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How To Fill Out 1040x Line By Line

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How To Fill Out 1040x Line By Line

How to fill out 1040x line by line Internal Revenue Bulletin:  2009-17  April 27, 2009  Rev. How to fill out 1040x line by line Proc. How to fill out 1040x line by line 2009-24 Table of Contents SECTION 1. How to fill out 1040x line by line PURPOSE SECTION 2. How to fill out 1040x line by line BACKGROUND SECTION 3. How to fill out 1040x line by line SCOPE SECTION 4. How to fill out 1040x line by line APPLICATION. How to fill out 1040x line by line 01 In General. How to fill out 1040x line by line . How to fill out 1040x line by line 02 Limitations on Depreciation Deductions for Certain Automobiles. How to fill out 1040x line by line . How to fill out 1040x line by line 03 Inclusions in Income of Lessees of Passenger Automobiles. How to fill out 1040x line by line SECTION 5. How to fill out 1040x line by line EFFECTIVE DATE SECTION 6. How to fill out 1040x line by line DRAFTING INFORMATION SECTION 1. How to fill out 1040x line by line PURPOSE . How to fill out 1040x line by line 01 This revenue procedure provides: (1) limitations on depreciation deductions for owners of passenger automobiles first placed in service by the taxpayer during calendar year 2009, including a separate table of limitations on depreciation deductions for trucks and vans; and (2) the amounts to be included in income by lessees of passenger automobiles first leased by the taxpayer during calendar year 2009, including a separate table of inclusion amounts for lessees of trucks and vans. How to fill out 1040x line by line . How to fill out 1040x line by line 02 The tables detailing these depreciation limitations and lessee inclusion amounts reflect the automobile price inflation adjustments required by § 280F(d)(7) of the Internal Revenue Code. How to fill out 1040x line by line SECTION 2. How to fill out 1040x line by line BACKGROUND . How to fill out 1040x line by line 01 For owners of passenger automobiles, § 280F(a) imposes dollar limitations on the depreciation deduction for the year that the passenger automobile is placed in service by the taxpayer and each succeeding year. How to fill out 1040x line by line Section 280F(d)(7) requires the amounts allowable as depreciation deductions to be increased by a price inflation adjustment amount for passenger automobiles placed in service after 1988. How to fill out 1040x line by line The method of calculating this price inflation amount for trucks and vans placed in service in or after calendar year 2003 uses a different CPI “automobile component” (the “new trucks” component) than that used in the price inflation amount calculation for other passenger automobiles (the “new cars” component), resulting in somewhat higher depreciation deductions for trucks and vans. How to fill out 1040x line by line This change reflects the higher rate of price inflation that trucks and vans have been subject to since 1988. How to fill out 1040x line by line . How to fill out 1040x line by line 02 Section 168(k)(1)(A) provides a 50 percent additional first year depreciation deduction for certain new property acquired by a taxpayer after December 31, 2007, and before January 1, 2010, if no written binding contract for the acquisition of the property existed before January 1, 2008. How to fill out 1040x line by line Section 168(k)(2)(F)(i) increases the first year depreciation allowed under § 280F(a)(1)(A) by $8,000 for passenger automobiles to which the 50 percent additional first year depreciation deduction applies. How to fill out 1040x line by line . How to fill out 1040x line by line 03 Section 168(k)(2)(D)(i) provides that the 50 percent additional first year depreciation deduction does not apply to any property required to be depreciated under the alternative depreciation system of § 168(g), including property described in § 280F(b)(1). How to fill out 1040x line by line Section 168(k)(2)(D)(iii) permits a taxpayer to elect to not claim the 50 percent additional first year depreciation deduction for any class of property. How to fill out 1040x line by line Section 168(k)(4) permits a corporation to elect to not claim the 50 percent additional first year depreciation deduction for all eligible qualified property (that is extension property or that is not extension property, as applicable) and instead to increase the business credit limitation under § 38(c) or the alternative minimum tax credit limitation under § 53(c). How to fill out 1040x line by line Accordingly, this revenue procedure provides tables for passenger automobiles for which the 50 percent additional depreciation deduction applies and tables for passenger automobiles for which the 50 percent additional first year depreciation deduction does not apply, including passenger automobiles in a class of property for which the taxpayer “elects out” of the 50 percent additional first year depreciation deduction or passenger automobiles that are eligible qualified property to which the § 168(k)(4) election applies. How to fill out 1040x line by line . How to fill out 1040x line by line 04 For leased passenger automobiles, § 280F(c) requires a reduction in the deduction allowed to the lessee of the passenger automobile. How to fill out 1040x line by line The reduction must be substantially equivalent to the limitations on the depreciation deductions imposed on owners of passenger automobiles. How to fill out 1040x line by line Under § 1. How to fill out 1040x line by line 280F-7(a) of the Income Tax Regulations, this reduction requires a lessee to include in gross income an inclusion amount determined by applying a formula to the amount obtained from a table. How to fill out 1040x line by line One table applies to lessees of trucks and vans and another table applies to all other passenger automobiles. How to fill out 1040x line by line Each table shows inclusion amounts for a range of fair market values for each taxable year after the passenger automobile is first leased. How to fill out 1040x line by line SECTION 3. How to fill out 1040x line by line SCOPE . How to fill out 1040x line by line 01 The limitations on depreciation deductions in section 4. How to fill out 1040x line by line 02(2) of this revenue procedure apply to passenger automobiles (other than leased passenger automobiles) that are placed in service by the taxpayer in calendar year 2009, and continue to apply for each taxable year that the passenger automobile remains in service. How to fill out 1040x line by line . How to fill out 1040x line by line 02 The tables in section 4. How to fill out 1040x line by line 03 of this revenue procedure apply to leased passenger automobiles for which the lease term begins during calendar year 2009. How to fill out 1040x line by line Lessees of these passenger automobiles must use these tables to determine the inclusion amount for each taxable year during which the passenger automobile is leased. How to fill out 1040x line by line See Rev. How to fill out 1040x line by line Proc. How to fill out 1040x line by line 2002-14, 2002-1 C. How to fill out 1040x line by line B. How to fill out 1040x line by line 450, for passenger automobiles first leased before January 1, 2003, Rev. How to fill out 1040x line by line Proc. How to fill out 1040x line by line 2003-75, 2003-2 C. How to fill out 1040x line by line B. How to fill out 1040x line by line 1018, for passenger automobiles first leased during calendar year 2003, Rev. How to fill out 1040x line by line Proc. How to fill out 1040x line by line 2004-20, 2004-1 C. How to fill out 1040x line by line B. How to fill out 1040x line by line 642, for passenger automobiles first leased during calendar year 2004, Rev. How to fill out 1040x line by line Proc. How to fill out 1040x line by line 2005-13, 2005-1 C. How to fill out 1040x line by line B. How to fill out 1040x line by line 759, for passenger automobiles first leased during calendar year 2005, Rev. How to fill out 1040x line by line Proc. How to fill out 1040x line by line 2006-18, 2006-1 C. How to fill out 1040x line by line B. How to fill out 1040x line by line 645, for passenger automobiles first leased during calendar year 2006, Rev. How to fill out 1040x line by line Proc. How to fill out 1040x line by line 2007-30, 2007-1 C. How to fill out 1040x line by line B. How to fill out 1040x line by line 1104, for passenger automobiles first leased during calendar year 2007, and Rev. How to fill out 1040x line by line Proc. How to fill out 1040x line by line 2008-22, 2008-12 I. How to fill out 1040x line by line R. How to fill out 1040x line by line B. How to fill out 1040x line by line 658, for passenger automobiles first leased during calendar year 2008. How to fill out 1040x line by line SECTION 4. How to fill out 1040x line by line APPLICATION . How to fill out 1040x line by line 01 In General. How to fill out 1040x line by line (1) Limitations on depreciation deductions for certain automobiles. How to fill out 1040x line by line The limitations on depreciation deductions for passenger automobiles placed in service by the taxpayer for the first time during calendar year 2009 are in Tables 1 through 4 in section 4. How to fill out 1040x line by line 02(2) of this revenue procedure. How to fill out 1040x line by line (2) Inclusions in income of lessees of passenger automobiles. How to fill out 1040x line by line A taxpayer first leasing a passenger automobile during calendar year 2009 must determine the inclusion amount that is added to gross income using Tables 5 and 6 in section 4. How to fill out 1040x line by line 03 of this revenue procedure. How to fill out 1040x line by line In addition, the taxpayer must follow the procedures of § 1. How to fill out 1040x line by line 280F-7(a). How to fill out 1040x line by line . How to fill out 1040x line by line 02 Limitations on Depreciation Deductions for Certain Automobiles. How to fill out 1040x line by line (1) Amount of the inflation adjustment. How to fill out 1040x line by line (a) Passenger automobiles (other than trucks or vans). How to fill out 1040x line by line Under § 280F(d)(7)(B)(i), the automobile price inflation adjustment for any calendar year is the percentage (if any) by which the CPI automobile component for October of the preceding calendar year exceeds the CPI automobile component for October 1987. How to fill out 1040x line by line The term “CPI automobile component” is defined in § 280F(d)(7)(B)(ii) as the “automobile component” of the Consumer Price Index for all Urban Consumers published by the Department of Labor. How to fill out 1040x line by line The new car component of the CPI was 115. How to fill out 1040x line by line 2 for October 1987 and 134. How to fill out 1040x line by line 837 for October 2008. How to fill out 1040x line by line The October 2008 index exceeded the October 1987 index by 19. How to fill out 1040x line by line 637. How to fill out 1040x line by line The Internal Revenue Service has, therefore, determined that the automobile price inflation adjustment for 2009 for passenger automobiles (other than trucks and vans) is 17. How to fill out 1040x line by line 05 percent (19. How to fill out 1040x line by line 637/115. How to fill out 1040x line by line 2 x 100%). How to fill out 1040x line by line This adjustment is applicable to all passenger automobiles (other than trucks and vans) that are first placed in service in calendar year 2009. How to fill out 1040x line by line The dollar limitations in § 280F(a) therefore must be multiplied by a factor of 0. How to fill out 1040x line by line 1705, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations applicable to passenger automobiles (other than trucks and vans) for calendar year 2009. How to fill out 1040x line by line (b) Trucks and vans. How to fill out 1040x line by line To determine the dollar limitations applicable to trucks and vans first placed in service during calendar year 2009, the new truck component of the CPI is used instead of the new car component. How to fill out 1040x line by line The new truck component of the CPI was 112. How to fill out 1040x line by line 4 for October 1987 and 133. How to fill out 1040x line by line 640 for October 2008. How to fill out 1040x line by line The October 2008 index exceeded the October 1987 index by 21. How to fill out 1040x line by line 24. How to fill out 1040x line by line The Service has, therefore, determined that the automobile price inflation adjustment for 2009 for trucks and vans is 18. How to fill out 1040x line by line 90 percent (21. How to fill out 1040x line by line 24/112. How to fill out 1040x line by line 4 x 100%). How to fill out 1040x line by line This adjustment is applicable to all trucks and vans that are first placed in service in calendar year 2009. How to fill out 1040x line by line The dollar limitations in § 280F(a) therefore must be multiplied by a factor of 0. How to fill out 1040x line by line 1890, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations applicable to trucks and vans. How to fill out 1040x line by line (2) Amount of the limitation. How to fill out 1040x line by line For passenger automobiles placed in service by the taxpayer in calendar year 2009, Tables 1 through 4 contain the dollar amount of the depreciation limitation for each taxable year. How to fill out 1040x line by line Use Table 1 for a passenger automobile (other than a truck or van) placed in service by the taxpayer in calendar year 2009, for which the 50 percent additional first year depreciation deduction does not apply, including a passenger automobile (other than a truck or van) in a class of property for which the taxpayer elects out of the 50 percent additional first year depreciation deduction or a passenger automobile that is eligible qualified property to which the § 168(k)(4) election applies. How to fill out 1040x line by line Use Table 2 for a passenger automobile (other than a truck or van) placed in service by the taxpayer in calendar year 2009, for which the 50 percent additional first year depreciation deduction applies. How to fill out 1040x line by line Use Table 3 for a truck or van placed in service by the taxpayer in calendar year 2009, for which the 50 percent additional first year depreciation deduction does not apply, including a truck or van in a class of property for which the taxpayer elects out of the 50 percent additional first year depreciation deduction or a truck or van that is eligible qualified property to which the § 168(k)(4) election applies. How to fill out 1040x line by line Use Table 4 for a truck or van placed in service by the taxpayer in calendar year 2009, for which the 50 percent additional first year depreciation deduction applies. How to fill out 1040x line by line REV. How to fill out 1040x line by line PROC. How to fill out 1040x line by line 2009-24 TABLE 1 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE BY THE TAXPAYER IN CALENDAR YEAR 2009, FOR WHICH THE 50 PERCENT ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $2,960 2nd Tax Year $4,800 3rd Tax Year $2,850 Each Succeeding Year $1,775 REV. How to fill out 1040x line by line PROC. How to fill out 1040x line by line 2009-24 TABLE 2 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE BY THE TAXPAYER IN CALENDAR YEAR 2009, FOR WHICH THE 50 PERCENT ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $10,960 2nd Tax Year $4,800 3rd Tax Year $2,850 Each Succeeding Year $1,775 REV. How to fill out 1040x line by line PROC. How to fill out 1040x line by line 2009-24 TABLE 3 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE BY THE TAXPAYER IN CALENDAR YEAR 2009, FOR WHICH THE 50 PERCENT ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $3,060 2nd Tax Year $4,900 3rd Tax Year $2,950 Each Succeeding Year $1,775 REV. How to fill out 1040x line by line PROC. How to fill out 1040x line by line 2009-24 TABLE 4 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE BY THE TAXPAYER IN CALENDAR YEAR 2009, FOR WHICH THE 50 PERCENT ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,060 2nd Tax Year $4,900 3rd Tax Year $2,950 Each Succeeding Year $1,775 . How to fill out 1040x line by line 03 Inclusions in Income of Lessees of Passenger Automobiles. How to fill out 1040x line by line The inclusion amounts for passenger automobiles first leased in calendar year 2009 are calculated under the procedures described in § 1. How to fill out 1040x line by line 280F-7(a). How to fill out 1040x line by line Lessees of passenger automobiles other than trucks and vans should use Table 5 of this revenue procedure in applying these procedures, while lessees of trucks and vans should use Table 6 of this revenue procedure. How to fill out 1040x line by line REV. How to fill out 1040x line by line PROC. How to fill out 1040x line by line 2009-24 TABLE 5 DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2009 Fair Market Value of Passenger Automobile Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & Later $18,500 $19,000 9 19 28 34 38 19,000 19,500 10 21 32 38 43 19,500 20,000 11 24 36 42 48 20,000 20,500 12 27 39 46 54 20,500 21,000 13 29 43 51 58 21,000 21,500 15 31 47 55 64 21,500 22,000 16 34 50 60 68 22,000 23,000 17 38 56 66 76 23,000 24,000 20 42 64 75 86 24,000 25,000 22 47 71 84 96 25,000 26,000 24 52 78 93 107 26,000 27,000 26 58 85 101 117 27,000 28,000 29 62 93 110 127 28,000 29,000 31 67 100 119 138 29,000 30,000 33 72 108 128 147 30,000 31,000 35 77 115 137 157 31,000 32,000 38 82 122 146 167 32,000 33,000 40 87 129 155 178 33,000 34,000 42 92 137 163 188 34,000 35,000 44 97 144 172 199 35,000 36,000 47 102 151 181 208 36,000 37,000 49 107 159 189 219 37,000 38,000 51 112 166 199 228 38,000 39,000 53 117 173 208 239 39,000 40,000 56 122 180 216 250 40,000 41,000 58 127 188 225 259 41,000 42,000 60 132 195 234 269 42,000 43,000 62 137 203 242 280 43,000 44,000 65 141 210 252 290 44,000 45,000 67 146 218 260 300 45,000 46,000 69 151 225 269 311 46,000 47,000 71 157 232 278 320 47,000 48,000 74 161 240 286 331 48,000 49,000 76 166 247 296 340 49,000 50,000 78 171 255 304 351 50,000 51,000 80 176 262 313 361 51,000 52,000 83 181 269 322 371 52,000 53,000 85 186 276 331 381 53,000 54,000 87 191 284 339 392 54,000 55,000 89 196 291 349 401 55,000 56,000 92 201 298 357 412 56,000 57,000 94 206 306 365 423 57,000 58,000 96 211 313 375 432 58,000 59,000 98 216 320 384 442 59,000 60,000 101 221 327 393 452 60,000 62,000 104 228 339 406 467 62,000 64,000 109 238 353 424 488 64,000 66,000 113 248 368 441 509 66,000 68,000 118 258 382 459 529 68,000 70,000 122 268 397 476 550 70,000 72,000 127 277 413 493 570 72,000 74,000 131 288 427 511 590 74,000 76,000 136 297 442 529 610 76,000 78,000 140 307 457 546 631 78,000 80,000 145 317 471 564 651 80,000 85,000 152 335 497 595 686 85,000 90,000 164 359 534 639 737 90,000 95,000 175 384 570 683 789 95,000 100,000 186 409 607 727 839 100,000 110,000 203 446 662 793 916 110,000 120,000 226 495 736 881 1,018 120,000 130,000 248 545 809 970 1,119 130,000 140,000 271 594 883 1,058 1,220 140,000 150,000 293 644 956 1,146 1,322 150,000 160,000 316 693 1,030 1,234 1,424 160,000 170,000 338 743 1,103 1,322 1,526 170,000 180,000 361 792 1,177 1,410 1,628 180,000 190,000 383 842 1,250 1,498 1,730 190,000 200,000 406 891 1,324 1,586 1,831 200,000 210,000 428 941 1,397 1,675 1,932 210,000 220,000 451 990 1,471 1,762 2,035 220,000 230,000 473 1,040 1,544 1,851 2,136 230,000 240,000 496 1,089 1,618 1,939 2,238 240,000 And up 518 1,139 1,691 2,027 2,340 REV. How to fill out 1040x line by line PROC. How to fill out 1040x line by line 2009-24 TABLE 6 DOLLAR AMOUNTS FOR TRUCKS AND VANS WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2009 Fair Market Value of Electric Automobile Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th and Later $18,500 $19,000 8 17 25 30 35 19,000 19,500 9 19 29 35 40 19,500 20,000 10 22 33 38 45 20,000 20,500 11 25 36 43 50 20,500 21,000 12 27 40 48 55 21,000 21,500 13 30 43 52 60 21,500 22,000 15 32 47 56 66 22,000 23,000 16 36 52 64 72 23,000 24,000 18 41 60 72 83 24,000 25,000 21 45 68 81 93 25,000 26,000 23 50 75 90 103 26,000 27,000 25 56 82 98 114 27,000 28,000 27 61 89 107 124 28,000 29,000 30 65 97 116 134 29,000 30,000 32 70 104 125 144 30,000 31,000 34 75 112 134 154 31,000 32,000 36 80 119 143 164 32,000 33,000 39 85 126 151 175 33,000 34,000 41 90 134 160 184 34,000 35,000 43 95 141 169 195 35,000 36,000 45 100 148 178 205 36,000 37,000 48 105 155 187 215 37,000 38,000 50 110 163 195 226 38,000 39,000 52 115 170 204 236 39,000 40,000 55 120 177 213 246 40,000 41,000 57 125 185 221 256 41,000 42,000 59 130 192 231 266 42,000 43,000 61 135 199 240 276 43,000 44,000 64 139 207 249 286 44,000 45,000 66 144 215 257 296 45,000 46,000 68 149 222 266 307 46,000 47,000 70 155 229 274 317 47,000 48,000 73 159 237 283 327 48,000 49,000 75 164 244 292 338 49,000 50,000 77 169 251 301 348 50,000 51,000 79 174 259 310 357 51,000 52,000 82 179 266 318 368 52,000 53,000 84 184 273 328 378 53,000 54,000 86 189 281 336 388 54,000 55,000 88 194 288 345 399 55,000 56,000 91 199 295 354 408 56,000 57,000 93 204 302 363 419 57,000 58,000 95 209 310 371 429 58,000 59,000 97 214 317 381 439 59,000 60,000 100 219 324 389 450 60,000 62,000 103 226 336 402 465 62,000 64,000 107 236 351 420 485 64,000 66,000 112 246 365 438 505 66,000 68,000 116 256 380 455 526 68,000 70,000 121 266 394 473 546 70,000 72,000 125 276 409 491 566 72,000 74,000 130 286 423 509 586 74,000 76,000 134 296 438 526 607 76,000 78,000 139 305 454 543 627 78,000 80,000 143 316 467 561 648 80,000 85,000 151 333 493 592 684 85,000 90,000 163 357 531 635 735 90,000 95,000 174 382 567 680 785 95,000 100,000 185 407 604 724 836 100,000 110,000 202 444 659 790 912 110,000 120,000 225 493 733 878 1,014 120,000 130,000 247 543 806 966 1,116 130,000 140,000 270 592 880 1,054 1,218 140,000 150,000 292 642 953 1,143 1,319 150,000 160,000 315 691 1,027 1,230 1,421 160,000 170,000 337 741 1,100 1,319 1,522 170,000 180,000 360 790 1,174 1,407 1,624 180,000 190,000 382 840 1,247 1,495 1,726 190,000 200,000 405 889 1,321 1,583 1,828 200,000 210,000 427 939 1,394 1,671 1,930 210,000 220,000 450 988 1,468 1,759 2,031 220,000 230,000 472 1,038 1,541 1,847 2,134 230,000 240,000 495 1,087 1,615 1,935 2,235 240,000 and up 517 1,137 1,688 2,024 2,336 SECTION 5. How to fill out 1040x line by line EFFECTIVE DATE This revenue procedure applies to passenger automobiles (other than leased passenger automobiles) that are first placed in service by a taxpayer during calendar year 2009, and to leased passenger automobiles that are first leased by a taxpayer during calendar year 2009. How to fill out 1040x line by line SECTION 6. How to fill out 1040x line by line DRAFTING INFORMATION The principal author of this revenue procedure is Bernard P. How to fill out 1040x line by line Harvey of the Office of Associate Chief Counsel (Income Tax & Accounting). How to fill out 1040x line by line For further information regarding this revenue procedure, contact Mr. How to fill out 1040x line by line Harvey at (202) 622-4930 (not a toll-free call). How to fill out 1040x line by line Prev  Up  Next   Home   More Internal Revenue Bulletins
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IRS Letters and Visits to Return Preparers

The Internal Revenue Service sends many letters annually to federal tax return preparers. Beginning in November 2013, the agency began its fifth year of a hands-on effort to improve the accuracy and quality of filed tax returns and to heighten awareness of preparer responsibilities. Approximately 12,000 letters will be sent to tax return preparers nationwide. Types of letters sent include:

Letter 4810 - Sent in November 2013 advising the recipient that an IRS representative will contact them to schedule an educational visit to review their responsibilities in correctly preparing the Schedule C.

Letter 5105 - Sent in December 2013 recommending the recipient review all Schedule C and preparer due diligence rules, as well as pay special attention to Schedule C accuracy in 2014.

Letter 5271 - Sent in December 2013 recommending the recipient review all Additional Child Tax Credit (ACTC) and preparer due diligence rules, as well as pay special attention to ACTC accuracy in 2014.

Letter 5272 - Sent in December 2013 recommending the recipient review all Additional Child Tax Credit (ACTC) and preparer due diligence rules, as well as pay special attention to ACTC accuracy in 2014 on returns where dependents have an Individual Tax Identification Number (ITIN).

Letter 5292 - Sent in November 2013 advising the recipient that an IRS representative will contact them to schedule an educational visit to review their responsibilities in correctly following preparer tax identification number (PTIN) rules.

The IRS also regularly checks whether federal tax return preparers are compliant with their own tax filing and payment responsibilities.

Letter 4911 - Sent to notify paid tax return preparers that they are not compliant with their personal tax responsibilities and should resolve the matter to avoid affecting their status as a preparer tax identification number (PTIN) holder.

IRS Letters and Visits to Return Preparers: FAQs

 

 

Page Last Reviewed or Updated: 19-Dec-2013

The How To Fill Out 1040x Line By Line

How to fill out 1040x line by line 2. How to fill out 1040x line by line   Entertainment Table of Contents Directly-Related Test Associated TestMeetings at conventions. How to fill out 1040x line by line 50% LimitExceptions to the 50% Limit What Entertainment Expenses Are Deductible?A meal as a form of entertainment. How to fill out 1040x line by line Deduction may depend on your type of business. How to fill out 1040x line by line Exception for events that benefit charitable organizations. How to fill out 1040x line by line Food and beverages in skybox seats. How to fill out 1040x line by line What Entertainment Expenses Are Not Deductible?Out-of-pocket expenses. How to fill out 1040x line by line You may be able to deduct business-related entertainment expenses you have for entertaining a client, customer, or employee. How to fill out 1040x line by line The rules and definitions are summarized in Table 2-1 . How to fill out 1040x line by line You can deduct entertainment expenses only if they are both ordinary and necessary and meet one of the following tests. How to fill out 1040x line by line Directly-related test. How to fill out 1040x line by line Associated test. How to fill out 1040x line by line Both of these tests are explained later. How to fill out 1040x line by line An ordinary expense is one that is common and accepted in your trade or business. How to fill out 1040x line by line A necessary expense is one that is helpful and appropriate for your business. How to fill out 1040x line by line An expense does not have to be required to be considered necessary. How to fill out 1040x line by line The amount you can deduct for entertainment expenses may be limited. How to fill out 1040x line by line Generally, you can deduct only 50% of your unreimbursed entertainment expenses. How to fill out 1040x line by line This limit is discussed later under 50% Limit. How to fill out 1040x line by line Directly-Related Test To meet the directly-related test for entertainment expenses (including entertainment-related meals), you must show that: The main purpose of the combined business and entertainment was the active conduct of business, You did engage in business with the person during the entertainment period, and You had more than a general expectation of getting income or some other specific business benefit at some future time. How to fill out 1040x line by line Business is generally not considered to be the main purpose when business and entertainment are combined on hunting or fishing trips, or on yachts or other pleasure boats. How to fill out 1040x line by line Even if you show that business was the main purpose, you generally cannot deduct the expenses for the use of an entertainment facility. How to fill out 1040x line by line See Entertainment facilities under What Entertainment Expenses Are Not Deductible? later in this chapter. How to fill out 1040x line by line You must consider all the facts, including the nature of the business transacted and the reasons for conducting business during the entertainment. How to fill out 1040x line by line It is not necessary to devote more time to business than to entertainment. How to fill out 1040x line by line However, if the business discussion is only incidental to the entertainment, the entertainment expenses do not meet the directly-related test. How to fill out 1040x line by line Table 2-1. How to fill out 1040x line by line When Are Entertainment Expenses Deductible? General rule You can deduct ordinary and necessary expenses to entertain a client, customer, or employee if the expenses meet the directly-related test or the associated test. How to fill out 1040x line by line Definitions Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation, and includes meals provided to a customer or client. How to fill out 1040x line by line An ordinary expense is one that is common and accepted in your trade or business. How to fill out 1040x line by line A necessary expense is one that is helpful and appropriate. How to fill out 1040x line by line Tests to be met Directly-related test Entertainment took place in a clear business setting, or Main purpose of entertainment was the active conduct of business, and You did engage in business with the person during the entertainment period, and You had more than a general expectation of getting income or some other specific business benefit. How to fill out 1040x line by line   Associated test Entertainment is associated with your trade or business, and Entertainment is directly before or after a substantial business discussion. How to fill out 1040x line by line Other rules You cannot deduct the cost of your meal as an entertainment expense if you are claiming the meal as a travel expense. How to fill out 1040x line by line You cannot deduct expenses that are lavish or extravagant under the circumstances. How to fill out 1040x line by line You generally can deduct only 50% of your unreimbursed entertainment expenses (see 50% Limit ). How to fill out 1040x line by line You do not have to show that business income or other business benefit actually resulted from each entertainment expense. How to fill out 1040x line by line Clear business setting. How to fill out 1040x line by line   If the entertainment takes place in a clear business setting and is for your business or work, the expenses are considered directly related to your business or work. How to fill out 1040x line by line The following situations are examples of entertainment in a clear business setting. How to fill out 1040x line by line Entertainment in a hospitality room at a convention where business goodwill is created through the display or discussion of business products. How to fill out 1040x line by line Entertainment that is mainly a price rebate on the sale of your products (such as a restaurant owner providing an occasional free meal to a loyal customer). How to fill out 1040x line by line Entertainment of a clear business nature occurring under circumstances where there is no meaningful personal or social relationship between you and the persons entertained. How to fill out 1040x line by line An example is entertainment of business and civic leaders at the opening of a new hotel or play when the purpose is to get business publicity rather than to create or maintain the goodwill of the persons entertained. How to fill out 1040x line by line Expenses not considered directly related. How to fill out 1040x line by line   Entertainment expenses generally are not considered directly related if you are not there or in situations where there are substantial distractions that generally prevent you from actively conducting business. How to fill out 1040x line by line The following are examples of situations where there are substantial distractions. How to fill out 1040x line by line A meeting or discussion at a nightclub, theater, or sporting event. How to fill out 1040x line by line A meeting or discussion during what is essentially a social gathering, such as a cocktail party. How to fill out 1040x line by line A meeting with a group that includes persons who are not business associates at places such as cocktail lounges, country clubs, golf clubs, athletic clubs, or vacation resorts. How to fill out 1040x line by line Associated Test Even if your expenses do not meet the directly-related test, they may meet the associated test. How to fill out 1040x line by line To meet the associated test for entertainment expenses (including entertainment-related meals), you must show that the entertainment is: Associated with the active conduct of your trade or business, and Directly before or after a substantial business discussion (defined later). How to fill out 1040x line by line Associated with trade or business. How to fill out 1040x line by line   Generally, an expense is associated with the active conduct of your trade or business if you can show that you had a clear business purpose for having the expense. How to fill out 1040x line by line The purpose may be to get new business or to encourage the continuation of an existing business relationship. How to fill out 1040x line by line Substantial business discussion. How to fill out 1040x line by line   Whether a business discussion is substantial depends on the facts of each case. How to fill out 1040x line by line A business discussion will not be considered substantial unless you can show that you actively engaged in the discussion, meeting, negotiation, or other business transaction to get income or some other specific business benefit. How to fill out 1040x line by line   The meeting does not have to be for any specified length of time, but you must show that the business discussion was substantial in relation to the meal or entertainment. How to fill out 1040x line by line It is not necessary that you devote more time to business than to entertainment. How to fill out 1040x line by line You do not have to discuss business during the meal or entertainment. How to fill out 1040x line by line Meetings at conventions. How to fill out 1040x line by line   You are considered to have a substantial business discussion if you attend meetings at a convention or similar event, or at a trade or business meeting sponsored and conducted by a business or professional organization. How to fill out 1040x line by line However, your reason for attending the convention or meeting must be to further your trade or business. How to fill out 1040x line by line The organization that sponsors the convention or meeting must schedule a program of business activities that is the main activity of the convention or meeting. How to fill out 1040x line by line Directly before or after business discussion. How to fill out 1040x line by line   If the entertainment is held on the same day as the business discussion, it is considered to be held directly before or after the business discussion. How to fill out 1040x line by line   If the entertainment and the business discussion are not held on the same day, you must consider the facts of each case to see if the associated test is met. How to fill out 1040x line by line Among the facts to consider are the place, date, and duration of the business discussion. How to fill out 1040x line by line If you or your business associates are from out of town, you must also consider the dates of arrival and departure, and the reasons the entertainment and the discussion did not take place on the same day. How to fill out 1040x line by line Example. How to fill out 1040x line by line A group of business associates comes from out of town to your place of business to hold a substantial business discussion. How to fill out 1040x line by line If you entertain those business guests on the evening before the business discussion, or on the evening of the day following the business discussion, the entertainment generally is considered to be held directly before or after the discussion. How to fill out 1040x line by line The expense meets the associated test. How to fill out 1040x line by line 50% Limit In general, you can deduct only 50% of your business-related meal and entertainment expenses. How to fill out 1040x line by line (If you are subject to the Department of Transportation's “hours of service” limits, you can deduct 80% of your business-related meal and entertainment expenses. How to fill out 1040x line by line See Individuals subject to “hours of service” limits , later. How to fill out 1040x line by line ) The 50% limit applies to employees or their employers, and to self-employed persons (including independent contractors) or their clients, depending on whether the expenses are reimbursed. How to fill out 1040x line by line Figure A summarizes the general rules explained in this section. How to fill out 1040x line by line The 50% limit applies to business meals or entertainment expenses you have while: Traveling away from home (whether eating alone or with others) on business, Entertaining customers at your place of business, a restaurant, or other location, or Attending a business convention or reception, business meeting, or business luncheon at a club. How to fill out 1040x line by line Included expenses. How to fill out 1040x line by line   Expenses subject to the 50% limit include: Taxes and tips relating to a business meal or entertainment activity, Cover charges for admission to a nightclub, Rent paid for a room in which you hold a dinner or cocktail party, and Amounts paid for parking at a sports arena. How to fill out 1040x line by line However, the cost of transportation to and from a business meal or a business-related entertainment activity is not subject to the 50% limit. How to fill out 1040x line by line Figure A. How to fill out 1040x line by line Does the 50% Limit Apply to Your Expenses? There are exceptions to these rules. How to fill out 1040x line by line See Exceptions to the 50% Limit . How to fill out 1040x line by line Please click here for the text description of the image. How to fill out 1040x line by line Figure A. How to fill out 1040x line by line Does the 50% limit apply to Your Expenses?TAs for Figure A are: Notice 87-23; Form 2106 instructions Application of 50% limit. How to fill out 1040x line by line   The 50% limit on meal and entertainment expenses applies if the expense is otherwise deductible and is not covered by one of the exceptions discussed later. How to fill out 1040x line by line   The 50% limit also applies to certain meal and entertainment expenses that are not business related. How to fill out 1040x line by line It applies to meal and entertainment expenses you have for the production of income, including rental or royalty income. How to fill out 1040x line by line It also applies to the cost of meals included in deductible educational expenses. How to fill out 1040x line by line When to apply the 50% limit. How to fill out 1040x line by line   You apply the 50% limit after determining the amount that would otherwise qualify for a deduction. How to fill out 1040x line by line You first have to determine the amount of meal and entertainment expenses that would be deductible under the other rules discussed in this publication. How to fill out 1040x line by line Example 1. How to fill out 1040x line by line You spend $200 for a business-related meal. How to fill out 1040x line by line If $110 of that amount is not allowable because it is lavish and extravagant, the remaining $90 is subject to the 50% limit. How to fill out 1040x line by line Your deduction cannot be more than $45 (50% × $90). How to fill out 1040x line by line Example 2. How to fill out 1040x line by line You purchase two tickets to a concert and give them to a client. How to fill out 1040x line by line You purchased the tickets through a ticket agent. How to fill out 1040x line by line You paid $200 for the two tickets, which had a face value of $80 each ($160 total). How to fill out 1040x line by line Your deduction cannot be more than $80 (50% × $160). How to fill out 1040x line by line Exceptions to the 50% Limit Generally, business-related meal and entertainment expenses are subject to the 50% limit. How to fill out 1040x line by line Figure A can help you determine if the 50% limit applies to you. How to fill out 1040x line by line Expenses not subject to 50% limit. How to fill out 1040x line by line   Your meal or entertainment expense is not subject to the 50% limit if the expense meets one of the following exceptions. How to fill out 1040x line by line 1 - Employee's reimbursed expenses. How to fill out 1040x line by line   If you are an employee, you are not subject to the 50% limit on expenses for which your employer reimburses you under an accountable plan. How to fill out 1040x line by line Accountable plans are discussed in chapter 6. How to fill out 1040x line by line 2 - Self-employed. How to fill out 1040x line by line   If you are self-employed, your deductible meal and entertainment expenses are not subject to the 50% limit if all of the following requirements are met. How to fill out 1040x line by line You have these expenses as an independent contractor. How to fill out 1040x line by line Your customer or client reimburses you or gives you an allowance for these expenses in connection with services you perform. How to fill out 1040x line by line You provide adequate records of these expenses to your customer or client. How to fill out 1040x line by line (See chapter 5 . How to fill out 1040x line by line )   In this case, your client or customer is subject to the 50% limit on the expenses. How to fill out 1040x line by line Example. How to fill out 1040x line by line You are a self-employed attorney who adequately accounts for meal and entertainment expenses to a client who reimburses you for these expenses. How to fill out 1040x line by line You are not subject to the directly-related or associated test, nor are you subject to the 50% limit. How to fill out 1040x line by line If the client can deduct the expenses, the client is subject to the 50% limit. How to fill out 1040x line by line If you (as an independent contractor) have expenses for meals and entertainment related to providing services for a client but do not adequately account for and seek reimbursement from the client for those expenses, you are subject to the directly-related or associated test and to the 50% limit. How to fill out 1040x line by line 3 - Advertising expenses. How to fill out 1040x line by line   You are not subject to the 50% limit if you provide meals, entertainment, or recreational facilities to the general public as a means of advertising or promoting goodwill in the community. How to fill out 1040x line by line For example, neither the expense of sponsoring a television or radio show nor the expense of distributing free food and beverages to the general public is subject to the 50% limit. How to fill out 1040x line by line 4 - Sale of meals or entertainment. How to fill out 1040x line by line   You are not subject to the 50% limit if you actually sell meals, entertainment, goods and services, or use of facilities to the public. How to fill out 1040x line by line For example, if you run a nightclub, your expense for the entertainment you furnish to your customers, such as a floor show, is not subject to the 50% limit. How to fill out 1040x line by line 5 - Charitable sports event. How to fill out 1040x line by line   You are not subject to the 50% limit if you pay for a package deal that includes a ticket to a qualified charitable sports event. How to fill out 1040x line by line For the conditions the sports event must meet, see Exception for events that benefit charitable organizations under What Entertainment Expenses Are Deductible?, later. How to fill out 1040x line by line Individuals subject to “hours of service” limits. How to fill out 1040x line by line   You can deduct a higher percentage of your meal expenses while traveling away from your tax home if the meals take place during or incident to any period subject to the Department of Transportation's “hours of service” limits. How to fill out 1040x line by line The percentage is 80%. How to fill out 1040x line by line   Individuals subject to the Department of Transportation's “hours of service” limits include the following persons. How to fill out 1040x line by line Certain air transportation workers (such as pilots, crew, dispatchers, mechanics, and control tower operators) who are under Federal Aviation Administration regulations. How to fill out 1040x line by line Interstate truck operators and bus drivers who are under Department of Transportation regulations. How to fill out 1040x line by line Certain railroad employees (such as engineers, conductors, train crews, dispatchers, and control operations personnel) who are under Federal Railroad Administration regulations. How to fill out 1040x line by line Certain merchant mariners who are under Coast Guard regulations. How to fill out 1040x line by line What Entertainment Expenses Are Deductible? This section explains different types of entertainment expenses you may be able to deduct. How to fill out 1040x line by line Entertainment. How to fill out 1040x line by line   Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation. How to fill out 1040x line by line Examples include entertaining guests at nightclubs; at social, athletic, and sporting clubs; at theaters; at sporting events; on yachts; or on hunting, fishing, vacation, and similar trips. How to fill out 1040x line by line   Entertainment also may include meeting personal, living, or family needs of individuals, such as providing meals, a hotel suite, or a car to customers or their families. How to fill out 1040x line by line A meal as a form of entertainment. How to fill out 1040x line by line   Entertainment includes the cost of a meal you provide to a customer or client, whether the meal is a part of other entertainment or by itself. How to fill out 1040x line by line A meal expense includes the cost of food, beverages, taxes, and tips for the meal. How to fill out 1040x line by line To deduct an entertainment-related meal, you or your employee must be present when the food or beverages are provided. How to fill out 1040x line by line    You cannot claim the cost of your meal both as an entertainment expense and as a travel expense. How to fill out 1040x line by line    Meals sold in the normal course of your business are not considered entertainment. How to fill out 1040x line by line Deduction may depend on your type of business. How to fill out 1040x line by line   Your kind of business may determine if a particular activity is considered entertainment. How to fill out 1040x line by line For example, if you are a dress designer and have a fashion show to introduce your new designs to store buyers, the show generally is not considered entertainment. How to fill out 1040x line by line This is because fashion shows are typical in your business. How to fill out 1040x line by line But, if you are an appliance distributor and hold a fashion show for the spouses of your retailers, the show generally is considered entertainment. How to fill out 1040x line by line Separating costs. How to fill out 1040x line by line   If you have one expense that includes the costs of entertainment and other services (such as lodging or transportation), you must allocate that expense between the cost of entertainment and the cost of other services. How to fill out 1040x line by line You must have a reasonable basis for making this allocation. How to fill out 1040x line by line For example, you must allocate your expenses if a hotel includes entertainment in its lounge on the same bill with your room charge. How to fill out 1040x line by line Taking turns paying for meals or entertainment. How to fill out 1040x line by line   If a group of business acquaintances takes turns picking up each others' meal or entertainment checks primarily for personal reasons, without regard to whether any business purposes are served, no member of the group can deduct any part of the expense. How to fill out 1040x line by line Lavish or extravagant expenses. How to fill out 1040x line by line   You cannot deduct expenses for entertainment that are lavish or extravagant. How to fill out 1040x line by line An expense is not considered lavish or extravagant if it is reasonable considering the facts and circumstances. How to fill out 1040x line by line Expenses will not be disallowed just because they are more than a fixed dollar amount or take place at deluxe restaurants, hotels, nightclubs, or resorts. How to fill out 1040x line by line Allocating between business and nonbusiness. How to fill out 1040x line by line   If you entertain business and nonbusiness individuals at the same event, you must divide your entertainment expenses between business and nonbusiness. How to fill out 1040x line by line You can deduct only the business part. How to fill out 1040x line by line If you cannot establish the part of the expense for each person participating, allocate the expense to each participant on a pro rata basis. How to fill out 1040x line by line Example. How to fill out 1040x line by line You entertain a group of individuals that includes yourself, three business prospects, and seven social guests. How to fill out 1040x line by line Only 4/11 of the expense qualifies as a business entertainment expense. How to fill out 1040x line by line You cannot deduct the expenses for the seven social guests because those costs are nonbusiness expenses. How to fill out 1040x line by line Trade association meetings. How to fill out 1040x line by line   You can deduct entertainment expenses that are directly related to and necessary for attending business meetings or conventions of certain exempt organizations if the expenses of your attendance are related to your active trade or business. How to fill out 1040x line by line These organizations include business leagues, chambers of commerce, real estate boards, trade associations, and professional associations. How to fill out 1040x line by line Entertainment tickets. How to fill out 1040x line by line   Generally, you cannot deduct more than the face value of an entertainment ticket, even if you paid a higher price. How to fill out 1040x line by line For example, you cannot deduct service fees you pay to ticket agencies or brokers or any amount over the face value of the tickets you pay to scalpers. How to fill out 1040x line by line Exception for events that benefit charitable organizations. How to fill out 1040x line by line   Different rules apply when the cost of a ticket to a sports event benefits a charitable organization. How to fill out 1040x line by line You can take into account the full cost you pay for the ticket, even if it is more than the face value, if all of the following conditions apply. How to fill out 1040x line by line The event's main purpose is to benefit a qualified charitable organization. How to fill out 1040x line by line The entire net proceeds go to the charity. How to fill out 1040x line by line The event uses volunteers to perform substantially all the event's work. How to fill out 1040x line by line    The 50% limit on entertainment does not apply to any expense for a package deal that includes a ticket to such a charitable sports event. How to fill out 1040x line by line Example 1. How to fill out 1040x line by line You purchase tickets to a golf tournament organized by the local volunteer fire company. How to fill out 1040x line by line All net proceeds will be used to buy new fire equipment. How to fill out 1040x line by line The volunteers will run the tournament. How to fill out 1040x line by line You can deduct the entire cost of the tickets as a business expense if they otherwise qualify as an entertainment expense. How to fill out 1040x line by line Example 2. How to fill out 1040x line by line You purchase tickets to a college football game through a ticket broker. How to fill out 1040x line by line After having a business discussion, you take a client to the game. How to fill out 1040x line by line Net proceeds from the game go to colleges that qualify as charitable organizations. How to fill out 1040x line by line However, since the colleges also pay individuals to perform services, such as coaching and recruiting, you can only use the face value of the tickets in determining your business deduction. How to fill out 1040x line by line Skyboxes and other private luxury boxes. How to fill out 1040x line by line   If you rent a skybox or other private luxury box for more than one event at the same sports arena, you generally cannot deduct more than the price of a nonluxury box seat ticket. How to fill out 1040x line by line   To determine whether a skybox has been rented for more than one event, count each game or other performance as one event. How to fill out 1040x line by line For example, renting a skybox for a series of playoff games is considered renting it for more than one event. How to fill out 1040x line by line All skyboxes you rent in the same arena, along with any rentals by related parties, are considered in making this determination. How to fill out 1040x line by line   Related parties include: Family members (spouses, ancestors, and lineal descendants), Parties who have made a reciprocal arrangement involving the sharing of skyboxes, Related corporations, A partnership and its principal partners, and A corporation and a partnership with common ownership. How to fill out 1040x line by line Example. How to fill out 1040x line by line You pay $3,000 to rent a 10-seat skybox at Team Stadium for three baseball games. How to fill out 1040x line by line The cost of regular nonluxury box seats at each event is $30 a seat. How to fill out 1040x line by line You can deduct (subject to the 50% limit) $900 ((10 seats × $30 each) × 3 events). How to fill out 1040x line by line Food and beverages in skybox seats. How to fill out 1040x line by line   If expenses for food and beverages are separately stated, you can deduct these expenses in addition to the amounts allowable for the skybox, subject to the requirements and limits that apply. How to fill out 1040x line by line The amounts separately stated for food and beverages must be reasonable. How to fill out 1040x line by line You cannot inflate the charges for food and beverages to avoid the limited deduction for skybox rentals. How to fill out 1040x line by line What Entertainment Expenses Are Not Deductible? This section explains different types of entertainment expenses you generally may not be able to deduct. How to fill out 1040x line by line Club dues and membership fees. How to fill out 1040x line by line   You cannot deduct dues (including initiation fees) for membership in any club organized for: Business, Pleasure, Recreation, or Other social purpose. How to fill out 1040x line by line This rule applies to any membership organization if one of its principal purposes is either: To conduct entertainment activities for members or their guests, or To provide members or their guests with access to entertainment facilities, discussed later. How to fill out 1040x line by line   The purposes and activities of a club, not its name, will determine whether or not you can deduct the dues. How to fill out 1040x line by line You cannot deduct dues paid to: Country clubs, Golf and athletic clubs, Airline clubs, Hotel clubs, and Clubs operated to provide meals under circumstances generally considered to be conducive to business discussions. How to fill out 1040x line by line Entertainment facilities. How to fill out 1040x line by line   Generally, you cannot deduct any expense for the use of an entertainment facility. How to fill out 1040x line by line This includes expenses for depreciation and operating costs such as rent, utilities, maintenance, and protection. How to fill out 1040x line by line   An entertainment facility is any property you own, rent, or use for entertainment. How to fill out 1040x line by line Examples include a yacht, hunting lodge, fishing camp, swimming pool, tennis court, bowling alley, car, airplane, apartment, hotel suite, or home in a vacation resort. How to fill out 1040x line by line Out-of-pocket expenses. How to fill out 1040x line by line   You can deduct out-of-pocket expenses, such as for food and beverages, catering, gas, and fishing bait, that you provided during entertainment at a facility. How to fill out 1040x line by line These are not expenses for the use of an entertainment facility. How to fill out 1040x line by line However, these expenses are subject to the directly-related and associated tests and to the 50% limit , all discussed earlier. How to fill out 1040x line by line Expenses for spouses. How to fill out 1040x line by line   You generally cannot deduct the cost of entertainment for your spouse or for the spouse of a customer. How to fill out 1040x line by line However, you can deduct these costs if you can show you had a clear business purpose, rather than a personal or social purpose, for providing the entertainment. How to fill out 1040x line by line Example. How to fill out 1040x line by line You entertain a customer. How to fill out 1040x line by line The cost is an ordinary and necessary business expense and is allowed under the entertainment rules. How to fill out 1040x line by line The customer's spouse joins you because it is impractical to entertain the customer without the spouse. How to fill out 1040x line by line You can deduct the cost of entertaining the customer's spouse. How to fill out 1040x line by line If your spouse joins the party because the customer's spouse is present, the cost of the entertainment for your spouse is also deductible. How to fill out 1040x line by line Gift or entertainment. How to fill out 1040x line by line   Any item that might be considered either a gift or entertainment generally will be considered entertainment. How to fill out 1040x line by line However, if you give a customer packaged food or beverages that you intend the customer to use at a later date, treat it as a gift. How to fill out 1040x line by line   If you give a customer tickets to a theater performance or sporting event and you do not go with the customer to the performance or event, you have a choice. How to fill out 1040x line by line You can treat the tickets as either a gift or entertainment, whichever is to your advantage. How to fill out 1040x line by line   You can change your treatment of the tickets at a later date by filing an amended return. How to fill out 1040x line by line Generally, an amended return must be filed within 3 years from the date the original return was filed or within 2 years from the time the tax was paid, whichever is later. How to fill out 1040x line by line   If you go with the customer to the event, you must treat the cost of the tickets as an entertainment expense. How to fill out 1040x line by line You cannot choose, in this case, to treat the tickets as a gift. How to fill out 1040x line by line Prev  Up  Next   Home   More Online Publications