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Online ez form Publication 590 - Introductory Material Table of Contents What's New for 2013 What's New for 2014 Reminders IntroductionOrdering forms and publications. Online ez form Tax questions. Online ez form Useful Items - You may want to see: Note. Online ez form After 2013, Publication 590 will be split into two separate publications as follows. Online ez form Publication 590-A, will focus on contributions to traditional IRAs as well as Roth IRAs. Online ez form This publication will include the rules for rollover and conversion contributions. Online ez form Publication 590-B, will focus on distributions from traditional IRAs as well as Roth IRAs. Online ez form This publication will include the rules for required minimum distributions and IRA beneficiaries. Online ez form What's New for 2013 Traditional IRA contribution and deduction limit. Online ez form  The contribution limit to your traditional IRA for 2013 will be increased to the smaller of the following amounts: $5,500, or Your taxable compensation for the year. Online ez form If you were age 50 or older before 2014, the most that can be contributed to your traditional IRA for 2013 will be the smaller of the following amounts: $6,500, or Your taxable compensation for the year. Online ez form For more information, see How Much Can Be Contributed? in chapter 1. Online ez form Roth IRA contribution limit. Online ez form  If contributions on your behalf are made only to Roth IRAs, your contribution limit for 2013 will generally be the lesser of: $5,500, or Your taxable compensation for the year. Online ez form If you were age 50 or older before 2014 and contributions on your behalf were made only to Roth IRAs, your contribution limit for 2013 will generally be the lesser of: $6,500, or Your taxable compensation for the year. Online ez form However, if your modified adjusted gross income (AGI) is above a certain amount, your contribution limit may be reduced. Online ez form For more information, see How Much Can Be Contributed? under Can You Contribute to a Roth IRA? in chapter 2. Online ez form Modified AGI limit for traditional IRA contributions increased. Online ez form  For 2013, if you were covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is: More than $95,000 but less than $115,000 for a married couple filing a joint return or a qualifying widow(er), More than $59,000 but less than $69,000 for a single individual or head of household, or Less than $10,000 for a married individual filing a separate return. Online ez form If you either lived with your spouse or file a joint return, and your spouse was covered by a retirement plan at work, but you were not, your deduction is phased out if your modified AGI is more than $178,000 but less than $188,000. Online ez form If your modified AGI is $188,000 or more, you cannot take a deduction for contributions to a traditional IRA. Online ez form See How Much Can You Deduct? in chapter 1. Online ez form Modified AGI limit for Roth IRA contributions increased. Online ez form  For 2013, your Roth IRA contribution limit is reduced (phased out) in the following situations. Online ez form Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $178,000. Online ez form You cannot make a Roth IRA contribution if your modified AGI is $188,000 or more. Online ez form Your filing status is single, head of household, or married filing separately and you did not live with your spouse at any time in 2013 and your modified AGI is at least $112,000. Online ez form You cannot make a Roth IRA contribution if your modified AGI is $127,000 or more. Online ez form Your filing status is married filing separately, you lived with your spouse at any time during the year, and your modified AGI is more than -0-. Online ez form You cannot make a Roth IRA contribution if your modified AGI is $10,000 or more. Online ez form See Can You Contribute to a Roth IRA? in chapter 2. Online ez form Net Investment Income Tax. Online ez form  For purposes of the Net Investment Income Tax (NIIT), net investment income does not include distributions from a qualified retirement plan (for example, 401(a), 403(a), 403(b), 457(b) plans, and IRAs). Online ez form However, these distributions are taken into account when determining the modified adjusted gross income threshold. Online ez form Distributions from a nonqualified retirement plan are included in net investment income. Online ez form See Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts, and its instructions for more information. Online ez form Kay Bailey Hutchison Spousal IRA. Online ez form . Online ez form  In 2013, spousal IRAs were renamed to Kay Bailey Hutchison Spousal IRAs. Online ez form There are no changes to the rules regarding these IRAs. Online ez form See Kay Bailey Hutchison Spousal IRA Limit in chapter 1 for more information. Online ez form What's New for 2014 Modified AGI limit for traditional IRA contributions increased. Online ez form  For 2014, if you are covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is: More than $96,000 but less than $116,000 for a married couple filing a joint return or a qualifying widow(er), More than $60,000 but less than $70,000 for a single individual or head of household, or Less than $10,000 for a married individual filing a separate return. Online ez form If you either live with your spouse or file a joint return, and your spouse is covered by a retirement plan at work, but you are not, your deduction is phased out if your modified AGI is more than $181,000 but less than $191,000. Online ez form If your modified AGI is $191,000 or more, you cannot take a deduction for contributions to a traditional IRA. Online ez form Modified AGI limit for Roth IRA contributions increased. Online ez form  For 2014, your Roth IRA contribution limit is reduced (phased out) in the following situations. Online ez form Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $181,000. Online ez form You cannot make a Roth IRA contribution if your modified AGI is $191,000 or more. Online ez form Your filing status is single, head of household, or married filing separately and you did not live with your spouse at any time in 2014 and your modified AGI is at least $114,000. Online ez form You cannot make a Roth IRA contribution if your modified AGI is $129,000 or more. Online ez form Your filing status is married filing separately, you lived with your spouse at any time during the year, and your modified AGI is more than -0-. Online ez form You cannot make a Roth IRA contribution if your modified AGI is $10,000 or more. Online ez form Reminders Future developments. Online ez form  For the latest information about developments related to Publication 590, such as legislation enacted after it was published, go to www. Online ez form irs. Online ez form gov/pub590. Online ez form Simplified employee pension (SEP). Online ez form  SEP IRAs are not covered in this publication. Online ez form They are covered in Publication 560, Retirement Plans for Small Business. Online ez form Deemed IRAs. Online ez form  A qualified employer plan (retirement plan) can maintain a separate account or annuity under the plan (a deemed IRA) to receive voluntary employee contributions. Online ez form If the separate account or annuity otherwise meets the requirements of an IRA, it will be subject only to IRA rules. Online ez form An employee's account can be treated as a traditional IRA or a Roth IRA. Online ez form For this purpose, a “qualified employer plan” includes: A qualified pension, profit-sharing, or stock bonus plan (section 401(a) plan), A qualified employee annuity plan (section 403(a) plan), A tax-sheltered annuity plan (section 403(b) plan), and A deferred compensation plan (section 457 plan) maintained by a state, a political subdivision of a state, or an agency or instrumentality of a state or political subdivision of a state. Online ez form Contributions to both traditional and Roth IRAs. Online ez form  For information on your combined contribution limit if you contribute to both traditional and Roth IRAs, see Roth IRAs and traditional IRAs under How Much Can Be Contributed? in chapter 2. Online ez form Statement of required minimum distribution (RMD). Online ez form  If an RMD is required from your IRA, the trustee, custodian, or issuer that held the IRA at the end of the preceding year must either report the amount of the RMD to you, or offer to calculate it for you. Online ez form The report or offer must include the date by which the amount must be distributed. Online ez form The report is due January 31 of the year in which the minimum distribution is required. Online ez form It can be provided with the year-end fair market value statement that you normally get each year. Online ez form No report is required for section 403(b) contracts (generally tax-sheltered annuities) or for IRAs of owners who have died. Online ez form IRA interest. Online ez form  Although interest earned from your IRA is generally not taxed in the year earned, it is not tax-exempt interest. Online ez form Tax on your traditional IRA is generally deferred until you take a distribution. Online ez form Do not report this interest on your return as tax-exempt interest. Online ez form For more information on tax-exempt interest, see the instructions for your tax return. Online ez form Photographs of missing children. Online ez form  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Online ez form Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Online ez form You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Online ez form Introduction This publication discusses individual retirement arrangements (IRAs). Online ez form An IRA is a personal savings plan that gives you tax advantages for setting aside money for retirement. Online ez form What are some tax advantages of an IRA?   Two tax advantages of an IRA are that: Contributions you make to an IRA may be fully or partially deductible, depending on which type of IRA you have and on your circumstances, and Generally, amounts in your IRA (including earnings and gains) are not taxed until distributed. Online ez form In some cases, amounts are not taxed at all if distributed according to the rules. Online ez form What's in this publication?   This publication discusses traditional, Roth, and SIMPLE IRAs. Online ez form It explains the rules for: Setting up an IRA, Contributing to an IRA, Transferring money or property to and from an IRA, Handling an inherited IRA, Receiving distributions (making withdrawals) from an IRA, and Taking a credit for contributions to an IRA. Online ez form   It also explains the penalties and additional taxes that apply when the rules are not followed. Online ez form To assist you in complying with the tax rules for IRAs, this publication contains worksheets, sample forms, and tables, which can be found throughout the publication and in the appendices at the back of the publication. Online ez form How to use this publication. Online ez form   The rules that you must follow depend on which type of IRA you have. Online ez form Use Table I-1 to help you determine which parts of this publication to read. Online ez form Also use Table I-1 if you were referred to this publication from instructions to a form. Online ez form Comments and suggestions. Online ez form   We welcome your comments about this publication and your suggestions for future editions. Online ez form   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Online ez form NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Online ez form Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Online ez form   You can send your comments from www. Online ez form irs. Online ez form gov/formspubs/. Online ez form Click on “More Information” and then on “Comment on Tax Forms and Publications”. Online ez form   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Online ez form Ordering forms and publications. Online ez form   Visit www. Online ez form irs. Online ez form gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Online ez form Internal Revenue Service 1201 N. Online ez form Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Online ez form   If you have a tax question, check the information available on IRS. Online ez form gov or call 1-800-829-1040. Online ez form We cannot answer tax questions sent to either of the above addresses. Online ez form Useful Items - You may want to see: Publications 560 Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) 571 Tax-Sheltered Annuity Plans (403(b) Plans) 575 Pension and Annuity Income 939 General Rule for Pensions and Annuities Forms (and instructions) W-4P Withholding Certificate for Pension or Annuity Payments 1099-R Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Online ez form 5304-SIMPLE Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)–Not for Use With a Designated Financial Institution 5305-S SIMPLE Individual Retirement Trust Account 5305-SA SIMPLE Individual Retirement Custodial Account 5305-SIMPLE Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)–for Use With a Designated Financial Institution 5329 Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts 5498 IRA Contribution Information 8606 Nondeductible IRAs 8815 Exclusion of Interest From Series EE and I U. Online ez form S. Online ez form Savings Bonds Issued After 1989 8839 Qualified Adoption Expenses 8880 Credit for Qualified Retirement Savings Contributions See chapter 5 for information about getting these publications and forms. Online ez form Table I-1. Online ez form Using This Publication IF you need information on . Online ez form . Online ez form . Online ez form THEN see . Online ez form . Online ez form . Online ez form traditional IRAs chapter 1. Online ez form Roth IRAs chapter 2, and parts of  chapter 1. Online ez form SIMPLE IRAs chapter 3. Online ez form the credit for qualified retirement savings contributions (the saver's credit) chapter 4. Online ez form how to keep a record of your contributions to, and distributions from, your traditional IRA(s) appendix A. Online ez form SEP IRAs and 401(k) plans Publication 560. Online ez form Coverdell education savings accounts (formerly called education IRAs) Publication 970. Online ez form IF for 2013, you received social security benefits, had taxable compensation, contributed to a traditional IRA, and you or your spouse was covered by an employer retirement plan, and you want to. Online ez form . Online ez form . Online ez form THEN see . Online ez form . Online ez form . Online ez form first figure your modified adjusted gross income (AGI) appendix B, worksheet 1. Online ez form then figure how much of your traditional IRA contribution you can deduct appendix B, worksheet 2. Online ez form and finally figure how much of your social security is taxable appendix B, worksheet 3. Online ez form Table I-2. Online ez form How Are a Traditional IRA and a Roth IRA Different? This table shows the differences between traditional and Roth IRAs. Online ez form Answers in the middle column apply to traditional IRAs. Online ez form Answers in the right column apply to Roth IRAs. Online ez form Question Answer   Traditional IRA? Roth IRA? Is there an age limit on when I can open and contribute to a Yes. Online ez form You must not have reached age  70½ by the end of the year. Online ez form See Who Can Open a Traditional IRA? in chapter 1. Online ez form No. Online ez form You can be any age. Online ez form See Can You Contribute to a Roth IRA? in chapter 2. Online ez form If I earned more than $5,500 in 2013 ($6,500 if I was 50 or older by the end of 2013), is there a limit on how much I can contribute to a Yes. Online ez form For 2013, you can contribute to a traditional IRA up to: $5,500, or $6,500 if you were age 50 or older by the end of 2013. Online ez form  There is no upper limit on how much you can earn and still contribute. Online ez form See How Much Can Be Contributed? in chapter 1. Online ez form Yes. Online ez form For 2013, you may be able to contribute to a Roth IRA up to: $5,500, or $6,500 if you were age 50 or older by the end of 2013,  but the amount you can contribute may be less than that depending on your income, filing status, and if you contribute to another IRA. Online ez form See How Much Can Be Contributed? and Table 2-1 in chapter 2. Online ez form Can I deduct contributions to a Yes. Online ez form You may be able to deduct your contributions to a traditional IRA depending on your income, filing status, whether you are covered by a retirement plan at work, and whether you receive social security benefits. Online ez form See How Much Can You Deduct? in chapter 1. Online ez form No. Online ez form You can never deduct contributions to a Roth IRA. Online ez form See What Is a Roth IRA? in chapter 2. Online ez form Do I have to file a form just because I contribute to a Not unless you make nondeductible contributions to your traditional IRA. Online ez form In that case, you must file Form 8606. Online ez form See Nondeductible Contributions in chapter 1. Online ez form No. Online ez form You do not have to file a form if you contribute to a Roth IRA. Online ez form See Contributions not reported in chapter 2. Online ez form Do I have to start taking distributions when I reach a certain age from a Yes. Online ez form You must begin receiving required minimum distributions by April 1 of the year following the year you reach age 70½. Online ez form See When Must You Withdraw Assets? (Required Minimum Distributions) in chapter 1. Online ez form No. Online ez form If you are the original owner of a Roth IRA, you do not have to take distributions regardless of your age. Online ez form See Are Distributions Taxable? in chapter 2. Online ez form However, if you are the beneficiary of a Roth IRA, you may have to take distributions. Online ez form See Distributions After Owner's Death in chapter 2. Online ez form How are distributions taxed from a Distributions from a traditional IRA are taxed as ordinary income, but if you made nondeductible contributions, not all of the distribution is taxable. Online ez form See Are Distributions Taxable? in chapter 1. Online ez form Distributions from a Roth IRA are not taxed as long as you meet certain criteria. Online ez form See Are Distributions Taxable? in chapter 2. Online ez form Do I have to file a form just because I receive distributions from a Not unless you have ever made a nondeductible contribution to a traditional IRA. Online ez form If you have, file Form 8606. Online ez form See Nondeductible Contributions in chapter 1. Online ez form Yes. Online ez form File Form 8606 if you received distributions from a Roth IRA (other than a rollover, qualified charitable distribution, one-time distribution to fund an HSA, recharacterization, certain qualified distributions, or a return of certain contributions). 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The Online Ez Form

Online ez form Tax Changes for Businesses Table of Contents 2001 ChangesNew 5-Year Carryback Rule for Net Operating Losses (NOLs) Electronic Form 1099 Tax Incentives for New York Liberty Zone Other 2001 Changes 2002 ChangesNonaccrual-Experience Method Issuance of Qualified Zone Academy Bonds Depletion Work Opportunity Credit Expanded in New York Liberty Zone Credit For Pension Plan Startup Costs Welfare-to-Work Credit Extended Work Opportunity Credit Extended Electric and Clean-Fuel Vehicles Renewable Electricity Production Credit Later ChangesSpecial Depreciation Allowance Extension of Placed in Service Date Special Liberty Zone Depreciation Allowance for New and Used Property Depreciation of Property Used on Indian Reservations Indian Employment Credit Extended 2001 Changes New 5-Year Carryback Rule for Net Operating Losses (NOLs) If you have an NOL from a tax year ending during 2001 or 2002, you must generally carry back the entire amount of the NOL to the 5 tax years before the NOL year (the carryback period). Online ez form However, you can still choose to use the previous carryback period. Online ez form You also can choose not to carry back an NOL and only carry it forward. Online ez form Individuals, estates, and trusts can file Form 1045, Application for Tentative Refund. Online ez form Corporations can file Form 1139, Corporation Application for Tentative Refund. Online ez form The instructions for these forms will be revised to reflect the new law. Online ez form Electronic Form 1099 For tax years ending after March 9, 2002, most Forms 1099 can be furnished electronically if the recipient consents, according to IRS regulations, to receive it that way. Online ez form Tax Incentives for New York Liberty Zone New tax benefits are provided for the parts of New York City damaged in the terrorist attacks on September 11, 2001. Online ez form These benefits apply to the newly created New York Liberty Zone, which 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. Online ez form Tax benefits for the New York Liberty Zone include the following. Online ez form A special depreciation allowance equal to 30% of the adjusted basis of qualified Liberty Zone property. Online ez form It is allowed for the year the property is placed in service. Online ez form No alternative minimum tax depreciation adjustment for qualified Liberty Zone property. Online ez form Classification of Liberty Zone leasehold improvement property as 5-year property. Online ez form Authorization of the issuance of tax-exempt New York Liberty bonds to finance the acquisition, construction, reconstruction, and renovation of nonresidential real property, residential rental property, and public utility property in the Liberty Zone. Online ez form An increased section 179 deduction for certain Liberty Zone property. Online ez form Extension of the replacement period from 2 years to 5 years for certain property involuntarily converted as a result of the terrorist attacks on September 11, 2001, but only if substantially all of the use of the replacement property is in New York City. Online ez form For more information about involuntary conversions, see Postponement of Gain in Publication 547, Casualties, Disasters, and Thefts. Online ez form In addition, for 2002 and 2003, the work opportunity credit is expanded by creating a new targeted group, consisting generally of employees who work in the Liberty Zone or, in certain cases, in New York City outside the Liberty Zone. Online ez form For more information, see Work Opportunity Credit Expanded in New York Liberty Zone under 2002 Changes, later. Online ez form For more information about the 30% special depreciation allowance, Liberty Zone leasehold improvement property, or increased section 179 deduction, see New York Liberty Zone Benefits, in chapter 5. Online ez form In addition, the tax benefits for the Liberty Zone will be covered in a new edition of Publication 954, Tax Incentives for Empowerment Zones and Other Distressed Communities, available later in 2002. Online ez form Other 2001 Changes Other changes are discussed in the following chapters. Online ez form Chapter 4 Car Expenses Chapter 5 Depreciation 2002 Changes Nonaccrual-Experience Method Under current law, if you perform services and use an accrual method of accounting, you do not accrue income which, based on experience, you expect to be uncollectible. Online ez form Beginning in 2002, this rule only applies if you perform services in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, and consulting, or your average annual gross receipts for the 3 prior tax years does not exceed $5,000,000. Online ez form As under current law, the nonaccrual-experience method will not apply to amounts on which you charge interest or a late payment penalty. Online ez form For more information, see Nonaccrual-Experience Method in chapter 11 of Publication 535, Business Expenses. Online ez form Issuance of Qualified Zone Academy Bonds State and local governments issue qualified zone academy bonds to raise funds for the use of qualified zone academies. Online ez form The amount of bonds that may be issued was limited to $400 million each year for 1998, 1999, 2000, and 2001. Online ez form This provision has been extended to provide for an additional $400 million of bonds to be issued each year for 2002 and 2003. Online ez form For more information about qualified zone academy bonds, see Publication 954, Tax Incentives for Empowerment Zones and Other Distressed Communities. Online ez form Depletion The suspension of the taxable income limit on percentage depletion from the marginal production of oil and natural gas that was scheduled to expire for tax years beginning after 2001 has been extended to tax years beginning before 2004. Online ez form For more information on marginal production, see section 613A(c) of the Internal Revenue Code. Online ez form Work Opportunity Credit Expanded in New York Liberty Zone The work opportunity credit is expanded to include a new targeted group consisting generally of employees who perform substantially all their services: In the New York Liberty Zone (defined earlier under Tax Incentives for New York Liberty Zone, under 2001 Changes), or Elsewhere in New York City for a business that relocated from the Liberty Zone due to the destruction or damage of its place of business by the September 11, 2001, terrorist attack. Online ez form The credit is available to employers for wages paid to new employees and existing employees for work performed during 2002 or 2003. Online ez form Certain limits apply. Online ez form For more information about the work opportunity credit, see Publication 954, Tax Incentives for Empowerment Zones and Other Distressed Communities. Online ez form Credit For Pension Plan Startup Costs The credit for pension plan startup costs is now allowed for plans that become effective after December 31, 2001. Online ez form Previously, the credit was only allowed for plans established after December 31, 2001. Online ez form For more information on the credit, see Important Changes for 2002 in Publication 560, Retirement Plans for Small Business. Online ez form Welfare-to-Work Credit Extended The welfare-to-work credit that was scheduled to expire for wages paid to individuals who began working for you after 2001 has been extended to include wages paid to qualified individuals who begin work for you in 2002 or 2003. Online ez form For more information on the welfare-to-work credit, see Publication 954, Tax Incentives for Empowerment Zones and Other Distressed Communities. Online ez form Work Opportunity Credit Extended The work opportunity credit that was scheduled to expire for wages paid to individuals who began working for you after 2001 has been extended to include wages paid to qualified individuals who begin work for you in 2002 or 2003. Online ez form For more information about the work opportunity credit, see Publication 954, Tax Incentives for Empowerment Zones and Other Distressed Communities. Online ez form Electric and Clean-Fuel Vehicles The maximum clean-fuel vehicle deduction and qualified electric vehicle credit were scheduled to be 25% lower for 2002 and both were scheduled to be phased out completely by 2005. Online ez form The full deduction and credit are now allowed for qualified property placed in service in 2002 and 2003. Online ez form The phaseout of the deduction and the credit will begin in 2004, and no deduction or credit will be allowed for property placed in service after 2006. Online ez form For more information about electric and clean-fuel vehicles, see chapter 12 in Publication 535, Business Expenses. Online ez form Renewable Electricity Production Credit The renewable electricity production credit is extended to include electricity produced by facilities placed in service after 2001 and before 2004. Online ez form Later Changes Special Depreciation Allowance You can claim the special depreciation allowance (an additional 30% depreciation deduction) for new property that you acquire before September 11, 2004, and place in service for your business generally before January 1, 2005, if you meet the other requirements for qualified property covered in chapter 5. Online ez form Accordingly, you will generally no longer be able to claim the special depreciation allowance for the qualified property if you acquire it after September 10, 2004, or place it in service for your business after December 31, 2004. Online ez form However, you will be able to claim the special Liberty Zone depreciation allowance (an additional 30% depreciation deduction) for most qualified property if you place it in service in the Liberty Zone after December 31, 2004, and generally before January 1, 2007, provided you meet the other requirements for qualified Liberty Zone property covered in chapter 5. Online ez form Extension of Placed in Service Date To qualify for the special depreciation allowance, your property must meet certain tests, including the placed in service date test, as well as the other requirements covered in chapter 5 of this publication. Online ez form To meet the placed in service date test, your property must generally 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. Online ez form However, certain property placed in service before January 1, 2006, may meet this test. Online ez form Transportation property and property with a recovery period of 10 years or longer meet the test if one of the following applies. Online ez form The property has an estimated production period of more than 2 years. Online ez form The property has an estimated production period of more than 1 year and it costs more than $1 million. Online ez form Transportation property is any tangible personal property used in the trade or business of transporting persons or property. Online ez form For property that qualifies for the special depreciation allowance solely because of the one-year extension of the placed in service date, only the part of the basis attributable to manufacture, construction, or production before September 11, 2004, is eligible for the special depreciation allowance. Online ez form Special Liberty Zone Depreciation Allowance for New and Used Property You can claim the special Liberty Zone depreciation allowance (an additional 30% depreciation deduction) for used property that you acquire after September 10, 2001, if the property meets the requirements listed under Qualified Liberty Zone Property in chapter 5 of this publication. Online ez form You will be able to claim the allowance for both new and used property that you acquire after September 10, 2004, provided the property meets the other requirements for qualified Liberty Zone property. Online ez form Depreciation of Property Used on Indian Reservations The special depreciation rules that apply to qualified property used on an Indian reservation were scheduled to expire for property placed in service after 2003. Online ez form These special rules have been extended to include property placed in service in 2004. Online ez form For more information about these rules, see Publication 946, How To Depreciate Property. Online ez form Indian Employment Credit Extended The Indian employment credit that was scheduled to expire for tax years beginning after 2003 has been extended to include a tax year beginning in 2004. Online ez form For more information about this credit, see Publication 954, Tax Incentives for Empowerment Zones and Other Distressed Communities. Online ez form Prev  Up  Next   Home   More Online Publications