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File Free 2012 Tax Return

File free 2012 tax return 1. File free 2012 tax return   2013 Filing Requirements Table of Contents General RequirementsSelf-employed persons. File free 2012 tax return Decedents If income tax was withheld from your pay, or if you qualify for the earned income credit, the additional child tax credit, the health coverage tax credit, or the American opportunity credit, you should file a return to get a refund even if you are not otherwise required to file a return. File free 2012 tax return Do not file a federal income tax return if you do not meet the filing requirements and are not due a refund. File free 2012 tax return If you need assistance to determine if you need to file a federal income tax return for 2013, go to IRS. File free 2012 tax return gov and use the Interactive Tax Assistant (ITA). File free 2012 tax return You can find the ITA by going to IRS. File free 2012 tax return gov and entering “interactive tax assistant” in the search box. File free 2012 tax return Open the ITA and click on Do I Need to File a Tax Return under Topics by Category. File free 2012 tax return General Requirements If you are a U. File free 2012 tax return S. File free 2012 tax return citizen or resident alien, you must file a return if your gross income for the year was at least the amount shown on the appropriate line in Table 1-1. File free 2012 tax return For other filing requirements, see your tax return instructions or Publication 501, Exemptions, Standard Deduction, and Filing Information. File free 2012 tax return If you were a nonresident alien at any time during the year, the filing requirements that apply to you may be different from those that apply to U. File free 2012 tax return S. File free 2012 tax return citizens. File free 2012 tax return See Publication 519, U. File free 2012 tax return S. File free 2012 tax return Tax Guide for Aliens. File free 2012 tax return Table 1-1. File free 2012 tax return 2013 Filing Requirements Chart for Most Taxpayers Note. File free 2012 tax return You must file a return if your gross income was at least the amount shown in the last column. File free 2012 tax return IF your filing status is. File free 2012 tax return . File free 2012 tax return . File free 2012 tax return AND at the end of 2013 you were*. File free 2012 tax return . File free 2012 tax return . File free 2012 tax return THEN file a return if your gross income** was at least. File free 2012 tax return . File free 2012 tax return . File free 2012 tax return Single under 65 $10,000 65 or older $11,500 Head of household under 65 $12,850 65 or older $14,350 Married filing jointly*** under 65 (both spouses) $20,000 65 or older (one spouse) $21,200 65 or older (both spouses) $22,400 Married filing separately any age $3,900 Qualifying widow(er)  with dependent child under 65 $16,100 65 or older $17,300 * If you were born before January 2, 1949, you are considered to be 65 or older at the end of 2013. File free 2012 tax return ** Gross income means all income you receive in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States or from the sale of your main home (even if you can exclude part or all of it). File free 2012 tax return It also includes gains, but not losses, reported on Form 8949 or Schedule D. File free 2012 tax return Gross income from a business means, for example, the amount on Schedule C, line 7, or Schedule F, line 9. File free 2012 tax return But in figuring gross income, do not reduce your income by any losses, including any loss on Schedule C, line 7, or Schedule F, line 9. File free 2012 tax return Do not include any social security benefits unless (a) you are married filing separately and you lived with your spouse at any time in 2013 or (b) one-half of your social security benefits plus your other gross income and any tax-exempt interest is more than $25,000 ($32,000 if married filing jointly). File free 2012 tax return If (a) or (b) applies, see the Instructions for Form 1040 or Publication 915, Social Security and Equivalent Railroad Retirement Benefits, to figure the taxable part of social security benefits you must include in gross income. File free 2012 tax return *** If you did not live with your spouse at the end of 2013 (or on the date your spouse died) and your gross income was at least $3,900, you must file a return regardless of your age. File free 2012 tax return Gross income. File free 2012 tax return   Gross income is all income you receive in the form of money, goods, property, and services that is not exempt from tax. File free 2012 tax return If you are married and live with your spouse in a community property state, half of any income defined by state law as community income may be considered yours. File free 2012 tax return The community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. File free 2012 tax return A registered domestic partner in Nevada, Washington, or California generally must report half the combined community income of the individual and his or her domestic partner. File free 2012 tax return For more information about community property, see Publication 555, Community Property. File free 2012 tax return   For more information on what to include in gross income, see chapter 2. File free 2012 tax return Self-employed persons. File free 2012 tax return    If you are self-employed in a business that provides services (where the production, purchase, or sale of merchandise is not an income-producing factor), gross income from that business is the gross receipts. File free 2012 tax return   If you are self-employed in a business involving manufacturing, merchandising, or mining, gross income from that business is the total sales minus the cost of goods sold. File free 2012 tax return Then, to this figure, you add any income from investments and from incidental or outside operations or sources. File free 2012 tax return See Publication 334, Tax Guide for Small Business, for more information. File free 2012 tax return Dependents. File free 2012 tax return   If you could be claimed as a dependent by another taxpayer (that is, you meet the dependency tests in Publication 501), special filing requirements apply. File free 2012 tax return See Publication 501. File free 2012 tax return Decedents A personal representative of a decedent's estate can be an executor, administrator, or anyone who is in charge of the decedent's property. File free 2012 tax return If you are acting as the personal representative of a person who died during the year, you may have to file a final return for that decedent. File free 2012 tax return You also have other duties, such as notifying the IRS that you are acting as the personal representative. File free 2012 tax return Form 56, Notice Concerning Fiduciary Relationship, is available for this purpose. File free 2012 tax return When you file a return for the decedent, either as the personal representative or as the surviving spouse, you should write “DECEASED,” the decedent's name, and the date of death across the top of the tax return. File free 2012 tax return If no personal representative has been appointed by the due date for filing the return, the surviving spouse (on a joint return) should sign the return and write in the signature area “Filing as surviving spouse. File free 2012 tax return ” For more information, see Publication 559, Survivors, Executors, and Administrators. File free 2012 tax return Surviving spouse. File free 2012 tax return   If you are the surviving spouse, the year your spouse died is the last year for which you can file a joint return with that spouse. File free 2012 tax return After that, if you do not remarry, you must file as a qualifying widow(er) with dependent child, head of household, or single. File free 2012 tax return For more information about each of these filing statuses, see Publication 501. File free 2012 tax return   If you remarry before the end of the year in which your spouse died, a final joint return with the deceased spouse cannot be filed. File free 2012 tax return You can, however, file a joint return with your new spouse. File free 2012 tax return In that case, the filing status of your deceased spouse for his or her final return is married filing separately. File free 2012 tax return The level of income that requires you to file an income tax return changes when your filing status changes (see Table 1-1). File free 2012 tax return Even if you and your deceased spouse were not required to file a return for several years, you may have to file a return for tax years after the year of death. File free 2012 tax return For example, if your filing status changes from filing jointly in 2012 to single in 2013 because of the death of your spouse, and your gross income is $17,500 for both years, you must file a return for 2013 even though you did not have to file a return for 2012. File free 2012 tax return Prev  Up  Next   Home   More Online Publications
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Sale of Assets Financed with Tax-Exempt Bonds by State and Local Governments and 501(c)(3) Organizations

Tax Exempt Bonds (“TEB”) focuses on providing participants in the municipal bond industry with quality service to assist issuers and conduit borrowers in understanding their tax responsibilities. TEB has initiated an outreach and educational services program to increase understanding and compliance with tax law applicable to tax-exempt bonds. As part of this service TEB is providing the following information with respect to the sale of property financed by tax-exempt bonds. Governmental issuers and 501(c)(3) organizations may use this information to establish practices to monitor tax compliance throughout the period that their bonds are outstanding. This information is not intended to be cited as an authoritative source. TEB recommends that issuers and 501(c)(3) organizations review this basic information concerning remedial actions in consultation with their counsel.

For remedial action with respect to exempt facility bonds, see section 1.142-2 of the Income Tax Regulations (the “Regulations”), and for build America bonds, see IRM 7.2.3.1.2.3.

Generally

To raise needed funds, state and local governments and 501(c)(3) organizations may plan to sell property financed with tax-exempt bonds. The sale of such property could cause the bond issue to become taxable. A timely remedial action, if necessary, will help ensure that the interest on the bond issue remains tax-exempt.

There are three basic remedial action options as generally described below:

  • Redemption or defeasance of nonqualified bonds
  • Alternative use of disposition proceeds
  • Alternative use of facility

Governmental Bonds Example

A governmental bond is one that is not a private activity bond. A bond is a private activity bond if both: (i) more than 10% of the proceeds of a bond issue are used for a private business use (the private business use test); and (ii) more than 10% of the debt service on the bonds is directly or indirectly secured by an interest in property or payments with respect to property used for a private business use or derived from payments in respect of property used for a private business use (the private security or payment test). The sale of bond-financed property, a “deliberate action,” may cause the bond issue to meet both of these tests.

Private business use, generally, is use directly or indirectly in a trade or business carried on by any person other than a governmental unit. The result of meeting both the private business use test and the private security or payment test (together, the private business tests) is that the tax-exempt bond issue becomes a taxable private activity bond.

An example of when governmental bonds are likely to meet the private business tests is the sale of a tax-exempt bond financed facility to a corporation. The sale is a deliberate action because the sale was within the issuer’s control. Depending on how much of the proceeds of the bond issue that the issuer used to construct or acquire the facility and how long after the bonds are issued that the sale occurs, the private business use test may be met since the purchaser is not a governmental entity. If the present value of the sales price is greater than 10% of the present value of the debt service on the bonds, the private security or payment test is met. If the revenues from the facility were pledged as security for the payment of debt service on the bonds and are expected to be more than 10% of the present value of the debt service, the private security or payment test is met (regardless of the sales price to the new purchaser). If the bond issue meets both the private business use test and the private security or payment test, the bonds are taxable unless remedial action is taken as described below.

Qualified 501(c)(3) Bonds Example

If the bonds financing the property are qualified 501(c)(3) bonds, the private business use test threshold of 10% is reduced to 5%. The 5% is further reduced by the percentage of proceeds of the bonds used to pay costs of issuance. (Up to 2% of the proceeds may be used for costs of issuance.) Additionally, use of tax-exempt bond financed property in an unrelated trade or business of any 501(c)(3) organization, as described in section 513 of the Internal Revenue Code (the “Code”), is considered private business use and counts toward the 5% limit.

An example of qualified 501(c)(3) bonds likely to meet the private business tests is the sale of tax-exempt bond financed land to a taxable corporation. The sale is a deliberate action because the sale was within the issuer’s (or 501(c)(3) borrower’s) control. Depending on how much of the proceeds of the bond issue that the issuer or 501(c)(3) borrower used to construct or acquire the facility and how long after the bonds are issued that the sale occurs, the private business use test may be met since the purchaser is not a governmental entity or a 501(c)(3) organization. If the parcel of land sold was pledged as security for the payment of debt service on the bonds, the private security or payment test is met if the sales price is more than 5% of the present value of the debt service on the bonds. If the revenues from the facility were pledged as security for the payment of debt service on the bonds and are expected to be more than 5% of the present value of the debt service, the private security or payment test is met (regardless of the sales price to the new purchaser). If the bond issue meets both the private business use test and the private security or payment test, the bonds are taxable unless remedial action is taken as described below.

A qualified 501(c)(3) bond is one where, among other requirements, the tax-exempt bond financed property is owned by a 501(c)(3) organization or a governmental unit. An example of qualified 501(c)(3) bonds failing to meet this requirement is the sale of the tax-exempt bond financed land to a taxable corporation. Accordingly, the bonds are taxable unless remedial action is taken as described below.

Remedial Action under the Treasury Regulations

The Regulations permit an issuer to take remedial action to preclude the sale of tax-exempt bond financed assets from causing the bonds to become taxable bonds. There are five basic conditions that an issuer must meet to qualify to take a remedial action. The conditions are:

  • The issuer must have reasonably expected on the issue date that the bonds would not meet either the applicable private business tests (including the ownership test for qualified 501(c)(3) bonds) or the private loan financing test for the entire term of the bonds.
  • The term of the bonds must not be longer than reasonably necessary for the qualified purposes of the issue (as a guideline, the term is not greater than 120% of the average reasonably expected economic life of the financed property).
  • Generally, the terms of a sale must be a bona fide and arm’s-length arrangement for fair market value.
  • Disposition proceeds must be treated as gross proceeds for arbitrage and rebate purposes. Disposition proceeds are any amounts, including property, derived from the sale, exchange or other disposition of the tax-exempt bond financed property.
  • Except for a remedial action involving the redemption or defeasance of nonqualified bonds, the proceeds must have been spent on a qualified purpose before the date of the deliberate action, that is, the sale of the bond-financed assets.

Redemption or Defeasance of Nonqualified Bonds

Generally, in the case of a sale of bond-financed property, the nonqualified bonds are the portion of the outstanding bonds equal to the percentage of the proceeds of the bond issue that financed that property. For example, if 50% of the proceeds of a bond issue financed the sold property, the nonqualified bonds equal 50% of the outstanding bonds of the issue at the time of the sale.

The first type of remedial action available is the redemption or defeasance of all of the nonqualified bonds within 90 days of the deliberate action. (Generally, proceeds of another issue of tax-exempt bonds may not be used for this redemption.) If the disposition proceeds are all cash, the issuer need not redeem or defease all of the nonqualified bonds, but must use all of the disposition proceeds to redeem a pro rata portion of nonqualified bonds. The redemption must be on the earliest call date after the deliberate action, or if the earliest call date is more than 90 days after the deliberate action, the issuer must establish a defeasance escrow within 90 days of the deliberate action. Defeasance is only permitted as a remedial action if the first call date is no more than 10 ½ years from the issue date of the bonds. The issuer must provide written notice to the Commissioner of the escrow within 90 days of its establishment.

Alternative Use of Disposition Proceeds

The second type of remedial action, available when the seller receives only cash, allows the issuer to spend the disposition proceeds within two years of the date of the sale for an alternative qualifying use. The issuer must treat the disposition proceeds as proceeds of the bonds, and must not take any action after the date of the sale to cause either the applicable private business use tests or the private loan financing test to be met. (If the bonds are qualified 501(c)(3) bonds, the disposition proceeds must be used for a qualified purpose under section 145 of the Code.) If the issuer does not expect the full amount of the disposition proceeds to be spent for a qualifying purpose within the two year period, it must use the balance of disposition proceeds to redeem (or defease) nonqualified bonds as allowed for the first type of remedial action described above.

Note: If the proceeds of a governmental bond issue are to be subsequently used by a 501(c)(3) organization, remediation by spending the disposition proceeds for an alternate use requires that the nonqualified bonds satisfy all the requirements for qualified 501(c)(3) bonds beginning on the date of the sale.

Alternative Use of Facility

The third type of remedial action available to the issuer is when the tax-exempt financed facility will be used after the sale for a purpose that is a qualifying purpose for another type of tax-exempt bonds (provided that the purchaser of the facility does not use tax-exempt bond proceeds for its purchase). The nonqualified bonds must satisfy all the requirements for the alternate type of tax-exempt bonds beginning on the date of the sale. The issuer must either apply any disposition proceeds resulting from the sale to pay the debt service on the bonds on the next available payment date or deposit the proceeds into an escrow within 90 days of their receipt. If the issuer must establish an escrow, the investment yield on the disposition proceeds must be restricted to the yield on the bonds and the escrow used to pay debt service on the next available payment date.

Allocation of Disposition Proceeds

For all three remedial actions, if the property was financed by different sources, the issuer must first allocate disposition proceeds to the outstanding bonds in proportion to the principal amounts of the outstanding bonds. If the disposition proceeds are not greater than the principal amount of outstanding bonds allocated to the sold property, the proceeds must first be allocated to the outstanding bonds before allocating to bonds no longer outstanding or to sources not derived from borrowing (such as revenues of the issuer).

Remedial Actions-Examples

The following examples assume that the above-described five conditions for remedial action are satisfied. Also, in these examples, no bond proceeds were used for costs of issuance or to fund a reserve fund.


Example 1. - Disposition proceeds are less than the principal amount of the outstanding bonds allocated to the sold property.

Issuer issues $10 million of bonds to finance the construction of a community center. Issuer later sells the center for $5 million, its fair market value. At this time, all $10 million of the bonds are still outstanding. The issuer may choose to remediate by using all $5 million of disposition proceeds to redeem within 90 days or establish a defeasance escrow for a pro rata portion of the $10 million of nonqualified bonds. The remaining outstanding $5 million of bonds would not be private activity bonds because the issuer has remediated as required by the Regulations.

Or, the issuer could remediate by using the alternative use of disposition proceeds option. Under this option, the issuer must apply the total amount of disposition proceeds, $5 million, to a qualifying alternative use within two years (or use a combination of the alternative use of disposition proceeds and redemption or defeasance options).

The disposition proceeds are considered gross proceeds of the bonds and as such are subject to the applicable yield restriction and arbitrage rebate rules pending their use as described above.

Example 2.- Disposition proceeds are greater than the principal amount of the outstanding bonds allocated to the sold property.

Issuer issues $10 million of bonds to finance a school and land. Issuer subsequently sells a portion of the land for $3 million. At this time, all $10 million of the bonds are still outstanding. The principal amount of outstanding bonds allocated to the sold property is $2 million. If the issuer chooses to remediate by redeeming bonds, it must redeem $2 million of outstanding bonds leaving the issuer with $1 million of gross proceeds.

Or, the issuer could remediate by using the alternative use of disposition proceeds option. If so, the Issuer must apply the total amount of the disposition proceeds, $3 million, to a qualifying use within two years (or use a combination of the alternative use of disposition proceeds and redemption or defeasance options).

The disposition proceeds are considered gross proceeds of the bonds and as such are subject to the applicable yield restriction and arbitrage rebate rules pending their use as described above.

Example 3. - Disposition proceeds are greater than the principal amount of the outstanding bonds allocated to the sold property and the conduit borrower finances the project in part with tax-exempt bond proceeds and in part with an equity contribution.

A 501(c)(3) conduit borrower contributed $4 million of cash from its revenues and used $6 million of tax-exempt bonds to finance a $10 million acquisition of a continuing care facility. Subsequently, the conduit borrower sells the facility for $12 million. At this time, all $6 million of the bonds are still outstanding. Thus the issuer has $6 million of nonqualified bonds. The issuer may remediate by either redeeming all of the $6 million nonqualified bonds or by requiring the conduit borrower to use $12 million of disposition proceeds for an alternative use within two years (provided all requirements of qualified 501(c)(3) bonds are met).

Of the $12 million of disposition proceeds, $6 million are considered gross proceeds of the bonds and as such are subject to the applicable yield restriction and arbitrage rebate rules pending their use as described above.

Gross Proceeds - Example 2 versus Example 3

When the tax-exempt bond financed property is sold for an amount in excess of the principal amount of the outstanding bonds allocated to that property, a different result occurs with respect to that excess amount depending on whether all the bonds of the issue have been redeemed. In Example 3, where the issuer redeemed all of the outstanding bonds, the remaining disposition proceeds are not gross proceeds of the bonds and, therefore, are no longer subject to the federal tax restrictions. This is because the amount of gross proceeds cannot exceed the amount of the outstanding bonds of the issue. Whereas in Example 2, although the issuer has redeemed the nonqualified bonds, the issuer still has bonds of the issue outstanding and thus the additional disposition proceeds are gross proceeds of the bonds and subject to the applicable yield restriction and arbitrage rebate rules pending their use.

Correction of Violations Using TEB Voluntary Closing Agreement Program (VCAP)

If an issuer or conduit borrower discovers that it has sold bond financed assets causing the applicable private business tests to be met but is ineligible to self-correct through a remedial action provision, TEB encourages the issuer to take advantage of its Voluntary Closing Agreement Program (TEB VCAP) to resolve federal tax violations relating to bonds as described in Notice 2008-31 and IRM section 7.2.3.

Page Last Reviewed or Updated: 04-Sep-2013

The File Free 2012 Tax Return

File free 2012 tax return Depreciation Table of Contents Introduction Special Depreciation AllowanceQualified Property Election Not To Claim the Allowance Rules for Returns Filed Before June 1, 2002 Passenger Automobiles New York Liberty Zone BenefitsSpecial Liberty Zone Depreciation Allowance Increased Section 179 Deduction Liberty Zone Leasehold Improvement Property If you depreciate business property that you acquired and placed in service after September 10, 2001, new law contains provisions that may affect your depreciation deduction for that property. File free 2012 tax return Publication 946, How To Depreciate Property, contains information on depreciation. File free 2012 tax return However, Publication 946 does not contain the new provisions because it was printed before the law was enacted. File free 2012 tax return The new provisions are in the Supplement to Publication 946, which is reprinted below. File free 2012 tax return Supplement to Publication 946 How To Depreciate Property   Introduction After Publication 946 was printed, the Job Creation and Worker Assistance Act of 2002 was signed into law by the President. File free 2012 tax return The new law made several changes in the tax rules explained in the publication. File free 2012 tax return Some of the changes apply to property placed in service during 2001. File free 2012 tax return This supplemental publication describes those changes and explains what you should do if you are affected by them. File free 2012 tax return The situations and examples in Publication 946 do not reflect any of the changes made by the Job Creation and Worker Assistance Act of 2002. File free 2012 tax return The new law contains the following provisions. File free 2012 tax return 30% depreciation deductions (special depreciation allowance and special New York Liberty Zone (Liberty Zone) depreciation allowance) for the year qualified property is placed in service after September 10, 2001. File free 2012 tax return An increased dollar limit on the section 179 deduction for qualified Liberty Zone property purchased after September 10, 2001. File free 2012 tax return A shorter recovery period for qualified Liberty Zone leasehold improvement property placed in service after September 10, 2001. File free 2012 tax return An increase in the maximum depreciation deduction for 2001 for a qualified passenger automobile placed in service after September 10, 2001. File free 2012 tax return If you believe you qualify for an increased deduction under any of these new rules, you must file the revised 2001 Form 4562 (dated March 2002) for 2001 calendar or fiscal years and 2000 fiscal years ending after September 10, 2001. File free 2012 tax return If you have already filed a tax return, this supplemental publication explains how to claim these benefits and how to elect not to claim the special depreciation allowance or special Liberty Zone depreciation allowance. File free 2012 tax return See Table 2 at the end of the supplement for an overview of the rules that apply if you filed your return before June 1, 2002. File free 2012 tax return Special Depreciation Allowance You can take a special depreciation allowance for qualified property you place in service after September 10, 2001. File free 2012 tax return The allowance is an additional deduction of 30% of the property's depreciable basis. File free 2012 tax return To figure the depreciable basis, you must first multiply the property's cost or other basis by the percentage of business/investment use and then reduce that amount by any section 179 deduction and certain other deductions and credits for the property. File free 2012 tax return See What Is the Basis for Depreciation? on page 23 in Publication 946 for more information on figuring depreciable basis. File free 2012 tax return The allowance is deductible for both regular tax and alternative minimum tax (AMT) purposes. File free 2012 tax return There is no AMT adjustment required for any depreciation figured on the remaining basis of the property. File free 2012 tax return In the year you claim the allowance (generally the year you place the property in service), you must reduce the depreciable basis of the property by the allowance before figuring your regular depreciation deduction. File free 2012 tax return Example 1. File free 2012 tax return On November 1, 2001, you bought and placed in service in your business qualified property that cost $100,000. File free 2012 tax return You did not elect to claim a section 179 deduction. File free 2012 tax return You can deduct 30% of the cost ($30,000) as a special depreciation allowance for 2001. File free 2012 tax return You use the remaining $70,000 of cost to figure your regular depreciation deduction for 2001 and later years. File free 2012 tax return Example 2. File free 2012 tax return The facts are the same as in Example 1, except that you choose to deduct $24,000 of the property's cost as a section 179 deduction. File free 2012 tax return You use the remaining $76,000 of cost to figure your special depreciation allowance of $22,800 ($76,000 × 30%). File free 2012 tax return You use the remaining $53,200 of cost to figure your regular depreciation deduction for 2001 and later years. File free 2012 tax return Qualified Property To qualify for the special depreciation allowance, your property must meet the following requirements. File free 2012 tax return It is new property of one of the following types. File free 2012 tax return Property depreciated under the modified accelerated cost recovery system (MACRS) with a recovery period of 20 years or less. File free 2012 tax return See Can You Use MACRS To Depreciate Your Property and Which Recovery Period Applies? on pages 7 and 23, respectively, in Publication 946. File free 2012 tax return Water utility property. File free 2012 tax return See 25-year property on page 22 in Publication 946. File free 2012 tax return Computer software that is not a section 197 intangible as described in Computer software on page 5 in Publication 946. File free 2012 tax return (The cost of some computer software is treated as part of the cost of hardware and is depreciated under MACRS. File free 2012 tax return ) Qualified leasehold improvement property (defined later). File free 2012 tax return It meets the following tests (explained later under Tests To Be Met). File free 2012 tax return Acquisition date test. File free 2012 tax return Placed in service date test. File free 2012 tax return Original use test. File free 2012 tax return It is not excepted property (explained later under Excepted Property). File free 2012 tax return Qualified leasehold improvement property. File free 2012 tax return    Generally, this is any improvement to an interior part of a building that is nonresidential real property, provided all of the following requirements are met. File free 2012 tax return The improvement is made under or pursuant to a lease by the lessee (or any sublessee) or the lessor of that part of the building. File free 2012 tax return That part of the building is to be occupied exclusively by the lessee (or any sublessee) of that part. File free 2012 tax return The improvement is placed in service more than 3 years after the date the building was first placed in service. File free 2012 tax return   However, a qualified leasehold improvement does not include any improvement for which the expenditure is attributable to any of the following. File free 2012 tax return The enlargement of the building. File free 2012 tax return Any elevator or escalator. File free 2012 tax return Any structural component benefiting a common area. File free 2012 tax return The internal structural framework of the building. File free 2012 tax return   Generally, a binding commitment to enter into a lease is treated as a lease and the parties to the commitment are treated as the lessor and lessee. File free 2012 tax return However, a binding commitment between related persons is not treated as a lease. File free 2012 tax return Related persons. File free 2012 tax return   For this purpose, the following are related persons. File free 2012 tax return Members of an affiliated group. File free 2012 tax return The persons listed in items (1) through (9) under Related persons on page 8 of Publication 946 (except that “80% or more” should be substituted for “more than 10%” each place it appears). File free 2012 tax return An executor and a beneficiary of the same estate. File free 2012 tax return Tests To Be Met To qualify for the special depreciation allowance, the property must meet all of the following tests. File free 2012 tax return Acquisition date test. File free 2012 tax return    Generally, you must have acquired the property either: After September 10, 2001, and before September 11, 2004, but only if no written binding contract for the acquisition was in effect before September 11, 2001, or Pursuant to a written binding contract entered into after September 10, 2001, and before September 11, 2004. File free 2012 tax return   Property you manufacture, construct, or produce for your own use meets this test if you began the manufacture, construction, or production of the property after September 10, 2001, and before September 11, 2004. File free 2012 tax return Placed in service date test. File free 2012 tax return   Generally, the property must be placed in service for use in your trade or business or for the production of income after September 10, 2001, and before January 1, 2005. File free 2012 tax return   If you sold property you placed in service after September 10, 2001, and you leased it back within 3 months after the property was originally placed in service, the property is treated as placed in service no earlier than the date it is used under the leaseback. File free 2012 tax return Original use test. File free 2012 tax return   The original use of the property must have begun with you after September 10, 2001. File free 2012 tax return “Original use” means the first use to which the property is put, whether or not by you. File free 2012 tax return Additional capital expenditures you incurred after September 10, 2001, to recondition or rebuild your property meet the original use test. File free 2012 tax return Excepted Property The following property does not qualify for the special depreciation allowance. File free 2012 tax return Property used by any person before September 11, 2001. File free 2012 tax return Property required to be depreciated using ADS. File free 2012 tax return This includes listed property used 50% or less in a qualified business use. File free 2012 tax return Qualified New York Liberty Zone leasehold improvement property (defined next). File free 2012 tax return Qualified New York Liberty Zone leasehold improvement property. File free 2012 tax return   This is any qualified leasehold improvement property (as defined earlier) if all of the following requirements are met. File free 2012 tax return The improvement is to a building located in the New York Liberty Zone (defined later under New York Liberty Zone Benefits). File free 2012 tax return The improvement is placed in service after September 10, 2001, and before January 1, 2007. File free 2012 tax return No written binding contract for the improvement was in effect before September 11, 2001. File free 2012 tax return Election Not To Claim the Allowance You can elect not to claim the special depreciation allowance for qualified property. File free 2012 tax return If you make this election for any property, it applies to all property in the same property class placed in service during the year. File free 2012 tax return To make this election, attach a statement to your return indicating you elect not to claim the allowance and the class of property for which you are making the election. File free 2012 tax return When to make election. File free 2012 tax return   Generally, you must make the election on a timely filed tax return (including extensions) for the year in which you place the property in service. File free 2012 tax return   However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the original return (not including extensions). File free 2012 tax return Attach the election statement to the amended return. File free 2012 tax return At the top of the election statement, write “Filed pursuant to section 301. File free 2012 tax return 9100–2. File free 2012 tax return ” Revoking an election. File free 2012 tax return   Once you elect not to deduct the special depreciation allowance for a class of property, you cannot revoke the election without IRS consent. File free 2012 tax return A request to revoke the election is subject to a user fee. File free 2012 tax return Rules for Returns Filed Before June 1, 2002 The following rules apply if you placed qualified property in service after September 10, 2001, and filed your return before June 1, 2002. File free 2012 tax return The rules apply to returns for the following years. File free 2012 tax return 2000 fiscal years that end after September 10, 2001. File free 2012 tax return 2001 calendar and fiscal years. File free 2012 tax return Claiming the allowance. File free 2012 tax return   If you did not claim the allowance on your return and did not make the election not to claim the allowance, you can do either of the following to claim the allowance. File free 2012 tax return File an amended return by the due date (not including extensions) of your return for the year following the year the property was placed in service. File free 2012 tax return Write “Filed Pursuant to Rev. File free 2012 tax return Proc. File free 2012 tax return 2002–33” at the top of the amended return. File free 2012 tax return File Form 3115, Application for Change in Accounting Method, with your return for the year following the year the property was placed in service. File free 2012 tax return Your return must be filed by the due date (including extensions). File free 2012 tax return Write “Automatic Change Filed Under Rev. File free 2012 tax return Proc. File free 2012 tax return 2002–33” on the appropriate line of Form 3115. File free 2012 tax return You must also file a copy (with signature) of the completed Form 3115 with the IRS National Office no later than when you file the original with your return. File free 2012 tax return For more information about filing Form 3115, including the address to send it to, see Revenue Procedure 2002–9, Revenue Procedure 2002–19, and Revenue Procedure 2002–33. File free 2012 tax return Example 1. File free 2012 tax return You are an individual and you use the calendar year. File free 2012 tax return You placed qualified property in service for your business in December 2001. File free 2012 tax return You filed your 2001 income tax return before April 15, 2002. File free 2012 tax return You did not claim the special depreciation allowance for the property and did not make the election not to claim the allowance. File free 2012 tax return You can claim the special allowance by filing an amended 2001 return by April 15, 2003, with “Filed Pursuant to Rev. File free 2012 tax return Proc. File free 2012 tax return 2002–33” at the top of the amended return. File free 2012 tax return You must file an amended return by April 15, 2003, even if you get an extension of time to file your 2002 tax return. File free 2012 tax return Example 2. File free 2012 tax return The facts concerning your 2001 return are the same as in Example 1. File free 2012 tax return In addition, you got an automatic 4-month extension of time (to August 15, 2003) to file your 2002 return. File free 2012 tax return You can claim the special allowance by filing a Form 3115 (with “Filed Pursuant to Rev. File free 2012 tax return Proc. File free 2012 tax return 2002–33” on the appropriate line) with your 2002 return by August 15, 2003. File free 2012 tax return You must also file a copy of this Form 3115 with the IRS National Office no later than when you file your 2002 return. File free 2012 tax return Electing not to claim the allowance. File free 2012 tax return   Generally, you have elected not to claim the special depreciation allowance for a class of property if you: Filed your return timely (including extensions) for the year you placed qualified property in service and indicated on a statement with the return that you are not claiming the allowance, or Filed your return timely and filed an amended return within 6 months of the due date of the original return (not including extensions) and indicated on a statement with the amended return that you are not claiming the allowance. File free 2012 tax return The statement must indicate that you are not deducting the special depreciation allowance and the class of property to which the election applies. File free 2012 tax return The statement can be either attached to or written on the return. File free 2012 tax return You can, for example, write “not deducting 30%” on Form 4562. File free 2012 tax return Deemed election. File free 2012 tax return   If you have not followed either of the procedures described above to elect not to claim the allowance, you may still be treated as making the election. File free 2012 tax return You will be treated as making the election if you meet both of the following conditions. File free 2012 tax return You filed your return for the year you placed the property in service and claimed depreciation, but not the special allowance, for any class of property. File free 2012 tax return You do not file an amended return or a Form 3115 within the time prescribed for claiming the special allowance. File free 2012 tax return See Claiming the allowance, earlier. File free 2012 tax return Passenger Automobiles The limit on your depreciation deduction (including any section 179 deduction) for any passenger automobile that is qualified property (defined earlier) placed in service after September 10, 2001, and for which you claim the special depreciation allowance is increased. File free 2012 tax return Generally, the limit is increased from $3,060 to $7,660. File free 2012 tax return However, if the automobile is a qualified electric car, the limit is increased from $9,280 to $23,080 ($22,980 if placed in service in 2002). File free 2012 tax return Table 1 shows the maximum deduction amounts for 2001. File free 2012 tax return Table 1. File free 2012 tax return Maximum Deduction for 2001 Qualified Vehicle Placed in Service Before Sept. File free 2012 tax return 11 Placed in Service After Sept. File free 2012 tax return 10 Passenger automobile $3,060 $7,660 Electric car 9,280 23,080 1 1$22,980 if you place an electric car in service in 2002. File free 2012 tax return Election not to claim the allowance. File free 2012 tax return   The increased maximum depreciation deduction does not apply if you elected not to claim the special depreciation allowance as explained earlier under Election Not To Claim the Allowance and Rules for Returns Filed Before June 1, 2002. File free 2012 tax return New York Liberty Zone Benefits Several benefits are available for property you place in service in the New York Liberty Zone (Liberty Zone). File free 2012 tax return They include a special depreciation allowance for the year you place the property in service, an increased section 179 deduction, and the classification of certain leasehold improvement property as 5-year property. File free 2012 tax return Area defined. File free 2012 tax return   The New York Liberty Zone is the area located on or south of Canal Street, East Broadway (east of its intersection with Canal Street), or Grand Street (east of its intersection with East Broadway) in the Borough of Manhattan in the City of New York, New York. File free 2012 tax return Special Liberty Zone Depreciation Allowance You can take a special depreciation allowance for qualified Liberty Zone property you place in service after September 10, 2001. File free 2012 tax return The allowance is an additional deduction of 30% of the property's depreciable basis. File free 2012 tax return To figure the depreciable basis, you must first multiply the property's cost or other basis by the percentage of business/investment use and then reduce that amount by any section 179 deduction and certain other deductions and credits for the property. File free 2012 tax return See What Is the Basis for Depreciation? on page 23 in Publication 946 for more information on figuring depreciable basis. File free 2012 tax return The allowance is deductible for both regular tax and alternative minimum tax (AMT) purposes. File free 2012 tax return There is no AMT adjustment required for any depreciation figured on the remaining basis of the property. File free 2012 tax return In the year you claim the allowance (generally the year you place the property in service), you must reduce the depreciable basis of the property by the allowance before figuring your regular depreciation deduction. File free 2012 tax return You cannot claim the special Liberty Zone depreciation allowance for property eligible for the special depreciation allowance explained earlier in Qualified Property under Special Depreciation Allowance. File free 2012 tax return Qualified property is eligible for only one special depreciation allowance. File free 2012 tax return Example 1. File free 2012 tax return On November 1, 2001, you bought and placed in service in your business, which is in the Liberty Zone, qualified Liberty Zone property that cost $200,000. File free 2012 tax return You did not elect to claim a section 179 deduction. File free 2012 tax return You can deduct 30% of the cost ($60,000) as a special Liberty Zone depreciation allowance for 2001. File free 2012 tax return You use the remaining $140,000 of cost to figure your regular depreciation deduction for 2001 and later years. File free 2012 tax return Example 2. File free 2012 tax return The facts are the same as in Example 1, except that you choose to deduct $59,000 of the property's cost as a section 179 deduction. File free 2012 tax return (See Increased Section 179 Deduction, later, for information concerning how this section 179 deduction amount is figured). File free 2012 tax return You use the remaining $141,000 of cost to figure your special Liberty Zone depreciation allowance of $42,300 ($141,000 × 30%). File free 2012 tax return You use the remaining $98,700 of cost to figure your regular depreciation deduction for 2001 and later years. File free 2012 tax return Qualified Liberty Zone Property For a 2001 calendar or fiscal year and a 2000 fiscal year that ends after September 10, 2001, property qualifies for the special Liberty Zone depreciation allowance if it meets the following requirements. File free 2012 tax return It is one of the following types of property. File free 2012 tax return Used property depreciated under MACRS with a recovery period of 20 years or less. File free 2012 tax return See Can You Use MACRS To Depreciate Your Property and Which Recovery Period Applies? on pages 7 and 23, respectively, in Publication 946. File free 2012 tax return Used water utility property. File free 2012 tax return See 25-year property on page 22 in Publication 946. File free 2012 tax return Used computer software that is not a section 197 intangible as described in Computer software on page 5 in Publication 946. File free 2012 tax return (The cost of some computer software is treated as part of the cost of hardware and is depreciated under MACRS. File free 2012 tax return ) Certain nonresidential real property and residential rental property (defined later). File free 2012 tax return It meets the following tests (explained later under Tests to be met). File free 2012 tax return Acquisition date test. File free 2012 tax return Placed in service date test. File free 2012 tax return Substantial use test. File free 2012 tax return Original use test. File free 2012 tax return It is not excepted property (explained later under Excepted property). File free 2012 tax return Nonresidential real property and residential rental property. File free 2012 tax return   This property is qualifying property only to the extent it rehabilitates real property damaged, or replaces real property destroyed or condemned, as a result of the terrorist attack of September 11, 2001. File free 2012 tax return Property is treated as replacing destroyed or condemned property if, as part of an integrated plan, such property replaces real property included in a continuous area that includes real property destroyed or condemned. File free 2012 tax return   For these purposes, real property is considered destroyed (or condemned) only if an entire building or structure was destroyed (or condemned) as a result of the terrorist attack. File free 2012 tax return Otherwise, the property is considered damaged real property. File free 2012 tax return For example, if certain structural components of a building (such as walls, floors, or plumbing fixtures) are damaged or destroyed as a result of the terrorist attack, but the building is not destroyed (or condemned), then only costs related to replacing the damaged or destroyed structural components qualify for the special Liberty Zone depreciation allowance. File free 2012 tax return Tests to be met. File free 2012 tax return   To qualify for the special Liberty Zone depreciation allowance, your property must meet all of the following tests. File free 2012 tax return Acquisition date test. File free 2012 tax return   You must have acquired the property by purchase after September 10, 2001, and there must not have been a binding written contract for the acquisition in effect before September 11, 2001. File free 2012 tax return   For information on the acquisition of property by purchase, see Property Acquired by Purchase on page 15 of Publication 946. File free 2012 tax return   Property you manufacture, construct, or produce for your own use meets this test if you began the manufacture, construction, or production of the property after September 10, 2001. File free 2012 tax return Placed in service date test. File free 2012 tax return   Generally, the property must be placed in service for use in your trade or business or for the production of income before January 1, 2007 (January 1, 2010, in the case of qualifying nonresidential real property and residential rental property). File free 2012 tax return   If you sold property you placed in service after September 10, 2001, and you leased it back within 3 months after the property was originally placed in service, the property is treated as placed in service no earlier than the date it is used under the leaseback. File free 2012 tax return Substantial use test. File free 2012 tax return   Substantially all use of the property must be in the Liberty Zone and in the active conduct of your trade or business in the Liberty Zone. File free 2012 tax return Original use test. File free 2012 tax return   The original use of the property in the Liberty Zone must have begun with you after September 10, 2001. File free 2012 tax return   Used property can be qualified Liberty Zone property if it has not previously been used within the Liberty Zone. File free 2012 tax return Also, additional capital expenditures you incurred after September 10, 2001, to recondition or rebuild your property meet the original use test if the original use of the property in the Liberty Zone began with you. File free 2012 tax return Excepted property. File free 2012 tax return   The following property does not qualify for the special Liberty Zone depreciation allowance. File free 2012 tax return Property eligible for the special depreciation allowance explained earlier in Qualified Property under Special Depreciation Allowance. File free 2012 tax return Property required to be depreciated using ADS. File free 2012 tax return This includes listed property used 50% or less in a qualified business use. File free 2012 tax return Qualified New York Liberty Zone leasehold improvement property (defined earlier in Excepted Property under Special Depreciation Allowance). File free 2012 tax return Example. File free 2012 tax return In December 2001, you bought and placed in service in your business in the Liberty Zone the following property. File free 2012 tax return New office furniture with a MACRS recovery period of 7 years. File free 2012 tax return A used computer with a MACRS recovery period of 5 years. File free 2012 tax return The computer had not previously been used within the Liberty Zone. File free 2012 tax return Because the office furniture is new property, it qualifies for the special depreciation allowance, but not the special Liberty Zone depreciation allowance. File free 2012 tax return Because the computer is used property that had not previously been used in the Liberty Zone, it qualifies for the special Liberty Zone depreciation allowance, but not the special depreciation allowance. File free 2012 tax return Election Not To Claim the Liberty Zone Allowance You can elect not to claim the special Liberty Zone depreciation allowance for qualified property. File free 2012 tax return If you make this election for any property, it applies to all property in the same property class placed in service during the year. File free 2012 tax return To make this election, attach a statement to your return indicating you elect not to claim the allowance and the class of property for which you are making the election. File free 2012 tax return When to make the election. File free 2012 tax return   Generally, you must make the election on a timely filed tax return (including extensions) for the year in which you place the property in service. File free 2012 tax return   However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the original return (not including extensions). File free 2012 tax return Attach the election statement to the amended return. File free 2012 tax return At the top of the election statement, write “Filed pursuant to section 301. File free 2012 tax return 9100–2. File free 2012 tax return ” Revoking an election. File free 2012 tax return   Once you elect not to deduct the special Liberty Zone depreciation allowance for a class of property, you cannot revoke the election without IRS consent. File free 2012 tax return A request to revoke the election is subject to a user fee. File free 2012 tax return Returns filed before June 1, 2002. File free 2012 tax return   The rules that apply to the special depreciation allowance discussed earlier in Rules for Returns Filed Before June 1, 2002 under Special Depreciation Allowance also apply to the special Liberty Zone depreciation allowance. File free 2012 tax return Increased Section 179 Deduction Under section 179 of the Internal Revenue Code, you can choose to recover all or part of the cost of certain qualifying property, up to a limit, by deducting it in the year you place the property in service. File free 2012 tax return For tax years beginning in 2000, that limit was $20,000. File free 2012 tax return For tax years beginning in 2001 and 2002, that limit is generally $24,000. File free 2012 tax return If the cost of qualifying section 179 property placed in service in a year is over $200,000, you must reduce the dollar limit (but not below zero) by the amount of the cost over $200,000. File free 2012 tax return Increased Dollar Limit The dollar limit on the section 179 deduction is increased for certain property placed in service in the Liberty Zone. File free 2012 tax return The increase is the smaller of the following amounts. File free 2012 tax return $35,000. File free 2012 tax return The cost of section 179 property that is qualified Liberty Zone property placed in service during the year. File free 2012 tax return If you use the revised 2001 Form 4562 (dated March 2002) for a tax year beginning in 2000, you must reduce the section 179 dollar limit to $20,000 before adding the additional amount for qualified property. File free 2012 tax return Qualified property. File free 2012 tax return   To qualify for the increased section 179 deduction, your property must be section 179 property that is either: Qualified Liberty Zone property, or Property that would be qualified Liberty Zone property except that it is eligible for the special depreciation allowance. File free 2012 tax return Qualified Liberty Zone property is explained earlier in Qualified Liberty Zone Property under Special Liberty Zone Depreciation Allowance. File free 2012 tax return Property eligible for the special depreciation allowance is explained earlier in Qualified Property under Special Depreciation Allowance. File free 2012 tax return For information on the requirements that must be met for property to qualify for the section 179 deduction, see What Property Qualifies? on page 14 of Publication 946. File free 2012 tax return Example 1. File free 2012 tax return In 2002, you place in service in your business, which is in the Liberty Zone, qualified property (defined earlier) costing $25,000. File free 2012 tax return Because this cost is less than $35,000, the dollar limit on the section 179 deduction is increased by $25,000 to $49,000 ($24,000 + $25,000). File free 2012 tax return Example 2. File free 2012 tax return In 2002, you place in service in your business, which is in the Liberty Zone, qualified property (defined earlier) costing $75,000. File free 2012 tax return Because $35,000 is less than the cost of the property you place in service, the dollar limit on the section 179 deduction you can claim is increased by $35,000 to $59,000 ($24,000 + $35,000). File free 2012 tax return Reduced Dollar Limit Generally, you must reduce the dollar limit for a year by the cost of qualifying section 179 property placed in service in the year that is more than $200,000. File free 2012 tax return However, if the cost of your Liberty Zone property exceeds $200,000, you take into account only 50% (instead of 100%) of the cost of qualified property placed in service in a year. File free 2012 tax return Example. File free 2012 tax return In 2002, you place in service in your business, which is in the Liberty Zone, qualified property costing $460,000. File free 2012 tax return Your increased dollar limit is $59,000 ($35,000 + $24,000). File free 2012 tax return Because 50% of the cost of the property you place in service ($230,000) is $30,000 more than $200,000, you must reduce your $59,000 dollar limit to $29,000 ($59,000 - $30,000). File free 2012 tax return Recapture Rules Rules similar to those explained on page 20 of Publication 946 under When Must You Recapture the Deduction? apply with respect to any qualified property you stop using in the Liberty Zone. File free 2012 tax return Returns Filed Before June 1, 2002 If you filed a return before June 1, 2002, and did not deduct the increased section 179 amount for qualified property placed in service after September 10, 2001, you can deduct the increased amount by filing an amended return by the due date (not including extensions) of the return for the year after the year the property was placed in service. File free 2012 tax return This rule applies to returns for the following years. File free 2012 tax return 2000 fiscal years that end after September 10, 2001. File free 2012 tax return 2001 calendar and fiscal years. File free 2012 tax return On the amended return, write “Filed Pursuant to Rev. File free 2012 tax return Proc. File free 2012 tax return 2002–33. File free 2012 tax return ” Liberty Zone Leasehold Improvement Property Qualified Liberty Zone leasehold improvement property (described earlier in Qualified Property under Special Depreciation Allowance) is 5-year property. File free 2012 tax return This means that it is depreciated over a recovery period of 5 years. File free 2012 tax return For information about recovery periods, see Which Recovery Period Applies? on page 23 of Publication 946. File free 2012 tax return The straight-line method must be used with respect to qualified Liberty Zone leasehold improvement property. File free 2012 tax return Under ADS, the recovery period for qualified Liberty Zone leasehold improvement property is 9 years. File free 2012 tax return Returns Filed Before June 1, 2002 If you filed either of the following returns before June 1, 2002, and did not depreciate qualified Liberty Zone leasehold improvement property placed in service during the tax year as 5-year property using the straight line method, you should file an amended return before you file your return for the year after the year the property was placed in service. File free 2012 tax return Your 2000 fiscal year return (for a 2000 fiscal year that ends after September 10, 2001). File free 2012 tax return Your 2001 calendar or fiscal year return. File free 2012 tax return On the amended return, write “Filed Pursuant to Rev. File free 2012 tax return Proc. File free 2012 tax return 2002–33. File free 2012 tax return ” Table 2. File free 2012 tax return Rules for Returns Filed Before June 1, 2002 Note:This chart highlights the rules for returns affected by the Job Creation and Worker Assistance Act of 2002 that were filed before June 1, 2002, without accounting for any of the new benefits under the law. File free 2012 tax return See the text for definitions and examples. File free 2012 tax return Do not rely on this chart alone. File free 2012 tax return IF you want to. File free 2012 tax return . File free 2012 tax return . File free 2012 tax return THEN you. File free 2012 tax return . File free 2012 tax return . File free 2012 tax return BY. File free 2012 tax return . File free 2012 tax return . File free 2012 tax return claim the special depreciation allowance or special Liberty Zone depreciation allowance • must file an amended return • the due date (not including extensions) of your return for the year after the year the property was placed in service, or • must file Form 3115, Application for Change in Accounting Method, with your return for the year after the year the property was placed in service • the due date (including extensions) of your return for the year after the year the property was placed in service, and • must file a copy of your completed Form 3115 with the IRS National Office • the date you file the original Form 3115 with your return for the year after the year the property was placed in service. File free 2012 tax return elect not to claim the special depreciation allowance or the special Liberty Zone depreciation allowance 1 • must have filed your return timely for the year the property was placed in service, and   • must file an amended return stating you are not claiming the allowance • the date that is 6 months after the due date of the original return (not including extensions). File free 2012 tax return deduct the increased section 179 amount • must file an amended return • the due date (not including extensions) of your return for the year after the year the property was placed in service. File free 2012 tax return use a 5-year recovery period for depreciating qualified Liberty Zone leasehold improvement property • should file an amended return • the date you file your return for the year after the year the property was placed in service. File free 2012 tax return 1See also Deemed election under Rules for Returns Filed Before June 1, 2002, earlier. 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