Page 95 - Small Business Taxes

16:31 - 2-Feb-2023
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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
More information. For more information on 115-97)—10 years. Amortization for these amended section 55 to impose a corporate al-
the amortization of pollution control facilities, costs should be reported on line 43 of ternative minimum tax. The amendment applies
see sections 169 and 291(c) and the related Form 4562. to tax years beginning after 2022.
regulations. Excise tax to fund Black Lung Benefits. P.L.
How to make the election. To elect to amor- 117-169 also amended section 4121 to elimi-
Research and tize qualifying costs over the optional recovery nate the reduction in tax on coal from mines lo-
period, complete Part VI of Form 4562 and at-
cated in the United States sold by the producer.
Experimental Costs tach a statement containing the following infor- The amendment applies to sales in calendar
mation to your return for the tax year in which
the election begins. quarters beginning after August 17, 2022.
You must amortize specified research or experi- • Your name, address, and taxpayer identifi-
mental costs paid or incurred in tax years begin- cation number. Reminders
ning after 2021. • The type of cost and the specific amount of
You must amortize specified research or ex- the cost for which you are making the elec- Domestic production activities deduction
tion.
perimental costs ratably over a 5-year period repealed. P.L. 115-97, December 22, 2017,
beginning with the midpoint of the tax year in Generally, the election must be made on a repealed section 199, which provided a deduc-
which the expenditures were paid or incurred. timely filed return (including extensions) for the tion for income attributable to domestic produc-
Research or experimental expenditures attribut- tax year in which you incurred the costs. How- tion activities. The amendment applies to tax
able to foreign research conducted outside the ever, if you timely filed your return for the year years beginning after 2017.
United States, Puerto Rico, or any possession without making the election, you can still make Qualified business income deduction enac-
of the United States must be amortized ratably the election by filing an amended return within 6 ted. P.L. 115-97 also added section 199A,
over a 15-year period beginning with the mid- months of the due date of the return (excluding which provides a deduction for qualified busi-
point of the tax year in which the expenditures extensions). Attach Form 4562 to the amended ness income. The amendment applies to tax
were paid or incurred. This includes any return and write “Filed pursuant to section years beginning after 2017. Section 199A does
amounts paid or incurred in connection with the 301.9100-2” on Form 4562. File the amended not apply to tax years beginning after 2025.
development of software which are not other- return at the same address you filed the original
wise excluded expenditures under Internal Rev- return.
enue Code section 174 and Treasury Regula- Note. The amortization deduction and re- Introduction
tions section 1.174-2. For a definition of
“research and experimental costs,” see chap- search and experimental expenditures under Depletion is the using up of natural resources
ter 7. former section 174(b) or the dollar amount of re- extracted from a mineral property by mining,
search and experimental expenditures for drilling, quarrying stone, or cutting timber. The
How to make the election. To change to the which you elected to amortize over the 10-year depletion deduction allows an owner or opera-
required method of accounting for specified re- period under section 59(e) must be reported on tor to account for the reduction of the mineral
search or experimental expenditures in the first line 43 of Form 4562. Attach a statement that property’s value or basis as a result of the ex-
tax year beginning after December 31, 2021, at- shows (a) a description of the costs, (b) the traction of the natural resource.
tach the statement in lieu of Form 3115 as de- date amortization began, (c) the amortizable There are two ways of figuring depletion:
scribed in section 7.02(5) of Revenue amount, (d) the applicable Code section, (e) the cost depletion and percentage depletion. For oil
Procedure 2023-11 to your income tax return. amortization period, (f) the accumulated amorti- and gas wells, mines, other natural deposits (in-
You must also complete Part VI of Form 4562 zation, and (g) the amortization amount for this cluding geothermal deposits), and mineral
and attach it to your income tax return. Gener- year. property, you must generally use the method
ally, you must file the return by due date (includ- that gives you the larger deduction. For stand-
ing extensions). However, if you timely filed Revoking the election. You must obtain con- ing timber, you must use cost depletion.
your return for the year without attaching the sent from the IRS to revoke your section 59(e)
statement in lieu of Form 3115 or completed election. Your request to revoke the election Topics
Part VI of Form 4562, you can make the elec- must be submitted to the IRS in the form of a
tion by filing an amended return within 6 months letter ruling before the end of the tax year in This chapter discusses:
of the due date of the return (including exten- which the optional recovery period ends. The
sions). Attach the required statement and com- request must contain all of the information nec- • Who can claim depletion
pleted Form 4562 to the amended return and essary to demonstrate the rare and unusual cir- • Mineral property
write “Filed pursuant to section 301.9100-2” on cumstances that would justify granting revoca- • Timber
Form 4562. File the amended return at the tion. If the request for revocation is approved,
same address you filed the original return. any unamortized costs are deductible in the Useful Items
year the revocation is effective. You may want to see:
Optional Write-off of Publication
Certain Tax Preferences 544 544 Sales and Other Dispositions of
Assets
You can elect to amortize certain tax preference
items over an optional period beginning in the 9. 551 551 Basis of Assets
tax year in which you incurred the costs. If you
make this election, there is no alternative mini- Form (and Instructions)
mum tax adjustment. The applicable costs and Depletion Schedule E (Form 1040) Schedule E (Form 1040) Supplemental
the optional recovery periods are as follows. Income and Loss
• Circulation costs—3 years.
• Intangible drilling and development Schedule K-1 (Form 1065) Schedule K-1 (Form 1065) Partner’s
costs—60 months. What’s New Share of Income, Deductions,
• Mining exploration and development Credits, etc.
costs—10 years. Schedule K-1 (Form 1120-S)
• Research and experimental expenditures Corporate alternative minimum tax reinsta- Shareholder's Share of Income,
Schedule K-1 (Form 1120-S)
paid or incurred in tax years beginning be- ted in 2023. P.L. 117-169, August 16, 2022, Deductions, Credits, etc.
fore January 1, 2022 (section 174(a) prior
to amendment by section 13206(a) of P.L. 6198 6198 At-Risk Limitations
Page 36 Chapter 9 Depletion