Tax Act 2009
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Tax Act 2009
Tax act 2009 Publication 3991 - Introductory Material Table of Contents Introduction Introduction All of the changes discussed in this publication resulted from the Job Creation and Worker Assistance Act of 2002. Tax act 2009 This publication highlights tax law changes that took effect retroactively for 2001 and others that take effect in 2002 and later years. Tax act 2009 The chapters are divided into separate sections based on when the changes take effect. Tax act 2009 For example, this publication covers the following topics. Tax act 2009 Tax benefits for the area of New York City damaged in terrorist attacks on September 11, 2001. Tax act 2009 New deduction available for educator expenses. Tax act 2009 Limit on the use of the non-accrual experience method of accounting. Tax act 2009 Pension changes such as the new tax credit for certain pension plan startup costs, an increased SEP contribution limit, figuring 403(b) catch-up contributions, and a provision for deemed IRAs. Tax act 2009 Extension of the welfare-to-work credit and work opportunity credit. Tax act 2009 New 5-year carryback rule for net operating losses (NOLs). Tax act 2009 See the discussion of each topic for more information. Tax act 2009 Certain changes had a major effect on two of the publications we issued for 2001. Tax act 2009 We published supplements to those two publications and they have been included in this publication as follows. Tax act 2009 Chapter 4 contains the supplement to Publication 463, Travel, Entertainment, Gift, and Car Expenses. Tax act 2009 This discusses the increase in the amount of depreciation deduction for certain automobiles. Tax act 2009 Chapter 5 contains the supplement to Publication 946, How To Depreciate Property. Tax act 2009 This discusses the special depreciation allowance for property acquired after September 10, 2001. Tax act 2009 Adjusting your withholding or estimated tax payments for 2002. Tax act 2009 If your tax for 2002 will be more or less than your 2001 tax, you may need to adjust your withholding or estimated tax payments accordingly. Tax act 2009 If your tax will decrease, you can get the benefit of lower taxes throughout the year. Tax act 2009 If you will owe more tax, you can avoid a penalty when you file your tax return. Tax act 2009 See the following table for forms and publications that will help you adjust your withholding or estimated tax payments. Tax act 2009 See chapter 6 for information on ordering forms and publications. Tax act 2009 To adjust your. Tax act 2009 . Tax act 2009 . Tax act 2009 . Tax act 2009 Get Form. Tax act 2009 . Tax act 2009 . Tax act 2009 And Publication. Tax act 2009 . Tax act 2009 . Tax act 2009 Withholding W–4, Employee's Withholding Allowance Certificate 919, How Do I Adjust My Tax Withholding? Estimated tax payments 1040–ES, Estimated Tax for Individuals 505, Tax Withholding and Estimated Tax Photographs of missing children. Tax act 2009 The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Tax act 2009 Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Tax act 2009 You can help bring these children home by looking at the photographs and calling 1–800–THE–LOST (1–800–843–5678) if you recognize a child. Tax act 2009 Comments and suggestions. Tax act 2009 We welcome your comments about this publication. Tax act 2009 You can e-mail us while visiting our web site at www. Tax act 2009 irs. Tax act 2009 gov. Tax act 2009 You can write to us at the following address: Internal Revenue Service Technical Publications Branch W:CAR:MP:FP:P 1111 Constitution Ave. Tax act 2009 NW Washington, DC 20224 We respond to many letters by telephone. Tax act 2009 Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Tax act 2009 Prev Up Next Home More Online Publications
Understanding your CP53 Notice
We can't provide your refund through direct deposit, so we're sending you a refund check by mail.
What you need to do
Your refund should arrive 3-4 weeks from the date of your notice. Please call the number listed on your notice if you haven't received your refund check after 4 weeks.
Answers to Common Questions
Why can’t the IRS send me a direct deposit refund for my return from two years ago?
Direct Deposit is only available for current year returns. All other refunds are paid by check.
I just moved. Can you recall the check and send a new one to my new address?
Refund checks are mailed only to the address of record, which is the address provided on the tax return or the result of a permanent address change request submitted after the return is filed. You may request a change of address by calling the number shown on your notice, or by filing Form 8822, Change of Address.
What do I need to do to get my refund through direct deposit next year?
When filing your tax return, complete the requested banking information in the "Refund" section of your tax form if you want to direct deposit the entire amount into one account. If you want to deposit into more than one account, you must file Form 8888, Direct Deposit of Refund to More Than One Account, with your return.
Tips for next year
Consider filing your taxes electronically. Filing online can help you avoid mistakes and find credits and deductions that you may qualify for. In many cases you can file for free. Learn more about e-file.
Page Last Reviewed or Updated: 04-Mar-2014
The Tax Act 2009
Tax act 2009 3. Tax act 2009 Rent Expense Table of Contents Introduction Topics - This chapter discusses: RentConditional sales contract. Tax act 2009 Leveraged leases. Tax act 2009 Leveraged leases of limited-use property. Tax act 2009 Taxes on Leased Property Cost of Getting a Lease Improvements by Lessee Capitalizing Rent Expenses Introduction This chapter discusses the tax treatment of rent or lease payments you make for property you use in your business but do not own. Tax act 2009 It also discusses how to treat other kinds of payments you make that are related to your use of this property. Tax act 2009 These include payments you make for taxes on the property. Tax act 2009 Topics - This chapter discusses: The definition of rent Taxes on leased property The cost of getting a lease Improvements by the lessee Capitalizing rent expenses Rent Rent is any amount you pay for the use of property you do not own. Tax act 2009 In general, you can deduct rent as an expense only if the rent is for property you use in your trade or business. Tax act 2009 If you have or will receive equity in or title to the property, the rent is not deductible. Tax act 2009 Unreasonable rent. Tax act 2009 You cannot take a rental deduction for unreasonable rent. Tax act 2009 Ordinarily, the issue of reasonableness arises only if you and the lessor are related. Tax act 2009 Rent paid to a related person is reasonable if it is the same amount you would pay to a stranger for use of the same property. Tax act 2009 Rent is not unreasonable just because it is figured as a percentage of gross sales. Tax act 2009 For examples of related persons, see Related persons in chapter 2, Publication 544. Tax act 2009 Rent on your home. Tax act 2009 If you rent your home and use part of it as your place of business, you may be able to deduct the rent you pay for that part. Tax act 2009 You must meet the requirements for business use of your home. Tax act 2009 For more information, see Business use of your home in chapter 1. Tax act 2009 Rent paid in advance. Tax act 2009 Generally, rent paid in your trade or business is deductible in the year paid or accrued. Tax act 2009 If you pay rent in advance, you can deduct only the amount that applies to your use of the rented property during the tax year. Tax act 2009 You can deduct the rest of your payment only over the period to which it applies. Tax act 2009 Example 1. Tax act 2009 You are a calendar year taxpayer and you leased a building for 5 years beginning July 1. Tax act 2009 Your rent is $12,000 per year. Tax act 2009 You paid the first year's rent ($12,000) on June 30. Tax act 2009 You can deduct only $6,000 (6/12 × $12,000) for the rent that applies to the first year. Tax act 2009 Example 2. Tax act 2009 You are a calendar year taxpayer. Tax act 2009 Last January you leased property for 3 years for $6,000 a year. Tax act 2009 You paid the full $18,000 (3 × $6,000) during the first year of the lease. Tax act 2009 Each year you can deduct only $6,000, the part of the lease that applies to that year. Tax act 2009 Canceling a lease. Tax act 2009 You generally can deduct as rent an amount you pay to cancel a business lease. Tax act 2009 Lease or purchase. Tax act 2009 There may be instances in which you must determine whether your payments are for rent or for the purchase of the property. Tax act 2009 You must first determine whether your agreement is a lease or a conditional sales contract. Tax act 2009 Payments made under a conditional sales contract are not deductible as rent expense. Tax act 2009 Conditional sales contract. Tax act 2009 Whether an agreement is a conditional sales contract depends on the intent of the parties. Tax act 2009 Determine intent based on the provisions of the agreement and the facts and circumstances that exist when you make the agreement. Tax act 2009 No single test, or special combination of tests, always applies. Tax act 2009 However, in general, an agreement may be considered a conditional sales contract rather than a lease if any of the following is true. Tax act 2009 The agreement applies part of each payment toward an equity interest you will receive. Tax act 2009 You get title to the property after you make a stated amount of required payments. Tax act 2009 The amount you must pay to use the property for a short time is a large part of the amount you would pay to get title to the property. Tax act 2009 You pay much more than the current fair rental value of the property. Tax act 2009 You have an option to buy the property at a nominal price compared to the value of the property when you may exercise the option. Tax act 2009 Determine this value when you make the agreement. Tax act 2009 You have an option to buy the property at a nominal price compared to the total amount you have to pay under the agreement. Tax act 2009 The agreement designates part of the payments as interest, or that part is easy to recognize as interest. Tax act 2009 Leveraged leases. Tax act 2009 Leveraged lease transactions may not be considered leases. Tax act 2009 Leveraged leases generally involve three parties: a lessor, a lessee, and a lender to the lessor. Tax act 2009 Usually the lease term covers a large part of the useful life of the leased property, and the lessee's payments to the lessor are enough to cover the lessor's payments to the lender. Tax act 2009 If you plan to take part in what appears to be a leveraged lease, you may want to get an advance ruling. Tax act 2009 Revenue Procedure 2001-28 on page 1156 of Internal Revenue Bulletin 2001-19 contains the guidelines the IRS will use to determine if a leveraged lease is a lease for federal income tax purposes. Tax act 2009 Revenue Procedure 2001-29 on page 1160 of the same Internal Revenue Bulletin provides the information required to be furnished in a request for an advance ruling on a leveraged lease transaction. Tax act 2009 Internal Revenue Bulletin 2001-19 is available at www. Tax act 2009 irs. Tax act 2009 gov/pub/irs-irbs/irb01-19. Tax act 2009 pdf. Tax act 2009 In general, Revenue Procedure 2001-28 provides that, for advance ruling purposes only, the IRS will consider the lessor in a leveraged lease transaction to be the owner of the property and the transaction to be a valid lease if all the factors in the revenue procedure are met, including the following. Tax act 2009 The lessor must maintain a minimum unconditional “at risk” equity investment in the property (at least 20% of the cost of the property) during the entire lease term. Tax act 2009 The lessee may not have a contractual right to buy the property from the lessor at less than fair market value when the right is exercised. Tax act 2009 The lessee may not invest in the property, except as provided by Revenue Procedure 2001-28. Tax act 2009 The lessee may not lend any money to the lessor to buy the property or guarantee the loan used by the lessor to buy the property. Tax act 2009 The lessor must show that it expects to receive a profit apart from the tax deductions, allowances, credits, and other tax attributes. Tax act 2009 The IRS may charge you a user fee for issuing a tax ruling. Tax act 2009 For more information, see Revenue Procedure 2014-1 available at www. Tax act 2009 irs. Tax act 2009 gov/irb/2014-1_IRB/ar05. Tax act 2009 html. Tax act 2009 Leveraged leases of limited-use property. Tax act 2009 The IRS will not issue advance rulings on leveraged leases of so-called limited-use property. Tax act 2009 Limited-use property is property not expected to be either useful to or usable by a lessor at the end of the lease term except for continued leasing or transfer to a lessee. Tax act 2009 See Revenue Procedure 2001-28 for examples of limited-use property and property that is not limited-use property. Tax act 2009 Leases over $250,000. Tax act 2009 Special rules are provided for certain leases of tangible property. Tax act 2009 The rules apply if the lease calls for total payments of more than $250,000 and any of the following apply. Tax act 2009 Rents increase during the lease. Tax act 2009 Rents decrease during the lease. Tax act 2009 Rents are deferred (rent is payable after the end of the calendar year following the calendar year in which the use occurs and the rent is allocated). Tax act 2009 Rents are prepaid (rent is payable before the end of the calendar year preceding the calendar year in which the use occurs and the rent is allocated). Tax act 2009 These rules do not apply if your lease specifies equal amounts of rent for each month in the lease term and all rent payments are due in the calendar year to which the rent relates (or in the preceding or following calendar year). Tax act 2009 Generally, if the special rules apply, you must use an accrual method of accounting (and time value of money principles) for your rental expenses, regardless of your overall method of accounting. Tax act 2009 In addition, in certain cases in which the IRS has determined that a lease was designed to achieve tax avoidance, you must take rent and stated or imputed interest into account under a constant rental accrual method in which the rent is treated as accruing ratably over the entire lease term. Tax act 2009 For details, see section 467 of the Internal Revenue Code. Tax act 2009 Taxes on Leased Property If you lease business property, you can deduct as additional rent any taxes you have to pay to or for the lessor. Tax act 2009 When you can deduct these taxes as additional rent depends on your accounting method. Tax act 2009 Cash method. Tax act 2009 If you use the cash method of accounting, you can deduct the taxes as additional rent only for the tax year in which you pay them. Tax act 2009 Accrual method. Tax act 2009 If you use an accrual method of accounting, you can deduct taxes as additional rent for the tax year in which you can determine all the following. Tax act 2009 That you have a liability for taxes on the leased property. Tax act 2009 How much the liability is. Tax act 2009 That economic performance occurred. Tax act 2009 The liability and amount of taxes are determined by state or local law and the lease agreement. Tax act 2009 Economic performance occurs as you use the property. Tax act 2009 Example 1. Tax act 2009 Oak Corporation is a calendar year taxpayer that uses an accrual method of accounting. Tax act 2009 Oak leases land for use in its business. Tax act 2009 Under state law, owners of real property become liable (incur a lien on the property) for real estate taxes for the year on January 1 of that year. Tax act 2009 However, they do not have to pay these taxes until July 1 of the next year (18 months later) when tax bills are issued. Tax act 2009 Under the terms of the lease, Oak becomes liable for the real estate taxes in the later year when the tax bills are issued. Tax act 2009 If the lease ends before the tax bill for a year is issued, Oak is not liable for the taxes for that year. Tax act 2009 Oak cannot deduct the real estate taxes as rent until the tax bill is issued. Tax act 2009 This is when Oak's liability under the lease becomes fixed. Tax act 2009 Example 2. Tax act 2009 The facts are the same as in Example 1 except that, according to the terms of the lease, Oak becomes liable for the real estate taxes when the owner of the property becomes liable for them. Tax act 2009 As a result, Oak will deduct the real estate taxes as rent on its tax return for the earlier year. Tax act 2009 This is the year in which Oak's liability under the lease becomes fixed. Tax act 2009 Cost of Getting a Lease You may either enter into a new lease with the lessor of the property or get an existing lease from another lessee. Tax act 2009 Very often when you get an existing lease from another lessee, you must pay the previous lessee money to get the lease, besides having to pay the rent on the lease. Tax act 2009 If you get an existing lease on property or equipment for your business, you generally must amortize any amount you pay to get that lease over the remaining term of the lease. Tax act 2009 For example, if you pay $10,000 to get a lease and there are 10 years remaining on the lease with no option to renew, you can deduct $1,000 each year. Tax act 2009 The cost of getting an existing lease of tangible property is not subject to the amortization rules for section 197 intangibles discussed in chapter 8. Tax act 2009 Option to renew. Tax act 2009 The term of the lease for amortization includes all renewal options plus any other period for which you and the lessor reasonably expect the lease to be renewed. Tax act 2009 However, this applies only if less than 75% of the cost of getting the lease is for the term remaining on the purchase date (not including any period for which you may choose to renew, extend, or continue the lease). Tax act 2009 Allocate the lease cost to the original term and any option term based on the facts and circumstances. Tax act 2009 In some cases, it may be appropriate to make the allocation using a present value computation. Tax act 2009 For more information, see Regulations section 1. Tax act 2009 178-1(b)(5). Tax act 2009 Example 1. Tax act 2009 You paid $10,000 to get a lease with 20 years remaining on it and two options to renew for 5 years each. Tax act 2009 Of this cost, you paid $7,000 for the original lease and $3,000 for the renewal options. Tax act 2009 Because $7,000 is less than 75% of the total $10,000 cost of the lease (or $7,500), you must amortize the $10,000 over 30 years. Tax act 2009 That is the remaining life of your present lease plus the periods for renewal. Tax act 2009 Example 2. Tax act 2009 The facts are the same as in Example 1, except that you paid $8,000 for the original lease and $2,000 for the renewal options. Tax act 2009 You can amortize the entire $10,000 over the 20-year remaining life of the original lease. Tax act 2009 The $8,000 cost of getting the original lease was not less than 75% of the total cost of the lease (or $7,500). Tax act 2009 Cost of a modification agreement. Tax act 2009 You may have to pay an additional “rent” amount over part of the lease period to change certain provisions in your lease. Tax act 2009 You must capitalize these payments and amortize them over the remaining period of the lease. Tax act 2009 You cannot deduct the payments as additional rent, even if they are described as rent in the agreement. Tax act 2009 Example. Tax act 2009 You are a calendar year taxpayer and sign a 20-year lease to rent part of a building starting on January 1. Tax act 2009 However, before you occupy it, you decide that you really need less space. Tax act 2009 The lessor agrees to reduce your rent from $7,000 to $6,000 per year and to release the excess space from the original lease. Tax act 2009 In exchange, you agree to pay an additional rent amount of $3,000, payable in 60 monthly installments of $50 each. Tax act 2009 You must capitalize the $3,000 and amortize it over the 20-year term of the lease. Tax act 2009 Your amortization deduction each year will be $150 ($3,000 ÷ 20). Tax act 2009 You cannot deduct the $600 (12 × $50) that you will pay during each of the first 5 years as rent. Tax act 2009 Commissions, bonuses, and fees. Tax act 2009 Commissions, bonuses, fees, and other amounts you pay to get a lease on property you use in your business are capital costs. Tax act 2009 You must amortize these costs over the term of the lease. Tax act 2009 Loss on merchandise and fixtures. Tax act 2009 If you sell at a loss merchandise and fixtures that you bought solely to get a lease, the loss is a cost of getting the lease. Tax act 2009 You must capitalize the loss and amortize it over the remaining term of the lease. Tax act 2009 Improvements by Lessee If you add buildings or make other permanent improvements to leased property, depreciate the cost of the improvements using the modified accelerated cost recovery system (MACRS). Tax act 2009 Depreciate the property over its appropriate recovery period. Tax act 2009 You cannot amortize the cost over the remaining term of the lease. Tax act 2009 If you do not keep the improvements when you end the lease, figure your gain or loss based on your adjusted basis in the improvements at that time. Tax act 2009 For more information, see the discussion of MACRS in Publication 946, How To Depreciate Property. Tax act 2009 Assignment of a lease. Tax act 2009 If a long-term lessee who makes permanent improvements to land later assigns all lease rights to you for money and you pay the rent required by the lease, the amount you pay for the assignment is a capital investment. Tax act 2009 If the rental value of the leased land increased since the lease began, part of your capital investment is for that increase in the rental value. Tax act 2009 The rest is for your investment in the permanent improvements. Tax act 2009 The part that is for the increased rental value of the land is a cost of getting a lease, and you amortize it over the remaining term of the lease. Tax act 2009 You can depreciate the part that is for your investment in the improvements over the recovery period of the property as discussed earlier, without regard to the lease term. Tax act 2009 Capitalizing Rent Expenses Under the uniform capitalization rules, you must capitalize the direct costs and part of the indirect costs for certain production or resale activities. Tax act 2009 Include these costs in the basis of property you produce or acquire for resale, rather than claiming them as a current deduction. Tax act 2009 You recover the costs through depreciation, amortization, or cost of goods sold when you use, sell, or otherwise dispose of the property. Tax act 2009 Indirect costs include amounts incurred for renting or leasing equipment, facilities, or land. Tax act 2009 Uniform capitalization rules. Tax act 2009 You may be subject to the uniform capitalization rules if you do any of the following, unless the property is produced for your use other than in a business or an activity carried on for profit. Tax act 2009 Produce real property or tangible personal property. Tax act 2009 For this purpose, tangible personal property includes a film, sound recording, video tape, book, or similar property. Tax act 2009 Acquire property for resale. Tax act 2009 However, these rules do not apply to the following property. Tax act 2009 Personal property you acquire for resale if your average annual gross receipts are $10 million or less for the 3 prior tax years. Tax act 2009 Property you produce if you meet either of the following conditions. Tax act 2009 Your indirect costs of producing the property are $200,000 or less. Tax act 2009 You use the cash method of accounting and do not account for inventories. Tax act 2009 Example 1. Tax act 2009 You rent construction equipment to build a storage facility. Tax act 2009 If you are subject to the uniform capitalization rules, you must capitalize as part of the cost of the building the rent you paid for the equipment. Tax act 2009 You recover your cost by claiming a deduction for depreciation on the building. Tax act 2009 Example 2. Tax act 2009 You rent space in a facility to conduct your business of manufacturing tools. Tax act 2009 If you are subject to the uniform capitalization rules, you must include the rent you paid to occupy the facility in the cost of the tools you produce. Tax act 2009 More information. Tax act 2009 For more information on these rules, see Uniform Capitalization Rules in Publication 538 and the regulations under Internal Revenue Code section 263A. Tax act 2009 Prev Up Next Home More Online Publications