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How To File Taxes As A College Student

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How To File Taxes As A College Student

How to file taxes as a college student 9. How to file taxes as a college student   Depletion Table of Contents Introduction Topics - This chapter discusses: Who Can Claim Depletion? Mineral PropertyCost Depletion Percentage Depletion Oil and Gas Wells Mines and Geothermal Deposits Lessor's Gross Income TimberTimber units. How to file taxes as a college student Depletion unit. How to file taxes as a college student Introduction Depletion is the using up of natural resources by mining, drilling, quarrying stone, or cutting timber. How to file taxes as a college student The depletion deduction allows an owner or operator to account for the reduction of a product's reserves. How to file taxes as a college student There are two ways of figuring depletion: cost depletion and percentage depletion. How to file taxes as a college student For mineral property, you generally must use the method that gives you the larger deduction. How to file taxes as a college student For standing timber, you must use cost depletion. How to file taxes as a college student Topics - This chapter discusses: Who can claim depletion Mineral property Timber Who Can Claim Depletion? If you have an economic interest in mineral property or standing timber, you can take a deduction for depletion. How to file taxes as a college student More than one person can have an economic interest in the same mineral deposit or timber. How to file taxes as a college student In the case of leased property, the depletion deduction is divided between the lessor and the lessee. How to file taxes as a college student You have an economic interest if both the following apply. How to file taxes as a college student You have acquired by investment any interest in mineral deposits or standing timber. How to file taxes as a college student You have a legal right to income from the extraction of the mineral or cutting of the timber to which you must look for a return of your capital investment. How to file taxes as a college student A contractual relationship that allows you an economic or monetary advantage from products of the mineral deposit or standing timber is not, in itself, an economic interest. How to file taxes as a college student A production payment carved out of, or retained on the sale of, mineral property is not an economic interest. How to file taxes as a college student Individuals, corporations, estates, and trusts who claim depletion deductions may be liable for alternative minimum tax. How to file taxes as a college student Basis adjustment for depletion. How to file taxes as a college student   You must reduce the basis of your property by the depletion allowed or allowable, whichever is greater. How to file taxes as a college student Mineral Property Mineral property includes oil and gas wells, mines, and other natural deposits (including geothermal deposits). How to file taxes as a college student For this purpose, the term “property” means each separate interest you own in each mineral deposit in each separate tract or parcel of land. How to file taxes as a college student You can treat two or more separate interests as one property or as separate properties. How to file taxes as a college student See section 614 of the Internal Revenue Code and the related regulations for rules on how to treat separate mineral interests. How to file taxes as a college student There are two ways of figuring depletion on mineral property. How to file taxes as a college student Cost depletion. How to file taxes as a college student Percentage depletion. How to file taxes as a college student Generally, you must use the method that gives you the larger deduction. How to file taxes as a college student However, unless you are an independent producer or royalty owner, you generally cannot use percentage depletion for oil and gas wells. How to file taxes as a college student See Oil and Gas Wells , later. How to file taxes as a college student Cost Depletion To figure cost depletion you must first determine the following. How to file taxes as a college student The property's basis for depletion. How to file taxes as a college student The total recoverable units of mineral in the property's natural deposit. How to file taxes as a college student The number of units of mineral sold during the tax year. How to file taxes as a college student Basis for depletion. How to file taxes as a college student   To figure the property's basis for depletion, subtract all the following from the property's adjusted basis. How to file taxes as a college student Amounts recoverable through: Depreciation deductions, Deferred expenses (including deferred exploration and development costs), and Deductions other than depletion. How to file taxes as a college student The residual value of land and improvements at the end of operations. How to file taxes as a college student The cost or value of land acquired for purposes other than mineral production. How to file taxes as a college student Adjusted basis. How to file taxes as a college student   The adjusted basis of your property is your original cost or other basis, plus certain additions and improvements, and minus certain deductions such as depletion allowed or allowable and casualty losses. How to file taxes as a college student Your adjusted basis can never be less than zero. How to file taxes as a college student See Publication 551, Basis of Assets, for more information on adjusted basis. How to file taxes as a college student Total recoverable units. How to file taxes as a college student   The total recoverable units is the sum of the following. How to file taxes as a college student The number of units of mineral remaining at the end of the year (including units recovered but not sold). How to file taxes as a college student The number of units of mineral sold during the tax year (determined under your method of accounting, as explained next). How to file taxes as a college student   You must estimate or determine recoverable units (tons, pounds, ounces, barrels, thousands of cubic feet, or other measure) of mineral products using the current industry method and the most accurate and reliable information you can obtain. How to file taxes as a college student You must include ores and minerals that are developed, in sight, blocked out, or assured. How to file taxes as a college student You must also include probable or prospective ores or minerals that are believed to exist based on good evidence. How to file taxes as a college student But see Elective safe harbor for owners of oil and gas property , later. How to file taxes as a college student Number of units sold. How to file taxes as a college student   You determine the number of units sold during the tax year based on your method of accounting. How to file taxes as a college student Use the following table to make this determination. How to file taxes as a college student    IF you  use . How to file taxes as a college student . How to file taxes as a college student . How to file taxes as a college student THEN the units sold during the year are . How to file taxes as a college student . How to file taxes as a college student . How to file taxes as a college student The cash method of accounting The units sold for which you receive payment during the tax year (regardless of the year of sale). How to file taxes as a college student An accrual method of accounting The units sold based on your inventories and method of accounting for inventory. How to file taxes as a college student   The number of units sold during the tax year does not include any for which depletion deductions were allowed or allowable in earlier years. How to file taxes as a college student Figuring the cost depletion deduction. How to file taxes as a college student   Once you have figured your property's basis for depletion, the total recoverable units, and the number of units sold during the tax year, you can figure your cost depletion deduction by taking the following steps. How to file taxes as a college student Step Action Result 1 Divide your property's basis for depletion by total recoverable units. How to file taxes as a college student Rate per unit. How to file taxes as a college student 2 Multiply the rate per unit by units sold during the tax year. How to file taxes as a college student Cost depletion deduction. How to file taxes as a college student You must keep accounts for the depletion of each property and adjust these accounts each year for units sold and depletion claimed. How to file taxes as a college student Elective safe harbor for owners of oil and gas property. How to file taxes as a college student   Instead of using the method described earlier to determine the total recoverable units, you can use an elective safe harbor. How to file taxes as a college student If you choose the elective safe harbor, the total recoverable units equal 105% of a property's proven reserves (both developed and undeveloped). How to file taxes as a college student For details, see Revenue Procedure 2004-19 on page 563 of Internal Revenue Bulletin 2004-10, available at www. How to file taxes as a college student irs. How to file taxes as a college student gov/pub/irs-irbs/irb04-10. How to file taxes as a college student pdf. How to file taxes as a college student   To make the election, attach a statement to your timely filed (including extensions) original return for the first tax year for which the safe harbor is elected. How to file taxes as a college student The statement must indicate that you are electing the safe harbor provided by Revenue Procedure 2004-19. How to file taxes as a college student The election, if made, is effective for the tax year in which it is made and all later years. How to file taxes as a college student It cannot be revoked for the tax year in which it is elected, but may be revoked in a later year. How to file taxes as a college student Once revoked, it cannot be re-elected for the next 5 years. How to file taxes as a college student Percentage Depletion To figure percentage depletion, you multiply a certain percentage, specified for each mineral, by your gross income from the property during the tax year. How to file taxes as a college student The rates to be used and other rules for oil and gas wells are discussed later under Independent Producers and Royalty Owners and under Natural Gas Wells . How to file taxes as a college student Rates and other rules for percentage depletion of other specific minerals are found later in Mines and Geothermal Deposits . How to file taxes as a college student Gross income. How to file taxes as a college student   When figuring percentage depletion, subtract from your gross income from the property the following amounts. How to file taxes as a college student Any rents or royalties you paid or incurred for the property. How to file taxes as a college student The part of any bonus you paid for a lease on the property allocable to the product sold (or that otherwise gives rise to gross income) for the tax year. How to file taxes as a college student A bonus payment includes amounts you paid as a lessee to satisfy a production payment retained by the lessor. How to file taxes as a college student   Use the following fraction to figure the part of the bonus you must subtract. How to file taxes as a college student No. How to file taxes as a college student of units sold in the tax year Recoverable units from the property × Bonus Payments For oil and gas wells and geothermal deposits, more information about the definition of gross income from the property is under Oil and Gas Wells , later. How to file taxes as a college student For other property, more information about the definition of gross income from the property is under Mines and Geothermal Deposits , later. How to file taxes as a college student Taxable income limit. How to file taxes as a college student   The percentage depletion deduction generally cannot be more than 50% (100% for oil and gas property) of your taxable income from the property figured without the depletion deduction and the domestic production activities deduction. How to file taxes as a college student   Taxable income from the property means gross income from the property minus all allowable deductions (except any deduction for depletion or domestic production activities) attributable to mining processes, including mining transportation. How to file taxes as a college student These deductible items include, but are not limited to, the following. How to file taxes as a college student Operating expenses. How to file taxes as a college student Certain selling expenses. How to file taxes as a college student Administrative and financial overhead. How to file taxes as a college student Depreciation. How to file taxes as a college student Intangible drilling and development costs. How to file taxes as a college student Exploration and development expenditures. How to file taxes as a college student Deductible taxes (see chapter 5), but not taxes that you capitalize or take as a credit. How to file taxes as a college student Losses sustained. How to file taxes as a college student   The following rules apply when figuring your taxable income from the property for purposes of the taxable income limit. How to file taxes as a college student Do not deduct any net operating loss deduction from the gross income from the property. How to file taxes as a college student Corporations do not deduct charitable contributions from the gross income from the property. How to file taxes as a college student If, during the year, you dispose of an item of section 1245 property that was used in connection with mineral property, reduce any allowable deduction for mining expenses by the part of any gain you must report as ordinary income that is allocable to the mineral property. How to file taxes as a college student See section 1. How to file taxes as a college student 613-5(b)(1) of the regulations for information on how to figure the ordinary gain allocable to the property. How to file taxes as a college student Oil and Gas Wells You cannot claim percentage depletion for an oil or gas well unless at least one of the following applies. How to file taxes as a college student You are either an independent producer or a royalty owner. How to file taxes as a college student The well produces natural gas that is either sold under a fixed contract or produced from geopressured brine. How to file taxes as a college student If you are an independent producer or royalty owner, see Independent Producers and Royalty Owners , next. How to file taxes as a college student For information on the depletion deduction for wells that produce natural gas that is either sold under a fixed contract or produced from geopressured brine, see Natural Gas Wells , later. How to file taxes as a college student Independent Producers and Royalty Owners If you are an independent producer or royalty owner, you figure percentage depletion using a rate of 15% of the gross income from the property based on your average daily production of domestic crude oil or domestic natural gas up to your depletable oil or natural gas quantity. How to file taxes as a college student However, certain refiners, as explained next, and certain retailers and transferees of proven oil and gas properties, as explained next, cannot claim percentage depletion. How to file taxes as a college student For information on figuring the deduction, see Figuring percentage depletion , later. How to file taxes as a college student Refiners who cannot claim percentage depletion. How to file taxes as a college student   You cannot claim percentage depletion if you or a related person refine crude oil and you and the related person refined more than 75,000 barrels on any day during the tax year based on average (rather than actual) daily refinery runs for the tax year. How to file taxes as a college student The average daily refinery run is computed by dividing total refinery runs for the tax year by the total number of days in the tax year. How to file taxes as a college student Related person. How to file taxes as a college student   You and another person are related persons if either of you holds a significant ownership interest in the other person or if a third person holds a significant ownership interest in both of you. How to file taxes as a college student For example, a corporation, partnership, estate, or trust and anyone who holds a significant ownership interest in it are related persons. How to file taxes as a college student A partnership and a trust are related persons if one person holds a significant ownership interest in each of them. How to file taxes as a college student For purposes of the related person rules, significant ownership interest means direct or indirect ownership of 5% or more in any one of the following. How to file taxes as a college student The value of the outstanding stock of a corporation. How to file taxes as a college student The interest in the profits or capital of a partnership. How to file taxes as a college student The beneficial interests in an estate or trust. How to file taxes as a college student Any interest owned by or for a corporation, partnership, trust, or estate is considered to be owned directly both by itself and proportionately by its shareholders, partners, or beneficiaries. How to file taxes as a college student Retailers who cannot claim percentage depletion. How to file taxes as a college student   You cannot claim percentage depletion if both the following apply. How to file taxes as a college student You sell oil or natural gas or their by-products directly or through a related person in any of the following situations. How to file taxes as a college student Through a retail outlet operated by you or a related person. How to file taxes as a college student To any person who is required under an agreement with you or a related person to use a trademark, trade name, or service mark or name owned by you or a related person in marketing or distributing oil, natural gas, or their by-products. How to file taxes as a college student To any person given authority under an agreement with you or a related person to occupy any retail outlet owned, leased, or controlled by you or a related person. How to file taxes as a college student The combined gross receipts from sales (not counting resales) of oil, natural gas, or their by-products by all retail outlets taken into account in (1) are more than $5 million for the tax year. How to file taxes as a college student   For the purpose of determining if this rule applies, do not count the following. How to file taxes as a college student Bulk sales (sales in very large quantities) of oil or natural gas to commercial or industrial users. How to file taxes as a college student Bulk sales of aviation fuels to the Department of Defense. How to file taxes as a college student Sales of oil or natural gas or their by-products outside the United States if none of your domestic production or that of a related person is exported during the tax year or the prior tax year. How to file taxes as a college student Related person. How to file taxes as a college student   To determine if you and another person are related persons, see Related person under Refiners who cannot claim percentage depletion, earlier. How to file taxes as a college student Sales through a related person. How to file taxes as a college student   You are considered to be selling through a related person if any sale by the related person produces gross income from which you may benefit because of your direct or indirect ownership interest in the person. How to file taxes as a college student   You are not considered to be selling through a related person who is a retailer if all the following apply. How to file taxes as a college student You do not have a significant ownership interest in the retailer. How to file taxes as a college student You sell your production to persons who are not related to either you or the retailer. How to file taxes as a college student The retailer does not buy oil or natural gas from your customers or persons related to your customers. How to file taxes as a college student There are no arrangements for the retailer to acquire oil or natural gas you produced for resale or made available for purchase by the retailer. How to file taxes as a college student Neither you nor the retailer knows of or controls the final disposition of the oil or natural gas you sold or the original source of the petroleum products the retailer acquired for resale. How to file taxes as a college student Transferees who cannot claim percentage depletion. How to file taxes as a college student   You cannot claim percentage depletion if you received your interest in a proven oil or gas property by transfer after 1974 and before October 12, 1990. How to file taxes as a college student For a definition of the term “transfer,” see section 1. How to file taxes as a college student 613A-7(n) of the regulations. How to file taxes as a college student For a definition of the term “interest in proven oil or gas property,” see section 1. How to file taxes as a college student 613A-7(p) of the regulations. How to file taxes as a college student Figuring percentage depletion. How to file taxes as a college student   Generally, as an independent producer or royalty owner, you figure your percentage depletion by computing your average daily production of domestic oil or gas and comparing it to your depletable oil or gas quantity. How to file taxes as a college student If your average daily production does not exceed your depletable oil or gas quantity, you figure your percentage depletion by multiplying the gross income from the oil or gas property (defined later) by 15%. How to file taxes as a college student If your average daily production of domestic oil or gas exceeds your depletable oil or gas quantity, you must make an allocation as explained later under Average daily production. How to file taxes as a college student   In addition, there is a limit on the percentage depletion deduction. How to file taxes as a college student See Taxable income limit , later. How to file taxes as a college student Average daily production. How to file taxes as a college student   Figure your average daily production by dividing your total domestic production of oil or gas for the tax year by the number of days in your tax year. How to file taxes as a college student Partial interest. How to file taxes as a college student   If you have a partial interest in the production from a property, figure your share of the production by multiplying total production from the property by your percentage of interest in the revenues from the property. How to file taxes as a college student   You have a partial interest in the production from a property if you have a net profits interest in the property. How to file taxes as a college student To figure the share of production for your net profits interest, you must first determine your percentage participation (as measured by the net profits) in the gross revenue from the property. How to file taxes as a college student To figure this percentage, you divide the income you receive for your net profits interest by the gross revenue from the property. How to file taxes as a college student Then multiply the total production from the property by your percentage participation to figure your share of the production. How to file taxes as a college student Example. How to file taxes as a college student Javier Robles owns oil property in which Pablo Olmos owns a 20% net profits interest. How to file taxes as a college student During the year, the property produced 10,000 barrels of oil, which Javier sold for $200,000. How to file taxes as a college student Javier had expenses of $90,000 attributable to the property. How to file taxes as a college student The property generated a net profit of $110,000 ($200,000 − $90,000). How to file taxes as a college student Pablo received income of $22,000 ($110,000 × . How to file taxes as a college student 20) for his net profits interest. How to file taxes as a college student Pablo determined his percentage participation to be 11% by dividing $22,000 (the income he received) by $200,000 (the gross revenue from the property). How to file taxes as a college student Pablo determined his share of the oil production to be 1,100 barrels (10,000 barrels × 11%). How to file taxes as a college student Depletable oil or natural gas quantity. How to file taxes as a college student   Generally, your depletable oil quantity is 1,000 barrels. How to file taxes as a college student Your depletable natural gas quantity is 6,000 cubic feet multiplied by the number of barrels of your depletable oil quantity that you choose to apply. How to file taxes as a college student If you claim depletion on both oil and natural gas, you must reduce your depletable oil quantity (1,000 barrels) by the number of barrels you use to figure your depletable natural gas quantity. How to file taxes as a college student Example. How to file taxes as a college student You have both oil and natural gas production. How to file taxes as a college student To figure your depletable natural gas quantity, you choose to apply 360 barrels of your 1000-barrel depletable oil quantity. How to file taxes as a college student Your depletable natural gas quantity is 2. How to file taxes as a college student 16 million cubic feet of gas (360 × 6000). How to file taxes as a college student You must reduce your depletable oil quantity to 640 barrels (1000 − 360). How to file taxes as a college student If you have production from marginal wells, see section 613A(c)(6) of the Internal Revenue Code to figure your depletable oil or natural gas quantity. How to file taxes as a college student Also, see Notice 2012-50, available at www. How to file taxes as a college student irs. How to file taxes as a college student gov/irb/2012–31_IRB/index. How to file taxes as a college student html. How to file taxes as a college student Business entities and family members. How to file taxes as a college student   You must allocate the depletable oil or gas quantity among the following related persons in proportion to each entity's or family member's production of domestic oil or gas for the year. How to file taxes as a college student Corporations, trusts, and estates if 50% or more of the beneficial interest is owned by the same or related persons (considering only persons that own at least 5% of the beneficial interest). How to file taxes as a college student You and your spouse and minor children. How to file taxes as a college student A related person is anyone mentioned in the related persons discussion under Nondeductible loss in chapter 2 of Publication 544, except that for purposes of this allocation, item (1) in that discussion includes only an individual, his or her spouse, and minor children. How to file taxes as a college student Controlled group of corporations. How to file taxes as a college student   Members of the same controlled group of corporations are treated as one taxpayer when figuring the depletable oil or natural gas quantity. How to file taxes as a college student They share the depletable quantity. How to file taxes as a college student A controlled group of corporations is defined in section 1563(a) of the Internal Revenue Code, except that, for this purpose, the stock ownership requirement in that definition is “more than 50%” rather than “at least 80%. How to file taxes as a college student ” Gross income from the property. How to file taxes as a college student   For purposes of percentage depletion, gross income from the property (in the case of oil and gas wells) is the amount you receive from the sale of the oil or gas in the immediate vicinity of the well. How to file taxes as a college student If you do not sell the oil or gas on the property, but manufacture or convert it into a refined product before sale or transport it before sale, the gross income from the property is the representative market or field price (RMFP) of the oil or gas, before conversion or transportation. How to file taxes as a college student   If you sold gas after you removed it from the premises for a price that is lower than the RMFP, determine gross income from the property for percentage depletion purposes without regard to the RMFP. How to file taxes as a college student   Gross income from the property does not include lease bonuses, advance royalties, or other amounts payable without regard to production from the property. How to file taxes as a college student Average daily production exceeds depletable quantities. How to file taxes as a college student   If your average daily production for the year is more than your depletable oil or natural gas quantity, figure your allowance for depletion for each domestic oil or natural gas property as follows. How to file taxes as a college student Figure your average daily production of oil or natural gas for the year. How to file taxes as a college student Figure your depletable oil or natural gas quantity for the year. How to file taxes as a college student Figure depletion for all oil or natural gas produced from the property using a percentage depletion rate of 15%. How to file taxes as a college student Multiply the result figured in (3) by a fraction, the numerator of which is the result figured in (2) and the denominator of which is the result figured in (1). How to file taxes as a college student This is your depletion allowance for that property for the year. How to file taxes as a college student Taxable income limit. How to file taxes as a college student   If you are an independent producer or royalty owner of oil and gas, your deduction for percentage depletion is limited to the smaller of the following. How to file taxes as a college student 100% of your taxable income from the property figured without the deduction for depletion and the deduction for domestic production activities under section 199 of the Internal Revenue Code. How to file taxes as a college student For a definition of taxable income from the property, see Taxable income limit , earlier, under Mineral Property. How to file taxes as a college student 65% of your taxable income from all sources, figured without the depletion allowance, the deduction for domestic production activities, any net operating loss carryback, and any capital loss carryback. How to file taxes as a college student You can carry over to the following year any amount you cannot deduct because of the 65%-of-taxable-income limit. How to file taxes as a college student Add it to your depletion allowance (before applying any limits) for the following year. How to file taxes as a college student Partnerships and S Corporations Generally, each partner or S corporation shareholder, and not the partnership or S corporation, figures the depletion allowance separately. How to file taxes as a college student (However, see Electing large partnerships must figure depletion allowance , later. How to file taxes as a college student ) Each partner or shareholder must decide whether to use cost or percentage depletion. How to file taxes as a college student If a partner or shareholder uses percentage depletion, he or she must apply the 65%-of-taxable-income limit using his or her taxable income from all sources. How to file taxes as a college student Partner's or shareholder's adjusted basis. How to file taxes as a college student   The partnership or S corporation must allocate to each partner or shareholder his or her share of the adjusted basis of each oil or gas property held by the partnership or S corporation. How to file taxes as a college student The partnership or S corporation makes the allocation as of the date it acquires the oil or gas property. How to file taxes as a college student   Each partner's share of the adjusted basis of the oil or gas property generally is figured according to that partner's interest in partnership capital. How to file taxes as a college student However, in some cases, it is figured according to the partner's interest in partnership income. How to file taxes as a college student   The partnership or S corporation adjusts the partner's or shareholder's share of the adjusted basis of the oil and gas property for any capital expenditures made for the property and for any change in partnership or S corporation interests. How to file taxes as a college student Recordkeeping. How to file taxes as a college student Each partner or shareholder must separately keep records of his or her share of the adjusted basis in each oil and gas property of the partnership or S corporation. How to file taxes as a college student The partner or shareholder must reduce his or her adjusted basis by the depletion allowed or allowable on the property each year. How to file taxes as a college student The partner or shareholder must use that reduced adjusted basis to figure cost depletion or his or her gain or loss if the partnership or S corporation disposes of the property. How to file taxes as a college student Reporting the deduction. How to file taxes as a college student   Information that you, as a partner or shareholder, use to figure your depletion deduction on oil and gas properties is reported by the partnership or S corporation on Schedule K-1 (Form 1065) or on Schedule K-1 (Form 1120S). How to file taxes as a college student Deduct oil and gas depletion for your partnership or S corporation interest on Schedule E (Form 1040). How to file taxes as a college student The depletion deducted on Schedule E is included in figuring income or loss from rental real estate or royalty properties. How to file taxes as a college student The instructions for Schedule E explain where to report this income or loss and whether you need to file either of the following forms. How to file taxes as a college student Form 6198, At-Risk Limitations. How to file taxes as a college student Form 8582, Passive Activity Loss Limitations. How to file taxes as a college student Electing large partnerships must figure depletion allowance. How to file taxes as a college student   An electing large partnership, rather than each partner, generally must figure the depletion allowance. How to file taxes as a college student The partnership figures the depletion allowance without taking into account the 65-percent-of-taxable-income limit and the depletable oil or natural gas quantity. How to file taxes as a college student Also, the adjusted basis of a partner's interest in the partnership is not affected by the depletion allowance. How to file taxes as a college student   An electing large partnership is one that meets both the following requirements. How to file taxes as a college student The partnership had 100 or more partners in the preceding year. How to file taxes as a college student The partnership chooses to be an electing large partnership. How to file taxes as a college student Disqualified persons. How to file taxes as a college student   An electing large partnership does not figure the depletion allowance of its partners that are disqualified persons. How to file taxes as a college student Disqualified persons must figure it themselves, as explained earlier. How to file taxes as a college student   All the following are disqualified persons. How to file taxes as a college student Refiners who cannot claim percentage depletion (discussed under Independent Producers and Royalty Owners , earlier). How to file taxes as a college student Retailers who cannot claim percentage depletion (discussed under Independent Producers and Royalty Owners , earlier). How to file taxes as a college student Any partner whose average daily production of domestic crude oil and natural gas is more than 500 barrels during the tax year in which the partnership tax year ends. How to file taxes as a college student Average daily production is discussed earlier. How to file taxes as a college student Natural Gas Wells You can use percentage depletion for a well that produces natural gas that is either Sold under a fixed contract, or Produced from geopressured brine. How to file taxes as a college student Natural gas sold under a fixed contract. How to file taxes as a college student   Natural gas sold under a fixed contract qualifies for a percentage depletion rate of 22%. How to file taxes as a college student This is domestic natural gas sold by the producer under a contract that does not provide for a price increase to reflect any increase in the seller's tax liability because of the repeal of percentage depletion for gas. How to file taxes as a college student The contract must have been in effect from February 1, 1975, until the date of sale of the gas. How to file taxes as a college student Price increases after February 1, 1975, are presumed to take the increase in tax liability into account unless demonstrated otherwise by clear and convincing evidence. How to file taxes as a college student Natural gas from geopressured brine. How to file taxes as a college student   Qualified natural gas from geopressured brine is eligible for a percentage depletion rate of 10%. How to file taxes as a college student This is natural gas that is both the following. How to file taxes as a college student Produced from a well you began to drill after September 1978 and before 1984. How to file taxes as a college student Determined in accordance with section 503 of the Natural Gas Policy Act of 1978 to be produced from geopressured brine. How to file taxes as a college student Mines and Geothermal Deposits Certain mines, wells, and other natural deposits, including geothermal deposits, qualify for percentage depletion. How to file taxes as a college student Mines and other natural deposits. How to file taxes as a college student   For a natural deposit, the percentage of your gross income from the property that you can deduct as depletion depends on the type of deposit. How to file taxes as a college student   The following is a list of the percentage depletion rates for the more common minerals. How to file taxes as a college student DEPOSITS RATE Sulphur, uranium, and, if from deposits in the United States, asbestos, lead ore, zinc ore, nickel ore, and mica 22% Gold, silver, copper, iron ore, and certain oil shale, if from deposits in the United States 15% Borax, granite, limestone, marble, mollusk shells, potash, slate, soapstone, and carbon dioxide produced from a well 14% Coal, lignite, and sodium chloride 10% Clay and shale used or sold for use in making sewer pipe or bricks or used or sold for use as sintered or burned lightweight aggregates 7½% Clay used or sold for use in making drainage and roofing tile, flower pots, and kindred products, and gravel, sand, and stone (other than stone used or sold for use by a mine owner or operator as dimension or ornamental stone) 5%   You can find a complete list of minerals and their percentage depletion rates in section 613(b) of the Internal Revenue Code. How to file taxes as a college student Corporate deduction for iron ore and coal. How to file taxes as a college student   The percentage depletion deduction of a corporation for iron ore and coal (including lignite) is reduced by 20% of: The percentage depletion deduction for the tax year (figured without this reduction), minus The adjusted basis of the property at the close of the tax year (figured without the depletion deduction for the tax year). How to file taxes as a college student Gross income from the property. How to file taxes as a college student   For property other than a geothermal deposit or an oil or gas well, gross income from the property means the gross income from mining. How to file taxes as a college student Mining includes all the following. How to file taxes as a college student Extracting ores or minerals from the ground. How to file taxes as a college student Applying certain treatment processes described later. How to file taxes as a college student Transporting ores or minerals (generally, not more than 50 miles) from the point of extraction to the plants or mills in which the treatment processes are applied. How to file taxes as a college student Excise tax. How to file taxes as a college student   Gross income from mining includes the separately stated excise tax received by a mine operator from the sale of coal to compensate the operator for the excise tax the mine operator must pay to finance black lung benefits. How to file taxes as a college student Extraction. How to file taxes as a college student   Extracting ores or minerals from the ground includes extraction by mine owners or operators of ores or minerals from the waste or residue of prior mining. How to file taxes as a college student This does not apply to extraction from waste or residue of prior mining by the purchaser of the waste or residue or the purchaser of the rights to extract ores or minerals from the waste or residue. How to file taxes as a college student Treatment processes. How to file taxes as a college student   The processes included as mining depend on the ore or mineral mined. How to file taxes as a college student To qualify as mining, the treatment processes must be applied by the mine owner or operator. How to file taxes as a college student For a listing of treatment processes considered as mining, see section 613(c)(4) of the Internal Revenue Code and the related regulations. How to file taxes as a college student Transportation of more than 50 miles. How to file taxes as a college student   If the IRS finds that the ore or mineral must be transported more than 50 miles to plants or mills to be treated because of physical and other requirements, the additional authorized transportation is considered mining and included in the computation of gross income from mining. How to file taxes as a college student    If you wish to include transportation of more than 50 miles in the computation of gross income from mining, request an advance ruling from the IRS. How to file taxes as a college student Include in the request the facts about the physical and other requirements that prevented the construction and operation of the plant within 50 miles of the point of extraction. How to file taxes as a college student For more information about requesting an advance ruling, see Revenue Procedure 2013-1, available at www. How to file taxes as a college student irs. How to file taxes as a college student gov/irb/2013-01_IRB/ar11. How to file taxes as a college student html. How to file taxes as a college student Disposal of coal or iron ore. How to file taxes as a college student   You cannot take a depletion deduction for coal (including lignite) or iron ore mined in the United States if both the following apply. How to file taxes as a college student You disposed of it after holding it for more than 1 year. How to file taxes as a college student You disposed of it under a contract under which you retain an economic interest in the coal or iron ore. How to file taxes as a college student Treat any gain on the disposition as a capital gain. How to file taxes as a college student Disposal to related person. How to file taxes as a college student   This rule does not apply if you dispose of the coal or iron ore to one of the following persons. How to file taxes as a college student A related person (as listed in chapter 2 of Publication 544). How to file taxes as a college student A person owned or controlled by the same interests that own or control you. How to file taxes as a college student Geothermal deposits. How to file taxes as a college student   Geothermal deposits located in the United States or its possessions qualify for a percentage depletion rate of 15%. How to file taxes as a college student A geothermal deposit is a geothermal reservoir of natural heat stored in rocks or in a watery liquid or vapor. How to file taxes as a college student For percentage depletion purposes, a geothermal deposit is not considered a gas well. How to file taxes as a college student   Figure gross income from the property for a geothermal steam well in the same way as for oil and gas wells. How to file taxes as a college student See Gross income from the property , earlier, under Oil and Gas Wells. How to file taxes as a college student Percentage depletion on a geothermal deposit cannot be more than 50% of your taxable income from the property. How to file taxes as a college student Lessor's Gross Income In the case of leased property, the depletion deduction is divided between the lessor and the lessee. How to file taxes as a college student A lessor's gross income from the property that qualifies for percentage depletion usually is the total of the royalties received from the lease. How to file taxes as a college student Bonuses and advanced royalties. How to file taxes as a college student   Bonuses and advanced royalties are payments a lessee makes before production to a lessor for the grant of rights in a lease or for minerals, gas, or oil to be extracted from leased property. How to file taxes as a college student If you are the lessor, your income from bonuses and advanced royalties received is subject to an allowance for depletion, as explained in the next two paragraphs. How to file taxes as a college student Figuring cost depletion. How to file taxes as a college student   To figure cost depletion on a bonus, multiply your adjusted basis in the property by a fraction, the numerator of which is the bonus and the denominator of which is the total bonus and royalties expected to be received. How to file taxes as a college student To figure cost depletion on advanced royalties, use the computation explained earlier under Cost Depletion , treating the number of units for which the advanced royalty is received as the number of units sold. How to file taxes as a college student Figuring percentage depletion. How to file taxes as a college student   In the case of mines, wells, and other natural deposits other than gas, oil, or geothermal property, you may use the percentage rates discussed earlier under Mines and Geothermal Deposits . How to file taxes as a college student Any bonus or advanced royalty payments are generally part of the gross income from the property to which the rates are applied in making the calculation. How to file taxes as a college student However, for oil, gas, or geothermal property, gross income does not include lease bonuses, advanced royalties, or other amounts payable without regard to production from the property. How to file taxes as a college student Ending the lease. How to file taxes as a college student   If you receive a bonus on a lease that ends or is abandoned before you derive any income from mineral extraction, include in income the depletion deduction you took. How to file taxes as a college student Do this for the year the lease ends or is abandoned. How to file taxes as a college student Also increase your adjusted basis in the property to restore the depletion deduction you previously subtracted. How to file taxes as a college student   For advanced royalties, include in income the depletion claimed on minerals for which the advanced royalties were paid if the minerals were not produced before the lease ended. How to file taxes as a college student Include this amount in income for the year the lease ends. How to file taxes as a college student Increase your adjusted basis in the property by the amount you include in income. How to file taxes as a college student Delay rentals. How to file taxes as a college student   These are payments for deferring development of the property. How to file taxes as a college student Since delay rentals are ordinary rent, they are ordinary income that is not subject to depletion. How to file taxes as a college student These rentals can be avoided by either abandoning the lease, beginning development operations, or obtaining production. How to file taxes as a college student Timber You can figure timber depletion only by the cost method. How to file taxes as a college student Percentage depletion does not apply to timber. How to file taxes as a college student Base your depletion on your cost or other basis in the timber. How to file taxes as a college student Your cost does not include the cost of land or any amounts recoverable through depreciation. How to file taxes as a college student Depletion takes place when you cut standing timber. How to file taxes as a college student You can figure your depletion deduction when the quantity of cut timber is first accurately measured in the process of exploitation. How to file taxes as a college student Figuring cost depletion. How to file taxes as a college student   To figure your cost depletion allowance, you multiply the number of timber units cut by your depletion unit. How to file taxes as a college student Timber units. How to file taxes as a college student   When you acquire timber property, you must make an estimate of the quantity of marketable timber that exists on the property. How to file taxes as a college student You measure the timber using board feet, log scale, cords, or other units. How to file taxes as a college student If you later determine that you have more or less units of timber, you must adjust the original estimate. How to file taxes as a college student   The term “timber property” means your economic interest in standing timber in each tract or block representing a separate timber account. How to file taxes as a college student Depletion unit. How to file taxes as a college student   You figure your depletion unit each year by taking the following steps. How to file taxes as a college student Determine your cost or adjusted basis of the timber on hand at the beginning of the year. How to file taxes as a college student Adjusted basis is defined under Cost Depletion in the discussion on Mineral Property. How to file taxes as a college student Add to the amount determined in (1) the cost of any timber units acquired during the year and any additions to capital. How to file taxes as a college student Figure the number of timber units to take into account by adding the number of timber units acquired during the year to the number of timber units on hand in the account at the beginning of the year and then adding (or subtracting) any correction to the estimate of the number of timber units remaining in the account. How to file taxes as a college student Divide the result of (2) by the result of (3). How to file taxes as a college student This is your depletion unit. How to file taxes as a college student Example. How to file taxes as a college student You bought a timber tract for $160,000 and the land was worth as much as the timber. How to file taxes as a college student Your basis for the timber is $80,000. How to file taxes as a college student Based on an estimated one million board feet (1,000 MBF) of standing timber, you figure your depletion unit to be $80 per MBF ($80,000 ÷ 1,000). How to file taxes as a college student If you cut 500 MBF of timber, your depletion allowance would be $40,000 (500 MBF × $80). How to file taxes as a college student When to claim depletion. How to file taxes as a college student   Claim your depletion allowance as a deduction in the year of sale or other disposition of the products cut from the timber, unless you choose to treat the cutting of timber as a sale or exchange (explained below). How to file taxes as a college student Include allowable depletion for timber products not sold during the tax year the timber is cut as a cost item in the closing inventory of timber products for the year. How to file taxes as a college student The inventory is your basis for determining gain or loss in the tax year you sell the timber products. How to file taxes as a college student Example. How to file taxes as a college student The facts are the same as in the previous example except that you sold only half of the timber products in the cutting year. How to file taxes as a college student You would deduct $20,000 of the $40,000 depletion that year. How to file taxes as a college student You would add the remaining $20,000 depletion to your closing inventory of timber products. How to file taxes as a college student Electing to treat the cutting of timber as a sale or exchange. How to file taxes as a college student   You can elect, under certain circumstances, to treat the cutting of timber held for more than 1 year as a sale or exchange. How to file taxes as a college student You must make the election on your income tax return for the tax year to which it applies. How to file taxes as a college student If you make this election, subtract the adjusted basis for depletion from the fair market value of the timber on the first day of the tax year in which you cut it to figure the gain or loss on the cutting. How to file taxes as a college student You generally report the gain as long-term capital gain. How to file taxes as a college student The fair market value then becomes your basis for figuring your ordinary gain or loss on the sale or other disposition of the products cut from the timber. How to file taxes as a college student For more information, see Timber in chapter 2 of Publication 544, Sales and Other Dispositions of Assets. How to file taxes as a college student   You may revoke an election to treat the cutting of timber as a sale or exchange without IRS's consent. How to file taxes as a college student The prior election (and revocation) is disregarded for purposes of making a subsequent election. How to file taxes as a college student See Form T (Timber), Forest Activities Schedule, for more information. How to file taxes as a college student Form T. How to file taxes as a college student   Complete and attach Form T (Timber) to your income tax return if you claim a deduction for timber depletion, choose to treat the cutting of timber as a sale or exchange, or make an outright sale of timber. How to file taxes as a college student Prev  Up  Next   Home   More Online Publications
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LT 39 (Letter 3228) Frequently Asked Questions (FAQs)

What is the notice telling me?

This is a reminder notice required by law informing you that you owe overdue tax.

What do I have to do?

If you are already working with us to resolve the balance, no action is required. You should contact us if you have unanswered questions about the overdue taxes or wrote or called us over 30 days ago and have not received a response. If you are able to pay the amount owed, send us full payment as outlined in the letter. If you are unable to full pay or believe that the overdue tax is incorrect, call us to resolve the account.

How much time do I have?

To avoid enforcement action, contact us within 10 days of the date on the letter.

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Enforced collection action may be taken to collect the amount you owe, including the filing of a Notice of Federal Tax Lien, or garnishment of your wages or other income sources, and/or bank accounts. A lien is a public notice to your creditors that the government has a right to your interests in your current assets and assets you acquire after we file the lien; it can affect your ability to obtain credit.

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If you do not agree with this notice, call us immediately at the number printed at the top of the notice. We will do our best to help you. If you called us about this matter before, but we did not correct the problem, you may want to contact the Office of the Taxpayer Advocate.

If you have already paid or arranged for an installment agreement, you should still call us at the number printed at the top of the notice to make sure your account reflects this.

Page Last Reviewed or Updated: 03-Feb-2014

The How To File Taxes As A College Student

How to file taxes as a college student Part One -   The Income Tax Return The four chapters in this part provide basic information on the tax system. How to file taxes as a college student They take you through the first steps of filling out a tax return—such as deciding what your filing status is, how many exemptions you can take, and what form to file. How to file taxes as a college student They also discuss recordkeeping requirements, IRS e-file (electronic filing), certain penalties, and the two methods used to pay tax during the year: withholding and estimated tax. How to file taxes as a college student Table of Contents 1. How to file taxes as a college student   Filing InformationWhat's New Reminders Introduction Do I Have To File a Return?Individuals—In General Dependents Certain Children Under Age 19 or Full-Time Students Self-Employed Persons Aliens Who Should File Which Form Should I Use?Form 1040EZ Form 1040A Form 1040 Does My Return Have To Be on Paper?IRS e-file When Do I Have To File?Private delivery services. How to file taxes as a college student Extensions of Time To File How Do I Prepare My Return?When Do I Report My Income and Expenses? Social Security Number (SSN) Presidential Election Campaign Fund Computations Attachments Third Party Designee Signatures Paid Preparer Refunds Amount You Owe Gift To Reduce Debt Held by the Public Name and Address Where Do I File? What Happens After I File?What Records Should I Keep? Why Keep Records? Kinds of Records to Keep Basic Records How Long to Keep Records Refund Information Interest on Refunds Change of Address What If I Made a Mistake?Amended Returns and Claims for Refund Penalties Identity Theft 2. How to file taxes as a college student   Filing StatusWhat's New Introduction Useful Items - You may want to see: Marital StatusDivorced persons. How to file taxes as a college student Divorce and remarriage. How to file taxes as a college student Annulled marriages. How to file taxes as a college student Head of household or qualifying widow(er) with dependent child. How to file taxes as a college student Considered married. How to file taxes as a college student Same-sex marriage. How to file taxes as a college student Spouse died during the year. How to file taxes as a college student Married persons living apart. How to file taxes as a college student Single Married Filing JointlyFiling a Joint Return Married Filing SeparatelySpecial Rules Head of HouseholdConsidered Unmarried Keeping Up a Home Qualifying Person Qualifying Widow(er) With Dependent Child 3. How to file taxes as a college student   Personal Exemptions and DependentsWhat's New Introduction Useful Items - You may want to see: ExemptionsPersonal Exemptions Exemptions for Dependents Qualifying Child Qualifying Relative Phaseout of Exemptions Social Security Numbers for DependentsBorn and died in 2013. How to file taxes as a college student Taxpayer identification numbers for aliens. How to file taxes as a college student Taxpayer identification numbers for adoptees. How to file taxes as a college student 4. How to file taxes as a college student   Tax Withholding and Estimated TaxWhat's New for 2014 Reminders Introduction Useful Items - You may want to see: Tax Withholding for 2014Salaries and Wages Tips Taxable Fringe Benefits Sick Pay Pensions and Annuities Gambling Winnings Unemployment Compensation Federal Payments Backup Withholding Estimated Tax for 2014Who Does Not Have To Pay Estimated Tax Who Must Pay Estimated Tax How To Figure Estimated Tax When To Pay Estimated Tax How To Figure Each Payment How To Pay Estimated Tax Credit for Withholding and Estimated Tax for 2013Withholding Estimated Tax Underpayment Penalty for 2013 Prev  Up  Next   Home   More Online Publications