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How To File 1040ez Online For Free

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How to file 1040ez online for free Publication 3991 - Introductory Material Table of Contents Introduction Introduction All of the changes discussed in this publication resulted from the Job Creation and Worker Assistance Act of 2002. How to file 1040ez online for free This publication highlights tax law changes that took effect retroactively for 2001 and others that take effect in 2002 and later years. How to file 1040ez online for free The chapters are divided into separate sections based on when the changes take effect. How to file 1040ez online for free For example, this publication covers the following topics. How to file 1040ez online for free Tax benefits for the area of New York City damaged in terrorist attacks on September 11, 2001. How to file 1040ez online for free New deduction available for educator expenses. How to file 1040ez online for free Limit on the use of the non-accrual experience method of accounting. How to file 1040ez online for free Pension changes such as the new tax credit for certain pension plan startup costs, an increased SEP contribution limit, figuring 403(b) catch-up contributions, and a provision for deemed IRAs. How to file 1040ez online for free Extension of the welfare-to-work credit and work opportunity credit. How to file 1040ez online for free New 5-year carryback rule for net operating losses (NOLs). How to file 1040ez online for free See the discussion of each topic for more information. How to file 1040ez online for free Certain changes had a major effect on two of the publications we issued for 2001. How to file 1040ez online for free We published supplements to those two publications and they have been included in this publication as follows. How to file 1040ez online for free Chapter 4 contains the supplement to Publication 463, Travel, Entertainment, Gift, and Car Expenses. How to file 1040ez online for free This discusses the increase in the amount of depreciation deduction for certain automobiles. How to file 1040ez online for free Chapter 5 contains the supplement to Publication 946, How To Depreciate Property. How to file 1040ez online for free This discusses the special depreciation allowance for property acquired after September 10, 2001. How to file 1040ez online for free Adjusting your withholding or estimated tax payments for 2002. How to file 1040ez online for free   If your tax for 2002 will be more or less than your 2001 tax, you may need to adjust your withholding or estimated tax payments accordingly. How to file 1040ez online for free If your tax will decrease, you can get the benefit of lower taxes throughout the year. How to file 1040ez online for free If you will owe more tax, you can avoid a penalty when you file your tax return. How to file 1040ez online for free   See the following table for forms and publications that will help you adjust your withholding or estimated tax payments. How to file 1040ez online for free See chapter 6 for information on ordering forms and publications. How to file 1040ez online for free To adjust your. How to file 1040ez online for free . How to file 1040ez online for free . How to file 1040ez online for free . How to file 1040ez online for free Get Form. How to file 1040ez online for free . How to file 1040ez online for free . How to file 1040ez online for free And Publication. How to file 1040ez online for free . How to file 1040ez online for free . How to file 1040ez online for free Withholding W–4, Employee's Withholding Allowance Certificate 919, How Do I Adjust My Tax Withholding? Estimated tax payments 1040–ES, Estimated Tax for Individuals 505, Tax Withholding and Estimated Tax Photographs of missing children. How to file 1040ez online for free   The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. How to file 1040ez online for free Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. How to file 1040ez online for free You can help bring these children home by looking at the photographs and calling 1–800–THE–LOST (1–800–843–5678) if you recognize a child. How to file 1040ez online for free Comments and suggestions. How to file 1040ez online for free   We welcome your comments about this publication. How to file 1040ez online for free   You can e-mail us while visiting our web site at www. How to file 1040ez online for free irs. How to file 1040ez online for free gov. How to file 1040ez online for free   You can write to us at the following address: Internal Revenue Service Technical Publications Branch W:CAR:MP:FP:P 1111 Constitution Ave. How to file 1040ez online for free NW Washington, DC 20224   We respond to many letters by telephone. How to file 1040ez online for free Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. How to file 1040ez online for free Prev  Up  Next   Home   More Online Publications
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The How To File 1040ez Online For Free

How to file 1040ez online for free Depreciation Table of Contents Introduction Special Depreciation AllowanceQualified Property Election Not To Claim the Allowance Rules for Returns Filed Before June 1, 2002 Passenger Automobiles New York Liberty Zone BenefitsSpecial Liberty Zone Depreciation Allowance Increased Section 179 Deduction Liberty Zone Leasehold Improvement Property If you depreciate business property that you acquired and placed in service after September 10, 2001, new law contains provisions that may affect your depreciation deduction for that property. How to file 1040ez online for free Publication 946, How To Depreciate Property, contains information on depreciation. How to file 1040ez online for free However, Publication 946 does not contain the new provisions because it was printed before the law was enacted. How to file 1040ez online for free The new provisions are in the Supplement to Publication 946, which is reprinted below. How to file 1040ez online for free Supplement to Publication 946 How To Depreciate Property   Introduction After Publication 946 was printed, the Job Creation and Worker Assistance Act of 2002 was signed into law by the President. How to file 1040ez online for free The new law made several changes in the tax rules explained in the publication. How to file 1040ez online for free Some of the changes apply to property placed in service during 2001. How to file 1040ez online for free This supplemental publication describes those changes and explains what you should do if you are affected by them. How to file 1040ez online for free The situations and examples in Publication 946 do not reflect any of the changes made by the Job Creation and Worker Assistance Act of 2002. How to file 1040ez online for free The new law contains the following provisions. How to file 1040ez online for free 30% depreciation deductions (special depreciation allowance and special New York Liberty Zone (Liberty Zone) depreciation allowance) for the year qualified property is placed in service after September 10, 2001. How to file 1040ez online for free An increased dollar limit on the section 179 deduction for qualified Liberty Zone property purchased after September 10, 2001. How to file 1040ez online for free A shorter recovery period for qualified Liberty Zone leasehold improvement property placed in service after September 10, 2001. How to file 1040ez online for free An increase in the maximum depreciation deduction for 2001 for a qualified passenger automobile placed in service after September 10, 2001. How to file 1040ez online for free If you believe you qualify for an increased deduction under any of these new rules, you must file the revised 2001 Form 4562 (dated March 2002) for 2001 calendar or fiscal years and 2000 fiscal years ending after September 10, 2001. How to file 1040ez online for free If you have already filed a tax return, this supplemental publication explains how to claim these benefits and how to elect not to claim the special depreciation allowance or special Liberty Zone depreciation allowance. How to file 1040ez online for free See Table 2 at the end of the supplement for an overview of the rules that apply if you filed your return before June 1, 2002. How to file 1040ez online for free Special Depreciation Allowance You can take a special depreciation allowance for qualified property you place in service after September 10, 2001. How to file 1040ez online for free The allowance is an additional deduction of 30% of the property's depreciable basis. How to file 1040ez online for free To figure the depreciable basis, you must first multiply the property's cost or other basis by the percentage of business/investment use and then reduce that amount by any section 179 deduction and certain other deductions and credits for the property. How to file 1040ez online for free See What Is the Basis for Depreciation? on page 23 in Publication 946 for more information on figuring depreciable basis. How to file 1040ez online for free The allowance is deductible for both regular tax and alternative minimum tax (AMT) purposes. How to file 1040ez online for free There is no AMT adjustment required for any depreciation figured on the remaining basis of the property. How to file 1040ez online for free In the year you claim the allowance (generally the year you place the property in service), you must reduce the depreciable basis of the property by the allowance before figuring your regular depreciation deduction. How to file 1040ez online for free Example 1. How to file 1040ez online for free On November 1, 2001, you bought and placed in service in your business qualified property that cost $100,000. How to file 1040ez online for free You did not elect to claim a section 179 deduction. How to file 1040ez online for free You can deduct 30% of the cost ($30,000) as a special depreciation allowance for 2001. How to file 1040ez online for free You use the remaining $70,000 of cost to figure your regular depreciation deduction for 2001 and later years. How to file 1040ez online for free Example 2. How to file 1040ez online for free The facts are the same as in Example 1, except that you choose to deduct $24,000 of the property's cost as a section 179 deduction. How to file 1040ez online for free You use the remaining $76,000 of cost to figure your special depreciation allowance of $22,800 ($76,000 × 30%). How to file 1040ez online for free You use the remaining $53,200 of cost to figure your regular depreciation deduction for 2001 and later years. How to file 1040ez online for free Qualified Property To qualify for the special depreciation allowance, your property must meet the following requirements. How to file 1040ez online for free It is new property of one of the following types. How to file 1040ez online for free Property depreciated under the modified accelerated cost recovery system (MACRS) with a recovery period of 20 years or less. How to file 1040ez online for free See Can You Use MACRS To Depreciate Your Property and Which Recovery Period Applies? on pages 7 and 23, respectively, in Publication 946. How to file 1040ez online for free Water utility property. How to file 1040ez online for free See 25-year property on page 22 in Publication 946. How to file 1040ez online for free Computer software that is not a section 197 intangible as described in Computer software on page 5 in Publication 946. How to file 1040ez online for free (The cost of some computer software is treated as part of the cost of hardware and is depreciated under MACRS. How to file 1040ez online for free ) Qualified leasehold improvement property (defined later). How to file 1040ez online for free It meets the following tests (explained later under Tests To Be Met). How to file 1040ez online for free Acquisition date test. How to file 1040ez online for free Placed in service date test. How to file 1040ez online for free Original use test. How to file 1040ez online for free It is not excepted property (explained later under Excepted Property). How to file 1040ez online for free Qualified leasehold improvement property. How to file 1040ez online for free    Generally, this is any improvement to an interior part of a building that is nonresidential real property, provided all of the following requirements are met. How to file 1040ez online for free The improvement is made under or pursuant to a lease by the lessee (or any sublessee) or the lessor of that part of the building. How to file 1040ez online for free That part of the building is to be occupied exclusively by the lessee (or any sublessee) of that part. How to file 1040ez online for free The improvement is placed in service more than 3 years after the date the building was first placed in service. How to file 1040ez online for free   However, a qualified leasehold improvement does not include any improvement for which the expenditure is attributable to any of the following. How to file 1040ez online for free The enlargement of the building. How to file 1040ez online for free Any elevator or escalator. How to file 1040ez online for free Any structural component benefiting a common area. How to file 1040ez online for free The internal structural framework of the building. How to file 1040ez online for free   Generally, a binding commitment to enter into a lease is treated as a lease and the parties to the commitment are treated as the lessor and lessee. How to file 1040ez online for free However, a binding commitment between related persons is not treated as a lease. How to file 1040ez online for free Related persons. How to file 1040ez online for free   For this purpose, the following are related persons. How to file 1040ez online for free Members of an affiliated group. How to file 1040ez online for free The persons listed in items (1) through (9) under Related persons on page 8 of Publication 946 (except that “80% or more” should be substituted for “more than 10%” each place it appears). How to file 1040ez online for free An executor and a beneficiary of the same estate. How to file 1040ez online for free Tests To Be Met To qualify for the special depreciation allowance, the property must meet all of the following tests. How to file 1040ez online for free Acquisition date test. How to file 1040ez online for free    Generally, you must have acquired the property either: After September 10, 2001, and before September 11, 2004, but only if no written binding contract for the acquisition was in effect before September 11, 2001, or Pursuant to a written binding contract entered into after September 10, 2001, and before September 11, 2004. How to file 1040ez online for free   Property you manufacture, construct, or produce for your own use meets this test if you began the manufacture, construction, or production of the property after September 10, 2001, and before September 11, 2004. How to file 1040ez online for free Placed in service date test. How to file 1040ez online for free   Generally, the property must be placed in service for use in your trade or business or for the production of income after September 10, 2001, and before January 1, 2005. How to file 1040ez online for free   If you sold property you placed in service after September 10, 2001, and you leased it back within 3 months after the property was originally placed in service, the property is treated as placed in service no earlier than the date it is used under the leaseback. How to file 1040ez online for free Original use test. How to file 1040ez online for free   The original use of the property must have begun with you after September 10, 2001. How to file 1040ez online for free “Original use” means the first use to which the property is put, whether or not by you. How to file 1040ez online for free Additional capital expenditures you incurred after September 10, 2001, to recondition or rebuild your property meet the original use test. How to file 1040ez online for free Excepted Property The following property does not qualify for the special depreciation allowance. How to file 1040ez online for free Property used by any person before September 11, 2001. How to file 1040ez online for free Property required to be depreciated using ADS. How to file 1040ez online for free This includes listed property used 50% or less in a qualified business use. How to file 1040ez online for free Qualified New York Liberty Zone leasehold improvement property (defined next). How to file 1040ez online for free Qualified New York Liberty Zone leasehold improvement property. How to file 1040ez online for free   This is any qualified leasehold improvement property (as defined earlier) if all of the following requirements are met. How to file 1040ez online for free The improvement is to a building located in the New York Liberty Zone (defined later under New York Liberty Zone Benefits). How to file 1040ez online for free The improvement is placed in service after September 10, 2001, and before January 1, 2007. How to file 1040ez online for free No written binding contract for the improvement was in effect before September 11, 2001. How to file 1040ez online for free Election Not To Claim the Allowance You can elect not to claim the special depreciation allowance for qualified property. How to file 1040ez online for free If you make this election for any property, it applies to all property in the same property class placed in service during the year. How to file 1040ez online for free To make this election, attach a statement to your return indicating you elect not to claim the allowance and the class of property for which you are making the election. How to file 1040ez online for free When to make election. How to file 1040ez online for free   Generally, you must make the election on a timely filed tax return (including extensions) for the year in which you place the property in service. How to file 1040ez online for free   However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the original return (not including extensions). How to file 1040ez online for free Attach the election statement to the amended return. How to file 1040ez online for free At the top of the election statement, write “Filed pursuant to section 301. How to file 1040ez online for free 9100–2. How to file 1040ez online for free ” Revoking an election. How to file 1040ez online for free   Once you elect not to deduct the special depreciation allowance for a class of property, you cannot revoke the election without IRS consent. How to file 1040ez online for free A request to revoke the election is subject to a user fee. How to file 1040ez online for free Rules for Returns Filed Before June 1, 2002 The following rules apply if you placed qualified property in service after September 10, 2001, and filed your return before June 1, 2002. How to file 1040ez online for free The rules apply to returns for the following years. How to file 1040ez online for free 2000 fiscal years that end after September 10, 2001. How to file 1040ez online for free 2001 calendar and fiscal years. How to file 1040ez online for free Claiming the allowance. How to file 1040ez online for free   If you did not claim the allowance on your return and did not make the election not to claim the allowance, you can do either of the following to claim the allowance. How to file 1040ez online for free File an amended return by the due date (not including extensions) of your return for the year following the year the property was placed in service. How to file 1040ez online for free Write “Filed Pursuant to Rev. How to file 1040ez online for free Proc. How to file 1040ez online for free 2002–33” at the top of the amended return. How to file 1040ez online for free File Form 3115, Application for Change in Accounting Method, with your return for the year following the year the property was placed in service. How to file 1040ez online for free Your return must be filed by the due date (including extensions). How to file 1040ez online for free Write “Automatic Change Filed Under Rev. How to file 1040ez online for free Proc. How to file 1040ez online for free 2002–33” on the appropriate line of Form 3115. How to file 1040ez online for free You must also file a copy (with signature) of the completed Form 3115 with the IRS National Office no later than when you file the original with your return. How to file 1040ez online for free For more information about filing Form 3115, including the address to send it to, see Revenue Procedure 2002–9, Revenue Procedure 2002–19, and Revenue Procedure 2002–33. How to file 1040ez online for free Example 1. How to file 1040ez online for free You are an individual and you use the calendar year. How to file 1040ez online for free You placed qualified property in service for your business in December 2001. How to file 1040ez online for free You filed your 2001 income tax return before April 15, 2002. How to file 1040ez online for free You did not claim the special depreciation allowance for the property and did not make the election not to claim the allowance. How to file 1040ez online for free You can claim the special allowance by filing an amended 2001 return by April 15, 2003, with “Filed Pursuant to Rev. How to file 1040ez online for free Proc. How to file 1040ez online for free 2002–33” at the top of the amended return. How to file 1040ez online for free You must file an amended return by April 15, 2003, even if you get an extension of time to file your 2002 tax return. How to file 1040ez online for free Example 2. How to file 1040ez online for free The facts concerning your 2001 return are the same as in Example 1. How to file 1040ez online for free In addition, you got an automatic 4-month extension of time (to August 15, 2003) to file your 2002 return. How to file 1040ez online for free You can claim the special allowance by filing a Form 3115 (with “Filed Pursuant to Rev. How to file 1040ez online for free Proc. How to file 1040ez online for free 2002–33” on the appropriate line) with your 2002 return by August 15, 2003. How to file 1040ez online for free You must also file a copy of this Form 3115 with the IRS National Office no later than when you file your 2002 return. How to file 1040ez online for free Electing not to claim the allowance. How to file 1040ez online for free   Generally, you have elected not to claim the special depreciation allowance for a class of property if you: Filed your return timely (including extensions) for the year you placed qualified property in service and indicated on a statement with the return that you are not claiming the allowance, or Filed your return timely and filed an amended return within 6 months of the due date of the original return (not including extensions) and indicated on a statement with the amended return that you are not claiming the allowance. How to file 1040ez online for free The statement must indicate that you are not deducting the special depreciation allowance and the class of property to which the election applies. How to file 1040ez online for free The statement can be either attached to or written on the return. How to file 1040ez online for free You can, for example, write “not deducting 30%” on Form 4562. How to file 1040ez online for free Deemed election. How to file 1040ez online for free   If you have not followed either of the procedures described above to elect not to claim the allowance, you may still be treated as making the election. How to file 1040ez online for free You will be treated as making the election if you meet both of the following conditions. How to file 1040ez online for free You filed your return for the year you placed the property in service and claimed depreciation, but not the special allowance, for any class of property. How to file 1040ez online for free You do not file an amended return or a Form 3115 within the time prescribed for claiming the special allowance. How to file 1040ez online for free See Claiming the allowance, earlier. How to file 1040ez online for free Passenger Automobiles The limit on your depreciation deduction (including any section 179 deduction) for any passenger automobile that is qualified property (defined earlier) placed in service after September 10, 2001, and for which you claim the special depreciation allowance is increased. How to file 1040ez online for free Generally, the limit is increased from $3,060 to $7,660. How to file 1040ez online for free However, if the automobile is a qualified electric car, the limit is increased from $9,280 to $23,080 ($22,980 if placed in service in 2002). How to file 1040ez online for free Table 1 shows the maximum deduction amounts for 2001. How to file 1040ez online for free Table 1. How to file 1040ez online for free Maximum Deduction for 2001 Qualified Vehicle Placed in Service Before Sept. How to file 1040ez online for free 11 Placed in Service After Sept. How to file 1040ez online for free 10 Passenger automobile $3,060 $7,660 Electric car 9,280 23,080 1 1$22,980 if you place an electric car in service in 2002. How to file 1040ez online for free Election not to claim the allowance. How to file 1040ez online for free   The increased maximum depreciation deduction does not apply if you elected not to claim the special depreciation allowance as explained earlier under Election Not To Claim the Allowance and Rules for Returns Filed Before June 1, 2002. How to file 1040ez online for free New York Liberty Zone Benefits Several benefits are available for property you place in service in the New York Liberty Zone (Liberty Zone). How to file 1040ez online for free They include a special depreciation allowance for the year you place the property in service, an increased section 179 deduction, and the classification of certain leasehold improvement property as 5-year property. How to file 1040ez online for free Area defined. How to file 1040ez online for free   The New York Liberty Zone is the area located on or south of Canal Street, East Broadway (east of its intersection with Canal Street), or Grand Street (east of its intersection with East Broadway) in the Borough of Manhattan in the City of New York, New York. How to file 1040ez online for free Special Liberty Zone Depreciation Allowance You can take a special depreciation allowance for qualified Liberty Zone property you place in service after September 10, 2001. How to file 1040ez online for free The allowance is an additional deduction of 30% of the property's depreciable basis. How to file 1040ez online for free To figure the depreciable basis, you must first multiply the property's cost or other basis by the percentage of business/investment use and then reduce that amount by any section 179 deduction and certain other deductions and credits for the property. How to file 1040ez online for free See What Is the Basis for Depreciation? on page 23 in Publication 946 for more information on figuring depreciable basis. How to file 1040ez online for free The allowance is deductible for both regular tax and alternative minimum tax (AMT) purposes. How to file 1040ez online for free There is no AMT adjustment required for any depreciation figured on the remaining basis of the property. How to file 1040ez online for free In the year you claim the allowance (generally the year you place the property in service), you must reduce the depreciable basis of the property by the allowance before figuring your regular depreciation deduction. How to file 1040ez online for free You cannot claim the special Liberty Zone depreciation allowance for property eligible for the special depreciation allowance explained earlier in Qualified Property under Special Depreciation Allowance. How to file 1040ez online for free Qualified property is eligible for only one special depreciation allowance. How to file 1040ez online for free Example 1. How to file 1040ez online for free On November 1, 2001, you bought and placed in service in your business, which is in the Liberty Zone, qualified Liberty Zone property that cost $200,000. How to file 1040ez online for free You did not elect to claim a section 179 deduction. How to file 1040ez online for free You can deduct 30% of the cost ($60,000) as a special Liberty Zone depreciation allowance for 2001. How to file 1040ez online for free You use the remaining $140,000 of cost to figure your regular depreciation deduction for 2001 and later years. How to file 1040ez online for free Example 2. How to file 1040ez online for free The facts are the same as in Example 1, except that you choose to deduct $59,000 of the property's cost as a section 179 deduction. How to file 1040ez online for free (See Increased Section 179 Deduction, later, for information concerning how this section 179 deduction amount is figured). How to file 1040ez online for free You use the remaining $141,000 of cost to figure your special Liberty Zone depreciation allowance of $42,300 ($141,000 × 30%). How to file 1040ez online for free You use the remaining $98,700 of cost to figure your regular depreciation deduction for 2001 and later years. How to file 1040ez online for free Qualified Liberty Zone Property For a 2001 calendar or fiscal year and a 2000 fiscal year that ends after September 10, 2001, property qualifies for the special Liberty Zone depreciation allowance if it meets the following requirements. How to file 1040ez online for free It is one of the following types of property. How to file 1040ez online for free Used property depreciated under MACRS with a recovery period of 20 years or less. How to file 1040ez online for free See Can You Use MACRS To Depreciate Your Property and Which Recovery Period Applies? on pages 7 and 23, respectively, in Publication 946. How to file 1040ez online for free Used water utility property. How to file 1040ez online for free See 25-year property on page 22 in Publication 946. How to file 1040ez online for free Used computer software that is not a section 197 intangible as described in Computer software on page 5 in Publication 946. How to file 1040ez online for free (The cost of some computer software is treated as part of the cost of hardware and is depreciated under MACRS. How to file 1040ez online for free ) Certain nonresidential real property and residential rental property (defined later). How to file 1040ez online for free It meets the following tests (explained later under Tests to be met). How to file 1040ez online for free Acquisition date test. How to file 1040ez online for free Placed in service date test. How to file 1040ez online for free Substantial use test. How to file 1040ez online for free Original use test. How to file 1040ez online for free It is not excepted property (explained later under Excepted property). How to file 1040ez online for free Nonresidential real property and residential rental property. How to file 1040ez online for free   This property is qualifying property only to the extent it rehabilitates real property damaged, or replaces real property destroyed or condemned, as a result of the terrorist attack of September 11, 2001. How to file 1040ez online for free Property is treated as replacing destroyed or condemned property if, as part of an integrated plan, such property replaces real property included in a continuous area that includes real property destroyed or condemned. How to file 1040ez online for free   For these purposes, real property is considered destroyed (or condemned) only if an entire building or structure was destroyed (or condemned) as a result of the terrorist attack. How to file 1040ez online for free Otherwise, the property is considered damaged real property. How to file 1040ez online for free For example, if certain structural components of a building (such as walls, floors, or plumbing fixtures) are damaged or destroyed as a result of the terrorist attack, but the building is not destroyed (or condemned), then only costs related to replacing the damaged or destroyed structural components qualify for the special Liberty Zone depreciation allowance. How to file 1040ez online for free Tests to be met. How to file 1040ez online for free   To qualify for the special Liberty Zone depreciation allowance, your property must meet all of the following tests. How to file 1040ez online for free Acquisition date test. How to file 1040ez online for free   You must have acquired the property by purchase after September 10, 2001, and there must not have been a binding written contract for the acquisition in effect before September 11, 2001. How to file 1040ez online for free   For information on the acquisition of property by purchase, see Property Acquired by Purchase on page 15 of Publication 946. How to file 1040ez online for free   Property you manufacture, construct, or produce for your own use meets this test if you began the manufacture, construction, or production of the property after September 10, 2001. How to file 1040ez online for free Placed in service date test. How to file 1040ez online for free   Generally, the property must be placed in service for use in your trade or business or for the production of income before January 1, 2007 (January 1, 2010, in the case of qualifying nonresidential real property and residential rental property). How to file 1040ez online for free   If you sold property you placed in service after September 10, 2001, and you leased it back within 3 months after the property was originally placed in service, the property is treated as placed in service no earlier than the date it is used under the leaseback. How to file 1040ez online for free Substantial use test. How to file 1040ez online for free   Substantially all use of the property must be in the Liberty Zone and in the active conduct of your trade or business in the Liberty Zone. How to file 1040ez online for free Original use test. How to file 1040ez online for free   The original use of the property in the Liberty Zone must have begun with you after September 10, 2001. How to file 1040ez online for free   Used property can be qualified Liberty Zone property if it has not previously been used within the Liberty Zone. How to file 1040ez online for free Also, additional capital expenditures you incurred after September 10, 2001, to recondition or rebuild your property meet the original use test if the original use of the property in the Liberty Zone began with you. How to file 1040ez online for free Excepted property. How to file 1040ez online for free   The following property does not qualify for the special Liberty Zone depreciation allowance. How to file 1040ez online for free Property eligible for the special depreciation allowance explained earlier in Qualified Property under Special Depreciation Allowance. How to file 1040ez online for free Property required to be depreciated using ADS. How to file 1040ez online for free This includes listed property used 50% or less in a qualified business use. How to file 1040ez online for free Qualified New York Liberty Zone leasehold improvement property (defined earlier in Excepted Property under Special Depreciation Allowance). How to file 1040ez online for free Example. How to file 1040ez online for free In December 2001, you bought and placed in service in your business in the Liberty Zone the following property. How to file 1040ez online for free New office furniture with a MACRS recovery period of 7 years. How to file 1040ez online for free A used computer with a MACRS recovery period of 5 years. How to file 1040ez online for free The computer had not previously been used within the Liberty Zone. How to file 1040ez online for free Because the office furniture is new property, it qualifies for the special depreciation allowance, but not the special Liberty Zone depreciation allowance. How to file 1040ez online for free Because the computer is used property that had not previously been used in the Liberty Zone, it qualifies for the special Liberty Zone depreciation allowance, but not the special depreciation allowance. How to file 1040ez online for free Election Not To Claim the Liberty Zone Allowance You can elect not to claim the special Liberty Zone depreciation allowance for qualified property. How to file 1040ez online for free If you make this election for any property, it applies to all property in the same property class placed in service during the year. How to file 1040ez online for free To make this election, attach a statement to your return indicating you elect not to claim the allowance and the class of property for which you are making the election. How to file 1040ez online for free When to make the election. How to file 1040ez online for free   Generally, you must make the election on a timely filed tax return (including extensions) for the year in which you place the property in service. How to file 1040ez online for free   However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the original return (not including extensions). How to file 1040ez online for free Attach the election statement to the amended return. How to file 1040ez online for free At the top of the election statement, write “Filed pursuant to section 301. How to file 1040ez online for free 9100–2. How to file 1040ez online for free ” Revoking an election. How to file 1040ez online for free   Once you elect not to deduct the special Liberty Zone depreciation allowance for a class of property, you cannot revoke the election without IRS consent. How to file 1040ez online for free A request to revoke the election is subject to a user fee. How to file 1040ez online for free Returns filed before June 1, 2002. How to file 1040ez online for free   The rules that apply to the special depreciation allowance discussed earlier in Rules for Returns Filed Before June 1, 2002 under Special Depreciation Allowance also apply to the special Liberty Zone depreciation allowance. How to file 1040ez online for free Increased Section 179 Deduction Under section 179 of the Internal Revenue Code, you can choose to recover all or part of the cost of certain qualifying property, up to a limit, by deducting it in the year you place the property in service. How to file 1040ez online for free For tax years beginning in 2000, that limit was $20,000. How to file 1040ez online for free For tax years beginning in 2001 and 2002, that limit is generally $24,000. How to file 1040ez online for free If the cost of qualifying section 179 property placed in service in a year is over $200,000, you must reduce the dollar limit (but not below zero) by the amount of the cost over $200,000. How to file 1040ez online for free Increased Dollar Limit The dollar limit on the section 179 deduction is increased for certain property placed in service in the Liberty Zone. How to file 1040ez online for free The increase is the smaller of the following amounts. How to file 1040ez online for free $35,000. How to file 1040ez online for free The cost of section 179 property that is qualified Liberty Zone property placed in service during the year. How to file 1040ez online for free If you use the revised 2001 Form 4562 (dated March 2002) for a tax year beginning in 2000, you must reduce the section 179 dollar limit to $20,000 before adding the additional amount for qualified property. How to file 1040ez online for free Qualified property. How to file 1040ez online for free   To qualify for the increased section 179 deduction, your property must be section 179 property that is either: Qualified Liberty Zone property, or Property that would be qualified Liberty Zone property except that it is eligible for the special depreciation allowance. How to file 1040ez online for free Qualified Liberty Zone property is explained earlier in Qualified Liberty Zone Property under Special Liberty Zone Depreciation Allowance. How to file 1040ez online for free Property eligible for the special depreciation allowance is explained earlier in Qualified Property under Special Depreciation Allowance. How to file 1040ez online for free For information on the requirements that must be met for property to qualify for the section 179 deduction, see What Property Qualifies? on page 14 of Publication 946. How to file 1040ez online for free Example 1. How to file 1040ez online for free In 2002, you place in service in your business, which is in the Liberty Zone, qualified property (defined earlier) costing $25,000. How to file 1040ez online for free Because this cost is less than $35,000, the dollar limit on the section 179 deduction is increased by $25,000 to $49,000 ($24,000 + $25,000). How to file 1040ez online for free Example 2. How to file 1040ez online for free In 2002, you place in service in your business, which is in the Liberty Zone, qualified property (defined earlier) costing $75,000. How to file 1040ez online for free Because $35,000 is less than the cost of the property you place in service, the dollar limit on the section 179 deduction you can claim is increased by $35,000 to $59,000 ($24,000 + $35,000). How to file 1040ez online for free Reduced Dollar Limit Generally, you must reduce the dollar limit for a year by the cost of qualifying section 179 property placed in service in the year that is more than $200,000. How to file 1040ez online for free However, if the cost of your Liberty Zone property exceeds $200,000, you take into account only 50% (instead of 100%) of the cost of qualified property placed in service in a year. How to file 1040ez online for free Example. How to file 1040ez online for free In 2002, you place in service in your business, which is in the Liberty Zone, qualified property costing $460,000. How to file 1040ez online for free Your increased dollar limit is $59,000 ($35,000 + $24,000). How to file 1040ez online for free Because 50% of the cost of the property you place in service ($230,000) is $30,000 more than $200,000, you must reduce your $59,000 dollar limit to $29,000 ($59,000 - $30,000). How to file 1040ez online for free Recapture Rules Rules similar to those explained on page 20 of Publication 946 under When Must You Recapture the Deduction? apply with respect to any qualified property you stop using in the Liberty Zone. How to file 1040ez online for free Returns Filed Before June 1, 2002 If you filed a return before June 1, 2002, and did not deduct the increased section 179 amount for qualified property placed in service after September 10, 2001, you can deduct the increased amount by filing an amended return by the due date (not including extensions) of the return for the year after the year the property was placed in service. How to file 1040ez online for free This rule applies to returns for the following years. How to file 1040ez online for free 2000 fiscal years that end after September 10, 2001. How to file 1040ez online for free 2001 calendar and fiscal years. How to file 1040ez online for free On the amended return, write “Filed Pursuant to Rev. How to file 1040ez online for free Proc. How to file 1040ez online for free 2002–33. How to file 1040ez online for free ” Liberty Zone Leasehold Improvement Property Qualified Liberty Zone leasehold improvement property (described earlier in Qualified Property under Special Depreciation Allowance) is 5-year property. How to file 1040ez online for free This means that it is depreciated over a recovery period of 5 years. How to file 1040ez online for free For information about recovery periods, see Which Recovery Period Applies? on page 23 of Publication 946. How to file 1040ez online for free The straight-line method must be used with respect to qualified Liberty Zone leasehold improvement property. How to file 1040ez online for free Under ADS, the recovery period for qualified Liberty Zone leasehold improvement property is 9 years. How to file 1040ez online for free Returns Filed Before June 1, 2002 If you filed either of the following returns before June 1, 2002, and did not depreciate qualified Liberty Zone leasehold improvement property placed in service during the tax year as 5-year property using the straight line method, you should file an amended return before you file your return for the year after the year the property was placed in service. How to file 1040ez online for free Your 2000 fiscal year return (for a 2000 fiscal year that ends after September 10, 2001). How to file 1040ez online for free Your 2001 calendar or fiscal year return. How to file 1040ez online for free On the amended return, write “Filed Pursuant to Rev. How to file 1040ez online for free Proc. How to file 1040ez online for free 2002–33. How to file 1040ez online for free ” Table 2. How to file 1040ez online for free Rules for Returns Filed Before June 1, 2002 Note:This chart highlights the rules for returns affected by the Job Creation and Worker Assistance Act of 2002 that were filed before June 1, 2002, without accounting for any of the new benefits under the law. How to file 1040ez online for free See the text for definitions and examples. How to file 1040ez online for free Do not rely on this chart alone. How to file 1040ez online for free IF you want to. How to file 1040ez online for free . How to file 1040ez online for free . How to file 1040ez online for free THEN you. How to file 1040ez online for free . How to file 1040ez online for free . How to file 1040ez online for free BY. How to file 1040ez online for free . How to file 1040ez online for free . How to file 1040ez online for free claim the special depreciation allowance or special Liberty Zone depreciation allowance • must file an amended return • the due date (not including extensions) of your return for the year after the year the property was placed in service, or • must file Form 3115, Application for Change in Accounting Method, with your return for the year after the year the property was placed in service • the due date (including extensions) of your return for the year after the year the property was placed in service, and • must file a copy of your completed Form 3115 with the IRS National Office • the date you file the original Form 3115 with your return for the year after the year the property was placed in service. How to file 1040ez online for free elect not to claim the special depreciation allowance or the special Liberty Zone depreciation allowance 1 • must have filed your return timely for the year the property was placed in service, and   • must file an amended return stating you are not claiming the allowance • the date that is 6 months after the due date of the original return (not including extensions). How to file 1040ez online for free deduct the increased section 179 amount • must file an amended return • the due date (not including extensions) of your return for the year after the year the property was placed in service. How to file 1040ez online for free use a 5-year recovery period for depreciating qualified Liberty Zone leasehold improvement property • should file an amended return • the date you file your return for the year after the year the property was placed in service. How to file 1040ez online for free 1See also Deemed election under Rules for Returns Filed Before June 1, 2002, earlier. How to file 1040ez online for free Prev  Up  Next   Home   More Online Publications