2004 Instructions for Form 1040 (ALL) - Supreme Law Firm

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If you received interest as a to file Form 5471 if, in 2004, you owned Exceptions. Check the “No” box if any of TIP nominee, you must give the ac- 10% or more of the total (a) value of a the following applies to you. tual owner a Form 1099-INT foreign corporation’s stock, or (b) com- • The combined value of the accounts unless the owner is your bined voting power of all classes of a for- was $10,000 or less during the whole year. spouse. You must also file a Form 1096 and eign corporation’s stock with voting rights. • The accounts were with a U.S. milia Form 1099-INT with the IRS. For more For details, see Form 5471 and its instruc- tary banking facility operated by a U.S. details, see the General Instructions for tions. financial institution. Forms 1099, 1098, 5498, and W-2G and • You were an officer or employee of a the Instructions for Forms 1099-INT and commercial bank that is supervised by the 1099-OID. Line 5 Comptroller of the Currency, the Board of Accrued Interest Governors of the Federal Reserve System, Ordinary Dividends or the Federal Deposit Insurance Corpora- When you buy bonds between interest paytion; the account was in your employer’s ment dates and pay accrued interest to the Report on line 5 all of your ordinary divi- name; and you did not have a personal fiseller, this interest is taxable to the seller. If dends. This amount should be shown in box nancial interest in the account. you received a Form 1099 for interest as a 1a of your Forms 1099-DIV or substitute • You were an officer or employee of a purchaser of a bond with accrued interest, statements. List each payer’s name and domestic corporation with securities listed follow the rules earlier under Nominees to show the amount. on national securities exchanges or with see how to report the accrued interest on Nominees assets of more than $1 million and 500 or Schedule B. But identify the amount to be more shareholders of record; the account subtracted as “Accrued Interest.” If you received a Form 1099-DIV that in- was in your employer’s name; you did not cludes ordinary dividends you received as a Tax-Exempt Interest have a personal financial interest in the acnominee (that is, in your name, but the ordicount; and the corporation’s chief financial If you received a Form 1099-INT for nary dividends actually belong to someone officer has given you written notice that the tax-exempt interest, follow the rules earlier else), report the total on line 5. Do this even corporation has filed a current report that under Nominees to see how to report the if you later distributed some or all of this includes the account. interest on Schedule B. But identify the income to others. Under your last entry on amount to be subtracted as “Tax-Exempt line 5, put a subtotal of all ordinary diviyou are considered to have an interest in or See Form TD F 90-22.1 to find out if Interest.” dends listed on line 5. Below this subtotal, signature or other authority over a financial Original Issue Discount (OID) enter “Nominee Distribution” and show the account in a foreign country (such as a bank total ordinary dividends you received as a If you are reporting OID in an amount less account, securities account, or other finannominee. Subtract this amount from the than the amount shown on Form cial account). You can get Form TD F subtotal and enter the result on line 6. 1099-OID, follow the rules earlier under 90-22.1 by visiting the IRS website at If you received dividends as a www.irs.gov/pub/irs-pdf/f9022-1.pdf. Nominees to see how to report the OID on Schedule B. But identify the amount to be TIP nominee, you must give the ac- If you checked the “Yes” box on line 7a, subtracted as “OID Adjustment.” tual owner a Form 1099-DIV file Form TD F 90-22.1 by June 30, 2005, unless the owner is your with the Department of the Treasury at the Amortizable Bond Premium spouse. You must also file a Form 1096 and address shown on that form. Do not attach If you are reducing your interest income on a Form 1099-DIV with the IRS. For more it to Form 1040. a bond by the amount of amortizable bond details, see the General Instructions for If you are required to file Form premium, follow the rules earlier under Forms 1099, 1098, 5498, and W-2G and 90-22.1 but do not do so, you Nominees to see how to report the interest the Instructions for Form 1099-DIV. may have to pay a penalty of up on Schedule B. But identify the amount to to $10,000 (more in some be subtracted as “ABP Adjustment.” cases). Line 3 Excludable Interest on Series EE and I U.S. Savings Bonds Issued After 1989 If, during 2004, you cashed series EE or I Part III. Foreign Accounts and Trusts Lines 7a and 7b Foreign Accounts Line 7b U.S. savings bonds issued after 1989 and Line 8 Line 7a If you checked the “Yes” box on line 7a, enter the name of the foreign country or countries in the space provided on line 7b. Attach a separate statement if you need more space. you paid qualified higher education expenses for yourself, your spouse, or your Check the “Yes” box on line 7a if either (1) Foreign Trusts dependents, you may be able to exclude or (2) next applies. If you received a distribution from a forpart or all of the interest on those bonds. 1. You own more than 50% of the stock eign trust, you must provide additional in- See Form 8815 for details. in any corporation that owns one or more formation. For this purpose, a loan of cash foreign bank accounts. or marketable securities generally is considered to be a distribution. See Form 3520 2. At any time during the year you had an interest in or signature or other authority for details. Part II. Ordinary over a financial account in a foreign coun- If you were the grantor of, or transferor try (such as a bank account, securities ac- to, a foreign trust that existed during 2004, count, or other financial account). you may have to file Form 3520. Dividends TIP You may have to file Form For line 7a, (2) does not apply 5471 if, in 2004, you were an to foreign securities held in a officer or director of a foreign TIP U.S. securities account. corporation. You may also have B-2
Department of the Treasury Internal Revenue Service 2004 Instructions for Schedule C Profit or Loss From Business Use Schedule C (Form 1040) to report income or loss from a business you operated or a profession you practiced as a sole proprietor. Also, use Schedule C to report wages and expenses you had as a statutory employee. An activity qualifies as a business if your primary purpose for engaging in the activity is for income or profit and you are involved in the activity with continuity and regularity. For example, a sporadic activity or a hobby does not qualify as a business. To report income from a nonbusiness activity, see the instructions for Form 1040, line 21. Small businesses and statutory employees with expenses of $5,000 or less may be able to file Schedule C-EZ instead of Schedule C. See Schedule C-EZ for details. You may be subject to state and local taxes and other requirements such as business licenses and fees. Check with your state and local governments for more information. Section references are to the Internal Revenue Code. • Schedule J to figure your tax by aver- your reporting position will be treated as a What’s New aging your fishing income over the previ- conversion of the entity. ous 3 years. Doing so may reduce your tax. • The maximum amount of business ex- Single-member limited liability company • Schedule SE to pay self-employment penses you can have and qualify to file (LLC). Generally, a single-member do- tax on income from any trade or business. Schedule C-EZ is increased from $2,500 to mestic LLC is not treated as a separate en- $5,000 for 2004. For other requirements • Form 4562 to claim depreciation on tity for federal income tax purposes. If you you must meet, see Schedule C-EZ. assets placed in service in 2004, to claim are the sole member of a domestic LLC, amortization that began in 2004, to make an file Schedule C or C-EZ (or Schedule E or • You can use up to four vehicles simul- election under section 179 to expense cer- F, if applicable). However, you can elect to taneously in your business and use the stan- tain property, or to report information on treat a domestic LLC as a corporation. See dard mileage rate. For details, see the listed property. Form 8832 for details on the election and instructions for line 9 beginning on • Form 4684 to report a casualty or theft the tax treatment of a foreign LLC. page C-3. gain or loss involving property used in your • For certain business start-up costs Heavy highway vehicle use tax. If you use trade or business or income-producing paid or incurred after October 22, 2004, certain highway trucks, truck-trailers, property. you can elect to deduct up to $5,000. This tractor-trailers, or buses in your trade or limit is reduced by the amount by which • Form 4797 to report sales, exchanges, business, you may have to pay a federal your start-up costs exceed $50,000. Also, and involuntary conversions (not from a highway motor vehicle use tax. See the In- the amortization period for certain business casualty or theft) of trade or business prop- structions for Form 2290 to find out if you start-up costs paid or incurred after October erty. owe this tax. 22, 2004, has been increased to 15 years. • Form 8271 if you are claiming or re- Information returns. You may have to file For details, see Pub. 535. porting on Schedule C or C-EZ any ininformation returns for wages paid to emcome, deduction, loss, credit, or other tax • You can elect to deduct costs of cer- ployees, certain payments of fees and other tain qualified film and television produc- benefit from an interest purchased or other- nonemployee compensation, interest, rents, tions that begin after October 22, 2004. For wise acquired in a tax shelter required to be royalties, real estate transactions, annuities, details, see Pub. 535. registered with the IRS. and pensions. You may also have to file an • You can elect to deduct certain forestor sales of groups of assets that constitute a more of consumer products to a person on a • Form 8594 to report certain purchases information return if you sold $5,000 or ation and reforestation costs paid or intrade or business. buy-sell, deposit-commission, or other simcurred after October 22, 2004, instead of amortizing them over 84 months. This elec- • Form 8824 to report like-kind ex- ilar basis for resale. For details, see the tion does not apply to estates and trusts. changes. 2004 General Instructions for Forms 1099, Also, the dollar limitation for amortization • Form 8829 to claim expenses for busion certain forestation and reforestation ness use of your home. If you received cash of more than 1098, 5498, and W-2G. costs paid or incurred after October 22, Husband-wife business. If you and your $10,000 in one or more related transactions 2004, has been eliminated. For details, see spouse jointly own and operate a business in your trade or business, you may have to Pub. 535. and share in the profits and losses, you are file Form 8300. For details, see Pub. 1544. partners in a partnership, whether or not you have a formal partnership agreement. Reportable Transaction General Instructions Do not use Schedule C or C-EZ. Instead, Disclosure Statement file Form 1065. See Pub. 541 for more de- Use Form 8886 to disclose information for tails. Other Schedules and Forms each reportable transaction in which you You May Have To File Exception. If you and your spouse participated. Form 8886 must be filed for wholly own an unincorporated business as each tax year that your federal income tax • Schedule A to deduct interest, taxes, community property under the community liability is affected by your participation in and casualty losses not related to your busiproperty laws of a state, foreign country, or the transaction. You may have to pay a ness. U.S. possession, you can treat the business penalty if you are required to file Form • Schedule E to report rental real estate either as a sole proprietorship or a partnerand royalty income or (loss) that is not sub- ship. The only states with community prop- reportable transactions. 8886 but do not do so. The following are ject to self-employment tax. erty laws are Arizona, California, Idaho, • Any transaction that is the same as or • Schedule F to report profit or (loss) Louisiana, Nevada, New Mexico, Texas, substantially similar to tax avoidance transfrom farming. Washington, and Wisconsin. A change in actions identified by the IRS. C-1 Cat. No. 24329W
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Note. This booklet does not contain
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What is IRS e-file? It’s the fast
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Tax Return Page Reference Questions
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Quick and Easy Access to Tax Help a
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Topic TeleTax Topics No. Subject No
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Before You Fill In Form 1040 See Ho
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Chart B—For Children and Other De
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Form Item and Box in Which it Shoul
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Line 2 December 31, 2004, you were
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Form 1040—Lines 7 and 8a less tha
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gross income was over $139,500 ($69
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Form 1040—Lines 16a and 16b Age (
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Form 1040—Lines 20a and 20b Socia
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Form 1040—Line 25 IRA Deduction W
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Form 1040—Lines 27 Through 29 for
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Line 35 Include in the total on lin
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Page 45 and 46: Worksheet A—Earned Income Credit
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2004 Instructions for Form 1040 (ALL) - Supreme Law Firm

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