Instructions For Schedule C 1040 - 2016 (Page 6 of 18) in pdf

business use percentage drops to 50% or

if you used your vehicle for hire (such as

sions or fees that are capitalized or de-

less on leased listed property (other than

a taxicab). You must use actual expen-

ducted elsewhere on your return.

a vehicle), include on this line any inclu-

ses if you used five or more vehicles si-

You must file Form 1099-MISC to

sion amount. See chapter 5 of Pub. 946

multaneously in your business (such as

report certain commissions and fees of

to figure the amount.

in fleet operations). You cannot use ac-

$600 or more during the year. See the

tual expenses for a leased vehicle if you

Instructions for Form 1099-MISC for

previously used the standard mileage

Part II. Expenses

details.

rate for that vehicle.

Sales of property. Generally, commis-

You can take the standard mileage

sions and other fees paid to facilitate the

Capitalizing costs of property. If you

rate for 2016 only if you:

sale of property must be capitalized.

produced real or tangible personal prop-

Owned the vehicle and used the

However, if you are a dealer in property,

erty or acquired property for resale, cer-

standard mileage rate for the first year

enter on line 10 the commissions and

tain expenses attributable to the property

you placed the vehicle in service, or

fees you paid to facilitate the sale of that

generally must be included in inventory

Leased the vehicle and are using

property.

costs or capitalized. In addition to direct

the standard mileage rate for the entire

costs, producers of inventory property

lease period.

Note. A dealer in property is a person

generally must also include part of cer-

If you take the standard mileage rate:

who regularly sells property in the ordi-

tain indirect costs in their inventory.

Multiply the number of business

nary course of their trade or business.

Purchasers of personal property acquired

miles driven by 54 cents, and

For more information on the capitali-

for resale must include part of certain in-

Add to this amount your parking

zation of commissions and fees, see the

direct costs in inventory only if the aver-

fees and tolls.

examples under Regulations section

age annual gross receipts for the 3 prior

Enter the total on line 9. Do not de-

1.263(a)-1(e).

tax years exceed $10 million. Also, you

duct depreciation, rent or lease pay-

must capitalize part of the indirect costs

Line 11

ments, or your actual operating expen-

that benefit real or tangible personal

ses.

property constructed for use in a trade or

Enter the total cost of contract labor for

business, or noninventory property pro-

If you deduct actual expenses:

the tax year. Contract labor includes

duced for sale to customers. Reduce the

Include on line 9 the business por-

payments to persons you do not treat as

amounts on lines 8 through 26 and Part

tion of expenses for gasoline, oil, re-

employees (for example, independent

V by amounts capitalized. See Pub. 538

pairs, insurance, license plates, etc., and

contractors) for services performed for

for a discussion of uniform capitaliza-

Show depreciation on line 13 and

your trade or business. Do not include

tion rules.

rent or lease payments on line 20a.

contract labor deducted elsewhere on

your return, such as contract labor in-

For details, see chapter 4 of Pub. 463.

Exception for certain producers.

cludible on line 17, 21, 26, or 37. Also,

Producers who account for inventoriable

Information on your vehicle. If you

do not include salaries and wages paid

items in the same manner as materials

claim any car and truck expenses, you

to your employees; instead, see

Line

26,

and supplies that are not incidental can

must provide certain information on the

later.

currently deduct expenditures for direct

use of your vehicle by completing one

labor and all indirect costs that would

of the following.

You must file Form 1099-MISC to

otherwise be included in inventory costs.

1. Complete Schedule C, Part IV, or

report contract labor payments of $600

See

Part III

for more details.

Schedule C-EZ, Part III, if (a) you are

or more during the year. See the Instruc-

claiming the standard mileage rate, you

Exception for creative property. If

tions for Form 1099-MISC for details.

lease your vehicle, or your vehicle is

you are a freelance artist, author, or pho-

Line 12

fully depreciated, and (b) you are not re-

tographer, you may be exempt from the

quired to file Form 4562 for any other

capitalization rules. However, your per-

Enter your deduction for depletion on

reason. If you used more than one vehi-

sonal efforts must have created (or rea-

this line. If you have timber depletion,

cle during the year, attach a statement

sonably be expected to create) the prop-

attach Form T (Timber). See chapter 9

with the information requested in Sched-

erty. This exception does not apply to

of Pub. 535 for details.

ule C, Part IV, or Schedule C-EZ, Part

any expense related to printing, photo-

III, for each additional vehicle.

graphic plates, motion picture films, vid-

Line 13

eo tapes, or similar items. These expen-

2. Complete Form 4562, Part V, if

ses are subject to the capitalization rules.

you are claiming depreciation on your

Depreciation and section 179 expense

For details, see Uniform Capitalization

vehicle or you are required to file Form

deduction. Depreciation is the annual

Rules in Pub. 538.

4562 for any other reason (see

Line

13,

deduction allowed to recover the cost or

later).

Line 9

other basis of business or investment

property having a useful life substantial-

Line 10

You can deduct the actual expenses of

ly beyond the tax year. You can also de-

operating your car or truck or take the

Enter the total commissions and fees for

preciate improvements made to leased

standard mileage rate. This is true even

the tax year. Do not include commis-

business property. However, stock in

C-6

Instructions For Schedule C 1040 - 2016 Page 6

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