Tag Archives: Tax Forms

Form 4562 – Depreciation and Amortization

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Today’s post is about IRS Form 4562 and is a companion piece to an earlier post: IRS Form 4562: Information and Instructions

The purpose of Form 4562 is to allow a business to claim a deduction for depreciation and amortization. This form is also used to expense certain property under Section 179 and list any automobiles or listed property with business or investment use.

The summary form consists of six sections over two pages. A stand-alone fixed asset software package like Bassets eDepreciation can produce all the detail necessary for the supporting schedules and summarize the totals for summary form. Here is an overview of information required on Form 4562:

 

 

Summary Form

  • Page 1
    • Part I – Election to Expense Certain Tangible Property (Section 179)
    • Part II – Special Depreciation Allowance and Other Depreciation
    • Part III – MACRS Depreciation Allowance for Assets Placed in Service During the Current Tax Year
    • Part IV – Summary
  • Page 2
    • Part V – Listed Property
    • Part VI – Amortization

Schedules

  • Part I – Election to Expense Certain Tangible Property (Section 179)
  • Part III – MACRS Depreciation for Asset Placed in Service During Current Tax Year
  • Part V – Listed Property
  • Part VI – Amortization allows deduct part of certain capital costs over a fixed period

 

For more information, visit the following links at the IRS web site.

Detailed Instructions: http://www.irs.gov/pub/irs-pdf/i4562.pdf

Form 4562: http://www.irs.gov/pub/irs-pdf/f4562.pdf

 

Questions or comments about this post? We invite you to respond in the space below.

More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.

Form 4626 AMT: How and When to fill out the Alternative Minimum Tax form

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Businesses are required to use IRS Form 4626 to determine the Alternative Minimum Tax (AMT) under section 55 that they are held liable for, unless they qualify as exempt.  This post will address the purposes of form 4626, as well as the instructions for the form.  If you are new to filing, and wonder what AMT is altogether, you are in the right place.

Form 4626

(Click Image for actual PDF form)

Corporate Alternative Minimum Taxes are calculated in addition to regular taxes.  Companies must then compare the two, and are obligated to pay the higher amount.  The initial reasoning behind the mandated AMT was to prevent wealthy corporations from using too many tax loopholes that could be found in the regular tax system.  Created under the Tax Reform Act of 1986, the AMT has been considered by many to be irrelevant, and a burden to taxpayers.  Still, it serves as a great source of income to the government, and many feel that it would be too costly to repeal it.  So, in the meantime, companies (and many individuals for that matter) are forced to pay it.  Thus, below, we have provided the information you need to know in determining your company’s AMT payments, starting with the IRS stated qualifications for the filing the form.

Generally, companies must file Form 4626 if either of the following apply.

  • The corporation’s taxable income or (loss) before the net operating loss (NOL) deduction plus its adjustments and preferences total more than $40,000 or, if smaller, its allowable exemption amount.
  • The corporation claims any general business credit, any qualified electric vehicle credit, or the credit for prior year minimum tax.

IMPORTANT NOTE:  If the corporation is a “small corporation” exempt from the AMT (as is explained in detail HERE on  the actual form), do not file Form 4626.

Despite in many ways being outdated, form 4626 is something that many businesses still must file, and all businesses should at least be aware of.  If  you need any help in understanding the form, or if you are uncertain as to whether or not your company is one that must fill it out, feel free to contact us below or on the questions page.  Also, how do you feel about the AMT in general?  Do you hate it and think it should be repealed or amended?  Or do you think it still serves a purpose in thwarting a usage of too many tax loopholes?  Let us know any ideas or issues you have.

More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.

Form 4797: How and when to fill it out

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For those businesses that have sold any business property within the last year, the appropriate IRS form needed for filling would be IRS form 4797.  Several reasons to use this form are stated below as they appear on the IRS website.  Also, it is important to note that for 2009 filing, there are some new rules concerning sales of homes used for business purposes.  Below are the IRS stated reasons for using this form to report:

  1. The sale or exchange of:
    1. Property used in your trade or business;
    2. Depreciable and amortizable property;
    3. Oil, gas, geothermal, or other mineral property
    4. Section 126 Property
  2. The involuntary conversion (from other than casualty or theft) of property used in your trade or business and capital assets held in connection with a trade or business or a transaction entered into for profit.
  3. The disposition of capital assets not reported on schedule D.
  4. The gain or loss (including any related recapture) for partners and S corporations shareholders from certain section 179 property dispositions by partnerships (other than electing large partnerships) and S corporations.
  5. The computation of recapture amounts under section 179 and 280F(b)(2) when the business use of section 179 or listed property decreases to 50% or less

form-4797-sale-of-business-property1

Many people find confusion with whether or not use of this form is appropriate for their needs, and if it is, how exactly it should be filled out due to the many rules that apply.  To see these rules and the complete set of instructions offered by the IRS, click this link.  Once you decide you are comfortable and understanding, this is the actual form that you will be filling out.  If you take a look at it, you will notice that it is divided into four sections.  If you are like many who when they attempt to do this and find a need for more help, we would be happy to try to assist any problems or questions you leave us in the comments section or question page.

More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.

IRS Form 4562: Information and Instructions

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IRS Tax Form 4562 will begin a new series of posts covering the various tax forms and publications offered by the IRS when filing for depreciation and amortization expenses.  Form 4562 is used by a business to report the deductible expense related to any business property purchased during the given tax year.  Business property includes tangible assets that are either personal property (machinery, computers) or real property (buildings, building improvements) which can be depreciated.  Intangible property (computer software, patents) can be amortized over a period of time.  Below is a screen shot of the 2009 Form 4562.  Clicking the image will bring up the entire pdf file which you can fill out.

irs-form-4652

To find filing instructions for the form, simply click on this link which will direct you to the IRS website.

Once there, you will find amongst other things, information pertaining to the following:

1)  The Purpose of the form

  • Claim your deduction for depreciation and amortization,
  • Make the election under section 179 to expense certain property, and
  • Provide information on the business/investment use of automobiles and other listed property.

2)  Special Depreciation Allowance including:

3)  Recovery Periods and Class Lives

4)  Mid-Month, Mid-Quarter, and Half-Year Conventions

We  know how much everyone looks forward to completing this form.  So, if we can make your life any easier with this process, or help with any other IRS Forms, please ask us below, or on the questions page.  Furthermore, should you have any questions about filling out the forms, or which forms are applicable, feel free to ask as well.

More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.