Tax Forms 1040x
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Tax Forms 1040x
Tax forms 1040x Publication 530 - Introductory Material Table of Contents What's New Reminders IntroductionOrdering forms and publications. Tax forms 1040x Tax questions. Tax forms 1040x Useful Items - You may want to see: What's New Simplified method for business use of home deduction. Tax forms 1040x The IRS now provides a simplified method to determine your expenses for business use of your home. Tax forms 1040x For more information, see the Instructions for Schedule C (Form 1040). Tax forms 1040x Reminders Future developments. Tax forms 1040x For the latest information about developments related to Publication 530, such as legislation enacted after it was published, go to www. Tax forms 1040x irs. Tax forms 1040x gov/pub530. Tax forms 1040x Residential energy credits. Tax forms 1040x You may be able to take a credit if you made energy saving improvements to your home located in the United States in 2013. Tax forms 1040x See Form 5695, Residential Energy Credits, for more information. Tax forms 1040x Home Affordable Modification Program (HAMP). Tax forms 1040x If you benefit from Pay-for-Performance Success Payments, the payments are not taxable under HAMP. Tax forms 1040x Hardest Hit Fund and Emergency Homeowners' Loan Programs. Tax forms 1040x If you are a homeowner who received assistance under a State Housing Finance Agency Hardest Hit Fund program or an Emergency Homeowners' Loan Program, you may be able to deduct all of the payments you made on your mortgage during the year. Tax forms 1040x For details, see Hardest Hit Fund and Emergency Homeowners' Loan Programs under What You Can and Cannot Deduct, later. Tax forms 1040x Mortgage debt forgiveness. Tax forms 1040x You can exclude from gross income any discharges of qualified principal residence indebtedness made after 2006 and before 2014. Tax forms 1040x You must reduce the basis of your principal residence (but not below zero) by the amount you exclude. Tax forms 1040x See Discharges of qualified principal residence indebtedness , later, and Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment), for more information. Tax forms 1040x Repayment of first-time homebuyer credit. Tax forms 1040x Generally, you must repay any credit you claimed for a home you bought if you disposed of the home or it ceased to be your main home in 2013. Tax forms 1040x If you bought the home in 2008 and you owned and used it as your main home for all of 2013, you generally must continue repaying the credit with your 2013 tax return, but you do not have to attach Form 5405, Repayment of the First-Time Homebuyer Credit. Tax forms 1040x See Form 5405 and its instructions for details and for exceptions to the repayment rule. Tax forms 1040x Photographs of missing children. Tax forms 1040x The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Tax forms 1040x Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Tax forms 1040x 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. Tax forms 1040x Introduction This publication provides tax information for homeowners. Tax forms 1040x Your home may be a house, condominium, cooperative apartment, mobile home, houseboat, or house trailer that contains sleeping space and toilet and cooking facilities. Tax forms 1040x The following topics are explained. Tax forms 1040x How you treat items such as settlement and closing costs, real estate taxes, sales taxes, home mortgage interest, and repairs. Tax forms 1040x What you can and cannot deduct on your tax return. Tax forms 1040x The tax credit you can claim if you received a mortgage credit certificate when you bought your home. Tax forms 1040x Why you should keep track of adjustments to the basis of your home. Tax forms 1040x (Your home's basis generally is what it cost; adjustments include the cost of any improvements you might make. Tax forms 1040x ) What records you should keep as proof of the basis and adjusted basis. Tax forms 1040x Comments and suggestions. Tax forms 1040x We welcome your comments about this publication and your suggestions for future editions. Tax forms 1040x You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Tax forms 1040x NW, IR-6526 Washington, DC 20224 We respond to many letters by telephone. Tax forms 1040x Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Tax forms 1040x You can send your comments from www. Tax forms 1040x irs. Tax forms 1040x gov/formspubs/. Tax forms 1040x Click on “More Information” and then on “Comment on Tax Forms and Publications”. Tax forms 1040x 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. Tax forms 1040x Ordering forms and publications. Tax forms 1040x Visit www. Tax forms 1040x irs. Tax forms 1040x 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. Tax forms 1040x Internal Revenue Service 1201 N. Tax forms 1040x Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Tax forms 1040x If you have a tax question, check the information available on IRS. Tax forms 1040x gov or call 1-800-829-1040. Tax forms 1040x We cannot answer tax questions sent to either of the above addresses. Tax forms 1040x Useful Items - You may want to see: Publication 523 Selling Your Home 527 Residential Rental Property 547 Casualties, Disasters, and Thefts 551 Basis of Assets 555 Community Property 587 Business Use of Your Home 936 Home Mortgage Interest Deduction Form (and Instructions) 5405 Repayment of the First-Time Homebuyer Credit 5695 Residential Energy Credits 8396 Mortgage Interest Credit See How To Get Tax Help , near the end of this publication, for information about getting publications and forms. Tax forms 1040x Prev Up Next Home More Online Publications
Third Party Reporting Information Center - Information Documents
The IRS uses third-party information reporting on forms in the 1099 series to increase voluntary compliance and improve collections. Beginning in 2011, legislation requires reporting of income in two areas: payment card (credit, debit and certain electronic transactions) and securities basis reporting.
The links below take you to forms, instructions and background information related to the reporting requirements of payment cards and cost basis of securities sales. These regulations, notices and FAQs provide details on the implementation of Section 6050W of the Housing Assistance Tax Act of 2008 and of Section 6045(g) of the Energy Improvement and Extension Act of 2008.
Information Reporting on Payment Card and Third Party Network Transactions
Cost Basis Reporting on Securities Sales
Get Regular Updates:
Note: The following initiatives have been repealed.
- Information Reporting by Government Entities on Certain Government Payments (3% Withholding)
- Information Reporting on Payments to Corporations and Payments of Gross Proceeds and With Respect to Property
- Information Reporting on Real Estate Rental Property Expenses Payments
Page Last Reviewed or Updated: 25-Mar-2014
The Tax Forms 1040x
Tax forms 1040x Listed Property Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Listed Property DefinedPassenger Automobile Defined Dwelling Unit Other Property Used for Transportation Computers and Related Peripheral Equipment Predominant Use TestMeeting the Predominant Use Test Qualified Business Use Method of Allocating Use Applying the Predominant Use Test Deductions After Recovery Period Leased PropertyLessor Lessee What Records Must Be KeptAdequate Records Reporting Information on Form 4562 Deductions in Later Years Appendix Topics - This chapter discusses: Listed property defined The predominant use test What records must be kept Useful Items - You may want to see: Publication 463 Travel, Entertainment, and Gift Expenses 587 Business Use of Your Home (Including Use by Day-Care Providers) 917 Business Use of a Car 946 How To Depreciate Property Form (and Instructions) 2106–EZ Unreimbursed Employee Business Expenses 2106 Employee Business Expenses 4255 Recapture of Investment Credit 4562 Depreciation and Amortization This chapter discusses some special rules and recordkeeping requirements for listed property. Tax forms 1040x For complete coverage of the rules, including the rules concerning passenger automobiles, see Publication 946. Tax forms 1040x If listed property is not used predominantly (more than 50%) in a qualified business use as discussed inPredominant Use Test, later, the section 179 deduction is not allowable and the property must be depreciated using the straight line method. Tax forms 1040x Listed Property Defined Listed property is any of the following: Any passenger automobile (defined later), Any other property used for transportation, Any property of a type generally used for entertainment, recreation, or amusement (including photographic, phonographic, communication, and video recording equipment), Any computer and related peripheral equipment, defined later, unless it is used only at a regular business establishment and owned or leased by the person operating the establishment. Tax forms 1040x A regular business establishment includes a portion of a dwelling unit (defined later), if, and only if, that portion is used both regularly and exclusively for business as discussed in Publication 587. Tax forms 1040x Any cellular telephone (or similar telecommunication equipment) placed in service or leased in a tax year beginning after 1989. Tax forms 1040x Passenger Automobile Defined A passenger automobile is any four-wheeled vehicle made primarily for use on public streets, roads, and highways and rated at 6,000 pounds or less of unloaded gross vehicle weight (at 6,000 pounds or less of gross vehicle weight for trucks and vans). Tax forms 1040x It includes any part, component, or other item physically attached to the automobile or usually included in the purchase price of an automobile. Tax forms 1040x A passenger automobile does not include: An ambulance, hearse, or combination ambulance-hearse used directly in a trade or business, and A vehicle used directly in the trade or business of transporting persons or property for compensation or hire. Tax forms 1040x Dwelling Unit A dwelling unit is a house or apartment used to provide living accommodations in a building or structure. Tax forms 1040x It does not include a unit in a hotel, motel, inn, or other establishment where more than half the units are used on a transient basis. Tax forms 1040x Other Property Used for Transportation Other property used for transportation includes trucks, buses, boats, airplanes, motorcycles, and any other vehicles for transporting persons or goods. Tax forms 1040x Listed property does not include: Any vehicle which, by reason of its design, is not likely to be used more than a minimal amount for personal purposes, such as clearly marked police and fire vehicles, ambulances, or hearses used for those purposes, Any vehicle that is designed to carry cargo and that has a loaded gross vehicle weight over 14,000 pounds, bucket trucks (cherry pickers), cement mixers, combines, cranes and derricks, delivery trucks with seating only for the driver (or only for the driver plus a folding jump seat), dump trucks (including garbage trucks), flatbed trucks, forklifts, qualified moving vans, qualified specialized utility repair trucks, and refrigerated trucks, Any passenger bus used for that purpose with a capacity of at least 20 passengers and school buses, Any tractor or other special purpose farm vehicle, and unmarked vehicles used by law enforcement officers if the use is officially authorized, and Any vehicle, such as a taxicab, if substantially all its use is in the trade or business of providing services to transport persons or property for compensation or hire by unrelated persons. Tax forms 1040x Computers and Related Peripheral Equipment A computer is a programmable electronically activated device that: Is capable of accepting information, applying prescribed processes to the information, and supplying the results of those processes with or without human intervention, and Consists of a central processing unit with extensive storage, logic, arithmetic, and control capabilities. Tax forms 1040x Related peripheral equipment is any auxiliary machine which is designed to be controlled by the central processing unit of a computer. Tax forms 1040x Computer or peripheral equipment does not include: Any equipment which is an integral part of property which is not a computer, Typewriters, calculators, adding and accounting machines, copiers, duplicating equipment, and similar equipment, and Equipment of a kind, used primarily for the user's amusement or entertainment, such as video games. Tax forms 1040x Predominant Use Test If “listed property,” defined earlier, placed in service after June 18, 1984, is not used predominantly (more than 50%) in a qualified business use during any tax year: The section 179 deduction on the property is not allowable, and You must depreciate the property using the straight line method. Tax forms 1040x Listed property placed in service before 1987. Tax forms 1040x For listed property placed in service before 1987, depreciate the property over the following period: Class of Property Listed Property Recovery Period 3-year property 5 years 5-year property 12 years 10-year property 25 years 18-year real property 40 years 19-year real property 40 years If you must use the above recovery periods for listed property not used predominantly in a trade or business, use the percentages from Table 16 titled Listed Property Not Used Predominantly (Other Than 18- or 19-year Real Property), and Table 17 for 18- or 19-year real property, near the end of this publication in the Appendix. Tax forms 1040x Listed property placed in service after 1986. Tax forms 1040x For information on listed property placed in service after 1986, see Publication 946. Tax forms 1040x Meeting the Predominant Use Test Listed property meets the predominant use test for any tax year if its business use is more than 50% of its total use. Tax forms 1040x You must allocate the use of any item of listed property used for more than one purpose during the tax year among its various uses. Tax forms 1040x The percentage of investment use of listed property cannot be used as part of the percentage of qualified business use to meet the predominant use test. Tax forms 1040x However, the combined total of business and investment use is taken into account to figure your depreciation deduction for the property. Tax forms 1040x Note: Property does not stop being predominantly used in a qualified business use because of a transfer at death. Tax forms 1040x Example. Tax forms 1040x Sarah Bradley uses a home computer 50% of the time to manage her investments. Tax forms 1040x She also uses the computer 40% of the time in her part-time consumer research business. Tax forms 1040x Sarah's home computer is listed property because it is not used at a regular business establishment. Tax forms 1040x Because her business use of the computer does not exceed 50%, the computer is not predominantly used in a qualified business use for the tax year. Tax forms 1040x Because she does not meet the predominant use test, she cannot elect a section 179 deduction for this property. Tax forms 1040x Her combined rate of business/investment use for determining her depreciation deduction is 90%. Tax forms 1040x Qualified Business Use A qualified business use is any use in your trade or business. Tax forms 1040x However, it does not include: The use of property held merely to produce income (investment use), The leasing of property to any 5% owner or related person (to the point that the property is used by a 5% owner or person related to the owner or lessee of the property), The use of property as compensation for the performance of services by a 5% owner or related person, or The use of property as compensation for the performance of services by any person (other than a5% owner or related person) unless the value of the use is included in that person's gross income for the use of the property and income tax is withheld on that amount where required. Tax forms 1040x See Employees, later. Tax forms 1040x 5% owner. Tax forms 1040x A 5% owner of a business, other than a corporation, is any person who owns more than 5% of the capital or profits interest in the business. Tax forms 1040x A 5% owner of a corporation is any person who owns, or is considered to own: More than 5% of the outstanding stock of the corporation, or Stock possessing more than 5% of the total combined voting power of all stock in the corporation. Tax forms 1040x Related person. Tax forms 1040x A related person is anyone related to a taxpayer as discussed under Related persons, in chapter 2 under Nonqualifying Property in Publication 946. Tax forms 1040x Entertainment Use The use of listed property for entertainment, recreation, or amusement purposes is treated as a qualified business use only to the extent that expenses (other than interest and property tax expenses) for its use are deductible as ordinary and necessary business expenses. Tax forms 1040x See Publication 463. Tax forms 1040x Leasing or Compensatory Use of Aircraft If at least 25% of the total use of any aircraft during the tax year is for a qualified business use, the leasing or compensatory use of the aircraft by a 5% owner or related person is treated as a qualified business use. Tax forms 1040x Commuting The use of a vehicle for commuting is not business use, regardless of whether work is performed during the trip. Tax forms 1040x Use of Your Passenger Automobile by Another Person If someone else uses your automobile, that use is not business use unless: That use is directly connected with your business, The value of the use is property reported by you as income to the other person and tax is withheld on the income where required, or The value of the use results in a payment of fair market rent. Tax forms 1040x Any payment to you for the use of the automobile is treated as a rent payment for 3). Tax forms 1040x Employees Any use by an employee of his or her own listed property (or listed property rented by an employee) in performing services as an employee is not business use unless: The use is for the employer's convenience, and The use is required as a condition of employment. Tax forms 1040x Use for the employer's convenience. Tax forms 1040x Whether the use of listed property is for the employer's convenience must be determined from all the facts. Tax forms 1040x The use is for the employer's convenience if it is for a substantial business reason of the employer. Tax forms 1040x The use of listed property during the employee's regular working hours to carry on the employer's business is generally for the employer's convenience. Tax forms 1040x Use required as a condition of employment. Tax forms 1040x Whether the use of listed property is a condition of employment depends on all the facts and circumstances. Tax forms 1040x The use of property must be required for the employee to perform duties properly. Tax forms 1040x The employer need not explicitly require the employee to use the property. Tax forms 1040x A mere statement by the employer that the use of the property is a condition of employment is not sufficient. Tax forms 1040x Example 1. Tax forms 1040x Virginia Sycamore is employed as a courier with We Deliver which provides local courier services. Tax forms 1040x She owns and uses a motorcycle to deliver packages to downtown offices. Tax forms 1040x We Deliver explicitly requires all delivery persons to own a small car or motorcycle for use in their employment. Tax forms 1040x The company reimburses delivery persons for their costs. Tax forms 1040x Virginia's use of the motorcycle is for the convenience of We Deliver and is required as a condition of employment. Tax forms 1040x Example 2. Tax forms 1040x Bill Nelson is an inspector for Uplift, a construction company with many sites in the local area. Tax forms 1040x He must travel to these sites on a regular basis. Tax forms 1040x Uplift does not furnish an automobile or explicitly require him to use his own automobile. Tax forms 1040x However, it reimburses him for any costs he incurs in traveling to the various sites. Tax forms 1040x The use of his own automobile or a rental automobile is for the convenience of Uplift and is required as a condition of employment. Tax forms 1040x Method of Allocating Use For passenger automobiles and other means of transportation, allocate the property's use on the basis of mileage. Tax forms 1040x You determine the percentage of qualified business use by dividing the number of miles the vehicle is driven for business purposes during the year by the total number of miles the vehicle is driven for all purposes (including business miles) during the year. Tax forms 1040x For other items of listed property, allocate the property's use on the basis of the most appropriate unit of time. Tax forms 1040x For example, you can determine the percentage of business use of a computer by dividing the number of hours the computer is used for business purposes during the year by the total number of hours the computer is used for all purposes (including business hours) during the year. Tax forms 1040x Applying the Predominant Use Test You must apply the predominant use test for an item of listed property each year of the recovery period. Tax forms 1040x First Recovery Year If any item of listed property is not used predominantly in a qualified business use in the year it is placed in service: The property is not eligible for a section 179 deduction, and The depreciation deduction must be figured using the straight line method. Tax forms 1040x Note: The required use of the straight line method for an item of listed property that does not meet the predominant use test is not the same as electing the straight line method. Tax forms 1040x It does not mean that you have to use the straight line method for other property in the same class as the item of listed property. Tax forms 1040x Years After the First Recovery Year If you use listed property predominantly (more than 50%) in a qualified business use in the tax year you place it in service, but not in a subsequent tax year during the recovery period, the following rules apply: Figure depreciation using the straight line method. Tax forms 1040x Do this for each year, beginning with the year you no longer use the property predominantly in a qualified business use, and Figure any excess depreciation on the property and add it to: Your gross income, and The adjusted basis of your property. Tax forms 1040x See Recapture of excess depreciation, next. Tax forms 1040x Recapture of excess depreciation. Tax forms 1040x You must include any excess depreciation in your gross income for the first tax year the property is not predominantly used in a qualified business use. Tax forms 1040x Any excess depreciation must also be added to the adjusted basis of your property. Tax forms 1040x Excess depreciation is the excess (if any) of: The amount of depreciation allowable for the property (including any section 179 deduction claimed) for tax years before the first tax year the property was not predominantly used in a qualified business use, over The amount of depreciation that would have been allowable for those years if the property were not used predominantly in a qualified business use for the year it was placed in service. Tax forms 1040x This means you figure your depreciation using the percentages fromTable 16 or 17. Tax forms 1040x For information on investment credit recapture, see the instructions for Form 4255. Tax forms 1040x Deductions After Recovery Period When listed property (other than passenger automobiles) is used for business, investment, and personal purposes, no deduction is ever allowable for the personal use. Tax forms 1040x In tax years after the recovery period, you must determine if there is any unrecovered basis remaining before you compute the depreciation deduction for that tax year. Tax forms 1040x To make this determination, figure the depreciation for earlier tax years as if your property were used 100% for business or investment purposes, beginning with the first tax year in which some or all use is for business or investment. Tax forms 1040x See Car Used 50% or Less for Business in Publication 917. Tax forms 1040x Leased Property The limitations on cost recovery deductions apply to the rental of listed property. Tax forms 1040x The following discussion covers the rules that apply to the lessor (the owner of the property) and the lessee (the person who rents the property from the owner). Tax forms 1040x SeeLeasing a Car in Publication 917 for a discussion of leased passenger automobiles. Tax forms 1040x Lessor The limitations on cost recovery generally do not apply to any listed property leased or held for leasing by anyone regularly engaged in the business of leasing listed property. Tax forms 1040x A person is considered regularly engaged in the business of leasing listed property only if contracts for leasing of listed property are entered into with some frequency over a continuous period of time. Tax forms 1040x This determination is made on the basis of the facts and circumstances in each case and takes into account the nature of the person's business in its entirety. Tax forms 1040x Occasional or incidental leasing activity is insufficient. Tax forms 1040x For example, a person leasing only one passenger automobile during a tax year is not regularly engaged in the business of leasing automobiles. Tax forms 1040x An employer who allows an employee to use the employer's property for personal purposes and charges the employee for the use is not regularly engaged in the business of leasing the property used by the employee. Tax forms 1040x Lessee A lessee of listed property (other than passenger automobiles), must include an amount in gross income called the inclusion amount for the first tax year the property is not used predominantly in a qualified business use. Tax forms 1040x Inclusion amount for property leased before 1987. Tax forms 1040x You determine the inclusion amount for property leased after June 18, 1984 and before 1987 by multiplying the fair market value of the property by both the average business/investment use percentage and the applicable percentage. Tax forms 1040x You can find the applicable percentages for listed property that is 5- or 10-year recovery property in Tables 19 or 20 in Appendix A of Publication 946. Tax forms 1040x The lease term for listed property other than 18- or 19-year real property, and residential rental or nonresidential real property, includes options to renew. Tax forms 1040x For 18- or 19-year real property and residential rental or nonresidential real property that is listed property, the period of the lease does not include any option to renew at fair market value, determined at the time of renewal. Tax forms 1040x You treat two or more successive leases that are part of the same transaction (or a series of related transactions) for the same or substantially similar property as one lease. Tax forms 1040x Special rules. Tax forms 1040x The lessee adds the inclusion amount to gross income in the next tax year if: The lease term begins within 9 months before the close of the lessee's tax year, The lessee does not use the property predominantly in a qualified business use during that portion of the tax year, and The lease term continues into the lessee's next tax year. Tax forms 1040x The lessee determines the inclusion amount by taking into account the average of the business/investment use for both tax years and the applicable percentage for the tax year the lease term begins. Tax forms 1040x If the lease term is less than one year, the amount included in gross income is the amount that bears the same ratio to the additional inclusion amount as the number of days in the lease term bears to 365. Tax forms 1040x Maximum inclusion amount. Tax forms 1040x The inclusion amount cannot be more than the sum of the deductible amounts of rent allocable to the lessee's tax year in which the amount must be included in gross income. Tax forms 1040x What Records Must Be Kept You cannot take any depreciation or section 179 deduction for the use of listed property (including passenger automobiles) unless you can prove business/investment use with adequate records or sufficient evidence to support your own statements. Tax forms 1040x How long to keep records. Tax forms 1040x For listed property, records must be kept for as long as any excess depreciation can be recaptured (included in income). Tax forms 1040x Adequate Records To meet the adequate records requirement, you must maintain an account book, diary, log, statement of expense, trip sheet, or similar record or other documentary evidence that, together with the receipt, is sufficient to establish each element of an expenditure or use. Tax forms 1040x It is not necessary to record information in an account book, diary, or similar record if the information is already shown on the receipt. Tax forms 1040x However, your records should back up your receipts in an orderly manner. Tax forms 1040x Elements of Expenditure or Use The records or other documentary evidence must support: The amount of each separate expenditure, such as the cost of acquiring the item, maintenance and repair costs, capital improvement costs, lease payments, and any other expenses, The amount of each business and investment use (based on an appropriate measure, such as mileage for vehicles and time for other listed property), and the total use of the property for the tax year, The date of the expenditure or use, and The business or investment purpose for the expenditure or use. Tax forms 1040x Written documents of your expenditure or use are generally better evidence than oral statements alone. Tax forms 1040x A written record prepared at or near the time of the expenditure or use has greater value as proof of the expenditure or use. Tax forms 1040x A daily log is not required. Tax forms 1040x However, some type of record containing the elements of an expenditure or the business or investment use of listed property made at or near the time and backed up by other documents is preferable to a statement prepared later. Tax forms 1040x Timeliness The elements of an expenditure or use must be recorded at the time you have full knowledge of the elements. Tax forms 1040x An expense account statement made from an account book, diary, or similar record prepared or maintained at or near the time of the expenditure or use is generally considered a timely record if in the regular course of business: The statement is submitted by an employee to the employer, or The statement is submitted by an independent contractor to the client or customer. Tax forms 1040x For example, a log maintained on a weekly basis, which accounts for use during the week, will be considered a record made at or near the time of use. Tax forms 1040x Business Purpose Supported An adequate record of business purpose must generally be in the form of a written statement. Tax forms 1040x However, the amount of backup necessary to establish a business purpose depends on the facts and circumstances of each case. Tax forms 1040x A written explanation of the business purpose will not be required if the purpose can be determined from the surrounding facts and circumstances. Tax forms 1040x For example, a salesperson visiting customers on an established sales route will not normally need a written explanation of the business purpose of his or her travel. Tax forms 1040x Business Use Supported An adequate record contains enough information on each element of every business or investment use. Tax forms 1040x The amount of detail required to support the use depends on the facts and circumstances. Tax forms 1040x For example, a taxpayer whose only business use of a truck is to make customer deliveries on an established route can satisfy the requirement by recording the length of the route, including the total number of miles driven during the tax year and the date of each trip at or near the time of the trips. Tax forms 1040x Although an adequate record generally must be written, a record of the business use of listed property, such as a computer or automobile, can be prepared in a computer memory device using a logging program. Tax forms 1040x Separate or Combined Expenditures or Uses Each use by you is normally considered a separate use. Tax forms 1040x However, repeated uses can be combined as a single item. Tax forms 1040x Each expenditure is recorded as a separate item and not combined with other expenditures. Tax forms 1040x If you choose, however, amounts spent for the use of listed property during a tax year, such as for gasoline or automobile repairs, can be combined. Tax forms 1040x If these expenses are combined, you do not need to support the business purpose of each expense. Tax forms 1040x Instead, you can divide the expenses based on the total business use of the listed property. Tax forms 1040x Uses which can be considered part of a single use, such as a round trip or uninterrupted business use, can be accounted for by a single record. Tax forms 1040x For example, use of a truck to make deliveries at several locations which begin and end at the business premises and can include a stop at the business in between deliveries can be accounted for by a single record of miles driven. Tax forms 1040x Use of a passenger automobile by a salesperson for a business trip away from home over a period of time can be accounted for by a single record of miles traveled. Tax forms 1040x Minimal personal use (such as a stop for lunch between two business stops) is not an interruption of business use. Tax forms 1040x Confidential Information If any of the information on the elements of an expenditure or use is confidential, it does not need to be in the account book or similar record if it is recorded at or near the time of the expenditure or use. Tax forms 1040x It must be kept elsewhere and made available as support to the district director on request. Tax forms 1040x Substantial Compliance If you have not fully supported a particular element of an expenditure or use, but have complied with the adequate records requirement for the expenditure or use to the district director's satisfaction, you can establish this element by any evidence the district director deems adequate. Tax forms 1040x If you fail to establish that you have substantially complied with the adequate records requirement for an element of an expenditure or use to the district director's satisfaction, you must establish the element: By your own oral or written statement containing detailed information as to the element, and By other evidence sufficient to establish the element. Tax forms 1040x If the element is the cost or amount, time, place, or date of an expenditure or use, its supporting evidence must be direct, such as oral testimony by witnesses or a written statement setting forth detailed information about the element or the documentary evidence. Tax forms 1040x If the element is the business purpose of an expenditure, its supporting evidence can be circumstantial evidence. Tax forms 1040x Sampling You can maintain an adequate record for portions of a tax year and use that record to support your business and investment use for the entire tax year if it can be shown by other evidence that the periods for which an adequate record is maintained are representative of use throughout the year. Tax forms 1040x Loss of Records When you establish that failure to produce adequate records is due to loss of the records through circumstances beyond your control, such as through fire, flood, earthquake, or other casualty, you have the right to support a deduction by reasonable reconstruction of your expenditures and use. Tax forms 1040x Reporting Information on Form 4562 If you claim a deduction for any listed property, you must provide the requested information on page 2, Section B of Form 4562. Tax forms 1040x If you claim a deduction for any vehicle, you must answer certain questions onpage 2 of Form 4562 to provide information about the vehicle use. Tax forms 1040x Employees. Tax forms 1040x Employees claiming the standard mileage rate or actual expenses (including depreciation) must use Form 2106 instead of Part V of Form 4562. Tax forms 1040x Employees claiming the standard mileage rate may be able to use Form 2106–EZ. Tax forms 1040x Employer who provides vehicles to employees. Tax forms 1040x An employer who provides vehicles to employees must obtain enough information from those employees to provide the requested information onForm 4562. Tax forms 1040x An employer who provides more than five vehicles to employees need not include any information on his or her tax return. Tax forms 1040x Instead, the employer must obtain the information from his or her employees and indicate on his or her return that the information was obtained and is being retained. Tax forms 1040x You do not need to provide the information requested on page 2 of Form 4562 if, as an employer: You can satisfy the requirements of a written policy statement for vehicles either not used for personal purposes, or not used for personal purposes other than commuting, or You treat all vehicle use by employees as personal use. Tax forms 1040x See the instructions for Form 4562. Tax forms 1040x Deductions in Later Years When listed property is used for business, investment, and personal purposes, no deduction is allowable for its personal use either in the current year or any later tax year. Tax forms 1040x In later years, you must determine if there is any remaining unadjusted or unrecovered basis before you compute the depreciation deduction for that tax year. Tax forms 1040x In making this determination, figure the depreciation deductions for earlier tax years as if the listed property were used 100% for business or investment purposes in those years, beginning with the first tax year in which some or all of the property use is for business or investment. Tax forms 1040x For more information about deductions after the recovery period for automobiles, see Publication 917. Tax forms 1040x Appendix The following tables are for use in figuring depreciation deductions under the ACRS system. Tax forms 1040x Table 1. Tax forms 1040x 15-Year Real Property* (Other Than Low-Inclome Housing) Table 3. Tax forms 1040x Low-Income Housing* Table 6 - Table 9 Table 6 - Table 9 Table 10 - Table 13 Table 14 - Table 17 Prev Up Next Home More Online Publications