Instructions for Schedule J (Form 1040), Income Averaging for Farmers and Fishermen

If line 7 is zero, enter -0- on line 8. Otherwise, figure the tax on the amount on line 7 using:

The 2006 Tax Rate Schedules below,
The 2006 Qualified Dividends and Capital Gain Tax Worksheet on the next page,
The 2006 Schedule D Tax Worksheet in the 2006 Schedule D instructions (but use the 2006 Tax Rate Schedules below when figuring the tax on lines 34 and 36 of the Schedule D Tax Worksheet), or
The 2006 Foreign Earned Income Tax Worksheet below.

If your elected farm income includes net capital gain, you must use the 2006 Schedule D Tax Worksheet to figure the tax on the amount on line 7. However, if you filed Form 2555 or 2555-EZ for 2006, you must first complete the 2006 Foreign Earned Income Tax Worksheet, and then use the 2006 Schedule D Tax Worksheet to figure the tax on the amount on line 5 of that worksheet.

When completing the Schedule D Tax Worksheet, you must allocate 1/3 of the amount on line 2b (and 1/3 of the amount on line 2c, if any) to 2006. If for 2006 you had a capital loss that resulted in a capital loss carryover to 2007, do not reduce the elected farm income allocated to 2006 by any part of the carryover.

2006 Tax Rate Schedules—Line 8

Schedule X—Use if your 2006 filing status was Single or you checked filing status box 1 or 2 on Form 1040NR					Schedule Y-2—Use if your 2006 filing status was Married filing separately or you checked filing status box 3, 4, or 5 on Form 1040NR
If Schedule J, line 7, is: Over—	But not over—	Enter on Schedule J, line 8		of the amount over—	If Schedule J, line 7, is: Over—	But not over—	Enter on Schedule J, line 8		of the amount over—
$0 7,550 30,650 74,200 154,800 336,550	$7,550 30,650 74,200 154,800 336,550 .............	........... $755.00 + 4,220.00 + 15,107.50 + 37,675.50 + 97,653.00 +	10% 15% 25% 28% 33% 35%	$0 7,550 30,650 74,200 154,800 336,550	$0 7,550 30,650 61,850 94,225 168,275	$7,550 30,650 61,850 94,225 168,275 .............	........... $755.00 + 4,220.00 + 12,020.00 + 21,085.00 + 45,521.50 +	10% 15% 25% 28% 33% 35%	$0 7,550 30,650 61,850 94,225 168,275
Schedule Y-1—Use if your 2006 filing status was Married filing jointly or Qualifying widow(er) or you checked filing status box 6 on Form 1040NR					Schedule Z—Use if your 2006 filing status was Head of household
If Schedule J, line 7, is: Over—	But not over—	Enter on Schedule J, line 8		of the amount over—	If Schedule J, line 7, is: Over—	But not over—	Enter on Schedule J, line 8		of the amount over—
$0 15,100 61,300 123,700 188,450 336,550	$15,100 61,300 123,700 188,450 336,550 ............	........... $1,510.00 + 8,440.00 + 24,040.00 + 42,170.00 + 91,043.00 +	10% 15% 25% 28% 33% 35%	$0 15,100 61,300 123,700 188,450 336,550	$0 10,750 41,050 106,000 171,650 336,550	$10,750 41,050 106,000 171,650 336,550 .............	........... $1,075.00 + 5,620.00 + 21,857.50 + 40,239.50 + 94,656.50 +	10% 15% 25% 28% 33% 35%	$0 10,750 41,050 106,000 171,650 336,550

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2006 Foreign Earned Income Tax Worksheet—Line 8

Use this worksheet if you claimed the foreign earned income exclusion or the housing exclusion on your 2006 Form 1040 using Form 2555 or Form 2555-EZ.
1.	Enter the amount from your 2009 Schedule J, line 7		1.
2.	Enter the amount from your (and your spouse's, if filing jointly) 2006 Form 2555, line 45, or Form 2555-EZ, line 18	2.
3.	Enter the total amount of any itemized deductions you could not claim in 2006 because they were related to excluded income	3.
4.	Subtract line 3 from line 2. If zero or less, enter -0-		4.
5.	Combine lines 1 and 4. If zero or less, enter -0-		5.
6.	Tax on amount on line 5. Use the 2006 Tax Rate Schedules above, the 2006 Schedule D Tax Worksheet,* or the 2006 Qualified Dividends and Capital Gain Tax Worksheet,* whichever applies.			6.
7.	Tax on amount on line 4. Use the 2006 Tax Rate Schedules above			7.
8.	Subtract line 7 from line 6. Enter the result here and on your 2009 Schedule J, line 8			8.
*Enter the amount from line 5 above on line 1 of the 2006 Qualified Dividends and Capital Gain Tax Worksheet on page J-5 or the 2006 Schedule D Tax Worksheet in the 2006 Schedule D instructions if you use either of those worksheets to figure the tax on line 6 above. Complete the rest of either of those worksheets according to the worksheet's instructions. Then complete lines 7 and 8 above.

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2006 Qualified Dividends and Capital Gain Tax Worksheet—Line 8

Use this worksheet only if both of the following apply. Your elected farm income on your 2009 Schedule J, line 2a, does not include any net capital gain. You (a) entered qualified dividends on your 2006 Form 1040, line 9b (or your 2006 Form 1040A, line 9b, or 2006 Form 1040NR, line 10b); (b) entered capital gain distributions directly on your 2006 Form 1040, line 13 (or your 2006 Form 1040A, line 10, or 2006 Form 1040NR, line 14) and were not required to file Schedule D; or (c) filed Schedule D in 2006 and you answered "Yes" on lines 17 and 20 of that Schedule D.
1.	Amount from your 2009 Schedule J, line 7. If for 2006 you filed Form 2555 or 2555-EZ, enter the amount from line 5 of the worksheet on page J-4			1.
2.	Amount from your 2006 Form 1040, line 9b (or your 2006 Form 1040A, line 9b, or 2006 Form 1040NR, line 10b)		2.
3.	Did you file Schedule D in 2006?
	Yes.	Enter the smaller of line 15 or 16 of your 2006 Schedule D, but do not enter less than -0-	3.
	No.	Enter the amount from your 2006 Form 1040, line 13 (or your 2006 Form 1040A, line 10, or 2006 Form 1040NR, line 14)
4.	Add lines 2 and 3		4.
5.	Amount, if any, from your 2006 Form 4952, line 4g		5.
6.	Subtract line 5 from line 4. If zero or less, enter -0-			6.
7.	Subtract line 6 from line 1. If zero or less, enter -0-			7.
8.	Enter the smaller of:
	The amount on line 1, or
	$30,650 if single or married filing separately or if you checked filing status box 1, 2, 3, 4, or 5 on Form 1040NR;			8.
	$61,300 if married filing jointly or qualifying widow(er), or if you checked filing status box 6 on Form 1040NR; $41,050 if head of household.
9.	Is the amount on line 7 equal to or more than the amount on line 8?
	Yes.	Skip lines 9 through 11; go to line 12 and check the "No" box.
	No.	Enter the amount from line 7		9.
10.	Subtract line 9 from line 8			10.
11.	Multiply line 10 by 5% (.05)				11.
12.	Are the amounts on lines 6 and 10 the same?
	Yes.	Skip lines 12 through 15; go to line 16.
	No.	Enter the smaller of line 1 or line 6		12.
13.	Enter the amount from line 10 (if line 10 is blank, enter -0-)			13.
14.	Subtract line 13 from line 12			14.
15.	Multiply line 14 by 15% (.15)				15.
16.	Figure the tax on the amount on line 7. Use the 2006 Tax Rate Schedules on page J-4				16.
17.	Add lines 11, 15, and 16				17.
18.	Figure the tax on the amount on line 1. Use the 2006 Tax Rate Schedules on page J-4				18.
19.	Tax. Enter the smaller of line 17 or line 18 here and on your 2009 Schedule J, line 8. If for 2006 you filed Form 2555 or 2555-EZ, do not enter this amount on Schedule J, line 8. Instead, enter it on line 6 of the worksheet on page J-4				19.

Line 8(p4)

2006 Tax Rate Schedules—Line 8

2006 Foreign Earned Income Tax Worksheet—Line 8