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H&r Block Free Tax Form

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H&r Block Free Tax Form

H&r block free tax form 2. H&r block free tax form   Entertainment Table of Contents Directly-Related Test Associated TestMeetings at conventions. H&r block free tax form 50% LimitExceptions to the 50% Limit What Entertainment Expenses Are Deductible?A meal as a form of entertainment. H&r block free tax form Deduction may depend on your type of business. H&r block free tax form Exception for events that benefit charitable organizations. H&r block free tax form Food and beverages in skybox seats. H&r block free tax form What Entertainment Expenses Are Not Deductible?Out-of-pocket expenses. H&r block free tax form You may be able to deduct business-related entertainment expenses you have for entertaining a client, customer, or employee. H&r block free tax form The rules and definitions are summarized in Table 2-1 . H&r block free tax form You can deduct entertainment expenses only if they are both ordinary and necessary and meet one of the following tests. H&r block free tax form Directly-related test. H&r block free tax form Associated test. H&r block free tax form Both of these tests are explained later. H&r block free tax form An ordinary expense is one that is common and accepted in your trade or business. H&r block free tax form A necessary expense is one that is helpful and appropriate for your business. H&r block free tax form An expense does not have to be required to be considered necessary. H&r block free tax form The amount you can deduct for entertainment expenses may be limited. H&r block free tax form Generally, you can deduct only 50% of your unreimbursed entertainment expenses. H&r block free tax form This limit is discussed later under 50% Limit. H&r block free tax form Directly-Related Test To meet the directly-related test for entertainment expenses (including entertainment-related meals), you must show that: The main purpose of the combined business and entertainment was the active conduct of business, You did engage in business with the person during the entertainment period, and You had more than a general expectation of getting income or some other specific business benefit at some future time. H&r block free tax form Business is generally not considered to be the main purpose when business and entertainment are combined on hunting or fishing trips, or on yachts or other pleasure boats. H&r block free tax form Even if you show that business was the main purpose, you generally cannot deduct the expenses for the use of an entertainment facility. H&r block free tax form See Entertainment facilities under What Entertainment Expenses Are Not Deductible? later in this chapter. H&r block free tax form You must consider all the facts, including the nature of the business transacted and the reasons for conducting business during the entertainment. H&r block free tax form It is not necessary to devote more time to business than to entertainment. H&r block free tax form However, if the business discussion is only incidental to the entertainment, the entertainment expenses do not meet the directly-related test. H&r block free tax form Table 2-1. H&r block free tax form When Are Entertainment Expenses Deductible? General rule You can deduct ordinary and necessary expenses to entertain a client, customer, or employee if the expenses meet the directly-related test or the associated test. H&r block free tax form Definitions Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation, and includes meals provided to a customer or client. H&r block free tax form An ordinary expense is one that is common and accepted in your trade or business. H&r block free tax form A necessary expense is one that is helpful and appropriate. H&r block free tax form Tests to be met Directly-related test Entertainment took place in a clear business setting, or Main purpose of entertainment was the active conduct of business, and You did engage in business with the person during the entertainment period, and You had more than a general expectation of getting income or some other specific business benefit. H&r block free tax form   Associated test Entertainment is associated with your trade or business, and Entertainment is directly before or after a substantial business discussion. H&r block free tax form Other rules You cannot deduct the cost of your meal as an entertainment expense if you are claiming the meal as a travel expense. H&r block free tax form You cannot deduct expenses that are lavish or extravagant under the circumstances. H&r block free tax form You generally can deduct only 50% of your unreimbursed entertainment expenses (see 50% Limit ). H&r block free tax form You do not have to show that business income or other business benefit actually resulted from each entertainment expense. H&r block free tax form Clear business setting. H&r block free tax form   If the entertainment takes place in a clear business setting and is for your business or work, the expenses are considered directly related to your business or work. H&r block free tax form The following situations are examples of entertainment in a clear business setting. H&r block free tax form Entertainment in a hospitality room at a convention where business goodwill is created through the display or discussion of business products. H&r block free tax form Entertainment that is mainly a price rebate on the sale of your products (such as a restaurant owner providing an occasional free meal to a loyal customer). H&r block free tax form Entertainment of a clear business nature occurring under circumstances where there is no meaningful personal or social relationship between you and the persons entertained. H&r block free tax form An example is entertainment of business and civic leaders at the opening of a new hotel or play when the purpose is to get business publicity rather than to create or maintain the goodwill of the persons entertained. H&r block free tax form Expenses not considered directly related. H&r block free tax form   Entertainment expenses generally are not considered directly related if you are not there or in situations where there are substantial distractions that generally prevent you from actively conducting business. H&r block free tax form The following are examples of situations where there are substantial distractions. H&r block free tax form A meeting or discussion at a nightclub, theater, or sporting event. H&r block free tax form A meeting or discussion during what is essentially a social gathering, such as a cocktail party. H&r block free tax form A meeting with a group that includes persons who are not business associates at places such as cocktail lounges, country clubs, golf clubs, athletic clubs, or vacation resorts. H&r block free tax form Associated Test Even if your expenses do not meet the directly-related test, they may meet the associated test. H&r block free tax form To meet the associated test for entertainment expenses (including entertainment-related meals), you must show that the entertainment is: Associated with the active conduct of your trade or business, and Directly before or after a substantial business discussion (defined later). H&r block free tax form Associated with trade or business. H&r block free tax form   Generally, an expense is associated with the active conduct of your trade or business if you can show that you had a clear business purpose for having the expense. H&r block free tax form The purpose may be to get new business or to encourage the continuation of an existing business relationship. H&r block free tax form Substantial business discussion. H&r block free tax form   Whether a business discussion is substantial depends on the facts of each case. H&r block free tax form A business discussion will not be considered substantial unless you can show that you actively engaged in the discussion, meeting, negotiation, or other business transaction to get income or some other specific business benefit. H&r block free tax form   The meeting does not have to be for any specified length of time, but you must show that the business discussion was substantial in relation to the meal or entertainment. H&r block free tax form It is not necessary that you devote more time to business than to entertainment. H&r block free tax form You do not have to discuss business during the meal or entertainment. H&r block free tax form Meetings at conventions. H&r block free tax form   You are considered to have a substantial business discussion if you attend meetings at a convention or similar event, or at a trade or business meeting sponsored and conducted by a business or professional organization. H&r block free tax form However, your reason for attending the convention or meeting must be to further your trade or business. H&r block free tax form The organization that sponsors the convention or meeting must schedule a program of business activities that is the main activity of the convention or meeting. H&r block free tax form Directly before or after business discussion. H&r block free tax form   If the entertainment is held on the same day as the business discussion, it is considered to be held directly before or after the business discussion. H&r block free tax form   If the entertainment and the business discussion are not held on the same day, you must consider the facts of each case to see if the associated test is met. H&r block free tax form Among the facts to consider are the place, date, and duration of the business discussion. H&r block free tax form If you or your business associates are from out of town, you must also consider the dates of arrival and departure, and the reasons the entertainment and the discussion did not take place on the same day. H&r block free tax form Example. H&r block free tax form A group of business associates comes from out of town to your place of business to hold a substantial business discussion. H&r block free tax form If you entertain those business guests on the evening before the business discussion, or on the evening of the day following the business discussion, the entertainment generally is considered to be held directly before or after the discussion. H&r block free tax form The expense meets the associated test. H&r block free tax form 50% Limit In general, you can deduct only 50% of your business-related meal and entertainment expenses. H&r block free tax form (If you are subject to the Department of Transportation's “hours of service” limits, you can deduct 80% of your business-related meal and entertainment expenses. H&r block free tax form See Individuals subject to “hours of service” limits , later. H&r block free tax form ) The 50% limit applies to employees or their employers, and to self-employed persons (including independent contractors) or their clients, depending on whether the expenses are reimbursed. H&r block free tax form Figure A summarizes the general rules explained in this section. H&r block free tax form The 50% limit applies to business meals or entertainment expenses you have while: Traveling away from home (whether eating alone or with others) on business, Entertaining customers at your place of business, a restaurant, or other location, or Attending a business convention or reception, business meeting, or business luncheon at a club. H&r block free tax form Included expenses. H&r block free tax form   Expenses subject to the 50% limit include: Taxes and tips relating to a business meal or entertainment activity, Cover charges for admission to a nightclub, Rent paid for a room in which you hold a dinner or cocktail party, and Amounts paid for parking at a sports arena. H&r block free tax form However, the cost of transportation to and from a business meal or a business-related entertainment activity is not subject to the 50% limit. H&r block free tax form Figure A. H&r block free tax form Does the 50% Limit Apply to Your Expenses? There are exceptions to these rules. H&r block free tax form See Exceptions to the 50% Limit . H&r block free tax form Please click here for the text description of the image. H&r block free tax form Figure A. H&r block free tax form Does the 50% limit apply to Your Expenses?TAs for Figure A are: Notice 87-23; Form 2106 instructions Application of 50% limit. H&r block free tax form   The 50% limit on meal and entertainment expenses applies if the expense is otherwise deductible and is not covered by one of the exceptions discussed later. H&r block free tax form   The 50% limit also applies to certain meal and entertainment expenses that are not business related. H&r block free tax form It applies to meal and entertainment expenses you have for the production of income, including rental or royalty income. H&r block free tax form It also applies to the cost of meals included in deductible educational expenses. H&r block free tax form When to apply the 50% limit. H&r block free tax form   You apply the 50% limit after determining the amount that would otherwise qualify for a deduction. H&r block free tax form You first have to determine the amount of meal and entertainment expenses that would be deductible under the other rules discussed in this publication. H&r block free tax form Example 1. H&r block free tax form You spend $200 for a business-related meal. H&r block free tax form If $110 of that amount is not allowable because it is lavish and extravagant, the remaining $90 is subject to the 50% limit. H&r block free tax form Your deduction cannot be more than $45 (50% × $90). H&r block free tax form Example 2. H&r block free tax form You purchase two tickets to a concert and give them to a client. H&r block free tax form You purchased the tickets through a ticket agent. H&r block free tax form You paid $200 for the two tickets, which had a face value of $80 each ($160 total). H&r block free tax form Your deduction cannot be more than $80 (50% × $160). H&r block free tax form Exceptions to the 50% Limit Generally, business-related meal and entertainment expenses are subject to the 50% limit. H&r block free tax form Figure A can help you determine if the 50% limit applies to you. H&r block free tax form Expenses not subject to 50% limit. H&r block free tax form   Your meal or entertainment expense is not subject to the 50% limit if the expense meets one of the following exceptions. H&r block free tax form 1 - Employee's reimbursed expenses. H&r block free tax form   If you are an employee, you are not subject to the 50% limit on expenses for which your employer reimburses you under an accountable plan. H&r block free tax form Accountable plans are discussed in chapter 6. H&r block free tax form 2 - Self-employed. H&r block free tax form   If you are self-employed, your deductible meal and entertainment expenses are not subject to the 50% limit if all of the following requirements are met. H&r block free tax form You have these expenses as an independent contractor. H&r block free tax form Your customer or client reimburses you or gives you an allowance for these expenses in connection with services you perform. H&r block free tax form You provide adequate records of these expenses to your customer or client. H&r block free tax form (See chapter 5 . H&r block free tax form )   In this case, your client or customer is subject to the 50% limit on the expenses. H&r block free tax form Example. H&r block free tax form You are a self-employed attorney who adequately accounts for meal and entertainment expenses to a client who reimburses you for these expenses. H&r block free tax form You are not subject to the directly-related or associated test, nor are you subject to the 50% limit. H&r block free tax form If the client can deduct the expenses, the client is subject to the 50% limit. H&r block free tax form If you (as an independent contractor) have expenses for meals and entertainment related to providing services for a client but do not adequately account for and seek reimbursement from the client for those expenses, you are subject to the directly-related or associated test and to the 50% limit. H&r block free tax form 3 - Advertising expenses. H&r block free tax form   You are not subject to the 50% limit if you provide meals, entertainment, or recreational facilities to the general public as a means of advertising or promoting goodwill in the community. H&r block free tax form For example, neither the expense of sponsoring a television or radio show nor the expense of distributing free food and beverages to the general public is subject to the 50% limit. H&r block free tax form 4 - Sale of meals or entertainment. H&r block free tax form   You are not subject to the 50% limit if you actually sell meals, entertainment, goods and services, or use of facilities to the public. H&r block free tax form For example, if you run a nightclub, your expense for the entertainment you furnish to your customers, such as a floor show, is not subject to the 50% limit. H&r block free tax form 5 - Charitable sports event. H&r block free tax form   You are not subject to the 50% limit if you pay for a package deal that includes a ticket to a qualified charitable sports event. H&r block free tax form For the conditions the sports event must meet, see Exception for events that benefit charitable organizations under What Entertainment Expenses Are Deductible?, later. H&r block free tax form Individuals subject to “hours of service” limits. H&r block free tax form   You can deduct a higher percentage of your meal expenses while traveling away from your tax home if the meals take place during or incident to any period subject to the Department of Transportation's “hours of service” limits. H&r block free tax form The percentage is 80%. H&r block free tax form   Individuals subject to the Department of Transportation's “hours of service” limits include the following persons. H&r block free tax form Certain air transportation workers (such as pilots, crew, dispatchers, mechanics, and control tower operators) who are under Federal Aviation Administration regulations. H&r block free tax form Interstate truck operators and bus drivers who are under Department of Transportation regulations. H&r block free tax form Certain railroad employees (such as engineers, conductors, train crews, dispatchers, and control operations personnel) who are under Federal Railroad Administration regulations. H&r block free tax form Certain merchant mariners who are under Coast Guard regulations. H&r block free tax form What Entertainment Expenses Are Deductible? This section explains different types of entertainment expenses you may be able to deduct. H&r block free tax form Entertainment. H&r block free tax form   Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation. H&r block free tax form Examples include entertaining guests at nightclubs; at social, athletic, and sporting clubs; at theaters; at sporting events; on yachts; or on hunting, fishing, vacation, and similar trips. H&r block free tax form   Entertainment also may include meeting personal, living, or family needs of individuals, such as providing meals, a hotel suite, or a car to customers or their families. H&r block free tax form A meal as a form of entertainment. H&r block free tax form   Entertainment includes the cost of a meal you provide to a customer or client, whether the meal is a part of other entertainment or by itself. H&r block free tax form A meal expense includes the cost of food, beverages, taxes, and tips for the meal. H&r block free tax form To deduct an entertainment-related meal, you or your employee must be present when the food or beverages are provided. H&r block free tax form    You cannot claim the cost of your meal both as an entertainment expense and as a travel expense. H&r block free tax form    Meals sold in the normal course of your business are not considered entertainment. H&r block free tax form Deduction may depend on your type of business. H&r block free tax form   Your kind of business may determine if a particular activity is considered entertainment. H&r block free tax form For example, if you are a dress designer and have a fashion show to introduce your new designs to store buyers, the show generally is not considered entertainment. H&r block free tax form This is because fashion shows are typical in your business. H&r block free tax form But, if you are an appliance distributor and hold a fashion show for the spouses of your retailers, the show generally is considered entertainment. H&r block free tax form Separating costs. H&r block free tax form   If you have one expense that includes the costs of entertainment and other services (such as lodging or transportation), you must allocate that expense between the cost of entertainment and the cost of other services. H&r block free tax form You must have a reasonable basis for making this allocation. H&r block free tax form For example, you must allocate your expenses if a hotel includes entertainment in its lounge on the same bill with your room charge. H&r block free tax form Taking turns paying for meals or entertainment. H&r block free tax form   If a group of business acquaintances takes turns picking up each others' meal or entertainment checks primarily for personal reasons, without regard to whether any business purposes are served, no member of the group can deduct any part of the expense. H&r block free tax form Lavish or extravagant expenses. H&r block free tax form   You cannot deduct expenses for entertainment that are lavish or extravagant. H&r block free tax form An expense is not considered lavish or extravagant if it is reasonable considering the facts and circumstances. H&r block free tax form Expenses will not be disallowed just because they are more than a fixed dollar amount or take place at deluxe restaurants, hotels, nightclubs, or resorts. H&r block free tax form Allocating between business and nonbusiness. H&r block free tax form   If you entertain business and nonbusiness individuals at the same event, you must divide your entertainment expenses between business and nonbusiness. H&r block free tax form You can deduct only the business part. H&r block free tax form If you cannot establish the part of the expense for each person participating, allocate the expense to each participant on a pro rata basis. H&r block free tax form Example. H&r block free tax form You entertain a group of individuals that includes yourself, three business prospects, and seven social guests. H&r block free tax form Only 4/11 of the expense qualifies as a business entertainment expense. H&r block free tax form You cannot deduct the expenses for the seven social guests because those costs are nonbusiness expenses. H&r block free tax form Trade association meetings. H&r block free tax form   You can deduct entertainment expenses that are directly related to and necessary for attending business meetings or conventions of certain exempt organizations if the expenses of your attendance are related to your active trade or business. H&r block free tax form These organizations include business leagues, chambers of commerce, real estate boards, trade associations, and professional associations. H&r block free tax form Entertainment tickets. H&r block free tax form   Generally, you cannot deduct more than the face value of an entertainment ticket, even if you paid a higher price. H&r block free tax form For example, you cannot deduct service fees you pay to ticket agencies or brokers or any amount over the face value of the tickets you pay to scalpers. H&r block free tax form Exception for events that benefit charitable organizations. H&r block free tax form   Different rules apply when the cost of a ticket to a sports event benefits a charitable organization. H&r block free tax form You can take into account the full cost you pay for the ticket, even if it is more than the face value, if all of the following conditions apply. H&r block free tax form The event's main purpose is to benefit a qualified charitable organization. H&r block free tax form The entire net proceeds go to the charity. H&r block free tax form The event uses volunteers to perform substantially all the event's work. H&r block free tax form    The 50% limit on entertainment does not apply to any expense for a package deal that includes a ticket to such a charitable sports event. H&r block free tax form Example 1. H&r block free tax form You purchase tickets to a golf tournament organized by the local volunteer fire company. H&r block free tax form All net proceeds will be used to buy new fire equipment. H&r block free tax form The volunteers will run the tournament. H&r block free tax form You can deduct the entire cost of the tickets as a business expense if they otherwise qualify as an entertainment expense. H&r block free tax form Example 2. H&r block free tax form You purchase tickets to a college football game through a ticket broker. H&r block free tax form After having a business discussion, you take a client to the game. H&r block free tax form Net proceeds from the game go to colleges that qualify as charitable organizations. H&r block free tax form However, since the colleges also pay individuals to perform services, such as coaching and recruiting, you can only use the face value of the tickets in determining your business deduction. H&r block free tax form Skyboxes and other private luxury boxes. H&r block free tax form   If you rent a skybox or other private luxury box for more than one event at the same sports arena, you generally cannot deduct more than the price of a nonluxury box seat ticket. H&r block free tax form   To determine whether a skybox has been rented for more than one event, count each game or other performance as one event. H&r block free tax form For example, renting a skybox for a series of playoff games is considered renting it for more than one event. H&r block free tax form All skyboxes you rent in the same arena, along with any rentals by related parties, are considered in making this determination. H&r block free tax form   Related parties include: Family members (spouses, ancestors, and lineal descendants), Parties who have made a reciprocal arrangement involving the sharing of skyboxes, Related corporations, A partnership and its principal partners, and A corporation and a partnership with common ownership. H&r block free tax form Example. H&r block free tax form You pay $3,000 to rent a 10-seat skybox at Team Stadium for three baseball games. H&r block free tax form The cost of regular nonluxury box seats at each event is $30 a seat. H&r block free tax form You can deduct (subject to the 50% limit) $900 ((10 seats × $30 each) × 3 events). H&r block free tax form Food and beverages in skybox seats. H&r block free tax form   If expenses for food and beverages are separately stated, you can deduct these expenses in addition to the amounts allowable for the skybox, subject to the requirements and limits that apply. H&r block free tax form The amounts separately stated for food and beverages must be reasonable. H&r block free tax form You cannot inflate the charges for food and beverages to avoid the limited deduction for skybox rentals. H&r block free tax form What Entertainment Expenses Are Not Deductible? This section explains different types of entertainment expenses you generally may not be able to deduct. H&r block free tax form Club dues and membership fees. H&r block free tax form   You cannot deduct dues (including initiation fees) for membership in any club organized for: Business, Pleasure, Recreation, or Other social purpose. H&r block free tax form This rule applies to any membership organization if one of its principal purposes is either: To conduct entertainment activities for members or their guests, or To provide members or their guests with access to entertainment facilities, discussed later. H&r block free tax form   The purposes and activities of a club, not its name, will determine whether or not you can deduct the dues. H&r block free tax form You cannot deduct dues paid to: Country clubs, Golf and athletic clubs, Airline clubs, Hotel clubs, and Clubs operated to provide meals under circumstances generally considered to be conducive to business discussions. H&r block free tax form Entertainment facilities. H&r block free tax form   Generally, you cannot deduct any expense for the use of an entertainment facility. H&r block free tax form This includes expenses for depreciation and operating costs such as rent, utilities, maintenance, and protection. H&r block free tax form   An entertainment facility is any property you own, rent, or use for entertainment. H&r block free tax form Examples include a yacht, hunting lodge, fishing camp, swimming pool, tennis court, bowling alley, car, airplane, apartment, hotel suite, or home in a vacation resort. H&r block free tax form Out-of-pocket expenses. H&r block free tax form   You can deduct out-of-pocket expenses, such as for food and beverages, catering, gas, and fishing bait, that you provided during entertainment at a facility. H&r block free tax form These are not expenses for the use of an entertainment facility. H&r block free tax form However, these expenses are subject to the directly-related and associated tests and to the 50% limit , all discussed earlier. H&r block free tax form Expenses for spouses. H&r block free tax form   You generally cannot deduct the cost of entertainment for your spouse or for the spouse of a customer. H&r block free tax form However, you can deduct these costs if you can show you had a clear business purpose, rather than a personal or social purpose, for providing the entertainment. H&r block free tax form Example. H&r block free tax form You entertain a customer. H&r block free tax form The cost is an ordinary and necessary business expense and is allowed under the entertainment rules. H&r block free tax form The customer's spouse joins you because it is impractical to entertain the customer without the spouse. H&r block free tax form You can deduct the cost of entertaining the customer's spouse. H&r block free tax form If your spouse joins the party because the customer's spouse is present, the cost of the entertainment for your spouse is also deductible. H&r block free tax form Gift or entertainment. H&r block free tax form   Any item that might be considered either a gift or entertainment generally will be considered entertainment. H&r block free tax form However, if you give a customer packaged food or beverages that you intend the customer to use at a later date, treat it as a gift. H&r block free tax form   If you give a customer tickets to a theater performance or sporting event and you do not go with the customer to the performance or event, you have a choice. H&r block free tax form You can treat the tickets as either a gift or entertainment, whichever is to your advantage. H&r block free tax form   You can change your treatment of the tickets at a later date by filing an amended return. H&r block free tax form Generally, an amended return must be filed within 3 years from the date the original return was filed or within 2 years from the time the tax was paid, whichever is later. H&r block free tax form   If you go with the customer to the event, you must treat the cost of the tickets as an entertainment expense. H&r block free tax form You cannot choose, in this case, to treat the tickets as a gift. H&r block free tax form Prev  Up  Next   Home   More Online Publications
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The H&r Block Free Tax Form

H&r block free tax form Internal Revenue Bulletin:  2010-9  March 1, 2010  Rev. H&r block free tax form Proc. H&r block free tax form 2010-18 Table of Contents SECTION 1. H&r block free tax form PURPOSE SECTION 2. H&r block free tax form BACKGROUND SECTION 3. H&r block free tax form SCOPE SECTION 4. H&r block free tax form APPLICATION SECTION 5. H&r block free tax form EFFECTIVE DATE SECTION 6. H&r block free tax form DRAFTING INFORMATION SECTION 1. H&r block free tax form PURPOSE This revenue procedure provides: (1) limitations on depreciation deductions for owners of passenger automobiles first placed in service by the taxpayer during calendar year 2010, including a separate table of limitations on depreciation deductions for trucks and vans; and (2) the amounts to be included in income by lessees of passenger automobiles first leased by the taxpayer during calendar year 2010, including a separate table of inclusion amounts for lessees of trucks and vans. H&r block free tax form The tables detailing these depreciation limitations and lessee inclusion amounts reflect the automobile price inflation adjustments required by § 280F(d)(7) of the Internal Revenue Code. H&r block free tax form SECTION 2. H&r block free tax form BACKGROUND . H&r block free tax form 01 For owners of passenger automobiles, § 280F(a) imposes dollar limitations on the depreciation deduction for the year the taxpayer places the passenger automobile in service and for each succeeding year. H&r block free tax form Section 280F(d)(7) requires the amounts allowable as depreciation deductions to be increased by a price inflation adjustment amount for passenger automobiles placed in service after 1988. H&r block free tax form The method of calculating this price inflation amount for trucks and vans placed in service in or after calendar year 2003 uses a different CPI “automobile component” (the “new trucks” component) than that used in the price inflation amount calculation for other passenger automobiles (the “new cars” component), resulting in somewhat higher depreciation deductions for trucks and vans. H&r block free tax form This change reflects the higher rate of price inflation for trucks and vans since 1988. H&r block free tax form . H&r block free tax form 02 Section 280F(c) requires a reduction in the deduction allowed to the lessee of a leased passenger automobile. H&r block free tax form The reduction must be substantially equivalent to the limitations on the depreciation deductions imposed on owners of passenger automobiles. H&r block free tax form Under § 1. H&r block free tax form 280F-7(a) of the Income Tax Regulations, this reduction requires a lessee to include in gross income an inclusion amount determined by applying a formula to the amount obtained from a table. H&r block free tax form One table applies to lessees of trucks and vans and another table applies to all other passenger automobiles. H&r block free tax form Each table shows inclusion amounts for a range of fair market values for each taxable year after the passenger automobile is first leased. H&r block free tax form SECTION 3. H&r block free tax form SCOPE . H&r block free tax form 01 The limitations on depreciation deductions in section 4. H&r block free tax form 01(2) of this revenue procedure apply to passenger automobiles (other than leased passenger automobiles) that are placed in service by the taxpayer in calendar year 2010, and continue to apply for each taxable year that the passenger automobile remains in service. H&r block free tax form . H&r block free tax form 02 The tables in section 4. H&r block free tax form 02 of this revenue procedure apply to leased passenger automobiles for which the lease term begins during calendar year 2010. H&r block free tax form Lessees of these passenger automobiles must use these tables to determine the inclusion amount for each taxable year during which the passenger automobile is leased. H&r block free tax form See Rev. H&r block free tax form Proc. H&r block free tax form 2005-13, 2005-1 C. H&r block free tax form B. H&r block free tax form 759, for passenger automobiles first leased before calendar year 2006; Rev. H&r block free tax form Proc. H&r block free tax form 2006-18, 2006-1 C. H&r block free tax form B. H&r block free tax form 645, for passenger automobiles first leased during calendar year 2006; Rev. H&r block free tax form Proc. H&r block free tax form 2007-30, 2007-1 C. H&r block free tax form B. H&r block free tax form 1104, for passenger automobiles first leased during calendar year 2007; Rev. H&r block free tax form Proc. H&r block free tax form 2008-22, 2008-12 I. H&r block free tax form R. H&r block free tax form B. H&r block free tax form 658, for passenger automobiles first leased during calendar year 2008; and Rev. H&r block free tax form Proc. H&r block free tax form 2009-24, 2009-17 I. H&r block free tax form R. H&r block free tax form B. H&r block free tax form 885, for passenger automobiles first leased during calendar year 2009. H&r block free tax form SECTION 4. H&r block free tax form APPLICATION . H&r block free tax form 01 Limitations on Depreciation Deductions for Certain Automobiles. H&r block free tax form (1) Amount of the inflation adjustment. H&r block free tax form (a) Passenger automobiles (other than trucks or vans). H&r block free tax form Under § 280F(d)(7)(B)(i), the automobile price inflation adjustment for any calendar year is the percentage (if any) by which the CPI automobile component for October of the preceding calendar year exceeds the CPI automobile component for October 1987. H&r block free tax form The term “CPI automobile component” is defined in § 280F(d)(7)(B)(ii) as the “automobile component” of the Consumer Price Index for all Urban Consumers published by the Department of Labor. H&r block free tax form The new car component of the CPI was 115. H&r block free tax form 2 for October 1987 and 137. H&r block free tax form 851 for October 2009. H&r block free tax form The October 2009 index exceeded the October 1987 index by 22. H&r block free tax form 651. H&r block free tax form Therefore, the automobile price inflation adjustment for 2010 for passenger automobiles (other than trucks and vans) is 19. H&r block free tax form 66 percent (22. H&r block free tax form 651/115. H&r block free tax form 2 x 100%). H&r block free tax form The dollar limitations in § 280F(a) are multiplied by a factor of 0. H&r block free tax form 1966, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations applicable to passenger automobiles (other than trucks and vans) for calendar year 2010. H&r block free tax form This adjustment applies to all passenger automobiles (other than trucks and vans) that are first placed in service in calendar year 2010. H&r block free tax form (b) Trucks and vans. H&r block free tax form To determine the dollar limitations for trucks and vans first placed in service during calendar year 2010, the new truck component of the CPI is used instead of the new car component. H&r block free tax form The new truck component of the CPI was 112. H&r block free tax form 4 for October 1987 and 140. H&r block free tax form 897 for October 2009. H&r block free tax form The October 2009 index exceeded the October 1987 index by 28. H&r block free tax form 497. H&r block free tax form Therefore, the automobile price inflation adjustment for 2010 for trucks and vans is 25. H&r block free tax form 35 percent (28. H&r block free tax form 497/112. H&r block free tax form 4 x 100%). H&r block free tax form The dollar limitations in § 280F(a) are multiplied by a factor of 0. H&r block free tax form 2535, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations for trucks and vans. H&r block free tax form This adjustment applies to all trucks and vans that are first placed in service in calendar year 2010. H&r block free tax form (2) Amount of the limitation. H&r block free tax form Tables 1 and 2 contain the dollar amount of the depreciation limitation for each taxable year for passenger automobiles a taxpayer places in service in calendar year 2010. H&r block free tax form Use Table 1 for a passenger automobile (other than a truck or van) and Table 2 for a truck or van placed in service in calendar year 2010. H&r block free tax form REV. H&r block free tax form PROC. H&r block free tax form 2010-18 TABLE 1 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2010 Tax Year Amount 1st Tax Year $3,060 2nd Tax Year $4,900 3rd Tax Year $2,950 Each Succeeding Year $1,775 REV. H&r block free tax form PROC. H&r block free tax form 2010-18 TABLE 2 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2010 Tax Year Amount 1st Tax Year $3,160 2nd Tax Year $5,100 3rd Tax Year $3,050 Each Succeeding Year $1,875 . H&r block free tax form 02 Inclusions in Income of Lessees of Passenger Automobiles. H&r block free tax form A taxpayer must follow the procedures in § 1. H&r block free tax form 280F-7(a) for determining the inclusion amounts for passenger automobiles first leased in calendar year 2010. H&r block free tax form In applying these procedures, lessees of passenger automobiles other than trucks and vans should use Table 3 of this revenue procedure, while lessees of trucks and vans should use Table 4 of this revenue procedure. H&r block free tax form REV. H&r block free tax form PROC. H&r block free tax form 2010-18 TABLE 3 DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2010 Fair Market Value of Passenger Automobile Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & Later $16,700 $17,000 3 7 10 11 14 17,000 17,500 4 8 13 15 16 17,500 18,000 5 10 16 19 21 18,000 18,500 6 13 18 23 26 18,500 19,000 7 15 22 26 31 19,000 19,500 8 17 25 30 35 19,500 20,000 9 19 29 34 39 20,000 20,500 10 21 32 38 44 20,500 21,000 11 23 35 42 48 21,000 21,500 12 26 38 45 53 21,500 22,000 13 28 41 50 57 22,000 23,000 14 31 46 56 63 23,000 24,000 16 36 52 63 73 24,000 25,000 18 40 59 71 81 25,000 26,000 20 44 66 78 90 26,000 27,000 22 49 71 86 100 27,000 28,000 24 53 78 94 108 28,000 29,000 26 57 85 101 118 29,000 30,000 28 61 92 109 126 30,000 31,000 30 66 97 117 135 31,000 32,000 32 70 104 125 144 32,000 33,000 34 74 111 132 153 33,000 34,000 36 79 117 140 161 34,000 35,000 38 83 123 148 171 35,000 36,000 40 87 130 156 179 36,000 37,000 42 92 136 163 188 37,000 38,000 44 96 143 170 198 38,000 39,000 46 100 149 179 206 39,000 40,000 48 105 155 186 215 40,000 41,000 50 109 162 194 224 41,000 42,000 52 113 169 201 233 42,000 43,000 54 118 174 210 241 43,000 44,000 56 122 181 217 251 44,000 45,000 58 126 188 225 259 45,000 46,000 60 131 194 232 269 46,000 47,000 61 135 201 240 277 47,000 48,000 63 140 207 248 286 48,000 49,000 65 144 213 256 295 49,000 50,000 67 148 220 263 304 50,000 51,000 69 153 226 271 313 51,000 52,000 71 157 232 279 322 52,000 53,000 73 161 239 287 331 53,000 54,000 75 166 245 294 340 54,000 55,000 77 170 252 302 348 55,000 56,000 79 174 258 310 358 56,000 57,000 81 178 265 318 366 57,000 58,000 83 183 271 325 375 58,000 59,000 85 187 278 333 384 59,000 60,000 87 191 284 341 393 60,000 62,000 90 198 294 352 406 62,000 64,000 94 207 306 368 424 64,000 66,000 98 215 320 382 443 66,000 68,000 102 224 332 398 460 68,000 70,000 106 232 346 413 478 70,000 72,000 110 241 358 429 496 72,000 74,000 114 250 371 444 513 74,000 76,000 118 258 384 460 531 76,000 78,000 122 267 396 476 549 78,000 80,000 126 276 409 491 566 80,000 85,000 132 291 432 518 598 85,000 90,000 142 313 464 556 643 90,000 95,000 152 334 497 594 687 95,000 100,000 162 356 528 634 731 100,000 110,000 177 388 577 691 798 110,000 120,000 196 432 641 768 887 120,000 130,000 216 475 705 846 976 130,000 140,000 236 518 770 922 1,065 140,000 150,000 256 561 834 1,000 1,154 150,000 160,000 275 605 898 1,077 1,243 160,000 170,000 295 648 963 1,153 1,333 170,000 180,000 315 691 1,027 1,231 1,421 180,000 190,000 334 735 1,091 1,308 1,510 190,000 200,000 354 778 1,155 1,386 1,599 200,000 210,000 374 821 1,220 1,462 1,688 210,000 220,000 393 865 1,284 1,539 1,777 220,000 230,000 413 908 1,348 1,617 1,866 230,000 240,000 433 951 1,413 1,693 1,956 240,000 and up 453 995 1,476 1,771 2,044 REV. H&r block free tax form PROC. H&r block free tax form 2010-18 TABLE 4 DOLLAR AMOUNTS FOR TRUCKS AND VANS WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2010 Fair Market Value of Passenger Automobile Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & Later 17,000 17,500 3 6 9 10 11 17,500 18,000 4 8 12 14 16 18,000 18,500 5 10 15 18 21 18,500 19,000 6 12 19 22 24 19,000 19,500 7 15 21 26 29 19,500 20,000 8 17 25 29 34 20,000 20,500 9 19 28 33 38 20,500 21,000 10 21 31 37 43 21,000 21,500 11 23 35 41 47 21,500 22,000 12 25 38 45 51 22,000 23,000 13 29 42 51 58 23,000 24,000 15 33 49 58 67 24,000 25,000 17 37 56 66 76 25,000 26,000 19 42 62 73 85 26,000 27,000 21 46 68 82 93 27,000 28,000 23 50 75 89 103 28,000 29,000 25 55 81 97 111 29,000 30,000 27 59 88 104 121 30,000 31,000 29 63 94 113 129 31,000 32,000 31 68 100 120 138 32,000 33,000 33 72 107 127 148 33,000 34,000 35 76 114 135 156 34,000 35,000 37 81 119 143 165 35,000 36,000 39 85 126 151 174 36,000 37,000 41 89 133 158 183 37,000 38,000 43 94 139 166 191 38,000 39,000 45 98 145 174 201 39,000 40,000 47 102 152 182 209 40,000 41,000 49 106 159 189 218 41,000 42,000 51 111 164 198 227 42,000 43,000 53 115 171 205 236 43,000 44,000 55 119 178 213 245 44,000 45,000 57 124 184 220 254 45,000 46,000 59 128 190 228 263 46,000 47,000 60 133 197 235 272 47,000 48,000 62 137 203 244 280 48,000 49,000 64 142 209 251 290 49,000 50,000 66 146 216 259 298 50,000 51,000 68 150 223 266 308 51,000 52,000 70 154 229 275 316 52,000 53,000 72 159 235 282 325 53,000 54,000 74 163 242 290 334 54,000 55,000 76 167 249 297 343 55,000 56,000 78 172 254 305 352 56,000 57,000 80 176 261 313 361 57,000 58,000 82 180 268 320 370 58,000 59,000 84 185 274 328 378 59,000 60,000 86 189 280 336 388 60,000 62,000 89 195 291 347 401 62,000 64,000 93 204 303 363 418 64,000 66,000 97 213 315 379 436 66,000 68,000 101 221 329 394 454 68,000 70,000 105 230 341 410 472 70,000 72,000 109 239 354 424 490 72,000 74,000 113 247 367 440 508 74,000 76,000 117 256 380 455 526 76,000 78,000 121 264 393 471 543 78,000 80,000 125 273 406 486 561 80,000 85,000 131 289 428 513 592 85,000 90,000 141 310 461 552 636 90,000 95,000 151 332 492 591 681 95,000 100,000 161 353 525 629 726 100,000 110,000 176 386 573 686 793 110,000 120,000 195 430 637 763 882 120,000 130,000 215 473 701 841 971 130,000 140,000 235 516 766 918 1,059 140,000 150,000 255 559 830 995 1,149 150,000 160,000 274 603 894 1,072 1,238 160,000 170,000 294 646 958 1,150 1,326 170,000 180,000 314 689 1,023 1,226 1,416 180,000 190,000 333 733 1,087 1,303 1,505 190,000 200,000 353 776 1,151 1,381 1,594 200,000 210,000 373 819 1,216 1,457 1,683 210,000 220,000 392 863 1,280 1,534 1,772 220,000 230,000 412 906 1,344 1,612 1,861 230,000 240,000 432 949 1,409 1,689 1,949 240,000 and up 452 992 1,473 1,766 2,039 SECTION 5. H&r block free tax form EFFECTIVE DATE This revenue procedure applies to passenger automobiles that a taxpayer first places in service or first leases during calendar year 2010. H&r block free tax form SECTION 6. H&r block free tax form DRAFTING INFORMATION The principal author of this revenue procedure is Bernard P. H&r block free tax form Harvey of the Office of Associate Chief Counsel (Income Tax & Accounting). H&r block free tax form For further information regarding this revenue procedure, contact Mr. H&r block free tax form Harvey at (202) 622-4930 (not a toll-free call). H&r block free tax form Prev  Up  Next   Home   More Internal Revenue Bulletins