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previous page Previous Page: Publication 4492-A - Information for Taxpayers Affected by the May 4, 2007, Kansas Storms and Tornadoes - IRAs and Other Retirement Plans
next page Next Page: Publication 4492-A - Information for Taxpayers Affected by the May 4, 2007, Kansas Storms and Tornadoes - Request for Copy or Transcript of Tax Return
 Use previous pagenext page to find additional occurrences of topic items.Index for this Publication
taxmap/pubs/p4492a-005.htm#en_us_publink100016340

Additional Tax Relief for Businesses(p12)


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previous topic occurrence Additional Tax Relief for Businesses next topic occurrence

taxmap/pubs/p4492a-005.htm#en_us_publink100016341

Special Depreciation Allowance(p12)


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You can take a special depreciation allowance for qualified recovery assistance property (as defined below) you acquire after May 4, 2007. The special 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). The special allowance applies only for the first year the property is placed in service.
The special allowance is deductible for both the regular tax and the alternative minimum tax (AMT). There is no AMT adjustment required for any depreciation figured on the remaining basis of the property.
You can elect not to deduct the special allowance for qualified recovery assistance property. If you make this election for any property, it applies to all property in the same class placed in service during the year.
taxmap/pubs/p4492a-005.htm#en_us_publink100016342

Qualified recovery assistance property.(p12)


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Property that qualifies for the special allowance for qualified recovery assistance property includes the following.
For more information on this property, see Publication 946.
taxmap/pubs/p4492a-005.htm#en_us_publink100016343

Other tests to be met.(p12)


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To be qualified recovery assistance property, the property must also meet all of the following tests.
taxmap/pubs/p4492a-005.htm#en_us_publink100016344

Excepted property.(p12)


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Qualified recovery assistance property does not include any of the following.
taxmap/pubs/p4492a-005.htm#en_us_publink100016345

Recapture of special allowance.(p12)


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If, in any year after the year you claim the special allowance, the property ceases to be qualified recovery assistance property, you may have to recapture as ordinary income any excess benefit you received from claiming the special allowance.
taxmap/pubs/p4492a-005.htm#en_us_publink100012885

Amended return.(p12)


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If you have already filed your tax return, you may have to amend that return to claim any special allowance. Additional guidance will be published on how you may claim, or elect not to claim, the special allowance if you have already filed your tax return.
taxmap/pubs/p4492a-005.htm#en_us_publink100016346

Increased Section 179 Deduction(p12)


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An increased section 179 deduction is allowable for qualified section 179 recovery assistance property (as defined later) placed in service in the Kansas disaster area.
taxmap/pubs/p4492a-005.htm#en_us_publink100016347

Increased dollar limit.(p12)


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The limit on the section 179 deduction ($125,000 for 2007, $250,000 for 2008) is increased by the smaller of:
The amount for which you can make the election is reduced if the cost of all section 179 property you placed in service during the year exceeds $500,000 for 2007 and $800,000 for 2008 increased by the smaller of:
taxmap/pubs/p4492a-005.htm#en_us_publink100016348

Qualified section 179 recovery assistance property.(p13)


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Qualified section 179 recovery assistance property is section 179 property that is qualified recovery assistance property (explained earlier under Special Depreciation Allowance). Section 179 property does not include nonresidential real property or residential rental property. 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.
taxmap/pubs/p4492a-005.htm#en_us_publink100012886

Amended return.(p13)


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If you have already filed your tax return, you may have to amend that return for any increased section 179 deduction.
taxmap/pubs/p4492a-005.htm#en_us_publink100016353

Employee Retention Credit(p13)


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An eligible employer who conducted an active trade or business in the Kansas disaster area can claim the employee retention credit. The credit is 40% of qualified wages for each eligible employee (up to a maximum of $6,000 in qualified wages per employee). Generally, you must reduce your deduction for salaries and wages by the amount of this credit (before the tax liability limit). Use Form 5884-A to claim the credit. See Form 5884-A later. The following rules and definitions apply.
taxmap/pubs/p4492a-005.htm#en_us_publink100016354

Employers affected by the storms and tornadoes.(p13)


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The following definitions apply to employers affected by the storms and tornadoes.
taxmap/pubs/p4492a-005.htm#en_us_publink100016355

Eligible employer.(p13)
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For this purpose, an eligible employer is any employer who meets all of the following.
taxmap/pubs/p4492a-005.htm#en_us_publink100016356

Eligible employee.(p13)
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For this purpose, an eligible employee is an employee whose principal place of employment on May 4, 2007, with the eligible employer was in the Kansas disaster area. An employee is not an eligible employee for purposes of the storms and tornadoes if the employee is treated as an eligible employee for the work opportunity credit.
taxmap/pubs/p4492a-005.htm#en_us_publink100016363

Qualified wages.(p13)


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Qualified wages are wages you paid or incurred before January 1, 2008, (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 May 4, 2007, and ending on the date your trade or business resumed significant operations at that place. In addition, the wages must have been paid or incurred after May 4, 2007.
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.
Wages qualifying for the credit generally have the same meaning as wages subject to the Federal Unemployment Tax Act (FUTA). Qualified wages also include amounts you paid for medical or hospitalization expenses in connection with sickness or accident disability. Qualified wages for any employee must be reduced by the amount of any work supplementation payment you received under the Social Security Act.
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. For a special rule that applies to railroad employees, see section 51(h)(1)(B).
Qualified wages do not include the following.
taxmap/pubs/p4492a-005.htm#en_us_publink100012121

Form 5884-A.(p13)


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Use Section A of Form 5884-A (Rev. October 2006) to claim the employer retention credit. Section B does not apply to the Kansas disaster area. Before you complete the form, modify the form as follows.
Complete the form as instructed. Lines 1b and 1c do not apply. Include the amount from Form 5884-A, line 4 in the amount entered on Form 3800, line 1x. On the dotted line to the left of line 1x, enter "5884-A." Use the applicable dates and terms in this publication instead of those used in the Form 5884-A instructions.
taxmap/pubs/p4492a-005.htm#en_us_publink100015019

Amended return.(p14)


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You may have to amend a previously filed return to claim the employee retention credit.
taxmap/pubs/p4492a-005.htm#en_us_publink100016366

Demolition and Clean-up Costs(p14)


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You can elect to deduct 50% of any qualified recovery assistance clean-up costs for the tax year in which the costs are paid or incurred, instead of capitalizing them. Qualified recovery assistance clean-up costs are any amounts paid or incurred after May 3, 2007, and before January 1, 2010, for the removal of debris from, or the demolition of structures on, real property located in the Kansas disaster area that is:
taxmap/pubs/p4492a-005.htm#en_us_publink100021231

Amended return.(p14)


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If you have already filed your tax return, you may have to amend that return to claim the 50% of any qualified recovery assistance clean-up costs.
previous pagePrevious Page: Publication 4492-A - Information for Taxpayers Affected by the May 4, 2007, Kansas Storms and Tornadoes - IRAs and Other Retirement Plans
next pageNext Page: Publication 4492-A - Information for Taxpayers Affected by the May 4, 2007, Kansas Storms and Tornadoes - Request for Copy or Transcript of Tax Return
 Use previous pagenext page to find additional occurrences of topic items.Index for this Publication