Understanding the nuances of tax regulations and the paths available to taxpayers for managing their interpretations by the IRS is crucial for ensuring compliance while optimally positioning oneself in the maze of tax obligations. One such path involves the Form 5213, provided by the Department of the Treasury and Internal Revenue Service. This form's purpose is notably strategic, offering individuals, estates, trusts, partnerships, and S corporations the option to postpone the IRS's determination regarding the presumption that their activity is engaged for profit. Importantly, this election covers a significant duration—until the close of the 4th or 6th tax year after the activity's initiation, depending on its nature—with specific stipulations for operations primarily involving breeding, training, showing, or racing horses. The decision to utilize Form 5213 is not without complexities, obligating the taxpayer to a thorough understanding of their activities' descriptions, engagement timeframes, and the broader implications on deductions eligibility and tax liability. Morphing from mere paper to a pivotal financial strategy, the form embodies a critical decision point for taxpayers, marking an intersection between tactical delay and the quest for profitability's presumption within the ambit of IRS scrutiny. Beyond the mechanical act of filing, it underscores a nuanced dialogue between taxpayer intents and tax regulations, guided by detailed instructions and backed by the context of the Paperwork Reduction Act, focusing on taxpayer burden minimization.
| Question | Answer |
|---|---|
| Form Name | Form 5213 |
| Form Length | 2 pages |
| Fillable? | No |
| Fillable fields | 0 |
| Avg. time to fill out | 30 sec |
| Other names | 1998, form 5213, 4th, 60-day |
Form 5 2 1 3
(Rev. September 1994)
Department of the Treasury Internal Revenue Service
Election To Postpone Determination
as To Whether the Presumption Applies That an
Activity Is Engaged in for Profit
▶ To be filed by individuals, estates, trusts, partnerships, and S corporations.
OMB No.
Name(s) as shown on tax return |
Identifying number as shown on tax return |
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Address (number and street, apt. no., rural route) (or P.O. box number if mail is not delivered to street address) |
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City, town or post office, state, and ZIP code |
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The taxpayer named above elects to postpone a determination as to whether the presumption applies that the activity described below is engaged in for profit. The determination is postponed until the close of:
●The 6th tax year, for an activity that consists mainly of breeding, training, showing, or racing horses; or
●The 4th tax year for any other activity,
after the tax year in which the taxpayer first engaged in the activity.
1 Type of taxpayer engaged in the activity (check the box that applies):
Individual
Partnership
S corporation
Estate or trust
2a Description of activity for which you elect to postpone a determination
2b First tax year you engaged in activity described in 2a
Under penalties of perjury, I declare that I have examined this election, including accompanying schedules, and to the best of my knowledge and belief, it is true,
correct, and complete. |
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(Signature of taxpayer or fiduciary) |
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(Date) |
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(Signature of taxpayer’s spouse, if joint return was filed) |
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(Date) |
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(Signature of general partner authorized to sign partnership return) |
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(Date) |
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(Signature and title of officer, if an S corporation) |
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(Date) |
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For Paperwork Reduction Act Notice, see instructions on back. |
Cat. No. 42361U |
Form 5213 (Rev. |
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Form 5213 (Rev. |
Page 2 |
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General Instructions
Paperwork Reduction Act Notice
We ask for the information on this form to carry out the Internal Revenue laws of the United States. You are required to give us the information. We need it to ensure that you are complying with these laws and to allow us to figure and collect the right amount of tax.
The time needed to complete and file
this form will vary depending on individual circumstances. The estimated average time is:
Recordkeeping |
7 min. |
Learning about the |
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law or the form |
5 min. |
Preparing the form |
10 min. |
Copying, assembling, and |
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sending the form to the IRS |
20 min. |
If you have comments concerning the accuracy of these time estimates or suggestions for making this form more simple, we would be happy to hear from you. You can write to both the Internal Revenue Service, Attention: Reports Clearance Officer, PC:FP, Washington, DC 20224; and the Office of Management and Budget, Paperwork Reduction Project
DO NOT send the form to either of these offices. Instead, see Where To File on this page.
Purpose of Form
This form is used to elect to postpone an IRS determination as to whether the presumption applies that an activity is engaged in for profit.
General Information
Generally, if you are an individual, estate, trust, partnership, or S corporation in an activity not engaged in for profit, some of your deductions may not be allowed. For information on the limits on deductions in
However, an activity is presumed to be engaged in for profit (and, therefore, deductions are not limited) if the gross income exceeds the deductions:
●From an activity that consists mainly of breeding, training, showing, or racing horses for each of 2 or more of the tax years in the period of 7 consecutive tax years ending with the tax year in question; or
●From any other activity for each of 3 or more of the tax years in the period of 5 consecutive tax years ending with the tax year in question.
Who Should File
Individuals, estates, trusts, partnerships, and S corporations should use this form if they want to postpone an IRS determination as to whether the presumption applies that they are engaged in an activity for profit. Partnerships and
S corporations make the election, which is binding on all persons who were partners or shareholders at any time during the presumption period.
You may not use this form if you have been engaged in:
●Breeding, training, showing, or racing horses for more than 7 years; or
●Any other activity for more than 5 years.
If you elect a postponement and file this form on time, the IRS will generally postpone the determination until after the end of the 4th consecutive tax year (6th tax year for an activity that consists mainly of breeding, training, showing, or racing horses) after the tax year in which you first engaged in the activity. This period of 5 (or
7)tax years is called the “ presumption period.” The election to postpone covers the entire presumption period.
Joint Returns
If you and your spouse filed a joint return, both of you must elect to postpone the determination even if only one of you is engaged in the activity.
How Many Forms To File
Generally, if you want a postponement for more than one activity, you must file a separate Form 5213 for each activity.
However, you may file one form for more than one activity if all of the activities have the same presumption period. Be sure to describe each activity and list the first tax year in which you were engaged in the activities.
Generally, in determining whether you are engaged in more than one activity, you must consider all of the following:
●The similarity of the activities;
●The business purpose which is (or might be) served by carrying on the activities separately or together in a trade or business or investment setting; and
●The organizational and economic interrelationship of the activities.
When To File
File this form within 3 years after the due date of your return (determined without extensions) for the first tax year in which you engaged in the activity.
However, if you received a written notice that the IRS proposes to disallow deductions attributable to an activity not engaged in for profit (under Internal Revenue Code section 183) and you want a postponement of the determination, you must file this form within 60 days of receiving the notice. This
Where To File
File this form with the Internal Revenue Service Center where you are required to file your return. Do not send it in with any other return because that will delay processing the election to postpone.
Printed on recycled paper
However, if the IRS notifies you about proposing to disallow deductions for an activity not engaged in for profit, file the form with the IRS office that sent you the notification.
Automatic Extension of Period of Limitations
Generally, filing this form automatically extends the period of limitations for assessing any income tax deficiency specifically attributable to the activity during any year in the presumption period. The extension also applies to partners or shareholders in the activity.
The period is extended until 2 years after the due date for filing the return (determined without extensions) for the last tax year in the presumption period. For example, for an activity subject to a
The automatic extension applies only to those deductions attributable to the activity and to any deductions (such as medical expenses or charitable contribution deductions) that are affected by changes made to adjusted gross income.
The automatic extension does not affect general waivers of the statute of limitations that may be executed.
Specific Instructions
Name and Identifying Number as Shown on Tax Return
Enter your name(s) and identifying number as shown on your tax return for the first tax year in which you engaged in the activity.
If you are an individual, your identifying number is your social security number. If you are other than an individual, your identifying number is your employer identification number.
If you and your spouse filed a joint return, enter both your name and your spouse’s name as they were shown on your tax return. Enter the social security number that was shown first on your return as your identifying number.
Description of Activity
Describe the activity in detail. If you want a postponement for more than one activity, describe each activity separately on the form.
Signature and Date
Be sure to sign and date the form on the appropriate line or lines. Keep a copy for your records.