoriable items as materials and supplies that are not incidental (discussed later). Free 2010 tax software A qualifying taxpayer under Revenue Procedure 2001-10 in Internal Revenue Bulletin 2001-2. Free 2010 tax software A qualifying small business taxpayer under Revenue Procedure 2002-28 in Internal Revenue Bulletin 2002-18. Free 2010 tax software Qualifying taxpayer. Free 2010 tax software   You are a qualifying taxpayer if: Your average annual gross receipts for each prior tax year ending on or after December 17, 1998, is $1 million or less. Free 2010 tax software (Your average annual gross receipts for a tax year is figured by adding the gross receipts for that tax year and the 2 preceding tax years and dividing by 3. Free 2010 tax software ) Your business is not a tax shelter, as defined under section 448(d)(3) of the Internal Revenue Code. Free 2010 tax software Qualifying small business taxpayer. Free 2010 tax software   You are a qualifying small business taxpayer if: Your average annual gross receipts for each prior tax year ending on or after December 31, 2000, is more than $1 million but not more than $10 million. Free 2010 tax software (Your average annual gross receipts for a tax year is figured by adding the gross receipts for that tax year and the 2 preceding tax years and dividing the total by 3. Free 2010 tax software ) You are not prohibited from using the cash method under section 448 of the Internal Revenue Code. Free 2010 tax software Your principal business activity is an eligible business (described in Publication 538 and Revenue Procedure 2002-28). Free 2010 tax software Business not owned or not in existence for 3 years. Free 2010 tax software   If you did not own your business for all of the 3-tax-year period used in figuring your average annual gross receipts, include the period of any predecessor. Free 2010 tax software If your business has not been in existence for the 3-tax-year period, base your average on the period it has existed including any short tax years, annualizing the short tax year's gross receipts. Free 2010 tax software Materials and supplies that are not incidental. Free 2010 tax software   If you account for inventoriable items as materials and supplies that are not incidental, you will deduct the cost of the items you would otherwise include in inventory in the year you sell the items, or the year you pay for them, whichever is later. Free 2010 tax software If you are a producer, you can use any reasonable method to estimate the raw material in your work in process and finished goods on hand at the end of the year to determine the raw material used to produce finished goods that were sold during the year. Free 2010 tax software Changing accounting method. Free 2010 tax software   If you are a qualifying taxpayer or qualifying small business taxpayer and want to change to the cash method or to account for inventoriable items as non-incidental materials and supplies, you must file Form 3115, Application for Change in Accounting Method. Free 2010 tax software See Change in Accounting Method, later. Free 2010 tax software More information. Free 2010 tax software    For more information about the qualifying taxpayer exception, see Revenue Procedure 2001-10 in Internal Revenue Bulletin 2001-2. Free 2010 tax software For more information about the qualifying small business taxpayer exception, see Revenue Procedure 2002-28 in Internal Revenue Bulletin 2002-18. Free 2010 tax software Items included in inventory. Free 2010 tax software   If you are required to account for inventories, include the following items when accounting for your inventory. Free 2010 tax software Merchandise or stock in trade. Free 2010 tax software Raw materials. Free 2010 tax software Work in process. Free 2010 tax software Finished products. Free 2010 tax software Supplies that physically become a part of the item intended for sale. Free 2010 tax software Valuing inventory. Free 2010 tax software   You must value your inventory at the beginning and end of each tax year to determine your cost of goods sold (Schedule C, line 42). Free 2010 tax software To determine the value of your inventory, you need a method for identifying the items in your inventory and a method for valuing these items. Free 2010 tax software   Inventory valuation rules cannot be the same for all kinds of businesses. Free 2010 tax software The method you use to value your inventory must conform to generally accepted accounting principles for similar businesses and must clearly reflect income. Free 2010 tax software Your inventory practices must be consistent from year to year. Free 2010 tax software More information. Free 2010 tax software   For more information about inventories, see Publication 538. Free 2010 tax software Uniform Capitalization Rules Under the uniform capitalization rules, you must capitalize the direct costs and part of the indirect costs for production or resale activities. Free 2010 tax software Include these costs in the basis of property you produce or acquire for resale, rather than claiming them as a current deduction. Free 2010 tax software You recover the costs through depreciation, amortization, or cost of goods sold when you use, sell, or otherwise dispose of the property. Free 2010 tax software Activities subject to the uniform capitalization rules. Free 2010 tax software   You may be subject to the uniform capitalization rules if you do any of the following, unless the property is produced for your use other than in a business or an activity carried on for profit. Free 2010 tax software Produce real or tangible personal property. Free 2010 tax software For this purpose, tangible personal property includes a film, sound recording, video tape, book, or similar property. Free 2010 tax software Acquire property for resale. Free 2010 tax software Exceptions. Free 2010 tax software   These rules do not apply to the following property. Free 2010 tax software Personal property you acquire for resale if your average annual gross receipts are $10 million or less. Free 2010 tax software Property you produce if you meet either of the following conditions. Free 2010 tax software Your indirect costs of producing the property are $200,000 or less. Free 2010 tax software You use the cash method of accounting and do not account for inventories. Free 2010 tax software For more information, see Inventories, earlier. Free 2010 tax software Special Methods There are special methods of accounting for certain items of income or expense. Free 2010 tax software These include the following. Free 2010 tax software Amortization, discussed in chapter 8 of Publication 535, Business Expenses. Free 2010 tax software Bad debts, discussed in chapter 10 of Publication 535. Free 2010 tax software Depletion, discussed in chapter 9 of Publication 535. Free 2010 tax software Depreciation, discussed in Publication 946, How To Depreciate Property. Free 2010 tax software Installment sales, discussed in Publication 537, Installment Sales. Free 2010 tax software Change in Accounting Method Once you have set up your accounting method, you must generally get IRS approval before you can change to another method. Free 2010 tax software A change in your accounting method includes a change in: Your overall method, such as from cash to an accrual method, and Your treatment of any material item. Free 2010 tax software To get approval, you must file Form 3115, Application for Change in Accounting Method. Free 2010 tax software You can get IRS approval to change an accounting method under either the automatic change procedures or the advance consent request procedures. Free 2010 tax software You may have to pay a user fee. Free 2010 tax software For more information, see the form instructions. Free 2010 tax software Automatic change procedures. Free 2010 tax software   Certain taxpayers can presume to have IRS approval to change their method of accounting. Free 2010 tax software The approval is granted for the tax year for which the taxpayer requests a change (year of change), if the taxpayer complies with the provisions of the automatic change procedures. Free 2010 tax software No user fee is required for an application filed under an automatic change procedure generally covered in Revenue Procedure 2002-9. Free 2010 tax software   Generally, you must use Form 3115 to request an automatic change. Free 2010 tax software For more information, see the Instructions for Form 3115. Free 2010 tax software Prev  Up  Next   Home   More Online Publications