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Irs Forms Amended Return Instructions

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Irs Forms Amended Return Instructions

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Tax Relief for Victims of Floods in Nebraska

Updated 11/21/11 to add the Omaha Indian Reservation and Thurston county.
Updated 9/8/11 to add Lincoln, Nemaha and Richardson counties.

MIL-2011-06-NE, Aug. 17, 2011

Victims of flooding beginning on May 24, 2011 in parts of Nebraska may qualify for tax relief from the Internal Revenue Service.

The President has declared Boyd, Burt, Cass, Dakota, Dixon, Douglas, Knox, Lincoln, Nemaha, Richardson, Sarpy, Thurston and Washington counties and the Omaha Indian Reservation a federal disaster area. Individuals who reside or have a business in these localities may qualify for tax relief.

As a result, the IRS has postponed until Aug. 1, 2011, certain deadlines occurring from May 24 to Aug. 1 that affect taxpayers who live or have a business in the disaster area. This includes the June 15 deadline for making estimated tax payments.

In addition, the IRS is abating the failure-to-deposit penalties for employment and excise tax deposits due on or after May 24 and on or before June 8, 2011, as long as the deposits were made by June 8, 2011.

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 1-866-562-5227 to request this tax relief.

Covered Disaster Area

The areas listed above constitute a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and are entitled to the relief detailed below.

Affected Taxpayers

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

Grant of Relief

Under section 7508A, the IRS has given affected taxpayers until Aug. 1, 2011, to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after May 24 and on or before Aug. 1, 2011.

The IRS also gives affected taxpayers until Aug. 1 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after May 24 and on or before Aug. 1.

This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after May 24 and on or before June 8, provided the taxpayer made these deposits by June 8.

Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.

Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation, "Nebraska Flooding," at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Taxpayers may download forms and publications or order them by calling 1-800-TAX-FORM (1-800-829-3676). The IRS toll-free number for general tax questions is 1-800-829-1040.

Related Information: Recent IRS Disaster Relief Announcements
 

 

Page Last Reviewed or Updated: 20-Feb-2014

The Irs Forms Amended Return Instructions

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