8834 Qualified Electric Vehicle Credit

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I.R.S. SPECIFICATIONS

TO BE REMOVED BEFORE PRINTING

INSTRUCTIONS TO PRINTERS
SCHEDULE J (FORM 1040), PAGE 1 of 2 (Page 2 is blank)
MARGINS: TOP 13mm (1⁄ 2 "), CENTER SIDES.
PRINTS: FACE ONLY
PAPER: WHITE, WRITING, SUB. 20
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DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

SCHEDULE J
(Form 1040)
Department of the Treasury
Internal Revenue Service
(99)

Name(s) shown on Form 1040

1
2
3
4
5

6
7
8
9

10
11
12
13

14
15
16
17
18

19

20

Action

Date

Signature

O.K. to print
Revised proofs
requested

Income Averaging for
Farmers and Fishermen

OMB No. 1545-0074

2006

f
o
s
a
6
t
0
f
0
a
2
r
/
%
D /13
6
0
©

©

Attach to Form 1040 or Form 1040NR.
See Instructions for Schedule J (Form 1040).

Attachment
Sequence No.

20

Social security number (SSN)

Enter the taxable income from your 2006 Form 1040, line 43 or Form 1040NR, line 40
Enter your elected farm income (see page J-1). Do not enter more than the amount on line 1
Subtract line 2 from line 1
Figure the tax on the amount on line 3 using the 2006 tax rates (see page J-1)
If you used Schedule J to figure your tax for:
● 2005, enter the amount from your 2005 Schedule J, line 11.
● 2004 but not 2005, enter the amount from your 2004 Schedule J, line 15.
● 2003 but not 2004 nor 2005, enter the amount from your 2003
5
Schedule J, line 3.
Otherwise, enter the taxable income from your 2003 Form 1040,
line 40; Form 1040A, line 27; Form 1040EZ, line 6; or Form 1040NR,
line 38. If zero or less, see page J-2.
6
Divide the amount on line 2 by 3.0
7
Combine lines 5 and 6. If zero or less, enter -0Figure the tax on the amount on line 7 using the 2003 tax rates (see page J-3)
If you used Schedule J to figure your tax for:
● 2005, enter the amount from your 2005 Schedule J, line 15.
● 2004 but not 2005, enter the amount from your 2004
Schedule J, line 3.
9
Otherwise, enter the taxable income from your 2004 Form 1040,
line 42; Form 1040A, line 27; Form 1040EZ, line 6; or Form
1040NR, line 39. If zero or less, see page J-4.
10
Enter the amount from line 6
11
Combine lines 9 and 10. If less than zero, enter as a negative amount

1
2
3
4

Figure the tax on the amount on line 11 using the 2004 tax rates (see page J-5)

12

%

If you used Schedule J to figure your tax for 2005, enter the amount
from your 2005 Schedule J, line 3. Otherwise, enter the taxable income
from your 2005 Form 1040, line 43; Form 1040A, line 27; Form 1040EZ,
13
line 6; or Form 1040NR, line 40. If zero or less, see page J-6
14
Enter the amount from line 6
15
Combine lines 13 and 14. If less than zero, enter as a negative amount
Figure the tax on the amount on line 15 using the 2005 tax rates (see page J-7)
Add lines 4, 8, 12, and 16
If you used Schedule J to figure your tax for:
● 2005, enter the amount from your 2005 Schedule J, line 12.
● 2004 but not 2005, enter the amount from your 2004
Schedule J, line 16.
18
● 2003 but not 2004 nor 2005, enter the amount from your 2003
Schedule J, line 4.
Otherwise, enter the tax from your 2003 Form 1040, line 41*;
Form 1040A, line 28*; Form 1040EZ, line 10; or Form 1040NR, line 39*.
If you used Schedule J to figure your tax for:
● 2005, enter the amount from your 2005 Schedule J, line 16.
● 2004 but not 2005, enter the amount from your 2004
19
Schedule J, line 4.
Otherwise, enter the tax from your 2004 Form 1040, line 43*;
Form 1040A, line 28*; Form 1040EZ, line 10; or Form 1040NR, line 40*.

8

16
17

%

%

If you used Schedule J to figure your tax for 2005, enter the amount from your
2005 Schedule J, line 4. Otherwise, enter the tax from your 2005 Form 1040,
line 44*; Form 1040A, line 28*; Form 1040EZ, line 10; or Form 1040NR, line 41*

20

*Do not include tax from Form 8814 or 4972 or from recapture of an education credit. Also, do not
include alternative minimum tax from Form 1040A.

21
22

Add lines 18 through 20
Tax. Subtract line 21 from line 17. Also include this amount on Form 1040, line 44 or Form 1040NR, line 41
Caution. Your tax may be less if you figure it using the 2006 Tax Table, Tax Computation Worksheet,
Qualified Dividends and Capital Gain Tax Worksheet, Schedule D Tax Worksheet, or Foreign Earned
Income Tax Worksheet. Attach Schedule J only if you are using it to figure your tax.

For Paperwork Reduction Act Notice, see Form 1040 instructions.

Cat. No. 25513Y

Printed on recycled paper

21
22

Schedule J (Form 1040) 2006

PAGER/SGML

Userid: ________
Fileid: I1040SJ.XML

❏

Leading adjust: 0%

Draft
(Init. & date)

(10-Nov-2005)

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Ok to Print

Filename: D:\USERS\pzqbb\documents\Epicfiles\2005InSchJ.xml

Page 1 of 8 of 2005 Instructions for Schedule J

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Department of the Treasury
Internal Revenue Service

2005 Instructions for Schedule J
Use Schedule J (Form 1040) to elect to figure your 2005 tax by averaging, over the previous
3 years (base years), all or part of your 2005 taxable income from your trade or business of
Income
farming or fishing. This election may give you a lower tax if your 2005 income from farming
or fishing is high and your taxable income for one or more of the 3 prior years was low.
Averaging for
This election does not apply when figuring your alternative minimum tax on Form 6251.
Also, you do not have to recompute, because of this election, the tax liability of any minor
child who was required to use your tax rates in the prior years.
Farmers and
Fishermen
General Instructions
Prior Year Tax Returns
You may need copies of your original or
amended income tax returns for 2002,
2003, and 2004 to figure your tax on
Schedule J. If you do not have copies of
those returns, you can get them by filing
Form 4506. There is a $39 fee for each return requested. If your main home, principal place of business, or tax records are
located in a Presidentially declared disaster
area, the fee will be waived. If you want a
free transcript of your tax return, use Form
4506-T. See your Form 1040 instruction
booklet to find out how to get these forms.
Keep a copy of your 2005 income tax return for use in 2006, 2007, or 2008.

Definitions
Farming business. A farming business is
the trade or business of cultivating land or
raising or harvesting any agricultural or
horticultural commodity. This includes:

1. Operating a nursery or sod farm;
2. Raising or harvesting of trees bearing
fruits, nuts, or other crops;
3. Raising ornamental trees (but not evergreen trees that are more than 6 years old
when severed from the roots);
4. Raising, shearing, feeding, caring for,
training, and managing animals; and
5. Leasing land to a tenant engaged in a
farming business, but only if the lease payments are (a) based on a share of the
tenant’s production (not a fixed amount),
and (b) determined under a written agreement entered into before the tenant begins
significant activities on the land.
A farming business does not include:

• Contract harvesting of an agricultural
or horticultural commodity grown or raised
by someone else, or
• Merely buying or reselling plants or
animals grown or raised by someone else.

Fishing business. A fishing business is the

trade or business of fishing in which the
fish harvested, either in whole or in part,
are intended to enter commerce or enter
commerce through sale, barter, or trade.
This includes:
1. The catching, taking, or harvesting of
fish;
2. The attempted catching, taking, or
harvesting of fish;
3. Any other activity which can reasonably be expected to result in the catching,
taking, or harvesting of fish; or
4. Any operations at sea in support of, or
in preparation for, any activity described in
(1) through (3) above.
The word fish means finfish, mollusks,
crustaceans, and all other forms of marine
animal and plant life other than marine
mammals and birds.
A fishing business does not include any
scientific research activity which is conducted by a scientific research vessel.

Additional Information
See Regulations section 1.1301-1 for more
details.

Specific Instructions
Line 2
Elected Farm Income
To figure elected farm income, first figure
your taxable income from farming or fishing. This includes all income, gains, losses,
and deductions attributable to any farming
or fishing business. However, it does not
include gain from the sale or other disposition of land.
Your elected farm income is the amount
of your taxable income from farming or
fishing that you elect to include on line 2.
You do not have to include all of your taxable income from farming or fishing on line

J-1
Cat. No. 25514J

2. It may be to your advantage to include
less than the full amount, depending on
how the amount you include on line 2 affects your tax bracket for the current and
prior 3 tax years.
Your elected farm income cannot exceed your taxable income. Also, the portion
of your elected farm income treated as a net
capital gain cannot exceed the smaller of
your total net capital gain or your net capital gain attributable to your farming or fishing business. If your elected farm income
includes net capital gain, you must allocate
an equal portion of the net capital gain to
each of the base years. If, for any base year,
you had a capital loss that resulted in a capital loss carryover to the next tax year, do
not reduce the elected farm income allocated to that base year by any part of the
carryover.

Generally, income, gains,
losses, and deductions from
farming or fishing are reported
on:
Form 1040, line 7, to the extent of
wages and other compensation you
received as a shareholder in an S
corporation engaged in a farming or
fishing business;
Schedule C or C-EZ;
Schedule D;
Schedule E, Part II;
Schedule F;
Form 4797; and
Form 4835.

TIP

•

•
•
•
•
•
•

Line 4
Figure the tax on the amount on line 3 using
the 2005 Tax Table, Tax Computation
Worksheet, or Qualified Dividends and
Capital Gain Tax Worksheet from the 2005
Instructions for Form 1040, or the Schedule
D Tax Worksheet in the 2005 Instructions
for Schedule D. Enter the tax on line 4.

Page 2 of 8 of 2005 Instructions for Schedule J

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Line 5
If you used Schedule J to figure your tax for
2004 (that is, you entered the amount from
that Schedule J, line 22, on Form 1040, line
43, or on Form 1040X), enter on line 5 the
amount from your 2004 Schedule J, line 11.
If you used Schedule J to figure your tax for
2003 but not 2004, enter on line 5 the
amount from your 2003 Schedule J, line 15.
If you used Schedule J to figure your tax for
2002 but not 2003 nor 2004, enter on line 5
the amount from your 2002 Schedule J, line
3.
If you figured your tax for 2002, 2003,
and 2004 without using Schedule J, enter
on line 5 the taxable income from your
2002 tax return (or as previously adjusted
by the IRS, an amended return, etc.). But if
that amount is zero or less, complete the
worksheet below to figure the amount to
enter on line 5.
If you filed your 2002 tax return using
TeleFile, enter the taxable income from
your TeleFile Tax Record. If you did not
file a tax return for 2002, use the amount
you would have reported as your taxable
income had you been required to file a tax
return. Be sure to keep all your records for
2002 for at least 3 years after April 17,
2006 (or the date you file your 2005 tax
return, if later).

Instructions for 2002 Taxable
Income Worksheet
Line 2. Any net capital loss deduction on

your 2002 Schedule D, line 18, is not al-

lowed for income averaging purposes to the
extent it did not reduce your capital loss
carryover to 2003. This could happen if the
taxable income before subtracting exemptions shown on your 2002 Form 1040, line
39 (or as previously adjusted), was less
than zero. Enter the amount by which your
2002 capital loss carryover to 2003 (the
sum of your short- and long-term capital
loss carryovers) exceeds the excess of the
loss on your 2002 Schedule D, line 17, over
the loss on your 2002 Schedule D, line 18.
If you had any net operating loss (NOL)
carrybacks to 2002, be sure you refigured
your 2002 capital loss carryover to 2003.
Line 3. If you had an NOL for 2002, enter

the amount of that NOL as figured on the
2002 Form 1045, Schedule A, line 27, you
filed with Form 1045 or Form 1040X. If
you did not have an NOL for 2002, enter
the portion, if any, of the NOL carryovers
and carrybacks to 2002 that were not used
in 2002 and were carried to years after
2002.
Example. John Farmington did not use in-

come averaging for 2002, 2003, nor 2004.
For 2005, John has $18,000 of elected farm
income on line 2. The taxable income
before subtracting exemptions on his 2002
Form 1040, line 39, is $4,000. A deduction
for exemptions of $3,000 is shown on line
40, and line 41, taxable income, is $1,000.
However, John had a $22,200 NOL in
2003, $9,000 of which was remaining to
carry to 2002 after the NOL was carried
back to 2001. To complete line 1 of the

2002 Taxable Income Worksheet—Line 5

worksheet, John combines the $9,000 NOL
deduction with the $1,000 from his 2002
Form 1040, line 41. The result is a negative
$8,000, John’s 2002 taxable income, which
he enters as a positive amount on line 1 of
the 2002 worksheet.
When John filed his 2002 tax return, he
had a $3,000 net capital loss deduction on
Schedule D, line 18 (which was also entered on Form 1040, line 13), a $7,000 loss
on Schedule D, line 17, and a $4,000 capital loss carryover to 2003. However, when
John carried back the 2003 NOL to 2002,
he refigured his 2002 capital loss carryover
to 2003 as $7,000. John adds the $3,000
from Schedule D, line 18, and the $7,000
carryover. He subtracts from the result the
$7,000 loss on his Schedule D, line 17, and
enters $3,000 on line 2 of the worksheet.
John had $1,000 of taxable income in
2002 that reduced the 2003 NOL carryback. The $3,000 of exemptions and
$3,000 net capital loss deduction also reduced the amount of the 2003 NOL carryback. Therefore, only $2,000 was
available to carry to 2004 and later years, as
shown on his 2003 Form 1045, Schedule B,
line 9. John enters the $2,000 on line 3 of
the worksheet, and $5,000 on line 4. He
then subtracts the $5,000 from the $8,000
on line 1 and enters the result, $3,000, on
line 5 of the worksheet. He enters a negative $3,000 on Schedule J, line 5. He combines that amount with the $6,000 on
Schedule J, line 6, and enters $3,000 on
Schedule J, line 7.

Keep for Your Records

Complete this worksheet if you did not use Schedule J to figure your tax for both 2003 and 2004 and your 2002 taxable
income was zero or less. See the instructions above before completing this worksheet.
1. Figure the taxable income from your 2002 tax return (or as previously adjusted) without limiting it to
zero. If you had an NOL for 2002, do not include any NOL carryovers or carrybacks to 2002. Enter
the result as a positive amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. If there is a loss on your 2002 Schedule D, line 18, add that loss (as a positive
amount) and your 2002 capital loss carryover to 2003. Subtract from that sum the
amount of the loss on your 2002 Schedule D, line 17, and enter the result . . . . . . . 2.
3. If you had an NOL for 2002, enter it as a positive amount. Otherwise, enter as a
positive amount the portion, if any, of the NOL carryovers and carrybacks to 2002
that were not used in 2002 and were carried to years after 2002 . . . . . . . . . . . . . . 3.
4. Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5. Subtract line 4 from line 1. Enter the result as a negative amount on Schedule J, line 5 . . . . . . . . . . .

J-2

1.

4.
5.

Page 3 of 8 of 2005 Instructions for Schedule J

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2002 Tax Rate Schedules—Line 8
Schedule Y-2 — Use if your 2002 filing status was
Married filing separately

Schedule X — Use if your 2002 filing status was Single
If Schedule J,
line 7, is:
Over —
$0
6,000
27,950
67,700
141,250
307,050

But not
over —

Enter on
Schedule J,
line 8

$6,000
27,950
67,700
141,250
307,050
.............

...........
$600.00 +
3,892.50 +
14,625.00 +
36,690.00 +
94,720.00 +

10%
15%
27%
30%
35%
38.6%

of the
amount
over —

If Schedule J,
line 7, is:
Over —

But not
over —

Enter on
Schedule J,
line 8

$0
6,000
27,950
67,700
141,250
307,050

$0
6,000
23,350
56,425
85,975
153,525

$6,000
23,350
56,425
85,975
153,525
.............

...........
$600.00 +
3,202.50 +
12,132.75 +
20,997.75 +
44,640.25 +

Schedule Y-1 — Use if your 2002 filing status was Married
filing jointly or Qualifying widow(er)
If Schedule J,
line 7, is:
Over —
$0
12,000
46,700
112,850
171,950
307,050

But not
over —

Enter on
Schedule J,
line 8

$12,000
46,700
112,850
171,950
307,050
............

..........
$1,200.00 +
6,405.00 +
24,265.50 +
41,995.50 +
89,280.50 +

Line 8
If line 7 is zero, enter -0- on line 8. Otherwise, figure the tax on the amount on line 7
using:
• The 2002 Tax Rate Schedules above,

10%
15%
27%
30%
35%
38.6%

of the
amount
over —
10%
15%
27%
30%
35%
38.6%

$0
6,000
23,350
56,425
85,975
153,525

Schedule Z — Use if your 2002 filing status was Head of
household

of the
amount
over —

If Schedule J,
line 7, is:
Over —

But not
over —

Enter on
Schedule J,
line 8

$0
12,000
46,700
112,850
171,950
307,050

$0
10,000
37,450
96,700
156,600
307,050

$10,000
37,450
96,700
156,600
307,050
.............

...........
$1,000.00 +
5,117.50 +
21,115.00 +
39,085.00 +
91,742.50 +

• The 2002 Capital Gain Tax Worksheet below, or
• The Schedule D you filed for 2002
(but use the 2002 Tax Rate Schedules
above instead of the 2002 Tax Table when
figuring the tax on Schedule D, lines 25 and

of the
amount
over —
10%
15%
27%
30%
35%
38.6%

$0
10,000
37,450
96,700
156,600
307,050

39, or on the Schedule D Tax Worksheet,
lines 15 and 36).

2002 Capital Gain Tax Worksheet—Line 8

Keep for Your Records

Use this worksheet only if you entered capital gain distributions directly on line 13 of your 2002 Form 1040 (or line 10 of your 2002
Form 1040A) and checked the box on that line and elected farm income included on Schedule J, lines 5 and 6, does not include any
net capital gain.
1.
2.
3.
4.
5.

6.
7.
8.
9.
10.
11.
12.
13.
14.
15.

Amount from Schedule J, line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amount from your 2002 Form 1040, line 13 (or Form 1040A, line 10) . . . . . .
Subtract line 2 from line 1. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . .
Figure the tax on the amount on line 3. Use the 2002 Tax Rate Schedules above
Enter the smaller of:
• The amount on line 1 above or
• $27,950 if single for 2002; $46,700 if married filing
...........
jointly or qualifying widow(er); $23,350 if married
filing separately; or $37,450 if head of household.
Enter the amount from line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subtract line 6 from line 5. If zero or less, enter -0- and go to line 9 . . . . . . . .
Multiply line 7 by 10% (.10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Enter the smaller of line 1 or line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Enter the amount from line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subtract line 10 from line 9. If zero or less, enter -0- and go to line 13 . . . . . .
Multiply line 11 by 20% (.20) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Add lines 4, 8, and 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Figure the tax on the amount on line 1. Use the 2002 Tax Rate Schedules above
Tax. Enter the smaller of line 13 or line 14 here and on Schedule J, line 8 . . . .

1.
2.
3.
................

}

J-3

4.

5.

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6.
7.
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9.
10.
11.
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...........

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8.

12.
13.
14.
15.

Page 4 of 8 of 2005 Instructions for Schedule J

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Line 9
If you used Schedule J to figure your tax for
2004 (that is, you entered the amount from
that Schedule J, line 22, on Form 1040, line
43, or on Form 1040X), enter on line 9 the
amount from your 2004 Schedule J, line 15.
If you used Schedule J to figure your tax for
2003 but not 2004, enter on line 9 the
amount from your 2003 Schedule J, line 3.
If you figured your tax for both 2003
and 2004 without using Schedule J, enter
on line 9 the taxable income from your
2003 tax return (or as previously adjusted
by the IRS, an amended return, etc.). But if
that amount is zero or less, complete the
worksheet below to figure the amount to
enter on line 9.
If you filed your 2003 tax return using
TeleFile, enter the taxable income from
your TeleFile Tax Record. If you did not
file a tax return for 2003, use the amount
you would have reported as your taxable
income had you been required to file a tax
return. Be sure to keep all your records for
2003 until at least 3 years after April 17,
2006 (or the date you file your 2005 tax
return, if later).

Instructions for 2003 Taxable
Income Worksheet
Line 2. Any net capital loss deduction on

your 2003 Schedule D, line 18, is not allowed for income averaging purposes to the

extent it did not reduce your capital loss
carryover to 2004. This could happen if the
taxable income before subtracting exemptions shown on your 2003 Form 1040, line
38 (or as previously adjusted), was less
than zero. Enter the amount by which your
2003 capital loss carryover to 2004 (the
sum of your short- and long-term capital
loss carryovers) exceeds the excess of the
loss on your 2003 Schedule D, line 17a,
over the loss on your 2003 Schedule D, line
18. If you had any NOL carrybacks to
2003, be sure you refigured your 2003 capital loss carryover to 2004.
Line 3. If you had an NOL for 2003, enter

the amount of that NOL as figured on the
2003 Form 1045, Schedule A, line 27, you
filed with Form 1045 or Form 1040X. If
you did not have an NOL for 2003, enter
the portion, if any, of the NOL carryovers
and carrybacks to 2003 that were not used
in 2003 and were carried to years after
2003.
Example. John Farmington did not use income averaging for 2002, 2003, nor 2004.
The taxable income before subtracting exemptions on his 2003 Form 1040, line 38,
is a negative $29,950. A deduction for exemptions of $3,050 is shown on line 39,
and line 40, taxable income, is limited to
zero. John subtracts from the $29,950 loss
the $3,050 deduction for exemptions. The
result is a negative $33,000, John’s 2003
taxable income, which he enters as a posi-

2003 Taxable Income Worksheet—Line 9

tive amount on line 1 of the 2003 worksheet.
When John filed his 2003 tax return, he
had a $3,000 net capital loss deduction on
Schedule D, line 18 (which was also entered on Form 1040, line 13a), and a $7,000
loss on Schedule D, line 17a (as adjusted).
He also had a $7,000 capital loss carryover
to 2004. John adds the $3,000 from Schedule D, line 18, and the $7,000 carryover. He
subtracts from the result the $7,000 loss on
his Schedule D, line 17a, and enters $3,000
on line 2 of the worksheet.
John enters $22,200 on line 3 of the
worksheet, the 2003 NOL from his 2003
Form 1045, Schedule A, line 27. Of the
$33,000 negative taxable income, the
$3,050 deduction for exemptions, the
$3,000 capital loss deduction, and his
$4,750 standard deduction were not allowed in figuring the NOL. John had a
$22,200 loss on his 2003 Schedule F, the
only other item on his 2003 tax return.
John enters $25,200 on line 4 and
$7,800 on line 5. He enters $7,800 as a negative amount on Schedule J, line 9. He enters $6,000 on Schedule J, line 10, and a
negative $1,800 on Schedule J, line 11. If
he uses Schedule J to figure his tax for
2006, he will enter the negative $1,800
amount on his 2006 Schedule J as his 2003
taxable income for income averaging purposes.

Keep for Your Records

Complete this worksheet if you did not use Schedule J to figure your tax for 2004 and your 2003 taxable income was zero or
less. See the instructions above before completing this worksheet.
1. Figure the taxable income from your 2003 tax return (or as previously adjusted) without limiting it to
zero. If you had an NOL for 2003, do not include any NOL carryovers or carrybacks to 2003. Enter
the result as a positive amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. If there is a loss on your 2003 Schedule D, line 18, add that loss (as a positive
amount) and your 2003 capital loss carryover to 2004. Subtract from that sum the
amount of the loss on your 2003 Schedule D, line 17a, and enter the result . . . . .
2.
3. If you had an NOL for 2003, enter it as a positive amount. Otherwise, enter as a
positive amount the portion, if any, of the NOL carryovers and carrybacks to
2003 that were not used in 2003 and were carried to years after 2003 . . . . . . . . .
3.
4. Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5. Subtract line 4 from line 1. Enter the result as a negative amount on Schedule J, line 9 . . . . . . . . . . .

J-4

1.

4.
5.

Page 5 of 8 of 2005 Instructions for Schedule J

13:26 - 10-NOV-2005

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Line 12
If line 11 is zero or less, enter -0- on line 12.
Otherwise, figure the tax on the amount on
line 11 using:
• The 2003 Tax Rate Schedules below,

• The 2003 Qualified Dividends and
Capital Gain Tax Worksheet on page J-6,
or
• The Schedule D you filed for 2003
(but use the 2003 Tax Rate Schedules below instead of the 2003 Tax Table when

figuring the tax on Schedule D,
lines 50 and 52, or on the Schedule D Tax
Worksheet, lines 48 and 50).

2003 Tax Rate Schedules—Line 12
Schedule Y-2 — Use if your 2003 filing status was
Married filing separately

Schedule X — Use if your 2003 filing status was Single
If Schedule J,
line 11, is:
Over —

But not
over —

$0
7,000
28,400
68,800
143,500
311,950

$7,000
28,400
68,800
143,500
311,950
.............

of the
amount
over —

Enter on
Schedule J,
line 12
...........
$700.00 +
3,910.00 +
14,010.00 +
34,926.00 +
90,514.50 +

10%
15%
25%
28%
33%
35%

$0
7,000
28,400
68,800
143,500
311,950

Schedule Y-1 — Use if your 2003 filing status was Married
filing jointly or Qualifying widow(er)
If Schedule J,
line 11, is:
Over —

But not
over —

$0
14,000
56,800
114,650
174,700
311,950

$14,000
56,800
114,650
174,700
311,950
............

...........
$1,400.00 +
7,820.00 +
22,282.50 +
39,096.50 +
84,389.00 +

10%
15%
25%
28%
33%
35%

$0
7,000
28,400
57,325
87,350
155,975

But not
over —
$7,000
28,400
57,325
87,350
155,975
.............

of the
amount
over —

Enter on
Schedule J,
line 12
...........
$700.00 +
3,910.00 +
11,141.25 +
19,548.25 +
42,194.50 +

10%
15%
25%
28%
33%
35%

$0
7,000
28,400
57,325
87,350
155,975

Schedule Z — Use if your 2003 filing status was Head of
household

of the
amount
over —

Enter on
Schedule J,
line 12

If Schedule J,
line 11, is:
Over —

$0
14,000
56,800
114,650
174,700
311,950

If Schedule J,
line 11, is:
Over —
$0
10,000
38,050
98,250
159,100
311,950

J-5

But not
over —
$10,000
38,050
98,250
159,100
311,950
.............

of the
amount
over —

Enter on
Schedule J,
line 12
...........
$1,000.00 +
5,207.50 +
20,257.50 +
37,295.50 +
87,736.00 +

10%
15%
25%
28%
33%
35%

$0
10,000
38,050
98,250
159,100
311,950

Page 6 of 8 of 2005 Instructions for Schedule J

13:26 - 10-NOV-2005

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Line 13
If you used Schedule J to figure your tax for
2004 (that is, you entered the amount from
that Schedule J, line 22, on Form 1040,
line 43, or on Form 1040X), enter on line
13 the amount from that Schedule J, line 3.
If you did not use Schedule J to figure
your tax for 2004, enter on line 13 the taxable income from your 2004 tax return (or
as previously adjusted by the IRS, an
amended return, etc.). But if that amount is
zero or less, complete the worksheet on
page J-7 to figure the amount to enter on
line 13.
If you filed your 2004 tax return using
TeleFile, enter the taxable income from
your TeleFile Tax Record. If you did not
file a tax return for 2004, use the amount
you would have reported as your taxable
income had you been required to file a tax
return. Be sure to keep all your records for
2004 until at least 3 years after April 17,

2006 (or the date you file your 2005 tax
return, if later).

you did not have an NOL for 2004, enter
the portion, if any, of the NOL carryovers
and carrybacks to 2004 that were not used
in 2004 and were carried to years after
2004.

Instructions for 2004 Taxable
Income Worksheet
Line 2. Any net capital loss deduction on

Example. John Farmington did not use in-

your 2004 Schedule D, line 21, is not allowed for income averaging purposes to the
extent it did not reduce your capital loss
carryover to 2005. This could happen if the
taxable income before subtracting exemptions shown on your 2004 Form 1040, line
40 (or as previously adjusted), was less
than zero. Enter the amount by which your
2004 capital loss carryover to 2005 (the
sum of your short- and long-term capital
loss carryovers) exceeds the excess of the
loss on your 2004 Schedule D, line 16, over
the loss on your 2004 Schedule D, line 21.

come averaging for 2002, 2003, nor 2004.
The taxable income before subtracting exemptions on his 2004 Form 1040, line 40,
is a negative $1,000. This amount includes
an NOL deduction (NOLD) on his 2004
Form 1040, line 21, of $2,000. The $2,000
is the portion of the 2003 NOL that was
remaining from 2002 to be carried to 2004.
See the examples on pages J-2 and J-4. A
deduction for exemptions of $3,100 is
shown on Form 1040, line 41, and line 42,
taxable income, is limited to zero. John
does not have an NOL for 2004. John subtracts from the $1,000 negative amount on
Form 1040, line 40, the $3,100 deduction
for exemptions. The result is a negative
$4,100, John’s 2004 taxable income, which

Line 3. If you had an NOL for 2004, enter

the amount of that NOL as figured on the
2004 Form 1045, Schedule A, line 24, you
filed with Form 1045 or Form 1040X. If

2003 Qualified Dividends and Capital Gain Tax Worksheet—Line 12

Keep for Your Records

Use this worksheet only if:
• You entered (a) qualified dividends on your 2003 Form 1040, line 9b (or your 2003 Form 1040A, line 9b) or (b) capital gain
distributions directly on your 2003 Form 1040, line 13a (or your 2003 Form 1040A, line 10a) and checked the box on that line, and
• Your elected farm income on Schedule J, lines 9 and 10, does not include any net capital gain.
1. Amount from Schedule J, line 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. Enter the total of the amounts from your 2003 Form 1040, lines 9b
and 13a (or Form 1040A, lines 9b and 10a) . . . . . . . . . . . . . . . . 2.
3. Amount, if any, from your 2003 Form 4952, line 4g . . . . . . . . . . 3.
4. Subtract line 3 from 2. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . .
5. Enter the smaller of:
• The amount on line 1 above or
• $56,800 if married filing jointly or qualifying widow(er) for 2003, . . . . . . . .
$28,400 if single or married filing separately, or
$38,050 if head of household.
6. Subtract line 4 from line 1. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . .
7. Subtract line 6 from line 5. If zero or less, enter -0- and go to line 13 . . . . . . . . . . . .
8. Enter the total of the amounts from your 2003 Form 1040, lines
9b and 13b (or Form 1040A, lines 9b and 10b) . . . . . . . . . . . . . . 8.
9. Enter the smaller of line 7 or 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10. Multiply line 8 by 5% (.05) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11. Subtract line 9 from line 7. If zero, go to line 13 . . . . . . . . . . . . . . . . . . . . . . . . . .
12. Multiply line 11 by 10% (.10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13. Enter the smaller of line 1 or line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14. Enter the amount from line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15. Subtract line 14 from line 13. If zero or less, enter -0- and go to line 23 . . . . . . . . . .
16. Enter the total of the amounts from your 2003 Form 1040, lines
9b and 13b (or Form 1040A, lines 9b and 10b) . . . . . . . . . . . . . . 16.
17. Enter the amount from line 9 (if line 9 is blank, enter -0-) . . . . . . . 17.
18. Subtract line 17 from line 16 . . . . . . . . . . . . . . . . . . . . . . . . . . 18.
19. Enter the smaller of line 15 or line 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20. Multiply line 19 by 15% (.15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21. Subtract line 19 from line 15. If zero, go to line 23 . . . . . . . . . . . . . . . . . . . . . . . .
22. Multiply line 21 by 20% (.20) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23. Figure the tax on the amount on line 6. Use the 2003 Tax Rate Schedules on page J-5
24. Add lines 10, 12, 20, 22, and 23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25. Figure the tax on the amount on line 1. Use the 2003 Tax Rate Schedules on page J-5
26. Tax. Enter the smaller of line 24 or line 25 here and on Schedule J, line 12 . . . . . . .

}

J-6

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1.

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4.

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5.

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.......

6.
7.

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9.
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11.
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13.
14.
15.

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19.
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21.
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23.
24.
25.
26.

Page 7 of 8 of 2005 Instructions for Schedule J

13:26 - 10-NOV-2005

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

2004 Taxable Income Worksheet—Line 13

Keep for Your Records

Complete this worksheet if your 2004 taxable income is zero or less. See the instructions that begin on page J-6 before
completing this worksheet.
1. Figure the taxable income from your 2004 tax return (or as previously adjusted) without limiting it to
zero. If you had an NOL for 2004, do not include any NOL carryovers or carrybacks to 2004. Enter
the result as a positive amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. If there is a loss on your 2004 Schedule D, line 21, add that loss (as a positive
amount) and your 2004 capital loss carryover to 2005. Subtract from that sum the
amount of the loss on your 2004 Schedule D, line 16, and enter the result . . . . . .
2.
3. If you had an NOL for 2004, enter it as a positive amount. Otherwise, enter as a
positive amount the portion, if any, of the NOL carryovers and carrybacks to
2004 that were not used in 2004 and were carried to years after 2004 . . . . . . . . .
3.
4. Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5. Subtract line 4 from line 1. Enter the result as a negative amount on Schedule J, line 13 . . . . . . . . . .

he enters as a positive amount on line 1 of
the 2004 worksheet.
When John filed his 2004 tax return, he
had a $3,000 net capital loss deduction on
Schedule D, line 21(which was also entered
on Form 1040, line 13), a $7,000 loss on
Schedule D, line 16, and a $5,000 capital
loss carryover to 2005 (his 2004 capital
loss carryover to 2005 was $5,000, not
$4,000, because the amount on his Form
1040, line 40, was a negative $1,000). John
adds the $3,000 from Schedule D, line 21,
and the $5,000 carryover. He subtracts
from the result the $7,000 loss on his
Schedule D, line 16, and enters $1,000 on
line 2 of the worksheet.
John enters -0- on line 3 of the worksheet because he does not have an NOL for

2004 and did not have an NOL carryover
from 2004 available to carry to 2005 and
later years. The NOLD for 2004 of $2,000
was reduced to zero because it did not exceed his modified taxable income of
$4,000. Modified taxable income is figured
by adding back the $3,000 net capital loss
deduction and the $3,100 of exemptions to
negative taxable income (figured without
regard to the NOLD) of $2,100. John enters
$1,000 on line 4 and $3,100 on line 5. He
enters $3,100 as a negative amount on
Schedule J, line 13. He enters $6,000 on
Schedule J, line 14, and $2,900 on Schedule J, line 15. If he uses Schedule J to figure
his tax for 2006, he will enter $2,900 on his
2006 Schedule J as his 2004 taxable income for income averaging purposes.

1.

4.
5.

Line 16
If line 15 is zero or less, enter -0- on line 16.
Otherwise, figure the tax on the amount on
line 15 using:
• The 2004 Tax Rate Schedules below,
• The 2004 Qualified Dividends and
Capital Gain Tax Worksheet on page J-8,
or
• The 2004 Schedule D Tax Worksheet
(but use the 2004 Tax Rate Schedules below instead of the 2004 Tax Table when
figuring the tax on the Schedule D Tax
Worksheet, lines 34 and 36).

2004 Tax Rate Schedules—Line 16
Schedule Y-2 — Use if your 2004 filing status was
Married filing separately

Schedule X — Use if your 2004 filing status was Single
If Schedule J,
line 15, is:
Over —

But not
over —

$0
7,150
29,050
70,350
146,750
319,100

$7,150
29,050
70,350
146,750
319,100
.............

of the
amount
over —

Enter on
Schedule J,
line 16
...........
$715.00 +
4,000.00 +
14,325.00 +
35,717.00 +
92,592.50 +

10%
15%
25%
28%
33%
35%

$0
7,150
29,050
70,350
146,750
319,100

Schedule Y-1 — Use if your 2004 filing status was Married
filing jointly or Qualifying widow(er)
If Schedule J,
line 15, is:
Over —

But not
over —

$0
14,300
58,100
117,250
178,650
319,100

$14,300
58,100
117,250
178,650
319,100
............

...........
$1,430.00 +
8,000.00 +
22,787.50 +
39,979.50 +
86,328.00 +

10%
15%
25%
28%
33%
35%

$0
7,150
29,050
58,625
89,325
159,550

But not
over —
$7,150
29,050
58,625
89,325
159,550
.............

of the
amount
over —

Enter on
Schedule J,
line 16
...........
$715.00 +
4,000.00 +
11,393.75 +
19,989.75 +
43,164.00 +

10%
15%
25%
28%
33%
35%

$0
7,150
29,050
58,625
89,325
159,550

Schedule Z — Use if your 2004 filing status was Head of
household

of the
amount
over —

Enter on
Schedule J,
line 16

If Schedule J,
line 15, is:
Over —

$0
14,300
58,100
117,250
178,650
319,100

If Schedule J,
line 15, is:
Over —
$0
10,200
38,900
100,500
162,700
319,100

J-7

But not
over —
$10,200
38,900
100,500
162,700
319,100
.............

of the
amount
over —

Enter on
Schedule J,
line 16
...........
$1,020.00 +
5,325.00 +
20,725.00 +
38,141.00 +
89,753.00 +

10%
15%
25%
28%
33%
35%

$0
10,200
38,900
100,500
162,700
319,100

Page 8 of 8 of 2005 Instructions for Schedule J

13:26 - 10-NOV-2005

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Lines 18, 19, and 20

amended your return or the IRS made
changes to it, enter the corrected amount.

If you filed your 2002, 2003, or 2004 tax
return using TeleFile, enter your tax from
your TeleFile Tax Record. If you

2004 Qualified Dividends and Capital Gain Tax Worksheet—Line 16

Keep for Your Records

Use this worksheet only if both of the following apply.
• Your elected farm income on Schedule J, line 2, does not include any net capital gain.
• You (a) entered qualified dividends on your 2004 Form 1040, line 9b (or your 2004 Form 1040A, line 9b), (b) entered
capital gain distributions directly on your 2004 Form 1040, line 13 (or your 2004 Form 1040A, line 10) and checked the box
on that line, or (c) filed Schedule D in 2004 and you answered “Yes” on lines 17 and 20 of that Schedule D.
1. Amount from Schedule J, line 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.
2. Amount from Form 1040, line 9b (or Form 1040A, line
9b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.
3. Did you file Schedule D in 2004?
Yes. Enter the smaller of line 15 or 16 of your
2004 Schedule D, but do not enter less than
-03.
No. Enter the amount from Form 1040, line 13
(or Form 1040A, line 10)
4. Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.
5. Amount, if any, from your 2004 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
• $29,050 if single or married filing separately for 2004,
. . . . . . . . . . . 8.
$58,100 if married filing jointly or qualifying widow(er),
$38,900 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 2004 Tax Rate Schedules on page J-7 . . . . . . . . . . . 16.
17. Add lines 11, 15, and 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.
18. Figure the tax on the amount on line 1. Use the 2004 Tax Rate Schedules on page J-7 . . . . . . . . . . . 18.
19. Tax. Enter the smaller of line 17 or line 18 here and on Schedule J, line 16 . . . . . . . . . . . . . . . . . . . 19.

}

}

J-8