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Nm Taxation And Revenue Department

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Nm Taxation And Revenue Department

Nm taxation and revenue department 6. Nm taxation and revenue department   Basis of Assets Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Cost BasisReal Property Allocating the Basis Uniform Capitalization Rules Adjusted BasisIncreases to Basis Decreases to Basis Basis Other Than CostTaxable Exchanges Involuntary Conversions Nontaxable Exchanges Property Received as a Gift Property Transferred From a Spouse Inherited Property Property Distributed From a Partnership or Corporation Introduction Your basis is the amount of your investment in property for tax purposes. Nm taxation and revenue department Use basis to figure the gain or loss on the sale, exchange, or other disposition of property. Nm taxation and revenue department Also use basis to figure depreciation, amortization, depletion, and casualty losses. Nm taxation and revenue department If you use property for both business or investment purposes and for personal purposes, you must allocate the basis based on the use. Nm taxation and revenue department Only the basis allocated to the business or investment use of the property can be depreciated. Nm taxation and revenue department Your original basis in property is adjusted (increased or decreased) by certain events. Nm taxation and revenue department For example, if you make improvements to the property, increase your basis. Nm taxation and revenue department If you take deductions for depreciation, or casualty losses, or claim certain credits, reduce your basis. Nm taxation and revenue department Keep accurate records of all items that affect the basis of your assets. Nm taxation and revenue department For information on keeping records, see chapter 1. Nm taxation and revenue department Topics - This chapter discusses: Cost basis Adjusted basis Basis other than cost Useful Items - You may want to see: Publication 535 Business Expenses 544 Sales and Other Dispositions of Assets 551 Basis of Assets 946 How To Depreciate Property See chapter 16 for information about getting publications and forms. Nm taxation and revenue department Cost Basis The basis of property you buy is usually its cost. Nm taxation and revenue department Cost is the amount you pay in cash, debt obligations, other property, or services. Nm taxation and revenue department Your cost includes amounts you pay for sales tax, freight, installation, and testing. Nm taxation and revenue department The basis of real estate and business assets will include other items, discussed later. Nm taxation and revenue department Basis generally does not include interest payments. Nm taxation and revenue department However, see Carrying charges and Capitalized interest in chapter 4 of Publication 535. Nm taxation and revenue department You also may have to capitalize (add to basis) certain other costs related to buying or producing property. Nm taxation and revenue department Under the uniform capitalization rules, discussed later, you may have to capitalize direct costs and certain indirect costs of producing property. Nm taxation and revenue department Loans with low or no interest. Nm taxation and revenue department   If you buy property on a time-payment plan that charges little or no interest, the basis of your property is your stated purchase price minus the amount considered to be unstated interest. Nm taxation and revenue department You generally have unstated interest if your interest rate is less than the applicable federal rate. Nm taxation and revenue department See the discussion of unstated interest in Publication 537, Installment Sales. Nm taxation and revenue department Real Property Real property, also called real estate, is land and generally anything built on, growing on, or attached to land. Nm taxation and revenue department If you buy real property, certain fees and other expenses you pay are part of your cost basis in the property. Nm taxation and revenue department Some of these expenses are discussed next. Nm taxation and revenue department Lump sum purchase. Nm taxation and revenue department   If you buy improvements, such as buildings, and the land on which they stand for a lump sum, allocate your cost basis between the land and improvements. Nm taxation and revenue department Allocate the cost basis according to the respective fair market values (FMVs) of the land and improvements at the time of purchase. Nm taxation and revenue department Figure the basis of each asset by multiplying the lump sum by a fraction. Nm taxation and revenue department The numerator is the FMV of that asset and the denominator is the FMV of the whole property at the time of purchase. Nm taxation and revenue department Fair market value (FMV). Nm taxation and revenue department   FMV is the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all necessary facts. Nm taxation and revenue department Sales of similar property on or about the same date may help in figuring the FMV of the property. Nm taxation and revenue department If you are not certain of the FMV of the land and improvements, you can allocate the basis according to their assessed values for real estate tax purposes. Nm taxation and revenue department Real estate taxes. Nm taxation and revenue department   If you pay the real estate taxes the seller owed on real property you bought, and the seller did not reimburse you, treat those taxes as part of your basis. Nm taxation and revenue department   If you reimburse the seller for taxes the seller paid for you, you generally can deduct that amount as a tax expense. Nm taxation and revenue department Whether or not you reimburse the seller, do not include that amount in the basis of your property. Nm taxation and revenue department Settlement costs. Nm taxation and revenue department   Your basis includes the settlement fees and closing costs for buying the property. Nm taxation and revenue department See Publication 551 for a detailed list of items you can and cannot include in basis. Nm taxation and revenue department   Do not include fees and costs for getting a loan on the property. Nm taxation and revenue department Also, do not include amounts placed in escrow for the future payment of items such as taxes and insurance. Nm taxation and revenue department Points. Nm taxation and revenue department   If you pay points to get a loan (including a mortgage, second mortgage, or line-of-credit), do not add the points to the basis of the related property. Nm taxation and revenue department You may be able to deduct the points currently or over the term of the loan. Nm taxation and revenue department For more information about deducting points, see Points in chapter 4 of Publication 535. Nm taxation and revenue department Assumption of a mortgage. Nm taxation and revenue department   If you buy property and assume (or buy the property subject to) an existing mortgage, your basis includes the amount you pay for the property plus the amount you owe on the mortgage. Nm taxation and revenue department Example. Nm taxation and revenue department If you buy a farm for $100,000 cash and assume a mortgage of $400,000, your basis is $500,000. Nm taxation and revenue department Constructing assets. Nm taxation and revenue department   If you build property or have assets built for you, your expenses for this construction are part of your basis. Nm taxation and revenue department Some of these expenses include the following costs: Land, Labor and materials, Architect's fees, Building permit charges, Payments to contractors, Payments for rental equipment, and Inspection fees. Nm taxation and revenue department   In addition, if you use your own employees, farm materials, and equipment to build an asset, do not deduct the following expenses. Nm taxation and revenue department You must capitalize them (include them in the asset's basis). Nm taxation and revenue department Employee wages paid for the construction work, reduced by any employment credits allowed. Nm taxation and revenue department Depreciation on equipment you own while it is used in the construction. Nm taxation and revenue department Operating and maintenance costs for equipment used in the construction. Nm taxation and revenue department The cost of business supplies and materials used in the construction. Nm taxation and revenue department    Do not include the value of your own labor, or any other labor you did not pay for, in the basis of any property you construct. Nm taxation and revenue department Allocating the Basis In some instances, the rules for determining basis apply to a group of assets acquired in the same transaction or to property that consists of separate items. Nm taxation and revenue department To determine the basis of these assets or separate items, there must be an allocation of basis. Nm taxation and revenue department Group of assets acquired. Nm taxation and revenue department   If you buy multiple assets for a lump sum, allocate the amount you pay among the assets. Nm taxation and revenue department Use this allocation to figure your basis for depreciation and gain or loss on a later disposition of any of these assets. Nm taxation and revenue department You and the seller may agree in the sales contract to a specific allocation of the purchase price among the assets. Nm taxation and revenue department If this allocation is based on the value of each asset and you and the seller have adverse tax interests, the allocation generally will be accepted. Nm taxation and revenue department Farming business acquired. Nm taxation and revenue department   If you buy a group of assets that makes up a farming business, there are special rules you must use to allocate the purchase price among the assets. Nm taxation and revenue department Generally, reduce the purchase price by any cash received. Nm taxation and revenue department Allocate the remaining purchase price to the other business assets received in proportion to (but not more than) their FMV and in a certain order. Nm taxation and revenue department See Trade or Business Acquired under Allocating the Basis in Publication 551 for more information. Nm taxation and revenue department Transplanted embryo. Nm taxation and revenue department   If you buy a cow that is pregnant with a transplanted embryo, allocate to the basis of the cow the part of the purchase price equal to the FMV of the cow without the implant. Nm taxation and revenue department Allocate the rest of the purchase price to the basis of the calf. Nm taxation and revenue department Neither the cost allocated to the cow nor the cost allocated to the calf is deductible as a current business expense. Nm taxation and revenue department Uniform Capitalization Rules Under the uniform capitalization rules, you must include certain direct and indirect costs in the basis of property you produce or in your inventory costs, rather than claim them as a current deduction. Nm taxation and revenue department You recover these costs through depreciation, amortization, or cost of goods sold when you use, sell, or otherwise dispose of the property. Nm taxation and revenue department Generally, you are subject to the uniform capitalization rules if you do any of the following: Produce real or tangible personal property, or Acquire property for resale. Nm taxation and revenue department However, this rule does not apply to personal property if your average annual gross receipts for the 3-tax-year period ending with the year preceding the current tax year are $10 million or less. Nm taxation and revenue department You produce property if you construct, build, install, manufacture, develop, improve, or create the property. Nm taxation and revenue department You are not subject to the uniform capitalization rules if the property is produced for personal use. Nm taxation and revenue department In a farming business, you produce property if you raise or grow any agricultural or horticultural commodity, including plants and animals. Nm taxation and revenue department Plants. Nm taxation and revenue department   A plant produced in a farming business includes the following items: A fruit, nut, or other crop-bearing tree; An ornamental tree; A vine; A bush; Sod; and The crop or yield of a plant that will have more than one crop or yield. Nm taxation and revenue department Animals. Nm taxation and revenue department   An animal produced in a farming business includes any stock, poultry or other bird, and fish or other sea life. Nm taxation and revenue department The direct and indirect costs of producing plants or animals include preparatory costs and preproductive period costs. Nm taxation and revenue department Preparatory costs include the acquisition costs of the seed, seedling, plant, or animal. Nm taxation and revenue department For plants, preproductive period costs include the costs of items such as irrigation, pruning, frost protection, spraying, and harvesting. Nm taxation and revenue department For animals, preproductive period costs include the costs of items such as feed, maintaining pasture or pen areas, breeding, veterinary services, and bedding. Nm taxation and revenue department Exceptions. Nm taxation and revenue department   In a farming business, the uniform capitalization rules do not apply to: Any animal, Any plant with a preproductive period of 2 years or less, or Any costs of replanting certain plants lost or damaged due to casualty. Nm taxation and revenue department   Exceptions (1) and (2) do not apply to a corporation, partnership, or tax shelter required to use an accrual method of accounting. Nm taxation and revenue department See Accrual Method Required under Accounting Methods in chapter 2. Nm taxation and revenue department   In addition, you can elect not to use the uniform capitalization rules for plants with a preproductive period of more than 2 years. Nm taxation and revenue department If you make this election, special rules apply. Nm taxation and revenue department This election cannot be made by a corporation, partnership, or tax shelter required to use an accrual method of accounting. Nm taxation and revenue department This election also does not apply to any costs incurred for the planting, cultivation, maintenance, or development of any citrus or almond grove (or any part thereof) within the first 4 years the trees were planted. Nm taxation and revenue department    If you elect not to use the uniform capitalization rules, you must use the alternative depreciation system for all property used in any of your farming businesses and placed in service in any tax year during which the election is in effect. Nm taxation and revenue department See chapter 7, for additional information on depreciation. Nm taxation and revenue department Example. Nm taxation and revenue department You grow trees that have a preproductive period of more than 2 years. Nm taxation and revenue department The trees produce an annual crop. Nm taxation and revenue department You are an individual and the uniform capitalization rules apply to your farming business. Nm taxation and revenue department You must capitalize the direct costs and an allocable part of indirect costs incurred due to the production of the trees. Nm taxation and revenue department You are not required to capitalize the costs of producing the annual crop because its preproductive period is 2 years or less. Nm taxation and revenue department Preproductive period of more than 2 years. Nm taxation and revenue department   The preproductive period of plants grown in commercial quantities in the United States is based on their nationwide weighted average preproductive period. Nm taxation and revenue department Plants producing the crops or yields shown in Table 6-1 have a nationwide weighted average preproductive period of more than 2 years. Nm taxation and revenue department Other plants (not shown in Table 6-1) may also have a nationwide weighted average preproductive period of more than 2 years. Nm taxation and revenue department More information. Nm taxation and revenue department   For more information on the uniform capitalization rules that apply to property produced in a farming business, see Regulations section 1. Nm taxation and revenue department 263A-4. Nm taxation and revenue department Table 6-1. Nm taxation and revenue department Plants With a Preproductive Period of More Than 2 Years Plants producing the following crops or yields have a nationwide weighted average preproductive period of more than 2 years. Nm taxation and revenue department Almonds Apples Apricots Avocados Blueberries Cherries Chestnuts Coffee beans Currants Dates Figs Grapefruit Grapes Guavas Kiwifruit Kumquats Lemons Limes Macadamia nuts Mangoes Nectarines Olives Oranges Peaches Pears Pecans Persimmons Pistachio nuts Plums Pomegranates Prunes Tangelos Tangerines Tangors Walnuts Adjusted Basis Before figuring gain or loss on a sale, exchange, or other disposition of property or figuring allowable depreciation, depletion, or amortization, you must usually make certain adjustments to the cost basis or basis other than cost (discussed later) of the property. Nm taxation and revenue department The adjustments to the original basis are increases or decreases to the cost basis or other basis which result in the adjusted basis of the property. Nm taxation and revenue department Increases to Basis Increase the basis of any property by all items properly added to a capital account. Nm taxation and revenue department These include the cost of any improvements having a useful life of more than 1 year. Nm taxation and revenue department The following costs increase the basis of property. Nm taxation and revenue department The cost of extending utility service lines to property. Nm taxation and revenue department Legal fees, such as the cost of defending and perfecting title. Nm taxation and revenue department Legal fees for seeking a decrease in an assessment levied against property to pay for local improvements. Nm taxation and revenue department Assessments for items such as paving roads and building ditches that increase the value of the property assessed. Nm taxation and revenue department Do not deduct these expenses as taxes. Nm taxation and revenue department However, you can deduct as taxes amounts assessed for maintenance or repairs, or for meeting interest charges related to the improvements. Nm taxation and revenue department If you make additions or improvements to business property, depreciate the basis of each addition or improvement as separate depreciable property using the rules that would apply to the original property if you had placed it in service at the same time you placed the addition or improvement in service. Nm taxation and revenue department See chapter 7. Nm taxation and revenue department Deducting vs. Nm taxation and revenue department capitalizing costs. Nm taxation and revenue department   Do not add to your basis costs you can deduct as current expenses. Nm taxation and revenue department For example, amounts paid for incidental repairs or maintenance are deductible as business expenses and are not added to basis. Nm taxation and revenue department However, you can elect either to deduct or to capitalize certain other costs. Nm taxation and revenue department See chapter 7 in Publication 535. Nm taxation and revenue department Decreases to Basis The following are some items that reduce the basis of property. Nm taxation and revenue department Section 179 deduction. Nm taxation and revenue department Deductions previously allowed or allowable for amortization, depreciation, and depletion. Nm taxation and revenue department Alternative motor vehicle credit. Nm taxation and revenue department See Form 8910. Nm taxation and revenue department Alternative fuel vehicle refueling property credit. Nm taxation and revenue department See Form 8911. Nm taxation and revenue department Residential energy efficient property credits. Nm taxation and revenue department See Form 5695. Nm taxation and revenue department Investment credit (part or all) taken. Nm taxation and revenue department Casualty and theft losses and insurance reimbursements. Nm taxation and revenue department Payments you receive for granting an easement. Nm taxation and revenue department Exclusion from income of subsidies for energy conservation measures. Nm taxation and revenue department Certain canceled debt excluded from income. Nm taxation and revenue department Rebates from a manufacturer or seller. Nm taxation and revenue department Patronage dividends received from a cooperative association as a result of a purchase of property. Nm taxation and revenue department See Patronage Dividends in chapter 3. Nm taxation and revenue department Gas-guzzler tax. Nm taxation and revenue department See Form 6197. Nm taxation and revenue department Some of these items are discussed next. Nm taxation and revenue department For a more detailed list of items that decrease basis, see section 1016 of the Internal Revenue Code and Publication 551. Nm taxation and revenue department Depreciation and section 179 deduction. Nm taxation and revenue department   The adjustments you must make to the basis of the property if you take the section 179 deduction or depreciate the property are explained next. Nm taxation and revenue department For more information on these deductions, see chapter 7. Nm taxation and revenue department Section 179 deduction. Nm taxation and revenue department   If you take the section 179 expense deduction for all or part of the cost of qualifying business property, decrease the basis of the property by the deduction. Nm taxation and revenue department Depreciation. Nm taxation and revenue department   Decrease the basis of property by the depreciation you deducted or could have deducted on your tax returns under the method of depreciation you chose. Nm taxation and revenue department If you took less depreciation than you could have under the method chosen, decrease the basis by the amount you could have taken under that method. Nm taxation and revenue department If you did not take a depreciation deduction, reduce the basis by the full amount of the depreciation you could have taken. Nm taxation and revenue department   If you deducted more depreciation than you should have, decrease your basis by the amount you should have deducted plus the part of the excess depreciation you deducted that actually reduced your tax liability for any year. Nm taxation and revenue department   See chapter 7 for information on figuring the depreciation you should have claimed. Nm taxation and revenue department   In decreasing your basis for depreciation, take into account the amount deducted on your tax returns as depreciation and any depreciation you must capitalize under the uniform capitalization rules. Nm taxation and revenue department Casualty and theft losses. Nm taxation and revenue department   If you have a casualty or theft loss, decrease the basis of the property by any insurance or other reimbursement. Nm taxation and revenue department Also, decrease it by any deductible loss not covered by insurance. Nm taxation and revenue department See chapter 11 for information about figuring your casualty or theft loss. Nm taxation and revenue department   You must increase your basis in the property by the amount you spend on clean-up costs (such as debris removal) and repairs that restore the property to its pre-casualty condition. Nm taxation and revenue department To make this determination, compare the repaired property to the property before the casualty. Nm taxation and revenue department Easements. Nm taxation and revenue department   The amount you receive for granting an easement is usually considered to be proceeds from the sale of an interest in the real property. Nm taxation and revenue department It reduces the basis of the affected part of the property. Nm taxation and revenue department If the amount received is more than the basis of the part of the property affected by the easement, reduce your basis in that part to zero and treat the excess as a recognized gain. Nm taxation and revenue department See Easements and rights-of-way in chapter 3. Nm taxation and revenue department Exclusion from income of subsidies for energy conservation measures. Nm taxation and revenue department   You can exclude from gross income any subsidy you received from a public utility company for the purchase or installation of an energy conservation measure for a dwelling unit. Nm taxation and revenue department Reduce the basis of the property by the excluded amount. Nm taxation and revenue department Canceled debt excluded from income. Nm taxation and revenue department   If a debt you owe is canceled or forgiven, other than as a gift or bequest, you generally must include the canceled amount in your gross income for tax purposes. Nm taxation and revenue department A debt includes any indebtedness for which you are liable or which attaches to property you hold. Nm taxation and revenue department   You can exclude your canceled debt from income if the debt is any of the following. Nm taxation and revenue department Debt canceled in a bankruptcy case or when you are insolvent. Nm taxation and revenue department Qualified farm debt. Nm taxation and revenue department Qualified real property business debt (provided you are not a C corporation). Nm taxation and revenue department Qualified principal residence indebtedness. Nm taxation and revenue department Discharge of certain indebtedness of a qualified individual because of Midwestern disasters. Nm taxation and revenue department If you exclude canceled debt described in (1) or (2), you may have to reduce the basis of your depreciable and nondepreciable property. Nm taxation and revenue department If you exclude canceled debt described in (3), you must only reduce the basis of your depreciable property by the excluded amount. Nm taxation and revenue department   For more information about canceled debt in a bankruptcy case, see Publication 908, Bankruptcy Tax Guide. Nm taxation and revenue department For more information about insolvency and canceled debt that is qualified farm debt or qualified principal residence indebtedness, see chapter 3. Nm taxation and revenue department For more information about qualified real property business debt, see Publication 334, Tax Guide for Small Business. Nm taxation and revenue department For more information about canceled debt in Midwestern disaster areas, see Publication 4492-B, Information for Affected Taxpayers in the Midwestern Disaster Areas. Nm taxation and revenue department Basis Other Than Cost There are times when you cannot use cost as basis. Nm taxation and revenue department In these situations, the fair market value or the adjusted basis of property may be used. Nm taxation and revenue department Examples are discussed next. Nm taxation and revenue department Property changed from personal to business or rental use. Nm taxation and revenue department   When you hold property for personal use and then change it to business use or use it to produce rent, you must figure its basis for depreciation. Nm taxation and revenue department An example of changing property from personal to business use would be changing the use of your pickup truck that you originally purchased for your personal use to use in your farming business. Nm taxation and revenue department   The basis for depreciation is the lesser of: The FMV of the property on the date of the change, or Your adjusted basis on the date of the change. Nm taxation and revenue department   If you later sell or dispose of this property, the basis you use will depend on whether you are figuring a gain or loss. Nm taxation and revenue department The basis for figuring a gain is your adjusted basis in the property when you sell the property. Nm taxation and revenue department Figure the basis for a loss starting with the smaller of your adjusted basis or the FMV of the property at the time of the change to business or rental use. Nm taxation and revenue department Then make adjustments (increases and decreases) for the period after the change in the property's use, as discussed earlier under Adjusted Basis . Nm taxation and revenue department Property received for services. Nm taxation and revenue department   If you receive property for services, include the property's FMV in income. Nm taxation and revenue department The amount you include in income becomes your basis. Nm taxation and revenue department If the services were performed for a price agreed on beforehand, it will be accepted as the FMV of the property if there is no evidence to the contrary. Nm taxation and revenue department Example. Nm taxation and revenue department George Smith is an accountant and also operates a farming business. Nm taxation and revenue department George agreed to do some accounting work for his neighbor in exchange for a dairy cow. Nm taxation and revenue department The accounting work and the cow are each worth $1,500. Nm taxation and revenue department George must include $1,500 in income for his accounting services. Nm taxation and revenue department George's basis in the cow is $1,500. Nm taxation and revenue department Taxable Exchanges A taxable exchange is one in which the gain is taxable, or the loss is deductible. Nm taxation and revenue department A taxable gain or deductible loss also is known as a recognized gain or loss. Nm taxation and revenue department A taxable exchange occurs when you receive cash or get property that is not similar or related in use to the property exchanged. Nm taxation and revenue department If you receive property in exchange for other property in a taxable exchange, the basis of the property you receive is usually its FMV at the time of the exchange. Nm taxation and revenue department Example. Nm taxation and revenue department You trade a tract of farmland with an adjusted basis of $2,000 for a tractor that has an FMV of $6,000. Nm taxation and revenue department You must report a taxable gain of $4,000 for the land. Nm taxation and revenue department The tractor has a basis of $6,000. Nm taxation and revenue department Involuntary Conversions If you receive property as a result of an involuntary conversion, such as a casualty, theft, or condemnation, figure the basis of the replacement property you receive using the basis of the converted property. Nm taxation and revenue department Similar or related property. Nm taxation and revenue department   If the replacement property is similar or related in service or use to the converted property, the replacement property's basis is the same as the old property's basis on the date of the conversion. Nm taxation and revenue department However, make the following adjustments. Nm taxation and revenue department Decrease the basis by the following amounts. Nm taxation and revenue department Any loss you recognize on the involuntary conversion. Nm taxation and revenue department Any money you receive that you do not spend on similar property. Nm taxation and revenue department Increase the basis by the following amounts. Nm taxation and revenue department Any gain you recognize on the involuntary conversion. Nm taxation and revenue department Any cost of acquiring the replacement property. Nm taxation and revenue department Money or property not similar or related. Nm taxation and revenue department   If you receive money or property not similar or related in service or use to the converted property and you buy replacement property similar or related in service or use to the converted property, the basis of the replacement property is its cost decreased by the gain not recognized on the involuntary conversion. Nm taxation and revenue department Allocating the basis. Nm taxation and revenue department   If you buy more than one piece of replacement property, allocate your basis among the properties based on their respective costs. Nm taxation and revenue department Basis for depreciation. Nm taxation and revenue department   Special rules apply in determining and depreciating the basis of MACRS property acquired in an involuntary conversion. Nm taxation and revenue department For information, see Figuring the Deduction for Property Acquired in a Nontaxable Exchange under Figuring Depreciation Under MACRS in chapter 7. Nm taxation and revenue department For more information about involuntary conversions, see chapter 11. Nm taxation and revenue department Nontaxable Exchanges A nontaxable exchange is an exchange in which you are not taxed on any gain and you cannot deduct any loss. Nm taxation and revenue department A nontaxable gain or loss also is known as an unrecognized gain or loss. Nm taxation and revenue department If you receive property in a nontaxable exchange, its basis is usually the same as the basis of the property you transferred. Nm taxation and revenue department Like-Kind Exchanges The exchange of property for the same kind of property is the most common type of nontaxable exchange. Nm taxation and revenue department For an exchange to qualify as a like-kind exchange, you must hold for business or investment purposes both the property you transfer and the property you receive. Nm taxation and revenue department There must also be an exchange of like-kind property. Nm taxation and revenue department For more information, see Like-Kind Exchanges in  chapter 8. Nm taxation and revenue department The basis of the property you receive generally is the same as the adjusted basis of the property you gave up. Nm taxation and revenue department Example 1. Nm taxation and revenue department You traded a truck you used in your farming business for a new smaller truck to use in farming. Nm taxation and revenue department The adjusted basis of the old truck was $10,000. Nm taxation and revenue department The FMV of the new truck is $30,000. Nm taxation and revenue department Because this is a nontaxable exchange, you do not recognize any gain, and your basis in the new truck is $10,000, the same as the adjusted basis of the truck you traded. Nm taxation and revenue department Example 2. Nm taxation and revenue department You trade a field cultivator (adjusted basis of $8,000) for a planter (FMV of $9,000). Nm taxation and revenue department You use both the field cultivator and the planter in your farming business. Nm taxation and revenue department The basis of the planter you receive is $8,000, the same as the field cultivator traded Exchange expenses. Nm taxation and revenue department   Exchange expenses generally are the closing costs that you pay. Nm taxation and revenue department They include such items as brokerage commissions, attorney fees, and deed preparation fees. Nm taxation and revenue department Add them to the basis of the like-kind property you receive. Nm taxation and revenue department Property plus cash. Nm taxation and revenue department   If you trade property in a like-kind exchange and also pay money, the basis of the property you receive is the adjusted basis of the property you gave up plus the money you paid. Nm taxation and revenue department Example. Nm taxation and revenue department You trade in a truck (adjusted basis of $3,000) for another truck (FMV of $7,500) and pay $4,000. Nm taxation and revenue department Your basis in the new truck is $7,000 (the $3,000 adjusted basis of the old truck plus the $4,000 cash). Nm taxation and revenue department Special rules for related persons. Nm taxation and revenue department   If a like-kind exchange takes place directly or indirectly between related persons and either party disposes of the property within 2 years after the exchange, the exchange no longer qualifies for like-kind exchange treatment. Nm taxation and revenue department Each person must report any gain or loss not recognized on the original exchange unless the loss is not deductible under the related party rules. Nm taxation and revenue department Each person reports it on the tax return filed for the year in which the later disposition occurred. Nm taxation and revenue department If this rule applies, the basis of the property received in the original exchange will be its FMV. Nm taxation and revenue department For more information, see chapter 8. Nm taxation and revenue department Exchange of business property. Nm taxation and revenue department   Exchanging the property of one business for the property of another business generally is a multiple property exchange. Nm taxation and revenue department For information on figuring basis, see Multiple Property Exchanges in chapter 1 of Publication 544. Nm taxation and revenue department Basis for depreciation. Nm taxation and revenue department   Special rules apply in determining and depreciating the basis of MACRS property acquired in a like-kind transaction. Nm taxation and revenue department For information, see Figuring the Deduction for Property Acquired in a Nontaxable Exchange under Figuring Depreciation Under MACRS in chapter 7. Nm taxation and revenue department Partially Nontaxable Exchanges A partially nontaxable exchange is an exchange in which you receive unlike property or money in addition to like-kind property. Nm taxation and revenue department The basis of the property you receive is the same as the adjusted basis of the property you gave up with the following adjustments. Nm taxation and revenue department Decrease the basis by the following amounts. Nm taxation and revenue department Any money you receive. Nm taxation and revenue department Any loss you recognize on the exchange. Nm taxation and revenue department Increase the basis by the following amounts. Nm taxation and revenue department Any additional costs you incur. Nm taxation and revenue department Any gain you recognize on the exchange. Nm taxation and revenue department If the other party to the exchange assumes your liabilities, treat the debt assumption as money you received in the exchange. Nm taxation and revenue department Example 1. Nm taxation and revenue department You trade farmland (basis of $100,000) for another tract of farmland (FMV of $110,000) and $30,000 cash. Nm taxation and revenue department You realize a gain of $40,000. Nm taxation and revenue department This is the FMV of the land received plus the cash minus the basis of the land you traded ($110,000 + $30,000 − $100,000). Nm taxation and revenue department Include your gain in income (recognize gain) only to the extent of the cash received. Nm taxation and revenue department Your basis in the land you received is figured as follows. Nm taxation and revenue department Basis of land traded $100,000 Minus: Cash received (adjustment 1(a)) − 30,000   $70,000 Plus: Gain recognized (adjustment 2(b)) + 30,000 Basis of land received $100,000 Example 2. Nm taxation and revenue department You trade a truck (adjusted basis of $22,750) for another truck (FMV of $20,000) and $10,000 cash. Nm taxation and revenue department You realize a gain of $7,250. Nm taxation and revenue department This is the FMV of the truck received plus the cash minus the adjusted basis of the truck you traded ($20,000 + $10,000 − $22,750). Nm taxation and revenue department You include all the gain in your income (recognize gain) because the gain is less than the cash you received. Nm taxation and revenue department Your basis in the truck you received is figured as follows. Nm taxation and revenue department Adjusted basis of truck traded $22,750 Minus: Cash received (adjustment 1(a)) −10,000   $12,750 Plus: Gain recognized (adjustment 2(b)) + 7,250 Basis of truck received $20,000 Allocation of basis. Nm taxation and revenue department   If you receive like-kind and unlike properties in the exchange, allocate the basis first to the unlike property, other than money, up to its FMV on the date of the exchange. Nm taxation and revenue department The rest is the basis of the like-kind property. Nm taxation and revenue department Example. Nm taxation and revenue department You traded a tractor with an adjusted basis of $15,000 for another tractor that had an FMV of $12,500. Nm taxation and revenue department You also received $1,000 cash and a truck that had an FMV of $3,000. Nm taxation and revenue department The truck is unlike property. Nm taxation and revenue department You realized a gain of $1,500. Nm taxation and revenue department This is the FMV of the tractor received plus the FMV of the truck received plus the cash minus the adjusted basis of the tractor you traded ($12,500 + $3,000 + $1,000 − $15,000). Nm taxation and revenue department You include in income (recognize) all $1,500 of the gain because it is less than the FMV of the unlike property plus the cash received. Nm taxation and revenue department Your basis in the properties you received is figured as follows. Nm taxation and revenue department Adjusted basis of old tractor $15,000 Minus: Cash received (adjustment 1(a)) − 1,000   $14,000 Plus: Gain recognized (adjustment 2(b)) + 1,500 Total basis of properties received $15,500 Allocate the total basis of $15,500 first to the unlike property—the truck ($3,000). Nm taxation and revenue department This is the truck's FMV. Nm taxation and revenue department The rest ($12,500) is the basis of the tractor. Nm taxation and revenue department Sale and Purchase If you sell property and buy similar property in two mutually dependent transactions, you may have to treat the sale and purchase as a single nontaxable exchange. Nm taxation and revenue department Example. Nm taxation and revenue department You used a tractor on your farm for 3 years. Nm taxation and revenue department Its adjusted basis is $22,000 and its FMV is $40,000. Nm taxation and revenue department You are interested in a new tractor, which sells for $60,000. Nm taxation and revenue department Ordinarily, you would trade your old tractor for the new one and pay the dealer $20,000. Nm taxation and revenue department Your basis for depreciating the new tractor would then be $42,000 ($20,000 + $22,000, the adjusted basis of your old tractor). Nm taxation and revenue department However, you want a higher basis for depreciating the new tractor, so you agree to pay the dealer $60,000 for the new tractor if he will pay you $40,000 for your old tractor. Nm taxation and revenue department Because the two transactions are dependent on each other, you are treated as having exchanged your old tractor for the new one and paid $20,000 ($60,000 − $40,000). Nm taxation and revenue department Your basis for depreciating the new tractor is $42,000, the same as if you traded the old tractor. Nm taxation and revenue department Property Received as a Gift To figure the basis of property you receive as a gift, you must know its adjusted basis (defined earlier) to the donor just before it was given to you. Nm taxation and revenue department You also must know its FMV at the time it was given to you and any gift tax paid on it. Nm taxation and revenue department FMV equal to or greater than donor's adjusted basis. Nm taxation and revenue department   If the FMV of the property is equal to or greater than the donor's adjusted basis, your basis is the donor's adjusted basis when you received the gift. Nm taxation and revenue department Increase your basis by all or part of any gift tax paid, depending on the date of the gift. Nm taxation and revenue department   Also, for figuring gain or loss from a sale or other disposition of the property, or for figuring depreciation, depletion, or amortization deductions on business property, you must increase or decrease your basis (the donor's adjusted basis) by any required adjustments to basis while you held the property. Nm taxation and revenue department See Adjusted Basis , earlier. Nm taxation and revenue department   If you received a gift during the tax year, increase your basis in the gift (the donor's adjusted basis) by the part of the gift tax paid on it due to the net increase in value of the gift. Nm taxation and revenue department Figure the increase by multiplying the gift tax paid by the following fraction. Nm taxation and revenue department Net increase in value of the gift Amount of the gift   The net increase in value of the gift is the FMV of the gift minus the donor's adjusted basis. Nm taxation and revenue department The amount of the gift is its value for gift tax purposes after reduction by any annual exclusion and marital or charitable deduction that applies to the gift. Nm taxation and revenue department Example. Nm taxation and revenue department In 2013, you received a gift of property from your mother that had an FMV of $50,000. Nm taxation and revenue department Her adjusted basis was $20,000. Nm taxation and revenue department The amount of the gift for gift tax purposes was $36,000 ($50,000 minus the $14,000 annual exclusion). Nm taxation and revenue department She paid a gift tax of $7,320. Nm taxation and revenue department Your basis, $26,076, is figured as follows. Nm taxation and revenue department Fair market value $50,000 Minus: Adjusted basis −20,000 Net increase in value $30,000 Gift tax paid $7,320 Multiplied by ($30,000 ÷ $36,000) × . Nm taxation and revenue department 83 Gift tax due to net increase in value $6,076 Adjusted basis of property to your mother +20,000 Your basis in the property $26,076 Note. Nm taxation and revenue department If you received a gift before 1977, your basis in the gift (the donor's adjusted basis) includes any gift tax paid on it. Nm taxation and revenue department However, your basis cannot exceed the FMV of the gift when it was given to you. Nm taxation and revenue department FMV less than donor's adjusted basis. Nm taxation and revenue department   If the FMV of the property at the time of the gift is less than the donor's adjusted basis, your basis depends on whether you have a gain or a loss when you dispose of the property. Nm taxation and revenue department Your basis for figuring gain is the donor's adjusted basis plus or minus any required adjustments to basis while you held the property. Nm taxation and revenue department Your basis for figuring loss is its FMV when you received the gift plus or minus any required adjustments to basis while you held the property. Nm taxation and revenue department (See Adjusted Basis , earlier. Nm taxation and revenue department )   If you use the donor's adjusted basis for figuring a gain and get a loss, and then use the FMV for figuring a loss and get a gain, you have neither gain nor loss on the sale or other disposition of the property. Nm taxation and revenue department Example. Nm taxation and revenue department You received farmland as a gift from your parents when they retired from farming. Nm taxation and revenue department At the time of the gift, the land had an FMV of $80,000. Nm taxation and revenue department Your parents' adjusted basis was $100,000. Nm taxation and revenue department After you received the land, no events occurred that would increase or decrease your basis. Nm taxation and revenue department If you sell the land for $120,000, you will have a $20,000 gain because you must use the donor's adjusted basis at the time of the gift ($100,000) as your basis to figure a gain. Nm taxation and revenue department If you sell the land for $70,000, you will have a $10,000 loss because you must use the FMV at the time of the gift ($80,000) as your basis to figure a loss. Nm taxation and revenue department If the sales price is between $80,000 and $100,000, you have neither gain nor loss. Nm taxation and revenue department For instance, if the sales price was $90,000 and you tried to figure a gain using the donor's adjusted basis ($100,000), you would get a $10,000 loss. Nm taxation and revenue department If you then tried to figure a loss using the FMV ($80,000), you would get a $10,000 gain. Nm taxation and revenue department Business property. Nm taxation and revenue department   If you hold the gift as business property, your basis for figuring any depreciation, depletion, or amortization deductions is the same as the donor's adjusted basis plus or minus any required adjustments to basis while you hold the property. Nm taxation and revenue department Property Transferred From a Spouse The basis of property transferred to you or transferred in trust for your benefit by your spouse is the same as your spouse's adjusted basis. Nm taxation and revenue department The same rule applies to a transfer by your former spouse if the transfer is incident to divorce. Nm taxation and revenue department However, for property transferred in trust, adjust your basis for any gain recognized by your spouse or former spouse if the liabilities assumed plus the liabilities to which the property is subject are more than the adjusted basis of the property transferred. Nm taxation and revenue department The transferor must give you the records needed to determine the adjusted basis and holding period of the property as of the date of the transfer. Nm taxation and revenue department For more information, see Property Settlements in Publication 504, Divorced or Separated Individuals. Nm taxation and revenue department Inherited Property Your basis in property you inherited from a decedent, who died before January 1, 2010, or after December 31, 2010, is generally one of the following: The FMV of the property at the date of the decedent's death. Nm taxation and revenue department If a federal estate return is filed, you can use its appraised value. Nm taxation and revenue department The FMV on the alternate valuation date, if the personal representative for the estate elects to use alternate valuation. Nm taxation and revenue department For information on the alternate valuation, see the Instructions for Form 706. Nm taxation and revenue department The decedent's adjusted basis in land to the extent of the value that is excluded from the decedent's taxable estate as a qualified conservation easement. Nm taxation and revenue department If a federal estate tax return does not have to be filed, your basis in the inherited property is its appraised value at the date of death for state inheritance or transmission taxes. Nm taxation and revenue department Special-use valuation method. Nm taxation and revenue department   Under certain conditions, when a person dies, the executor or personal representative of that person's estate may elect to value qualified real property at other than its FMV. Nm taxation and revenue department If so, the executor or personal representative values the qualified real property based on its use as a farm or other closely held business. Nm taxation and revenue department If the executor or personal representative elects this method of valuation for estate tax purposes, this value is the basis of the property for the qualified heirs. Nm taxation and revenue department The qualified heirs should be able to get the necessary value from the executor or personal representative of the estate. Nm taxation and revenue department   If you are a qualified heir who received special-use valuation property, increase your basis by any gain recognized by the estate or trust because of post-death appreciation. Nm taxation and revenue department Post-death appreciation is the property's FMV on the date of distribution minus the property's FMV either on the date of the individual's death or on the alternate valuation date. Nm taxation and revenue department Figure all FMVs without regard to the special-use valuation. Nm taxation and revenue department   You may be liable for an additional estate tax if, within 10 years after the death of the decedent, you transfer the property or the property stops being used as a farm. Nm taxation and revenue department This tax does not apply if you dispose of the property in a like-kind exchange or in an involuntary conversion in which all of the proceeds are reinvested in qualified replacement property. Nm taxation and revenue department The tax also does not apply if you transfer the property to a member of your family and certain requirements are met. Nm taxation and revenue department   You can elect to increase your basis in special-use valuation property if it becomes subject to the additional estate tax. Nm taxation and revenue department To increase your basis, you must make an irrevocable election and pay interest on the additional estate tax figured from the date 9 months after the decedent's death until the date of payment of the additional estate tax. Nm taxation and revenue department If you meet these requirements, increase your basis in the property to its FMV on the date of the decedent's death or the alternate valuation date. Nm taxation and revenue department The increase in your basis is considered to have occurred immediately before the event that resulted in the additional estate tax. Nm taxation and revenue department   You make the election by filing, with Form 706-A, United States Additional Estate Tax Return, a statement that: Contains your (and the estate's) name, address, and taxpayer identification number; Identifies the election as an election under section 1016(c) of the Internal Revenue Code; Specifies the property for which you are making the election; and Provides any additional information required by the Form 706-A instructions. Nm taxation and revenue department   For more information, see Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, Form 706-A, and the related instructions. Nm taxation and revenue department Property inherited from a decedent who died in 2010. Nm taxation and revenue department   If you inherited property from a decedent who died in 2010, different rules may apply. Nm taxation and revenue department See Publication 4895, Tax Treatment of Property Acquired From a Decendent Dying in 2010, for details. Nm taxation and revenue department Property Distributed From a Partnership or Corporation The following rules apply to determine a partner's basis and a shareholder's basis in property distributed respectively from a partnership to the partner with respect to the partner's interest in the partnership and from a corporation to the shareholder with respect to the shareholder's ownership of stock in the corporation. Nm taxation and revenue department Partner's basis. Nm taxation and revenue department   Unless there is a complete liquidation of a partner's interest, the basis of property (other than money) distributed by a partnership to the partner is its adjusted basis to the partnership immediately before the distribution. Nm taxation and revenue department However, the basis of the property to the partner cannot be more than the adjusted basis of his or her interest in the partnership reduced by any money received in the same transaction. Nm taxation and revenue department For more information, see Partner's Basis for Distributed Property in Publication 541, Partnerships. Nm taxation and revenue department Shareholder's basis. Nm taxation and revenue department   The basis of property distributed by a corporation to a shareholder is its fair market value. Nm taxation and revenue department For more information about corporate distributions, see Distributions to Shareholders in Publication 542, Corporations. Nm taxation and revenue department Prev  Up  Next   Home   More Online Publications
 
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The Nm Taxation And Revenue Department

Nm taxation and revenue department Publication 4492 - Main Contents Table of Contents DefinitionsHurricane Katrina Disaster Area Katrina Covered Disaster Area Gulf Opportunity (GO) Zone (Core Disaster Area) Hurricane Rita Disaster Area (Rita Covered Disaster Area) Rita GO Zone Hurricane Wilma Disaster Area Wilma Covered Disaster Area Wilma GO Zone Extended Tax Deadlines Charitable Giving IncentivesTemporary Suspension of Limits on Charitable Contributions Standard Mileage Rate for Charitable Use of Vehicles Mileage Reimbursements to Charitable Volunteers Charitable Deduction for Contributions of Food Inventory Charitable Deduction for Contributions of Book Inventories to Public Schools Casualty and Theft LossesTime limit for making election. Nm taxation and revenue department Replacement Period for Nonrecognition of Gain Net Operating Losses IRAs and Other Retirement PlansDefinitions Taxation of Qualified Hurricane Distributions Repayment of Qualified Hurricane Distributions Repayment of Qualified Distributions for the Purchase or Construction of a Main Home Loans From Qualified Plans Additional Tax Relief for IndividualsEarned Income Credit and Child Tax Credit Additional Exemption for Housing Individuals Displaced by Hurricane Katrina Education Credits Recapture of Federal Mortgage Subsidy Exclusion of Certain Cancellations of Indebtedness by Reason of Hurricane Katrina Tax Relief for Temporary Relocation Additional Tax Relief for BusinessesSpecial Depreciation Allowance Increased Section 179 Deduction Work Opportunity Credit Employee Retention Credit Hurricane Katrina Housing Credit Reforestation Costs Demolition and Clean-up Costs Increase in Rehabilitation Tax Credit Request for Copy or Transcript of Tax Return How To Get Tax Help Definitions The following definitions are used throughout this publication. Nm taxation and revenue department Hurricane Katrina Disaster Area The Hurricane Katrina disaster area covers the area for which the President declared a major disaster before September 14, 2005, because of Hurricane Katrina. Nm taxation and revenue department The Hurricane Katrina disaster area covers the entire states of Alabama, Florida, Louisiana, and Mississippi. Nm taxation and revenue department Katrina Covered Disaster Area A portion of the Hurricane Katrina disaster area has been designated by the IRS as a covered disaster area. Nm taxation and revenue department The Katrina covered disaster area covers the following areas in four states. Nm taxation and revenue department Alabama. Nm taxation and revenue department   The counties of Baldwin, Bibb, Choctaw, Clarke, Colbert, Cullman, Greene, Hale, Jefferson, Lamar, Lauderdale, Marengo, Marion, Mobile, Monroe, Perry, Pickens, Sumter, Tuscaloosa, Washington, Wilcox, and Winston. Nm taxation and revenue department Florida. Nm taxation and revenue department   The counties of Bay, Broward, Collier, Escambia, Franklin, Gulf, Miami-Dade, Monroe, Okaloosa, Santa Rosa, and Walton. Nm taxation and revenue department Louisiana. Nm taxation and revenue department   All parishes. Nm taxation and revenue department Mississippi. Nm taxation and revenue department   All counties. Nm taxation and revenue department Gulf Opportunity (GO) Zone (Core Disaster Area) The GO Zone (also called the core disaster area) covers the portion of the Hurricane Katrina disaster area determined by the Federal Emergency Management Agency (FEMA) to be eligible for either individual only or both individual and public assistance from the Federal Government. Nm taxation and revenue department The GO Zone covers the following areas in three states. Nm taxation and revenue department Alabama. Nm taxation and revenue department   The counties of Baldwin, Choctaw, Clarke, Greene, Hale, Marengo, Mobile, Pickens, Sumter, Tuscaloosa, and Washington. Nm taxation and revenue department Louisiana. Nm taxation and revenue department   The parishes of Acadia, Ascension, Assumption, Calcasieu, Cameron, East Baton Rouge, East Feliciana, Iberia, Iberville, Jefferson, Jefferson Davis, Lafayette, Lafourche, Livingston, Orleans, Plaquemines, Pointe Coupee, St. Nm taxation and revenue department Bernard, St. Nm taxation and revenue department Charles, St. Nm taxation and revenue department Helena, St. Nm taxation and revenue department James, St. Nm taxation and revenue department John the Baptist, St. Nm taxation and revenue department Martin, St. Nm taxation and revenue department Mary, St. Nm taxation and revenue department Tammany, Tangipahoa, Terrebonne, Vermilion, Washington, West Baton Rouge, and West Feliciana. Nm taxation and revenue department Mississippi. Nm taxation and revenue department   The counties of Adams, Amite, Attala, Choctaw, Claiborne, Clarke, Copiah, Covington, Forrest, Franklin, George, Greene, Hancock, Harrison, Hinds, Holmes, Humphreys, Jackson, Jasper, Jefferson, Jefferson Davis, Jones, Kemper, Lamar, Lauderdale, Lawrence, Leake, Lincoln, Lowndes, Madison, Marion, Neshoba, Newton, Noxubee, Oktibbeha, Pearl River, Perry, Pike, Rankin, Scott, Simpson, Smith, Stone, Walthall, Warren, Wayne, Wilkinson, Winston, and Yazoo. Nm taxation and revenue department Hurricane Rita Disaster Area (Rita Covered Disaster Area) The Hurricane Rita disaster area (also designated by the IRS as the Rita covered disaster area) covers the area for which the President declared a major disaster before October 6, 2005, because of Hurricane Rita. Nm taxation and revenue department This area covers the entire states of Louisiana and Texas. Nm taxation and revenue department Rita GO Zone The Rita GO Zone covers the portion of the Hurricane Rita disaster area determined by FEMA to be eligible for either individual only or both individual and public assistance from the Federal Government. Nm taxation and revenue department The Rita GO Zone covers the following areas in two states. Nm taxation and revenue department Louisiana. Nm taxation and revenue department   The parishes of Acadia, Allen, Ascension, Beauregard, Calcasieu, Cameron, Evangeline, Iberia, Jefferson, Jefferson Davis, Lafayette, Lafourche, Livingston, Plaquemines, Sabine, St. Nm taxation and revenue department Landry, St. Nm taxation and revenue department Martin, St. Nm taxation and revenue department Mary, St. Nm taxation and revenue department Tammany, Terrebonne, Vermilion, Vernon, and West Baton Rouge. Nm taxation and revenue department Texas. Nm taxation and revenue department   The counties of Angelina, Brazoria, Chambers, Fort Bend, Galveston, Hardin, Harris, Jasper, Jefferson, Liberty, Montgomery, Nacogdoches, Newton, Orange, Polk, Sabine, San Augustine, San Jacinto, Shelby, Trinity, Tyler, and Walker. Nm taxation and revenue department Hurricane Wilma Disaster Area The Hurricane Wilma disaster area covers the area for which the President declared a major disaster before November 14, 2005, because of Hurricane Wilma. Nm taxation and revenue department The Hurricane Wilma disaster area covers the entire state of Florida. Nm taxation and revenue department Wilma Covered Disaster Area A portion of the Hurricane Wilma disaster area has been designated by the IRS as a covered disaster area. Nm taxation and revenue department The Wilma covered disaster area covers the following counties. Nm taxation and revenue department Florida. Nm taxation and revenue department   Brevard, Broward, Charlotte, Collier, DeSoto, Glades, Hardee, Hendry, Highlands, Indian River, Lee, Martin, Miami-Dade, Monroe, Okeechobee, Osceola, Palm Beach, Polk, St. Nm taxation and revenue department Lucie, and Sarasota. Nm taxation and revenue department Wilma GO Zone The Wilma GO Zone covers the portion of the Hurricane Wilma disaster area determined by FEMA to be eligible for either individual only or both individual and public assistance from the Federal Government. Nm taxation and revenue department The Wilma GO Zone covers the following counties. Nm taxation and revenue department Florida. Nm taxation and revenue department   Brevard, Broward, Collier, Glades, Hendry, Indian River, Lee, Martin, Miami-Dade, Monroe, Okeechobee, Palm Beach, and St. Nm taxation and revenue department Lucie. Nm taxation and revenue department Extended Tax Deadlines The IRS has extended deadlines that apply to filing returns, paying taxes, and performing certain other time-sensitive acts for certain taxpayers affected by Hurricane Katrina, Rita, or Wilma, until February 28, 2006. Nm taxation and revenue department The extension applies to deadlines (either an original or extended due date) that occur during the following periods. Nm taxation and revenue department After August 28, 2005 (August 23, 2005, for Florida affected taxpayers), and before February 28, 2006, for taxpayers affected by Hurricane Katrina. Nm taxation and revenue department After September 22, 2005, and before February 28, 2006, for taxpayers affected by Hurricane Rita. Nm taxation and revenue department After October 22, 2005, and before February 28, 2006, for taxpayers affected by Hurricane Wilma. Nm taxation and revenue department Affected taxpayer. Nm taxation and revenue department   The following taxpayers are eligible for the extension. Nm taxation and revenue department Any individual whose main home is located in a covered disaster area. Nm taxation and revenue department Any business entity or sole proprietor whose principal place of business is located in a covered disaster area. Nm taxation and revenue department Any individual, business entity, or sole proprietor whose records needed to meet a postponed deadline are maintained or whose tax professional's office is in a covered disaster area. Nm taxation and revenue department The main home or principal place of business does not have to be located in the covered area. Nm taxation and revenue department Any individual visiting a county or parish in the Hurricane Katrina or Hurricane Rita covered disaster area that was injured or killed (and the estate of an individual killed) as a result of the hurricane or its aftermath. Nm taxation and revenue department Any estate or trust whose tax records needed to meet a filing or payment deadline are maintained in a covered disaster area. Nm taxation and revenue department Generally, any individual who is a worker assisting in the relief activities in a covered disaster area. Nm taxation and revenue department However, a relief worker assisting in the Wilma covered disaster area is not an affected taxpayer unless the worker is affiliated with a recognized government or philanthropic organization assisting in the relief activities. Nm taxation and revenue department The spouse of an affected taxpayer, solely with regard to a joint income tax return with that taxpayer. Nm taxation and revenue department   To ensure correct processing, affected taxpayers should write the assigned disaster designation (for example, “Hurricane Katrina”) in red ink at the top of any forms or documents filed with the IRS. Nm taxation and revenue department Affected taxpayers can also identify themselves to the IRS or ask hurricane-related questions by calling the special IRS disaster hotline at 1-866-562-5227. Nm taxation and revenue department Acts extended. Nm taxation and revenue department   Deadlines for performing the following acts are extended. Nm taxation and revenue department Filing any return of income, estate, gift, generation-skipping transfer, excise, or employment tax. Nm taxation and revenue department Paying any income, estate, gift, generation-skipping transfer, excise, or employment tax. Nm taxation and revenue department This includes making estimated tax payments. Nm taxation and revenue department Making certain contributions, distributions, recharacterizing contributions, or making a rollover to or from a qualified retirement plan. Nm taxation and revenue department Filing certain petitions with the Tax Court. Nm taxation and revenue department Filing a claim for credit or refund of any tax. Nm taxation and revenue department Bringing suit upon a claim for credit or refund. Nm taxation and revenue department Certain other acts described in Revenue Procedure 2005-27. Nm taxation and revenue department You can find Revenue Procedure 2005-27 on page 1050 of Internal Revenue Bulletin 2005-20 at www. Nm taxation and revenue department irs. Nm taxation and revenue department gov/pub/irs-irbs/irb05-20. Nm taxation and revenue department pdf. Nm taxation and revenue department Forgiveness of interest and penalties. Nm taxation and revenue department   The IRS may forgive the interest and penalties on any underpaid income, estate, gift, employment, or excise tax for the length of any extension. Nm taxation and revenue department Charitable Giving Incentives Temporary Suspension of Limits on Charitable Contributions Individuals. Nm taxation and revenue department   Qualified contributions are not subject to the overall limit on itemized deductions or the 50% adjusted gross income (AGI) limit. Nm taxation and revenue department A qualified contribution is a charitable contribution paid in cash or by check after August 27, 2005, and before January 1, 2006, to a 50% limit organization (other than certain private foundations described in section 509(a)(3)) if you make an election to have the 50% limit not apply to these contributions. Nm taxation and revenue department   Your deduction for qualified contributions is limited to your AGI minus your deduction for all other charitable contributions. Nm taxation and revenue department You can carry over any contributions you are not able to deduct for 2005 because of this limit. Nm taxation and revenue department In 2006, treat the carryover of your unused qualified contributions as a carryover of contributions subject to the 50% limit. Nm taxation and revenue department Exception. Nm taxation and revenue department   Qualified contributions do not include a contribution to a segregated fund or account for which you (or any person you appoint or designate) have or expect to have advisory privileges with respect to distributions or investments based on your contribution. Nm taxation and revenue department Corporations. Nm taxation and revenue department   A corporation may elect to deduct qualified cash contributions without regard to the 10% taxable income limit if the contributions were made after August 27, 2005, and before January 1, 2006, to a qualified charitable organization (other than certain private foundations described in section 509(a)(3)), for Hurricane Katrina, Rita, or Wilma relief efforts. Nm taxation and revenue department The corporation's deduction for these qualified contributions is limited to 100% of taxable income (as modified for the 10% limit) minus the corporation's deduction for all other charitable contributions. Nm taxation and revenue department Any qualified contributions over this limit can be carried over to the next 5 years, subject to the 10% limit. Nm taxation and revenue department Partners and shareholders. Nm taxation and revenue department   Each partner in a partnership and each shareholder in an S corporation makes a separate election to have the appropriate limit not apply. Nm taxation and revenue department More information. Nm taxation and revenue department   For more information, see Publication 526 or Publication 542, Corporations. Nm taxation and revenue department Publication 526 includes a worksheet you can use to figure your deduction if any limits apply to your charitable contributions. Nm taxation and revenue department Standard Mileage Rate for Charitable Use of Vehicles The following are special standard mileage rates in effect in 2005 and 2006 for the cost of operating your automobile for providing charitable services solely related to Hurricane Katrina. Nm taxation and revenue department 29 cents per mile for the period August 25 through August 31, 2005. Nm taxation and revenue department 34 cents per mile for the period September 1 through December 31, 2005. Nm taxation and revenue department 32 cents per mile for the period January 1 through December 31, 2006. Nm taxation and revenue department Mileage Reimbursements to Charitable Volunteers You can exclude from income amounts you receive as mileage reimbursements for the use of a private passenger automobile for the benefit of a qualified charitable organization in providing relief related to Hurricane Katrina during the period beginning on August 25, 2005, and ending on December 31, 2006. Nm taxation and revenue department You cannot claim a deduction or credit for amounts you receive as a mileage reimbursement. Nm taxation and revenue department You must keep records of miles driven, time, place (or use), and purpose of the mileage. Nm taxation and revenue department The amount you can exclude from income cannot exceed the standard business mileage rate (shown below) for expenses incurred during the following periods. Nm taxation and revenue department 40. Nm taxation and revenue department 5 cents per mile for the period August 25 through August 31, 2005. Nm taxation and revenue department 48. Nm taxation and revenue department 5 cents per mile for the period September 1 through December 31, 2005. Nm taxation and revenue department 44. Nm taxation and revenue department 5 cents per mile for the period January 1 through December 31, 2006. Nm taxation and revenue department Charitable Deduction for Contributions of Food Inventory Any taxpayer engaged in a trade or business is eligible to claim a deduction for a contribution of “apparently wholesome food” inventory to a qualified charitable organization described in section 501(c)(3) (except for private nonoperating foundations) after August 27, 2005, and before January 1, 2006. Nm taxation and revenue department “Apparently wholesome food” is food that meets all quality and labeling standards imposed by federal, state, and local laws and regulations even though the food may not be readily marketable due to appearance, age, freshness, grade, size, surplus, or other conditions. Nm taxation and revenue department The deduction is equal to the lesser of: The basis of the donated food plus one-half of the gain that would have been realized if the donated food had been sold at fair market value on the date of the donation, or Two times the basis of the donated food. Nm taxation and revenue department The taxpayer must receive written certification from the donee stating: The donated food is related to the purpose or function of the donee's basis for exemption under section 501(c)(3) and is to be used solely for the care of the ill, the needy, or infants; and The food was not given in exchange for money, other property, or services. Nm taxation and revenue department For a taxpayer other than a C corporation, the deduction is limited to 10% of the taxpayer's total net income from all trades or businesses from which the food contributions were made (figured without regard to the deduction for charitable contributions). Nm taxation and revenue department For example, if a taxpayer is a sole proprietor, a shareholder in an S corporation, and a partner in a partnership, and each made a contribution of apparently wholesome food inventory, the taxpayer's deduction is limited to 10% of the taxpayer's total net income from the sole proprietorship, S corporation, and partnership (figured without regard to the deduction for charitable contributions). Nm taxation and revenue department Charitable Deduction for Contributions of Book Inventories to Public Schools A corporation (other than an S corporation) may be allowed a charitable deduction for a qualified book contribution made after August 27, 2005, and before January 1, 2006, to a public school that: Provides elementary or secondary education (kindergarten through grade 12), and Normally maintains a regular faculty and curriculum and has a regular enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on. Nm taxation and revenue department . Nm taxation and revenue department The deduction is equal to the lesser of: The basis of the donated books plus one-half of the gain that would have been realized if the donated books had been sold at fair market value on the date of the donation, or Two times the basis of the donated books. Nm taxation and revenue department The corporation must receive written certification from the school stating that the donated books are suitable for the organization's educational programs and will be used for such programs. Nm taxation and revenue department Casualty and Theft Losses The following paragraphs explain changes to casualty and theft losses that were caused by Hurricane Katrina, Rita, or Wilma. Nm taxation and revenue department For more information, see Publication 547. Nm taxation and revenue department Limits on personal casualty or theft losses caused by Hurricane Katrina, Rita, or Wilma. Nm taxation and revenue department   The following losses to personal use property are not subject to the $100 or 10% of adjusted gross income limits. Nm taxation and revenue department Losses that arose in the Hurricane Katrina disaster area after August 24, 2005, and that were caused by Hurricane Katrina. Nm taxation and revenue department Losses that arose in the Hurricane Rita disaster area after September 22, 2005, and that were caused by Hurricane Rita. Nm taxation and revenue department Losses that arose in the Hurricane Wilma disaster area after October 22, 2005, and that were caused by Hurricane Wilma. Nm taxation and revenue department Qualifying losses include losses from flooding or other casualty, and from theft, that arose in the hurricane disaster area and that were caused by the hurricane. Nm taxation and revenue department Special instructions for individuals who elect to claim a Hurricane Katrina, Rita, or Wilma casualty or theft loss for 2004. Nm taxation and revenue department   Casualty and theft losses are generally deductible only in the year the casualty occurred or theft was discovered. Nm taxation and revenue department However, Hurricane Katrina, Rita, and Wilma are Presidentially declared disasters. Nm taxation and revenue department Therefore, you can elect to deduct losses from these hurricanes on your tax return for the previous year. Nm taxation and revenue department If you make this election, use the following additional instructions to complete your forms. Nm taxation and revenue department   Individuals filing or amending their 2004 tax return whose only casualty or theft losses to personal use property claimed on that return were caused by Hurricane Katrina, Rita, or Wilma should write “Hurricane Katrina,” “Hurricane Rita,” or “Hurricane Wilma” at the top of Form 1040 or 1040X. Nm taxation and revenue department They must also complete and attach the 2004 Form 4684 and write “Hurricane Katrina,”“Hurricane Rita,” or “Hurricane Wilma” on the dotted line next to line 11 and enter -0- on lines 11 and 17. Nm taxation and revenue department   Individuals filing or amending their 2004 tax return who also have casualty or theft losses to personal use property not related to Hurricane Katrina, Rita, or Wilma should disregard the caution directing taxpayers to use only one Form 4684, located above line 13, and complete lines 13 through 18 on two Forms 4684. Nm taxation and revenue department The Form 1040 or 1040X and the first Form 4684 should be prepared as explained above for Hurricane Katrina, Rita, or Wilma losses only. Nm taxation and revenue department The second Form 4684 should be prepared in the normal manner for all gains and non-Hurricane Katrina, Rita or Wilma losses. Nm taxation and revenue department If both Forms 4684 have a loss on line 18, they should carry the combined losses from that line to Schedule A (Form 1040), line 19. Nm taxation and revenue department If there is a gain on line 15 of the second Form 4684, disregard the instruction to enter it on Schedule D (Form 1040), and instead enter on Schedule A (Form 1040), line 19, the excess of the loss from the first Form 4684 over the gain on line 15 of the second Form 4684. Nm taxation and revenue department , Time limit for making election. Nm taxation and revenue department   You must make this election to claim your casualty or theft loss in 2004 by the later of the following dates. Nm taxation and revenue department The due date (without extensions) for filing your 2005 income tax return. Nm taxation and revenue department The due date (with extensions) for filing your 2004 income tax return. Nm taxation and revenue department Example. Nm taxation and revenue department If you are a calendar year individual taxpayer, you have until April 17, 2006, to amend your 2004 tax return to claim a casualty or theft loss that occurred during 2005. Nm taxation and revenue department Replacement Period for Nonrecognition of Gain Generally, an involuntary conversion occurs when property is damaged, destroyed, stolen, seized, requisitioned, or condemned, and you receive other property or money in payment, such as insurance or a condemnation award. Nm taxation and revenue department Generally, you do not have to report a gain (if any) if you replace the property within 2 years (4 years for a main home in a Presidentially declared disaster area). Nm taxation and revenue department However, for property that was involuntarily converted after August 24, 2005, as a result of Hurricane Katrina, a 5-year replacement period applies if substantially all of the use of the replacement property is in the Hurricane Katrina disaster area. Nm taxation and revenue department For more information, see the Instructions for Form 4684. Nm taxation and revenue department Net Operating Losses Qualified GO Zone loss. Nm taxation and revenue department   Generally, you can carry a net operating loss (NOL) back to the 2 tax years before the NOL year. Nm taxation and revenue department However, the portion of an NOL that is a qualified GO Zone loss can be carried back to the 5 tax years before the NOL year. Nm taxation and revenue department In addition, the 90% limit on the alternative tax NOL deduction (ATNOLD) does not apply to such portion of the ATNOLD. Nm taxation and revenue department   A qualified GO Zone loss is the smaller of: The excess of the NOL for the year over the specified liability loss for the year to which a 10-year carryback applies, or The total of the following deductions (to the extent they are taken into account in computing the NOL for the tax year): Qualified GO Zone casualty loss (as defined below), Moving expenses paid or incurred after August 27, 2005, and before January 1, 2008, for the employment of an individual whose main home was in the GO Zone before August 28, 2005, who was unable to remain in that home because of Hurricane Katrina, and whose main job location (after the move) is in the GO Zone, Temporary housing expenses paid or incurred after August 27, 2005, and before January 1, 2008, to house employees of the taxpayer whose main job location is in the GO Zone, Depreciation or amortization allowable for any qualified GO Zone property (even if you elected not to claim the special GO Zone depreciation allowance for such property) for the year placed in service, and Repair expenses (including expenses for the removal of debris) paid or incurred after August 27, 2005, and before January 1, 2008, for any damage from Hurricane Katrina to property located in the GO Zone. Nm taxation and revenue department Qualified GO Zone casualty loss. Nm taxation and revenue department   A qualified GO Zone casualty loss is any deductible section 1231 loss of property located in the GO Zone if the loss was caused by Hurricane Katrina. Nm taxation and revenue department For this purpose, the amount of the loss is reduced by any recognized gain from an involuntary conversion caused by Hurricane Katrina of property located in the GO Zone. Nm taxation and revenue department Any such loss taken into account in figuring your qualified GO Zone loss is not eligible for the election to be treated as having occurred in the previous tax year. Nm taxation and revenue department 5-year NOL carryback of certain timber losses. Nm taxation and revenue department   Generally, you can carry the portion of an NOL due to income and deductions attributable to a farming business back to the 5 tax years before the NOL year. Nm taxation and revenue department You can treat income and deductions attributable to qualified timber property as attributable to a farming business if any portion of the property is located in the GO Zone, Rita GO Zone, or Wilma GO Zone, and the income and deductions are allocable to the part of your tax year which is after the applicable date below. Nm taxation and revenue department August 27, 2005, if any portion of the property is located in the GO Zone. Nm taxation and revenue department September 22, 2005, if any portion of the property is located in the Rita GO Zone (but not in the GO Zone). Nm taxation and revenue department October 22, 2005, if any portion of the property is located in the Wilma GO Zone (but not in the GO Zone or the RITA GO Zone). Nm taxation and revenue department   These rules will not apply after 2006. Nm taxation and revenue department   However, these rules apply only to a timber producer who: Held qualified timber property (defined in Publication 535, Business Expenses) on the applicable date below: August 28, 2005, if any portion of the property is located in the GO Zone, September 23, 2005, if any portion of the property is located in the Rita GO Zone (but not in the GO Zone), or October 23, 2005, if any portion of the property is located in the Wilma GO Zone (but not in the GO Zone or the Rita GO Zone); Is not a corporation with stock publicly traded on an established securities market; Is not a real estate investment trust; and Did not hold more than 500 acres of qualified timber property on the applicable date above. Nm taxation and revenue department More information. Nm taxation and revenue department   For more information on NOLs, see Publication 536 or Publication 542, Corporations. Nm taxation and revenue department IRAs and Other Retirement Plans New rules provide for tax-favored withdrawals, repayments, and loans from certain retirement plans for taxpayers who suffered economic losses as a result of Hurricane Katrina, Rita, or Wilma. Nm taxation and revenue department Definitions Qualified hurricane distribution. Nm taxation and revenue department   A qualified hurricane distribution is any distribution you received from an eligible retirement plan if all of the following apply. Nm taxation and revenue department The distribution was made: After August 24, 2005, and before January 1, 2007, for Hurricane Katrina; After September 22, 2005, and before January 1, 2007, for Hurricane Rita; or After October 22, 2005, and before January 1, 2007, for Hurricane Wilma. Nm taxation and revenue department Your main home was located in a hurricane disaster area listed below on the date shown for that area. Nm taxation and revenue department August 28, 2005, for the Hurricane Katrina disaster area. Nm taxation and revenue department September 23, 2005, for the Hurricane Rita disaster area. Nm taxation and revenue department October 23, 2005, for the Hurricane Wilma disaster area. Nm taxation and revenue department You sustained an economic loss because of Hurricane Katrina, Rita, or Wilma and your main home was in that hurricane disaster area on the date shown in (2) above for that hurricane. Nm taxation and revenue department Examples of an economic loss include, but are not limited to: Loss, damage to, or destruction of real or personal property from fire, flooding, looting, vandalism, theft, wind, or other cause; Loss related to displacement from your home; or Loss of livelihood due to temporary or permanent layoffs. Nm taxation and revenue department   If (1) through (3) above apply, you can generally designate any distribution (including periodic payments and required minimum distributions) from an eligible retirement plan as a qualified hurricane distribution, regardless of whether the distribution was made on account of Hurricane Katrina, Rita, or Wilma. Nm taxation and revenue department Qualified hurricane distributions are permitted without regard to your need or the actual amount of your economic loss. Nm taxation and revenue department   The total of your qualified hurricane distributions from all plans is limited to $100,000. Nm taxation and revenue department If you have distributions in excess of $100,000 from more than one type of plan, such as a 401(k) plan and an IRA, you may allocate the $100,000 limit among the plans any way you choose. Nm taxation and revenue department   A reduction or offset (after August 24, 2005, for Katrina; after September 22, 2005, for Rita; or after October 22, 2005, for Wilma) of your account balance in an eligible retirement plan in order to repay a loan can also be designated as a qualified hurricane distribution. Nm taxation and revenue department Eligible retirement plan. Nm taxation and revenue department   An eligible retirement plan can be any of the following. Nm taxation and revenue department A qualified pension, profit-sharing, or stock bonus plan (including a 401(k) plan). Nm taxation and revenue department A qualified annuity plan. Nm taxation and revenue department A tax-sheltered annuity contract. Nm taxation and revenue department A governmental section 457 deferred compensation plan. Nm taxation and revenue department A traditional, SEP, SIMPLE, or Roth IRA. Nm taxation and revenue department Main home. Nm taxation and revenue department   Generally, your main home is the home where you live most of the time. Nm taxation and revenue department A temporary absence due to special circumstances, such as illness, education, business, military service, evacuation, or vacation, will not change your main home. Nm taxation and revenue department Taxation of Qualified Hurricane Distributions Qualified hurricane distributions are included in income in equal amounts over three years. Nm taxation and revenue department However, if you elect, you can include the entire distribution in your income in the year it was received. Nm taxation and revenue department Qualified hurricane distributions are not subject to the additional 10% tax (or the additional 25% tax for certain distributions from SIMPLE IRAs) on early distributions from qualified retirement plans (including IRAs). Nm taxation and revenue department However, any distributions you receive in excess of the $100,000 qualified hurricane distribution limit may be subject to the additional tax on early distributions. Nm taxation and revenue department For more information, see Form 8915. Nm taxation and revenue department Repayment of Qualified Hurricane Distributions If you choose, you generally can repay any portion of a qualified hurricane distribution that is eligible for tax-free rollover treatment to an eligible retirement plan. Nm taxation and revenue department Also, you can repay a qualified hurricane distribution made on account of a hardship from a retirement plan. Nm taxation and revenue department However, see Exceptions below for qualified hurricane distributions you cannot repay. Nm taxation and revenue department You have three years from the day after the date you received the distribution to make a repayment. Nm taxation and revenue department Amounts that are repaid are treated as a qualified rollover and are not included in income. Nm taxation and revenue department Also, for purposes of the one-rollover-per-year limitation for IRAs, a repayment to an IRA is not considered a qualified rollover. Nm taxation and revenue department See Form 8915 for more information on how to report repayments. Nm taxation and revenue department Exceptions. Nm taxation and revenue department   You cannot repay the following types of distributions. Nm taxation and revenue department Qualified hurricane distributions received as a beneficiary (other than a surviving spouse). Nm taxation and revenue department Required minimum distributions. Nm taxation and revenue department Periodic payments (other than from an IRA) that are for: A period of 10 years or more, Your life or life expectancy, or The joint lives or joint life expectancies of you and your beneficiary. Nm taxation and revenue department Repayment of Qualified Distributions for the Purchase or Construction of a Main Home If you received a qualified distribution to purchase or construct a main home in the Hurricane Katrina, Rita, or Wilma disaster area, you can repay that distribution before March 1, 2006, to an eligible retirement plan after August 24, 2005 (Katrina); after September 22, 2005 (Rita); or after October 22, 2005 (Wilma). Nm taxation and revenue department For this purpose, an eligible retirement plan is any plan, annuity, or IRA to which a qualified rollover can be made. Nm taxation and revenue department To be a qualified distribution, the distribution must meet all of the following requirements. Nm taxation and revenue department The distribution is a hardship distribution from a 401(k) plan, a hardship distribution from a tax-sheltered annuity contract, or a qualified first-time homebuyer distribution from an IRA. Nm taxation and revenue department The distribution was received in 2005 after February 28 and before: August 29 for Hurricane Katrina; September 24 for Hurricane Rita; or October 24 for Hurricane Wilma. Nm taxation and revenue department The distribution was to be used to purchase or construct a main home in the Hurricane Katrina, Rita, or Wilma disaster area that was not purchased or constructed because of Hurricane Katrina, Rita, or Wilma. Nm taxation and revenue department Amounts that are repaid before March 1, 2006, are treated as a qualified rollover and are not included in income. Nm taxation and revenue department Also, for purposes of the one-rollover-per-year limitation for IRAs, a repayment to an IRA is not considered a qualified rollover. Nm taxation and revenue department A qualified distribution not repaid before March 1, 2006, may be taxable for 2005 and subject to the additional 10% tax (or the additional 25% tax for certain SIMPLE IRAs) on early distributions. Nm taxation and revenue department You must file Form 8915 if you received a qualified distribution that you repaid, in whole or in part, before March 1, 2006. Nm taxation and revenue department Loans From Qualified Plans The following benefits are available to qualified individuals. Nm taxation and revenue department Increases to the limits for distributions treated as loans from employer plans. Nm taxation and revenue department A 1-year suspension for payments due on plan loans. Nm taxation and revenue department Qualified individual. Nm taxation and revenue department   You are a qualified individual if any of the following apply. Nm taxation and revenue department Your main home on August 28, 2005, was located in the Hurricane Katrina disaster area and you had an economic loss because of Hurricane Katrina. Nm taxation and revenue department Your main home on September 23, 2005, was located in the Hurricane Rita disaster area and you had an economic loss because of Hurricane Rita. Nm taxation and revenue department Your main home on October 23, 2005, was located in the Hurricane Wilma disaster area and you had an economic loss because of Hurricane Wilma. Nm taxation and revenue department Examples of an economic loss include, but are not limited to: Loss, damage to, or destruction of real or personal property from fire, flooding, looting, vandalism, theft, wind, or other cause; Loss related to displacement from your home; or Loss of livelihood due to temporary or permanent layoffs. Nm taxation and revenue department Limits on plan loans. Nm taxation and revenue department   The $50,000 limit for distributions treated as plan loans is increased to $100,000. Nm taxation and revenue department In addition, the limit based on 50% of your vested accrued benefit is increased to 100% of that benefit. Nm taxation and revenue department The higher limits apply only to loans received during the following period. Nm taxation and revenue department If your main home was located in the Hurricane Katrina disaster area, the period began on September 24, 2005, and ends on December 31, 2006. Nm taxation and revenue department If your main home was located in the Hurricane Rita or Wilma disaster area, the period began on December 21, 2005, and ends on December 31, 2006. Nm taxation and revenue department If you are a qualified individual based on Hurricane Katrina and another hurricane, use the period based on Hurricane Katrina. Nm taxation and revenue department One-year suspension of loan payments. Nm taxation and revenue department   Payments on plan loans due before 2007 may be suspended for 1 year by the plan administrator. Nm taxation and revenue department To qualify for the suspension, the due date for any loan payment must occur during the period beginning on: August 28, 2005, if your main home was located in the Hurricane Katrina disaster area. Nm taxation and revenue department September 23, 2005, if your main home was located in the Hurricane Rita disaster area. Nm taxation and revenue department October 23, 2005, if your main home was located in the Hurricane Wilma disaster area. Nm taxation and revenue department If you are a qualified individual based on more than one hurricane, use the period with the earliest beginning date. Nm taxation and revenue department Additional Tax Relief for Individuals Earned Income Credit and Child Tax Credit You can elect to use your 2004 earned income to figure your earned income credit (EIC) and additional child tax credit for 2005 if: Your 2005 earned income is less than your 2004 earned income, and At least one of the following statements is true. Nm taxation and revenue department Your main home on August 25, 2005, was in the Gulf Opportunity (GO) Zone. Nm taxation and revenue department Your main home on August 25, 2005, was in the Hurricane Katrina disaster area and you were displaced from that home because of Hurricane Katrina. Nm taxation and revenue department Your main home on September 23, 2005, was in the Rita GO Zone. Nm taxation and revenue department Your main home on September 23, 2005, was in the Hurricane Rita disaster area and you were displaced from that home because of Hurricane Rita. Nm taxation and revenue department Your main home on October 23, 2005, was in the Wilma GO Zone. Nm taxation and revenue department Your main home on October 23, 2005, was in the Hurricane Wilma disaster area and you were displaced from that home because of Hurricane Wilma. Nm taxation and revenue department Earned income. Nm taxation and revenue department    For the purpose of this election, your earned income for both the EIC and the additional child tax credit is the amount of earned income used to figure your EIC, even if you did not take the EIC and even if that amount is different than your earned income for the additional child tax credit. Nm taxation and revenue department If you are claiming only the additional child tax credit, you must figure the amount of your earned income for EIC purposes to determine your eligibility to make the election and the amount of the credit. Nm taxation and revenue department Joint returns. Nm taxation and revenue department   If you file a joint return, you qualify to make this election even if only one spouse meets the requirements. Nm taxation and revenue department If you make the election, your 2004 earned income is the sum of your 2004 earned income and your spouse's 2004 earned income. Nm taxation and revenue department Making the election. Nm taxation and revenue department   If you make the election to use your 2004 earned income, the election applies for figuring both the EIC and the additional child tax credit. Nm taxation and revenue department However, you can make the election for the additional child tax credit even if you do not take the EIC. Nm taxation and revenue department   Electing to use your 2004 earned income may increase or decrease your EIC. Nm taxation and revenue department Take the following steps to decide whether to make the election. Nm taxation and revenue department Figure your 2005 EIC using your 2004 earned income. Nm taxation and revenue department Figure your 2005 additional child tax credit using your 2004 earned income for EIC purposes. Nm taxation and revenue department Add the results of (1) and (2). Nm taxation and revenue department Figure your 2005 EIC using your 2005 earned income. Nm taxation and revenue department Figure your 2005 additional child tax credit using your 2005 earned income for additional child tax credit purposes. Nm taxation and revenue department Add the results of (4) and (5). Nm taxation and revenue department Compare the results of (3) and (6). Nm taxation and revenue department If (3) is larger than (6), it is to your benefit to make the election. Nm taxation and revenue department If (3) is equal to or smaller than (6), making the election will not help you. Nm taxation and revenue department   If you elect to use your 2004 earned income and you are claiming the EIC, enter “PYEI” and the amount of your 2004 earned income on the dotted line next to line 66a of Form 1040, on the line next to line 41a of Form 1040A, or in the space to the left of line 8a of Form 1040EZ. Nm taxation and revenue department   If you elect to use your 2004 earned income and you are claiming the additional child tax credit, enter your 2004 earned income for EIC purposes (even if you did not claim the EIC) on Form 8812, Additional Child Tax Credit, line 4a, and check the box on that line. Nm taxation and revenue department   Because Form 8812 was released before the GO Zone legislation was enacted, the instructions refer only to individuals whose main home was in the Hurricane Katrina disaster area. Nm taxation and revenue department When completing Form 8812, line 4a, use the above rules to determine your eligibility to make the election (instead of the Form 8812 instructions). Nm taxation and revenue department Getting your 2004 tax return information. Nm taxation and revenue department   If you do not have your 2004 tax records, you can get the amount of earned income used to figure your 2004 EIC by calling 1-866-562-5227. Nm taxation and revenue department You can also get this information by visiting the IRS website at www. Nm taxation and revenue department irs. Nm taxation and revenue department gov. Nm taxation and revenue department   If you prefer to figure your 2004 earned income yourself, copies or transcripts of your filed and processed tax returns can help you reconstruct your tax records. Nm taxation and revenue department See Request for Copy or Transcript of Tax Return on page 16. Nm taxation and revenue department Additional Exemption for Housing Individuals Displaced by Hurricane Katrina You may be able to claim an additional exemption amount of $500 for providing housing in your main home for each individual displaced by Hurricane Katrina. Nm taxation and revenue department The additional exemption amount is claimed on new Form 8914. Nm taxation and revenue department The additional exemption amount is allowable once per taxpayer for a specific individual in 2005 or 2006, but not in both years. Nm taxation and revenue department The maximum additional exemption amount you can claim for all displaced individuals is $2,000 ($1,000 if married filing separately). Nm taxation and revenue department The additional exemption amount you claim for displaced individuals in 2005 will reduce the $2,000 maximum for 2006. Nm taxation and revenue department If two or more taxpayers share the same main home, only one taxpayer in that main home can claim the additional exemption amount for a specific displaced individual. Nm taxation and revenue department If married filing separately, only one spouse may claim the additional exemption amount for a specific displaced individual. Nm taxation and revenue department In order for you to be considered to have provided housing, you must have a legal interest in the main home (that is, own or rent the home). Nm taxation and revenue department To qualify as a displaced individual, the individual: Must have had his or her main home in the Hurricane Katrina disaster area on August 28, 2005, and he or she must have been displaced from that home. Nm taxation and revenue department If the individual's main home was located outside the core disaster area, that home must have been damaged by Hurricane Katrina or the individual must have been evacuated from that home because of Hurricane Katrina, Must have been provided housing in your main home for a period of at least 60 consecutive days ending in the tax year in which the exemption is claimed, and Cannot be your spouse or dependent. Nm taxation and revenue department You cannot claim the additional exemption amount if you received rent (or any other amount) from any source for providing the housing. Nm taxation and revenue department You are permitted to receive payments or reimbursements that do not relate to normal housing costs, including the following. Nm taxation and revenue department Food, clothing, or personal items consumed or used by the displaced individual. Nm taxation and revenue department Reimbursement for the cost of any long distance telephone calls made by the displaced individual. Nm taxation and revenue department Reimbursement for the cost of gasoline for the displaced individual's use of your vehicle. Nm taxation and revenue department However, you cannot claim the additional exemption amount if you received any reimbursement for the extra costs of heat, electricity, or water used by the displaced individual. Nm taxation and revenue department Also, you must report on Form 8914 the displaced individual's social security number or individual taxpayer identification number to claim an additional exemption amount. Nm taxation and revenue department For more information, see Form 8914. Nm taxation and revenue department Education Credits The education credits have been expanded for students attending an eligible educational institution located in the Gulf Opportunity Zone (GOZ students) for any tax year beginning in 2005 or 2006. Nm taxation and revenue department The Hope credit for a GOZ student is increased to 100% of the first $2,000 in qualified education expenses and 50% of the next $2,000 of qualified education expenses for a maximum credit of $3,000 per student. Nm taxation and revenue department The lifetime learning credit rate for a GOZ student is increased from 20% to 40%. Nm taxation and revenue department The definition of qualified education expenses for a GOZ student also has been expanded. Nm taxation and revenue department In addition to tuition and fees required for the student's enrollment or attendance at an eligible educational institution, qualified education expenses for a GOZ student include the following. Nm taxation and revenue department Books, supplies, and equipment required for enrollment or attendance at an eligible educational institution. Nm taxation and revenue department For a special needs student, expenses that are necessary for that person's enrollment or attendance at an eligible educational institution. Nm taxation and revenue department For a student who is at least a half-time student, the reasonable costs of room and board, but only to the extent that the costs are not more than the greater of the following two amounts. Nm taxation and revenue department The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student. Nm taxation and revenue department The actual amount charged if the student is residing in housing owned or operated by the eligible educational institution. Nm taxation and revenue department You will need to contact the eligible educational institution for qualified room and board costs. Nm taxation and revenue department For more information, see Form 8863. Nm taxation and revenue department Recapture of Federal Mortgage Subsidy Generally, if you financed your home under a federally subsidized program (loans from tax-exempt qualified mortgage bonds or loans with mortgage credit certificates), you may have to recapture all or part of the benefit you received from that program when you sell or otherwise dispose of your home. Nm taxation and revenue department However, you do not have to recapture any benefit if your mortgage loan was a qualified home improvement loan of not more than $15,000. Nm taxation and revenue department This amount is increased to $150,000 if the loan was provided before 2011 and was used to: Repair damage caused by Hurricane Katrina to a residence in the Hurricane Katrina disaster area, or Alter, repair, or improve an existing owner-occupied residence in the GO Zone, Rita GO Zone, or Wilma GO Zone. Nm taxation and revenue department Exclusion of Certain Cancellations of Indebtedness by Reason of Hurricane Katrina Generally, discharges of nonbusiness debts (such as mortgages) made after August 24, 2005, and before January 1, 2007, are excluded from income for individuals whose main home was in the Hurricane Katrina disaster area on August 25, 2005. Nm taxation and revenue department If the individual's main home was located outside the core disaster area, the individual also must have had an economic loss because of Hurricane Katrina. Nm taxation and revenue department Examples of an economic loss include, but are not limited to: Loss, damage to, or destruction of real or personal property from fire, flooding, looting, vandalism, theft, wind, or other cause; Loss related to displacement from your home; or Loss of livelihood due to temporary or permanent layoffs. Nm taxation and revenue department This relief does not apply to any debt secured by real property located outside the Hurricane Katrina disaster area. Nm taxation and revenue department You may also have to reduce certain tax attributes by the amount excluded. Nm taxation and revenue department For more information, see Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment). Nm taxation and revenue department Tax Relief for Temporary Relocation Under the Gulf Opportunity Zone Act of 2005, the IRS may adjust the internal revenue laws to ensure that taxpayers do not lose a deduction or credit or experience a change of filing status in 2005 or 2006 as a result of a temporary relocation caused by Hurricane Katrina, Rita, or Wilma. Nm taxation and revenue department However, any such adjustment must ensure that an individual is not taken into account by more than one taxpayer for the same tax benefit. Nm taxation and revenue department The IRS has exercised this authority as follows. Nm taxation and revenue department In determining whether you furnished over one-half of the cost of maintaining a household, you can exclude from total household costs any assistance received from the government or charitable organizations because you were temporarily relocated as a result of Hurricane Katrina, Rita, or Wilma. Nm taxation and revenue department In determining whether you provided more than one-half of an individual's support, you can disregard any assistance received from the government or charitable organizations because you were temporarily relocated as a result of Hurricane Katrina, Rita, or Wilma. Nm taxation and revenue department You can treat as a student an individual who enrolled in school before August 25, 2005, and who is unable to attend classes because of Hurricane Katrina, for each month of the enrollment period that individual is prevented by Hurricane Katrina from attending school as planned. Nm taxation and revenue department You can treat as a student an individual who enrolled in school before September 23, 2005, and who is unable to attend classes because of Hurricane Rita, for each month of the enrollment period that individual is prevented by Hurricane Rita from attending school as planned. Nm taxation and revenue department You can treat as a student an individual who enrolled in school before October 23, 2005, and who is unable to attend classes because of Hurricane Wilma, for each month of the enrollment period that individual is prevented by Hurricane Wilma from attending school as planned. Nm taxation and revenue department Additional Tax Relief for Businesses Special Depreciation Allowance You can take a special depreciation allowance for qualified Gulf Opportunity (GO) Zone property (as defined below) you place in service after August 27, 2005. Nm taxation and revenue department The allowance is an additional deduction of 50% of the property's depreciable basis (after any section 179 deduction and before figuring your regular depreciation deduction). Nm taxation and revenue department The special allowance applies only for the first year the property is placed in service. Nm taxation and revenue department The allowance is deductible for both the regular tax and the alternative minimum tax (AMT). Nm taxation and revenue department There is no AMT adjustment required for any depreciation figured on the remaining basis of the property. Nm taxation and revenue department You can elect not to deduct the special GO Zone depreciation allowance for qualified property. Nm taxation and revenue department If you make this election for any property, it applies to all property in the same class placed in service during the year. Nm taxation and revenue department Qualified GO Zone property. Nm taxation and revenue department   Property that qualifies for the special GO Zone depreciation allowance includes the following. Nm taxation and revenue department Tangible property depreciated under the modified accelerated cost recovery system (MACRS) with a recovery period of 20 years or less. Nm taxation and revenue department Water utility property. Nm taxation and revenue department Computer software that is readily available for purchase by the general public, is subject to a nonexclusive license, and has not been substantially modified. Nm taxation and revenue department (The cost of some computer software is treated as part of the cost of hardware and is depreciated under MACRS. Nm taxation and revenue department ) Qualified leasehold improvement property. Nm taxation and revenue department Nonresidential real property and residential rental property. Nm taxation and revenue department   For more information on this property, see Publication 946. Nm taxation and revenue department Other tests to be met. Nm taxation and revenue department   To be qualified GO Zone property, the property must also meet all of the following tests. Nm taxation and revenue department You must have acquired the property, by purchase, after August 27, 2005, but only if no binding written contract for the acquisition was in effect before August 28, 2005. Nm taxation and revenue department The property must be placed in service before 2008 (2009 in the case of nonresidential real property and residential rental property). Nm taxation and revenue department Substantially all of the use of the property must be in the GO Zone and in the active conduct of your trade or business in the GO Zone. Nm taxation and revenue department The original use of the property in the GO Zone must begin with you after August 27, 2005. Nm taxation and revenue department Used property can be qualified GO Zone property if it has not previously been used within the GO Zone. Nm taxation and revenue department Also, additional capital expenditures you incurred after August 27, 2005, to recondition or rebuild your property meet the original use test if the original use of the property in the GO Zone began with you. Nm taxation and revenue department Excepted property. Nm taxation and revenue department   Qualified GO Zone property does not include any of the following. Nm taxation and revenue department Property required to be depreciated using the Alternative Depreciation System (ADS). Nm taxation and revenue department Property any portion of which is financed with the proceeds of a tax-exempt obligation under section 103. Nm taxation and revenue department Property for which you are claiming a commercial revitalization deduction. Nm taxation and revenue department Any property used in connection with any private or commercial golf course, country club, massage parlor, hot tub facility, suntan facility, or any store, the principal business of which is the sale of alcoholic beverages for consumption off premises. Nm taxation and revenue department Any gambling or animal racing property (as defined below). Nm taxation and revenue department Property in the same class as that for which you elected not to claim the special GO Zone depreciation allowance. Nm taxation and revenue department   Gambling or animal racing property is: Any equipment, furniture, software, or other property used directly in connection with gambling, the racing of animals, or the on-site viewing of such racing, and The portion of any real property (determined by square footage) that is dedicated to gambling, the racing of animals, or the on-site viewing of such racing, unless this portion is less than 100 square feet. Nm taxation and revenue department Recapture of special allowance. Nm taxation and revenue department   If, in any year after the year you claim the special allowance, the property ceases to be qualified GO Zone property, you may have to recapture as ordinary income any excess benefit you received from claiming the special allowance. Nm taxation and revenue department Increased Section 179 Deduction An increased section 179 deduction is allowable for qualified section 179 Gulf Opportunity (GO) Zone property (as defined later) placed in service in the GO Zone. Nm taxation and revenue department Increased dollar limit. Nm taxation and revenue department   The limit on the section 179 deduction ($105,000 for 2005, $108,000 for 2006) for qualified section 179 GO Zone property acquired after August 27, 2005, is increased by the smaller of: $100,000, or The cost of qualified section 179 GO Zone property placed in service during the year (including such property placed in service by your spouse, even if you are filing a separate return). Nm taxation and revenue department   The amount for which you can make the election is reduced if the cost of all qualified section 179 GO Zone property you placed in service during the year exceeds $420,000 for 2005 ($430,000 for 2006) increased by the smaller of: $600,000, or The cost of qualified section 179 GO Zone property placed in service during the year. Nm taxation and revenue department Qualified section 179 GO Zone property. Nm taxation and revenue department   Qualified section 179 GO Zone property is section 179 property that is qualified GO Zone property (explained earlier under Special Depreciation Allowance). Nm taxation and revenue department Section 179 property does not include nonresidential real property or residential rental property. Nm taxation and revenue department For more information, including the requirements that must be met for property to qualify for the section 179 deduction, see chapter 2 of Publication 946. Nm taxation and revenue department Work Opportunity Credit For the work opportunity credit, the definition of “targeted group employee” has been expanded to include a Hurricane Katrina employee. Nm taxation and revenue department Hurricane Katrina employee. Nm taxation and revenue department   A Hurricane Katrina employee is: A person who, on August 28, 2005, had a main home in the core disaster area and, within a two-year period beginning on that date, is hired to perform services principally in the core disaster area; or A person who, on August 28, 2005, had a main home in the core disaster area, was displaced from that main home as a result of Hurricane Katrina, and was hired during the period beginning on August 28, 2005, and ending on December 31, 2005. Nm taxation and revenue department Qualified wages. Nm taxation and revenue department   Generally, qualified wages do not include wages you paid to a targeted group employee who worked for you previously. Nm taxation and revenue department However, wages will qualify if: You paid them to an employee who is a Hurricane Katrina employee, The employee was not in your employment on August 28, 2005, and This is your first hire of the employee as a Hurricane Katrina employee after August 28, 2005. Nm taxation and revenue department   For more information, see Form 5884. Nm taxation and revenue department Certification requirements. Nm taxation and revenue department   An employee must provide to the employer reasonable evidence that he or she is a Hurricane Katrina employee. Nm taxation and revenue department An employer may accept a completed Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity and Welfare-to-Work Credits, as such evidence. Nm taxation and revenue department The certification requirements described in Form 8850 do not apply to a Hurricane Katrina employee. Nm taxation and revenue department Do not send any Forms 8850 that have only box 1 checked to the state employment security agency. Nm taxation and revenue department Instead, the employer should keep these Forms 8850 with the employer's other records. Nm taxation and revenue department For more information, see Form 8850 and its instructions. Nm taxation and revenue department Employee Retention Credit An eligible employer who conducted an active trade or business in the Gulf Opportunity (GO) Zone, the Rita GO Zone, or the Wilma GO Zone can claim the employee retention credit. Nm taxation and revenue department The credit is 40% of qualified wages for each eligible employee (up to a maximum of $6,000 in qualified wages per employee). Nm taxation and revenue department Generally, you must reduce your deduction for salaries and wages by the amount of this credit (before the tax liability limit). Nm taxation and revenue department Use Form 5884-A to claim the credit. Nm taxation and revenue department See the following rules and definitions for each hurricane. Nm taxation and revenue department Employers affected by Hurricane Katrina. Nm taxation and revenue department   The following definitions apply to employers affected by Hurricane Katrina. Nm taxation and revenue department Eligible employer. Nm taxation and revenue department   For this purpose, an eligible employer is any employer who conducted an active trade or business on August 28, 2005, in the GO Zone and whose trade or business was inoperable on any day after August 28, 2005, and before January 1, 2006, because of damage caused by Hurricane Katrina. Nm taxation and revenue department Eligible employee. Nm taxation and revenue department   For this purpose, an eligible employee is an employee whose principal place of employment on August 28, 2005, with such eligible employer was in the GO Zone. Nm taxation and revenue department An employee is not an eligible employee for purposes of Hurricane Katrina if the employee is treated as an eligible employee for the work opportunity credit. Nm taxation and revenue department Employers affected by Hurricane Rita. Nm taxation and revenue department   The following definitions apply to employers affected by Hurricane Rita. Nm taxation and revenue department Eligible employer. Nm taxation and revenue department   For this purpose, an eligible employer is any employer who conducted an active trade or business on September 23, 2005, in the Rita GO Zone and whose trade or business was inoperable on any day after September 23, 2005, and before January 1, 2006, because of damage caused by Hurricane Rita. Nm taxation and revenue department Eligible employee. Nm taxation and revenue department   For this purpose, an eligible employee is an employee whose principal place of employment on September 23, 2005, with such eligible employer was in the Rita GO Zone. Nm taxation and revenue department An employee is not an eligible employee for purposes of Hurricane Rita if the employee is treated as an eligible employee for the work opportunity credit or the Hurricane Katrina employee retention credit. Nm taxation and revenue department Employers affected by Hurricane Wilma. Nm taxation and revenue department   The following definitions apply to employers affected by Hurricane Wilma. Nm taxation and revenue department Eligible employer. Nm taxation and revenue department   For this purpose, an eligible employer is any employer who conducted an active trade or business on October 23, 2005, in the Wilma GO Zone and whose trade or business was inoperable on any day after October 23, 2005, and before January 1, 2006, because of damage caused by Hurricane Wilma. Nm taxation and revenue department Eligible employee. Nm taxation and revenue department   For this purpose, an eligible employee is an employee whose principal place of employment on October 23, 2005, with such eligible employer was in the Wilma GO Zone. Nm taxation and revenue department An employee is not an eligible employee for purposes of Hurricane Wilma if the employee is treated as an eligible employee for the work opportunity credit or the Hurricane Katrina or Rita employee retention credit. Nm taxation and revenue department Qualified wages. Nm taxation and revenue department   Qualified wages are wages you paid or incurred before January 1, 2006, (up to $6,000 per employee) for an eligible employee beginning on the date your trade or business first became inoperable at the employee's principal place of employment immediately before the applicable hurricane, and ending on the date your trade or business resumed significant operations at that place. Nm taxation and revenue department In addition, the wages must have been paid or incurred after the following date. Nm taxation and revenue department August 28, 2005, for Hurricane Katrina. Nm taxation and revenue department September 23, 2005, for Hurricane Rita. Nm taxation and revenue department October 23, 2005, for Hurricane Wilma. Nm taxation and revenue department    This includes wages paid even if the employee performed no services, performed services at a place of employment other than the principal place of employment, or performed services at the principal place of employment before significant operations resumed. Nm taxation and revenue department    Wages qualifying for the credit generally have the same meaning as wages subject to the Federal Unemployment Tax Act (FUTA). Nm taxation and revenue department Qualified wages also include amounts you paid for medical or hospitalization expenses in connection with sickness or accident disability. Nm taxation and revenue department Qualified wages for any employee must be reduced by the amount of any work supplementation payment you received under the Social Security Act. Nm taxation and revenue department   For agricultural employees, if the work performed by any employee during more than half of any pay period qualified under FUTA as agricultural labor, that employee's wages subject to social security and Medicare taxes are qualified wages. Nm taxation and revenue department For a special rule that applies to railroad employees, see section 51(h)(1)(B). Nm taxation and revenue department   Qualified wages do not include the following. Nm taxation and revenue department Wages paid to your dependent or a related individual. Nm taxation and revenue department See section 51(i)(1). Nm taxation and revenue department Wages paid to any employee during the period for which you received payment for the employee from a federally funded on-the-job training program. Nm taxation and revenue department Wages for services of replacement workers during a strike or lockout. Nm taxation and revenue department   For more information, see Form 5884-A. Nm taxation and revenue department Hurricane Katrina Housing Credit An employer who conducted an active trade or business in the Gulf Opportunity (GO) Zone can claim the Hurricane Katrina housing credit. Nm taxation and revenue department The credit is equal to 30% of the value (up to $600 per month per employee) of in-kind lodging furnished to a qualified employee (and the employee's spouse or dependents) from January 1, 2006, through July 1, 2006. Nm taxation and revenue department The value of the lodging is excluded from the income of the qualified employee but is treated as wages for purposes of taxes imposed under the Federal Insurance Contributions Act (FICA) and the Federal Unemployment Tax Act (FUTA). Nm taxation and revenue department Generally, you must reduce your deduction for salaries and wages by the amount of this credit (before the tax liability limit). Nm taxation and revenue department The employer must use Form 5884-A to claim the credit. Nm taxation and revenue department A qualified employee is an individual who had a main home in the GO Zone on August 28, 2005, and who performs substantially all employment services in the GO Zone for the employer furnishing the lodging. Nm taxation and revenue department The employee cannot be your dependent or a related individual. Nm taxation and revenue department See section 51(i)(1). Nm taxation and revenue department For more information, see Form 5884-A. Nm taxation and revenue department Reforestation Costs You may be able to elect to deduct a limited amount of reforestation costs for each qualified timber property. Nm taxation and revenue department The deduction for any tax year generally is limited to $10,000 ($5,000 if married filing separately, $0 for a trust). Nm taxation and revenue department However, this limit is increased if you paid or incurred reforestation costs after the applicable date below and any portion of the qualified timber property is located in one of the following areas. Nm taxation and revenue department August 27, 2005, if any portion of the property is located in the GO Zone. Nm taxation and revenue department September 22, 2005, if any portion of the property is located in the Rita GO Zone (but not in the GO Zone). Nm taxation and revenue department October 22, 2005, if any portion of the property is located in the Wilma GO Zone. Nm taxation and revenue department The limit for each qualified timber property is increased by the smaller of: $10,000 ($5,000 if married filing separately, $0 for a trust), or The amount of reforestation costs you paid or incurred after the applicable date for the qualified timber property, any portion of which is located in the zone described above. Nm taxation and revenue department The increase in the limit applies only to costs paid or incurred before 2008. Nm taxation and revenue department However, these rules do not apply to any timber producer who: Held more than 500 acres of qualified timber property at any time during the tax year, Is a corporation with stock publicly traded on an established securities market, or Is a real estate investment trust. Nm taxation and revenue department For more information about the election to deduct reforestation costs, see chapter 8 in Publication 535, Business Expenses. Nm taxation and revenue department Demolition and Clean-up Costs You can elect to deduct 50% of any qualified GO Zone clean-up costs for the tax year in which the costs are paid or incurred, instead of capitalizing them. Nm taxation and revenue department Qualified GO Zone clean-up costs are any amounts paid or incurred after August 27, 2005, and before January 1, 2008, for the removal of debris from, or the demolition of structures on, real property located in the GO Zone that is: Held by you for use in a trade or business or for the production of income, or Inventory or other property held primarily for sale to customers in the ordinary course of your trade or business. Nm taxation and revenue department Increase in Rehabilitation Tax Credit The rehabilitation credit is increased for qualified rehabilitation expenditures paid or incurred after August 27, 2005, and before January 1, 2009, on buildings located in the GO Zone as follows. Nm taxation and revenue department For pre-1936 buildings (other than certified historic structures), the credit percentage is increased from 10% to 13%. Nm taxation and revenue department For certified historic structures, the credit percentage is increased from 20% to 26%. Nm taxation and revenue department For more information, see Form 3468, Investment Credit. Nm taxation and revenue department Request for Copy or Transcript of Tax Return Request for copy of tax return. Nm taxation and revenue department   You can use Form 4506 to order a copy of your tax return. Nm taxation and revenue department Generally, there is a $39. Nm taxation and revenue department 00 fee for requesting each copy of a tax return. Nm taxation and revenue department If your main home, principal place of business, or tax records are located in a Presidentially declared disaster area, the fee will be waived if the assigned disaster designation (for example, “Hurricane Katrina”) is written in red across the top of the form when filed. Nm taxation and revenue department Request for transcript of tax return. Nm taxation and revenue department   You can use Form 4506-T to order a free transcript of your tax return. Nm taxation and revenue department A transcript provides most of the line entries from a tax return and usually contains the information that a third party requires. Nm taxation and revenue department You can also call 1-800-829-1040 to order a transcript. Nm taxation and revenue department How To Get Tax Help Special IRS assistance. Nm taxation and revenue department   The IRS is providing special help for those affected by Hurricane Katrina, Rita, or Wilma, as well as survivors and personal representatives of the victims. Nm taxation and revenue department We have set up a special toll-free number for people who may have trouble filing or paying their taxes because they were affected by Hurricane Katrina, Rita, or Wilma, or who have other tax issues related to the hurricanes. Nm taxation and revenue department Call 1-866-562-5227 Monday through Friday In English-7 a. Nm taxation and revenue department m. Nm taxation and revenue department to 10 p. Nm taxation and revenue department m. Nm taxation and revenue department local time In Spanish-8 a. Nm taxation and revenue department m. Nm taxation and revenue department to 9:30 p. Nm taxation and revenue department m. Nm taxation and revenue department local time   The IRS website at www. Nm taxation and revenue department irs. Nm taxation and revenue department gov has notices and other tax relief information. Nm taxation and revenue department Check it periodically for any new guidance. Nm taxation and revenue department Other help from the IRS. Nm taxation and revenue department   You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get more information from the IRS in several ways. Nm taxation and revenue department By selecting the method that is best for you, you will have quick and easy access to tax help. Nm taxation and revenue department Contacting your Taxpayer Advocate. Nm taxation and revenue department   If you have attempted to deal with an IRS problem unsuccessfully, you should contact your Taxpayer Advocate. Nm taxation and revenue department   The Taxpayer Advocate independently represents your interests and concerns within the IRS by protecting your rights and resolving problems that have not been fixed through normal channels. Nm taxation and revenue department While Taxpayer Advocates cannot change the tax law or make a technical tax decision, they can clear up problems that resulted from previous contacts and ensure that your case is given a complete and impartial review. Nm taxation and revenue department   To contact your Taxpayer Advocate: Call the Taxpayer Advocate toll free at 1-877-777-4778. Nm taxation and revenue department Call, write, or fax the Taxpayer Advocate office in your area. Nm taxation and revenue department Call 1-800-829-4059 if you are a TTY/TDD user. Nm taxation and revenue department Visit www. Nm taxation and revenue department irs. Nm taxation and revenue department gov/advocate. Nm taxation and revenue department   For more information, see Publication 1546, How To Get Help With Unresolved Tax Problems (now available in Chinese, Korean, Russian, and Vietnamese, in addition to English and Spanish). Nm taxation and revenue department Free tax services. Nm taxation and revenue department   To find out what services are available, get Publication 910, IRS Guide to Free Tax Services. Nm taxation and revenue department It contains a list of free tax publications and an index of tax topics. Nm taxation and revenue department It also describes other free tax information services, including tax education and assistance programs and a list of TeleTax topics. Nm taxation and revenue department Internet. Nm taxation and revenue department You can access the IRS website 24 hours a day, 7 days a week, at www. Nm taxation and revenue department irs. Nm taxation and revenue department gov to: E-file your return. Nm taxation and revenue department Find out about commercial tax preparation and e-file services available free to eligible taxpayers. Nm taxation and revenue department Check the status of your refund. Nm taxation and revenue department Click on Where's My Refund. Nm taxation and revenue department Be sure to wait at least 6 weeks from the date you filed your return (3 weeks if you filed electronically). Nm taxation and revenue department Have your tax return available because you will need to know your social security number, your filing status, and the exact whole dollar amount of your refund. Nm taxation and revenue department Download forms, instructions, and publications. Nm taxation and revenue department Order IRS products online. Nm taxation and revenue department Research your tax questions online. Nm taxation and revenue department Search publications online by topic or keyword. Nm taxation and revenue department View Internal Revenue Bulletins (IRBs) published in the last few years. Nm taxation and revenue department Figure your withholdin