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Tax Planning Us State Income Taxes

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Tax Planning Us State Income Taxes

Tax planning us state income taxes 7. Tax planning us state income taxes   Costs You Can Deduct or Capitalize Table of Contents What's New Introduction Topics - This chapter discusses: Useful Items - You may want to see: Carrying Charges Research and Experimental CostsProduct. Tax planning us state income taxes Costs not included. Tax planning us state income taxes Intangible Drilling Costs Exploration CostsPartnerships and S corporations. Tax planning us state income taxes Development Costs Circulation Costs Business Start-Up and Organizational Costs Reforestation Costs Retired Asset Removal Costs Barrier Removal CostsOther barrier removals. Tax planning us state income taxes Film and Television Production Costs What's New Film and television productions costs. Tax planning us state income taxes  The election to expense film and television production costs does not apply to productions that begin after December 31, 2013. Tax planning us state income taxes See Film and Television Production Costs , later. Tax planning us state income taxes Introduction This chapter discusses costs you can elect to deduct or capitalize. Tax planning us state income taxes You generally deduct a cost as a current business expense by subtracting it from your income in either the year you incur it or the year you pay it. Tax planning us state income taxes If you capitalize a cost, you may be able to recover it over a period of years through periodic deductions for amortization, depletion, or depreciation. Tax planning us state income taxes When you capitalize a cost, you add it to the basis of property to which it relates. Tax planning us state income taxes A partnership, corporation, estate, or trust makes the election to deduct or capitalize the costs discussed in this chapter except for exploration costs for mineral deposits. Tax planning us state income taxes Each individual partner, shareholder, or beneficiary elects whether to deduct or capitalize exploration costs. Tax planning us state income taxes You may be subject to the alternative minimum tax (AMT) if you deduct research and experimental, intangible drilling, exploration, development, circulation, or business organizational costs. Tax planning us state income taxes For more information on the alternative minimum tax, see the instructions for the following forms. Tax planning us state income taxes Form 6251, Alternative Minimum Tax—Individuals. Tax planning us state income taxes Form 4626, Alternative Minimum Tax—Corporations. Tax planning us state income taxes Topics - This chapter discusses: Carrying charges Research and experimental costs Intangible drilling costs Exploration costs Development costs Circulation costs Qualified disaster expenses Business start-up and organizational costs Reforestation costs Retired asset removal costs Barrier removal costs Film and television production costs Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets Form (and Instructions) 3468 Investment Credit 8826 Disabled Access Credit See chapter 12 for information about getting publications and forms. Tax planning us state income taxes Carrying Charges Carrying charges include the taxes and interest you pay to carry or develop real property or to carry, transport, or install personal property. Tax planning us state income taxes Certain carrying charges must be capitalized under the uniform capitalization rules. Tax planning us state income taxes (For information on capitalization of interest, see chapter 4 . Tax planning us state income taxes ) You can elect to capitalize carrying charges not subject to the uniform capitalization rules, but only if they are otherwise deductible. Tax planning us state income taxes You can elect to capitalize carrying charges separately for each project you have and for each type of carrying charge. Tax planning us state income taxes For unimproved and unproductive real property, your election is good for only 1 year. Tax planning us state income taxes You must decide whether to capitalize carrying charges each year the property remains unimproved and unproductive. Tax planning us state income taxes For other real property, your election to capitalize carrying charges remains in effect until construction or development is completed. Tax planning us state income taxes For personal property, your election is effective until the date you install or first use it, whichever is later. Tax planning us state income taxes How to make the election. Tax planning us state income taxes   To make the election to capitalize a carrying charge, attach a statement to your original tax return for the year the election is to be effective indicating which charges you are electing to capitalize. Tax planning us state income taxes 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 return (excluding extensions). Tax planning us state income taxes Attach the statement to the amended return and write “Filed pursuant to section 301. Tax planning us state income taxes 9100-2” on the statement. Tax planning us state income taxes File the amended return at the same address you filed the original return. Tax planning us state income taxes Research and Experimental Costs The costs of research and experimentation are generally capital expenses. Tax planning us state income taxes However, you can elect to deduct these costs as a current business expense. Tax planning us state income taxes Your election to deduct these costs is binding for the year it is made and for all later years unless you get IRS approval to make a change. Tax planning us state income taxes If you meet certain requirements, you may elect to defer and amortize research and experimental costs. Tax planning us state income taxes For information on electing to defer and amortize these costs, see Research and Experimental Costs in chapter 8. Tax planning us state income taxes Research and experimental costs defined. Tax planning us state income taxes   Research and experimental costs are reasonable costs you incur in your trade or business for activities intended to provide information that would eliminate uncertainty about the development or improvement of a product. Tax planning us state income taxes Uncertainty exists if the information available to you does not establish how to develop or improve a product or the appropriate design of a product. Tax planning us state income taxes Whether costs qualify as research and experimental costs depends on the nature of the activity to which the costs relate rather than on the nature of the product or improvement being developed or the level of technological advancement. Tax planning us state income taxes      The costs of obtaining a patent, including attorneys' fees paid or incurred in making and perfecting a patent application, are research and experimental costs. Tax planning us state income taxes However, costs paid or incurred to obtain another's patent are not research and experimental costs. Tax planning us state income taxes Product. Tax planning us state income taxes   The term “product” includes any of the following items. Tax planning us state income taxes Formula. Tax planning us state income taxes Invention. Tax planning us state income taxes Patent. Tax planning us state income taxes Pilot model. Tax planning us state income taxes Process. Tax planning us state income taxes Technique. Tax planning us state income taxes Property similar to the items listed above. Tax planning us state income taxes It also includes products used by you in your trade or business or held for sale, lease, or license. Tax planning us state income taxes Costs not included. Tax planning us state income taxes   Research and experimental costs do not include expenses for any of the following activities. Tax planning us state income taxes Advertising or promotions. Tax planning us state income taxes Consumer surveys. Tax planning us state income taxes Efficiency surveys. Tax planning us state income taxes Management studies. Tax planning us state income taxes Quality control testing. Tax planning us state income taxes Research in connection with literary, historical, or similar projects. Tax planning us state income taxes The acquisition of another's patent, model, production, or process. Tax planning us state income taxes When and how to elect. Tax planning us state income taxes   You make the election to deduct research and experimental costs by deducting them on your tax return for the year in which you first pay or incur research and experimental costs. Tax planning us state income taxes If you do not make the election to deduct research and experimental costs in the first year in which you pay or incur the costs, you can deduct the costs in a later year only with approval from the IRS. Tax planning us state income taxes Deducting or Amortizing Research and Experimentation Costs IF you . Tax planning us state income taxes . Tax planning us state income taxes . Tax planning us state income taxes THEN . Tax planning us state income taxes . Tax planning us state income taxes . Tax planning us state income taxes Elect to deduct research and experimental costs as a current business expense Deduct all research and experimental costs in the first year you pay or incur the costs and all later years. Tax planning us state income taxes Do not deduct research and experimental costs as a current business expense If you meet the requirements, amortize them over at least 60 months, starting with the month you first receive an economic benefit from the research. Tax planning us state income taxes See Research and Experimental Costs in chapter 8. Tax planning us state income taxes Research credit. Tax planning us state income taxes   If you pay or incur qualified research expenses, you may be able to take the research credit. Tax planning us state income taxes For more information see Form 6765, Credit for Increasing Research Activities and its instructions. Tax planning us state income taxes Intangible Drilling Costs The costs of developing oil, gas, or geothermal wells are ordinarily capital expenditures. Tax planning us state income taxes You can usually recover them through depreciation or depletion. Tax planning us state income taxes However, you can elect to deduct intangible drilling costs (IDCs) as a current business expense. Tax planning us state income taxes These are certain drilling and development costs for wells in the United States in which you hold an operating or working interest. Tax planning us state income taxes You can deduct only costs for drilling or preparing a well for the production of oil, gas, or geothermal steam or hot water. Tax planning us state income taxes You can elect to deduct only the costs of items with no salvage value. Tax planning us state income taxes These include wages, fuel, repairs, hauling, and supplies related to drilling wells and preparing them for production. Tax planning us state income taxes Your cost for any drilling or development work done by contractors under any form of contract is also an IDC. Tax planning us state income taxes However, see Amounts paid to contractor that must be capitalized , later. Tax planning us state income taxes You can also elect to deduct the cost of drilling exploratory bore holes to determine the location and delineation of offshore hydrocarbon deposits if the shaft is capable of conducting hydrocarbons to the surface on completion. Tax planning us state income taxes It does not matter whether there is any intent to produce hydrocarbons. Tax planning us state income taxes If you do not elect to deduct your IDCs as a current business expense, you can elect to deduct them over the 60-month period beginning with the month they were paid or incurred. Tax planning us state income taxes Amounts paid to contractor that must be capitalized. Tax planning us state income taxes   Amounts paid to a contractor must be capitalized if they are either: Amounts properly allocable to the cost of depreciable property, or Amounts paid only out of production or proceeds from production if these amounts are depletable income to the recipient. Tax planning us state income taxes How to make the election. Tax planning us state income taxes   You elect to deduct IDCs as a current business expense by taking the deduction on your income tax return for the first tax year you have eligible costs. Tax planning us state income taxes No formal statement is required. Tax planning us state income taxes If you file Schedule C (Form 1040), enter these costs under “Other expenses. Tax planning us state income taxes ”   For oil and gas wells, your election is binding for the year it is made and for all later years. Tax planning us state income taxes For geothermal wells, your election can be revoked by the filing of an amended return on which you do not take the deduction. Tax planning us state income taxes You can file the amended return for the year up to the normal time of expiration for filing a claim for credit or refund, generally, within 3 years after the date you filed the original return or within 2 years after the date you paid the tax, whichever is later. Tax planning us state income taxes Energy credit for costs of geothermal wells. Tax planning us state income taxes   If you capitalize the drilling and development costs of geothermal wells that you place in service during the tax year, you may be able to claim a business energy credit. Tax planning us state income taxes See the Instructions for Form 3468 for more information. Tax planning us state income taxes Nonproductive well. Tax planning us state income taxes   If you capitalize your IDCs, you have another option if the well is nonproductive. Tax planning us state income taxes You can deduct the IDCs of the nonproductive well as an ordinary loss. Tax planning us state income taxes You must indicate and clearly state your election on your tax return for the year the well is completed. Tax planning us state income taxes Once made, the election for oil and gas wells is binding for all later years. Tax planning us state income taxes You can revoke your election for a geothermal well by filing an amended return that does not claim the loss. Tax planning us state income taxes Costs incurred outside the United States. Tax planning us state income taxes   You cannot deduct as a current business expense all the IDCs paid or incurred for an oil, gas, or geothermal well located outside the United States. Tax planning us state income taxes However, you can elect to include the costs in the adjusted basis of the well to figure depletion or depreciation. Tax planning us state income taxes If you do not make this election, you can deduct the costs over the 10-year period beginning with the tax year in which you paid or incurred them. Tax planning us state income taxes These rules do not apply to a nonproductive well. Tax planning us state income taxes Exploration Costs The costs of determining the existence, location, extent, or quality of any mineral deposit are ordinarily capital expenditures if the costs lead to the development of a mine. Tax planning us state income taxes You recover these costs through depletion as the mineral is removed from the ground. Tax planning us state income taxes However, you can elect to deduct domestic exploration costs paid or incurred before the beginning of the development stage of the mine (except those for oil and gas wells). Tax planning us state income taxes How to make the election. Tax planning us state income taxes   You elect to deduct exploration costs by taking the deduction on your income tax return, or on an amended income tax return, for the first tax year for which you wish to deduct the costs paid or incurred during the tax year. Tax planning us state income taxes Your return must adequately describe and identify each property or mine, and clearly state how much is being deducted for each one. Tax planning us state income taxes The election applies to the tax year you make this election and all later tax years. Tax planning us state income taxes Partnerships and S corporations. Tax planning us state income taxes   Each partner, not the partnership, elects whether to capitalize or to deduct that partner's share of exploration costs. Tax planning us state income taxes Each shareholder, not the S corporation, elects whether to capitalize or to deduct that shareholder's share of exploration costs. Tax planning us state income taxes Reduced corporate deductions for exploration costs. Tax planning us state income taxes   A corporation (other than an S corporation) can deduct only 70% of its domestic exploration costs. Tax planning us state income taxes It must capitalize the remaining 30% of costs and amortize them over the 60-month period starting with the month the exploration costs are paid or incurred. Tax planning us state income taxes A corporation may also elect to capitalize and amortize mining exploration costs over a 10-year period. Tax planning us state income taxes For more information on this method of amortization, see Internal Revenue Code section 59(e). Tax planning us state income taxes   The 30% the corporation capitalizes cannot be added to its basis in the property to figure cost depletion. Tax planning us state income taxes However, the amount amortized is treated as additional depreciation and is subject to recapture as ordinary income on a disposition of the property. Tax planning us state income taxes See Section 1250 Property under Depreciation Recapture in chapter 3 of Publication 544. Tax planning us state income taxes   These rules also apply to the deduction of development costs by corporations. Tax planning us state income taxes See Development Costs , later. Tax planning us state income taxes Recapture of exploration expenses. Tax planning us state income taxes   When your mine reaches the producing stage, you must recapture any exploration costs you elected to deduct. Tax planning us state income taxes Use either of the following methods. Tax planning us state income taxes Method 1—Include the deducted costs in gross income for the tax year the mine reaches the producing stage. Tax planning us state income taxes Your election must be clearly indicated on the return. Tax planning us state income taxes Increase your adjusted basis in the mine by the amount included in income. Tax planning us state income taxes Generally, you must elect this recapture method by the due date (including extensions) of your return. Tax planning us state income taxes 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 return (excluding extensions). Tax planning us state income taxes Make the election on your amended return and write “Filed pursuant to section 301. Tax planning us state income taxes 9100-2” on the form where you are including the income. Tax planning us state income taxes File the amended return at the same address you filed the original return. Tax planning us state income taxes Method 2—Do not claim any depletion deduction for the tax year the mine reaches the producing stage and any later tax years until the depletion you would have deducted equals the exploration costs you deducted. Tax planning us state income taxes   You also must recapture deducted exploration costs if you receive a bonus or royalty from mine property before it reaches the producing stage. Tax planning us state income taxes Do not claim any depletion deduction for the tax year you receive the bonus or royalty and any later tax years until the depletion you would have deducted equals the exploration costs you deducted. Tax planning us state income taxes   Generally, if you dispose of the mine before you have fully recaptured the exploration costs you deducted, recapture the balance by treating all or part of your gain as ordinary income. Tax planning us state income taxes Under these circumstances, you generally treat as ordinary income all of your gain if it is less than your adjusted exploration costs with respect to the mine. Tax planning us state income taxes If your gain is more than your adjusted exploration costs, treat as ordinary income only a part of your gain, up to the amount of your adjusted exploration costs. Tax planning us state income taxes Foreign exploration costs. Tax planning us state income taxes   If you pay or incur exploration costs for a mine or other natural deposit located outside the United States, you cannot deduct all the costs in the current year. Tax planning us state income taxes You can elect to include the costs (other than for an oil, gas, or geothermal well) in the adjusted basis of the mineral property to figure cost depletion. Tax planning us state income taxes (Cost depletion is discussed in chapter 9 . Tax planning us state income taxes ) If you do not make this election, you must deduct the costs over the 10-year period beginning with the tax year in which you pay or incur them. Tax planning us state income taxes These rules also apply to foreign development costs. Tax planning us state income taxes Development Costs You can deduct costs paid or incurred during the tax year for developing a mine or any other natural deposit (other than an oil or gas well) located in the United States. Tax planning us state income taxes These costs must be paid or incurred after the discovery of ores or minerals in commercially marketable quantities. Tax planning us state income taxes Development costs also include depreciation on improvements used in the development of ores or minerals and costs incurred for you by a contractor. Tax planning us state income taxes Development costs do not include the costs for the acquisition or improvement of depreciable property. Tax planning us state income taxes Instead of deducting development costs in the year paid or incurred, you can elect to treat the cost as deferred expenses and deduct them ratably as the units of produced ores or minerals benefited by the expenses are sold. Tax planning us state income taxes This election applies each tax year to expenses paid or incurred in that year. Tax planning us state income taxes Once made, the election is binding for the year and cannot be revoked for any reason. Tax planning us state income taxes How to make the election. Tax planning us state income taxes   The election to deduct development costs ratably as the ores or minerals are sold must be made for each mine or other natural deposit by a clear indication on your return or by a statement filed with the IRS office where you file your return. Tax planning us state income taxes Generally, you must make the election by the due date of the return (including extensions). Tax planning us state income taxes 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 return (excluding extensions). Tax planning us state income taxes Clearly indicate the election on your amended return and write “Filed pursuant to section 301. Tax planning us state income taxes 9100-2. Tax planning us state income taxes ” File the amended return at the same address you filed the original return. Tax planning us state income taxes Foreign development costs. Tax planning us state income taxes   The rules discussed earlier for foreign exploration costs apply to foreign development costs. Tax planning us state income taxes Reduced corporate deductions for development costs. Tax planning us state income taxes   The rules discussed earlier for reduced corporate deductions for exploration costs also apply to corporate deductions for development costs. Tax planning us state income taxes Circulation Costs A publisher can deduct as a current business expense the costs of establishing, maintaining, or increasing the circulation of a newspaper, magazine, or other periodical. Tax planning us state income taxes For example, a publisher can deduct the cost of hiring extra employees for a limited time to get new subscriptions through telephone calls. Tax planning us state income taxes Circulation costs are deductible even if they normally would be capitalized. Tax planning us state income taxes This rule does not apply to the following costs that must be capitalized. Tax planning us state income taxes The purchase of land or depreciable property. Tax planning us state income taxes The acquisition of circulation through the purchase of any part of the business of another publisher of a newspaper, magazine, or other periodical, including the purchase of another publisher's list of subscribers. Tax planning us state income taxes Other treatment of circulation costs. Tax planning us state income taxes   If you do not want to deduct circulation costs as a current business expense, you can elect one of the following ways to recover these costs. Tax planning us state income taxes Capitalize all circulation costs that are properly chargeable to a capital account (see chapter 1 ). Tax planning us state income taxes Amortize circulation costs over the 3-year period beginning with the tax year they were paid or incurred. Tax planning us state income taxes How to make the election. Tax planning us state income taxes   You elect to capitalize circulation costs by attaching a statement to your return for the first tax year the election applies. Tax planning us state income taxes Your election is binding for the year it is made and for all later years, unless you get IRS approval to revoke it. Tax planning us state income taxes Business Start-Up and Organizational Costs Business start-up and organizational costs are generally capital expenditures. Tax planning us state income taxes However, you can elect to deduct up to $5,000 of business start-up and $5,000 of organizational costs paid or incurred after October 22, 2004. Tax planning us state income taxes The $5,000 deduction is reduced by the amount your total start-up or organizational costs exceed $50,000. Tax planning us state income taxes Any remaining costs must be amortized. Tax planning us state income taxes For information about amortizing start-up and organizational costs, see chapter 8 . Tax planning us state income taxes Start-up costs include any amounts paid or incurred in connection with creating an active trade or business or investigating the creation or acquisition of an active trade or business. Tax planning us state income taxes Organizational costs include the costs of creating a corporation. Tax planning us state income taxes For more information on start-up and organizational costs, see chapter 8 . Tax planning us state income taxes How to make the election. Tax planning us state income taxes   You elect to deduct the start-up or organizational costs by claiming the deduction on your income tax return (filed by the due date including extensions) for the tax year in which the active trade or business begins. Tax planning us state income taxes 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 return (excluding extensions). Tax planning us state income taxes Clearly indicate the election on your amended return and write “Filed pursuant to section 301. Tax planning us state income taxes 9100-2. Tax planning us state income taxes ” File the amended return at the same address you filed the original return. Tax planning us state income taxes The election applies when computing taxable income for the current tax year and all subsequent years. Tax planning us state income taxes Reforestation Costs Reforestation costs are generally capital expenditures. Tax planning us state income taxes However, you can elect to deduct up to $10,000 ($5,000 if married filing separately; $0 for a trust) of qualifying reforestation costs paid or incurred after October 22, 2004, for each qualified timber property. Tax planning us state income taxes The remaining costs can be amortized over an 84-month period. Tax planning us state income taxes For information about amortizing reforestation costs, see chapter 8 . Tax planning us state income taxes Qualifying reforestation costs are the direct costs of planting or seeding for forestation or reforestation. Tax planning us state income taxes Qualified timber property is property that contains trees in significant commercial quantities. Tax planning us state income taxes See chapter 8 for more information on qualifying reforestation costs and qualified timber property. Tax planning us state income taxes If you elect to deduct qualified reforestation costs, create and maintain separate timber accounts for each qualified timber property and include all reforestation costs and the dates each was applied. Tax planning us state income taxes Do not include this qualified timber property in any account (for example, depletion block) for which depletion is allowed. Tax planning us state income taxes How to make the election. Tax planning us state income taxes   You elect to deduct qualifying reforestation costs by claiming the deduction on your timely filed income tax return (including extensions) for the tax year the expenses were paid or incurred. Tax planning us state income taxes If Form T (Timber), Forest Activities Schedule, is required, complete Part IV of Form T. Tax planning us state income taxes If Form T is not required, attach a statement containing the following information for each qualified timber property for which an election is being made. Tax planning us state income taxes The unique stand identification numbers. Tax planning us state income taxes The total number of acres reforested during the tax year. Tax planning us state income taxes The nature of the reforestation treatments. Tax planning us state income taxes The total amounts of qualified reforestation expenditures eligible to be amortized or deducted. Tax planning us state income taxes   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 return (excluding extensions). Tax planning us state income taxes Clearly indicate the election on your amended return and write “Filed pursuant to section 301. Tax planning us state income taxes 9100-2. Tax planning us state income taxes ” File the amended return at the same address you filed the original return. Tax planning us state income taxes The election applies when computing taxable income for the current tax year and all subsequent years. Tax planning us state income taxes   For additional information on reforestation costs, see chapter 8 . Tax planning us state income taxes Recapture. Tax planning us state income taxes   This deduction may have to be recaptured as ordinary income under section 1245 when you sell or otherwise dispose of the property that would have received an addition to basis if you had not elected to deduct the expenditure. Tax planning us state income taxes For more information on recapturing the deduction, see Depreciation Recapture in Publication 544. Tax planning us state income taxes Retired Asset Removal Costs If you retire and remove a depreciable asset in connection with the installation or production of a replacement asset, you can deduct the costs of removing the retired asset. Tax planning us state income taxes However, if you replace a component (part) of a depreciable asset, capitalize the removal costs if the replacement is an improvement and deduct the costs if the replacement is a repair. Tax planning us state income taxes Barrier Removal Costs The cost of an improvement to a business asset is normally a capital expense. Tax planning us state income taxes However, you can elect to deduct the costs of making a facility or public transportation vehicle more accessible to and usable by those who are disabled or elderly. Tax planning us state income taxes You must own or lease the facility or vehicle for use in connection with your trade or business. Tax planning us state income taxes A facility is all or any part of buildings, structures, equipment, roads, walks, parking lots, or similar real or personal property. Tax planning us state income taxes A public transportation vehicle is a vehicle, such as a bus or railroad car, that provides transportation service to the public (including service for your customers, even if you are not in the business of providing transportation services). Tax planning us state income taxes You cannot deduct any costs that you paid or incurred to completely renovate or build a facility or public transportation vehicle or to replace depreciable property in the normal course of business. Tax planning us state income taxes Deduction limit. Tax planning us state income taxes   The most you can deduct as a cost of removing barriers to the disabled and the elderly for any tax year is $15,000. Tax planning us state income taxes However, you can add any costs over this limit to the basis of the property and depreciate these excess costs. Tax planning us state income taxes Partners and partnerships. Tax planning us state income taxes   The $15,000 limit applies to a partnership and also to each partner in the partnership. Tax planning us state income taxes A partner can allocate the $15,000 limit in any manner among the partner's individually incurred costs and the partner's distributive share of partnership costs. Tax planning us state income taxes If the partner cannot deduct the entire share of partnership costs, the partnership can add any costs not deducted to the basis of the improved property. Tax planning us state income taxes   A partnership must be able to show that any amount added to basis was not deducted by the partner and that it was over a partner's $15,000 limit (as determined by the partner). Tax planning us state income taxes If the partnership cannot show this, it is presumed that the partner was able to deduct the distributive share of the partnership's costs in full. Tax planning us state income taxes Example. Tax planning us state income taxes Emilio Azul's distributive share of ABC partnership's deductible expenses for the removal of architectural barriers was $14,000. Tax planning us state income taxes Emilio had $12,000 of similar expenses in his sole proprietorship. Tax planning us state income taxes He elected to deduct $7,000 of them. Tax planning us state income taxes Emilio allocated the remaining $8,000 of the $15,000 limit to his share of ABC's expenses. Tax planning us state income taxes Emilio can add the excess $5,000 of his own expenses to the basis of the property used in his business. Tax planning us state income taxes Also, if ABC can show that Emilio could not deduct $6,000 ($14,000 – $8,000) of his share of the partnership's expenses because of how Emilio applied the limit, ABC can add $6,000 to the basis of its property. Tax planning us state income taxes Qualification standards. Tax planning us state income taxes   You can deduct your costs as a current expense only if the barrier removal meets the guidelines and requirements issued by the Architectural and Transportation Barriers Compliance Board under the Americans with Disabilities Act (ADA) of 1990. Tax planning us state income taxes You can view the Americans with Disabilities Act at www. Tax planning us state income taxes ada. Tax planning us state income taxes gov/pubs/ada. Tax planning us state income taxes htm. Tax planning us state income taxes   The following is a list of some architectural barrier removal costs that can be deducted. Tax planning us state income taxes Ground and floor surfaces. Tax planning us state income taxes Walks. Tax planning us state income taxes Parking lots. Tax planning us state income taxes Ramps. Tax planning us state income taxes Entrances. Tax planning us state income taxes Doors and doorways. Tax planning us state income taxes Stairs. Tax planning us state income taxes Floors. Tax planning us state income taxes Toilet rooms. Tax planning us state income taxes Water fountains. Tax planning us state income taxes Public telephones. Tax planning us state income taxes Elevators. Tax planning us state income taxes Controls. Tax planning us state income taxes Signage. Tax planning us state income taxes Alarms. Tax planning us state income taxes Protruding objects. Tax planning us state income taxes Symbols of accessibility. Tax planning us state income taxes You can find the ADA guidelines and requirements for architectural barrier removal at www. Tax planning us state income taxes usdoj. Tax planning us state income taxes gov/crt/ada/reg3a. Tax planning us state income taxes html. Tax planning us state income taxes   The costs for removal of transportation barriers from rail facilities, buses, and rapid and light rail vehicles are deductible. Tax planning us state income taxes You can find the guidelines and requirements for transportation barrier removal at www. Tax planning us state income taxes fta. Tax planning us state income taxes dot. Tax planning us state income taxes gov. Tax planning us state income taxes   Also, you can access the ADA website at www. Tax planning us state income taxes ada. Tax planning us state income taxes gov for additional information. Tax planning us state income taxes Other barrier removals. Tax planning us state income taxes   To be deductible, expenses of removing any barrier not covered by the above standards must meet all three of the following tests. Tax planning us state income taxes The removed barrier must be a substantial barrier to access or use of a facility or public transportation vehicle by persons who have a disability or are elderly. Tax planning us state income taxes The removed barrier must have been a barrier for at least one major group of persons who have a disability or are elderly (such as people who are blind, deaf, or wheelchair users). Tax planning us state income taxes The barrier must be removed without creating any new barrier that significantly impairs access to or use of the facility or vehicle by a major group of persons who have a disability or are elderly. Tax planning us state income taxes How to make the election. Tax planning us state income taxes   If you elect to deduct your costs for removing barriers to the disabled or the elderly, claim the deduction on your income tax return (partnership return for partnerships) for the tax year the expenses were paid or incurred. Tax planning us state income taxes Identify the deduction as a separate item. Tax planning us state income taxes The election applies to all the qualifying costs you have during the year, up to the $15,000 limit. Tax planning us state income taxes If you make this election, you must maintain adequate records to support your deduction. Tax planning us state income taxes   For your election to be valid, you generally must file your return by its due date, including extensions. Tax planning us state income taxes 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 return (excluding extensions). Tax planning us state income taxes Clearly indicate the election on your amended return and write “Filed pursuant to section 301. Tax planning us state income taxes 9100-2. Tax planning us state income taxes ” File the amended return at the same address you filed the original return. Tax planning us state income taxes Your election is irrevocable after the due date, including extensions, of your return. Tax planning us state income taxes Disabled access credit. Tax planning us state income taxes   If you make your business accessible to persons with disabilities and your business is an eligible small business, you may be able to claim the disabled access credit. Tax planning us state income taxes If you choose to claim the credit, you must reduce the amount you deduct or capitalize by the amount of the credit. Tax planning us state income taxes   For more information, see Form 8826, Disabled Access Credit. Tax planning us state income taxes Film and Television Production Costs Film and television production costs are generally capital expenses. Tax planning us state income taxes However, you can elect to deduct costs paid or incurred for certain productions commencing before January 1, 2014. Tax planning us state income taxes For more information, see section 181 of the Internal Revenue Code and the related Treasury Regulations. Tax planning us state income taxes Prev  Up  Next   Home   More Online Publications
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HIRE Act: Questions and Answers for Employers

Under the Hiring Incentives to Restore Employment (HIRE) Act, enacted March 18, 2010, two new tax benefits are available to employers who hire certain previously unemployed workers (“qualified employees”).

The first, referred to as the payroll tax exemption, provides employers with an exemption from the employer’s 6.2 percent share of social security tax on wages paid to qualifying employees, effective for wages paid from March 19, 2010 through December 31, 2010.

In addition, for each qualified employee retained for at least 52 consecutive weeks, businesses will also be eligible for a general business tax credit, referred to as the new hire retention credit, of 6.2 percent of wages paid to the qualified employee over the 52 week period, up to a maximum credit of $1,000.

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Page Last Reviewed or Updated: 26-Dec-2013

The Tax Planning Us State Income Taxes

Tax planning us state income taxes 9. Tax planning us state income taxes   Figuring Net Profit or Loss Table of Contents Introduction Net Operating Losses (NOLs) Not-for-Profit Activities Introduction After figuring your business income and expenses, you are ready to figure the net profit or net loss from your business. Tax planning us state income taxes You do this by subtracting business expenses from business income. Tax planning us state income taxes If your expenses are less than your income, the difference is net profit and becomes part of your income on page 1 of Form 1040. Tax planning us state income taxes If your expenses are more than your income, the difference is a net loss. Tax planning us state income taxes You usually can deduct it from gross income on page 1 of Form 1040. Tax planning us state income taxes But in some situations your loss is limited. Tax planning us state income taxes This chapter briefly explains two of those situations. Tax planning us state income taxes Other situations that may limit your loss are explained in the Instructions for Schedule C, line G and line 32. Tax planning us state income taxes If you have more than one business, you must figure your net profit or loss for each business on a separate Schedule C. Tax planning us state income taxes Net Operating Losses (NOLs) If your deductions for the year are more than your income for the year (line 41 of your Form 1040 is a negative number), you may have a net operating loss (NOL). Tax planning us state income taxes You can use an NOL by deducting it from your income in another year or years. Tax planning us state income taxes Examples of typical losses that may produce an NOL include, but are not limited to, losses incurred from the following. Tax planning us state income taxes Your trade or business. Tax planning us state income taxes Your work as an employee (unreimbursed employee business expenses). Tax planning us state income taxes A casualty or theft. Tax planning us state income taxes Moving expenses. Tax planning us state income taxes Rental property. Tax planning us state income taxes A loss from operating a business is the most common reason for an NOL. Tax planning us state income taxes For details about NOLs, see Publication 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts. Tax planning us state income taxes It explains how to figure an NOL, when to use it, how to claim an NOL deduction, and how to figure an NOL carryover. Tax planning us state income taxes Not-for-Profit Activities If you do not carry on your business to make a profit, there is a limit on the deductions you can take. Tax planning us state income taxes You cannot use a loss from the activity to offset other income. Tax planning us state income taxes Activities you do as a hobby, or mainly for sport or recreation, come under this limit. Tax planning us state income taxes For details about not-for-profit activities, see chapter 1 in Publication 535, Business Expenses. Tax planning us state income taxes That chapter explains how to determine whether your activity is carried on to make a profit and how to figure the amount of loss you can deduct. Tax planning us state income taxes Prev  Up  Next   Home   More Online Publications