Federal Election to Postpone Determination as To Whether the Presumption Applies That an Activity is Engaged in for Profit

Election to Postpone Determination as To Whether the Presumption Applies That an Activity is Engaged in for Profit
Form 5213 (Rev. February 2006)
Form

5213

(Rev. February 2006)
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
䊳

OMB No. 1545-0195

To be filed by individuals, estates, trusts, partnerships, and S corporations.

Name(s) as shown on tax return

Identifying number as shown on tax return

Address (number and street, apt. no., rural route) (or P.O. box number if mail is not delivered to street address)

City, town or post office, state, and ZIP code

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):

2a

Individual
Partnership
S corporation
Description of activity for which you elect to postpone a determination

2b

First tax year you engaged in activity described in 2a

Estate or trust

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.

(Signature of taxpayer or fiduciary)

(Date)

(Signature of taxpayer’s spouse, if joint return was filed)

(Date)

(Signature of general partner authorized to sign partnership return)

(Date)

(Signature and title of officer, if an S corporation)

(Date)

For Privacy Act and Paperwork Reduction Act Notice, see instructions on back.

Cat. No. 42361U

Form

5213

(Rev. 2-2006)

Form 5213 (Rev. 2-2006)

General Instructions
Purpose of Form
Use Form 5213 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.
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.
For information on the limits on deductions
in not-for-profit activities, see Pub. 535,
Business Expenses.

Who Should File
Individuals, estates, trusts, partnerships
(including limited liability companies or other
entities that are treated as partnerships for
Federal tax purposes), 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. An election made by a
partnership or an S corporation 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 in detail and list the
first tax year in which you were engaged in
the activities.

Page

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 that 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 after receiving the
notice. This 60-day period does not extend
the 3-year period referred to above.

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. 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 5-year presumption
period that began in 2003 and ends in 2007,
the period of limitations automatically extends
to April 15, 2010, for all tax years in the
presumption period that would otherwise
expire before that date. Periods of limitations
for tax years in the 5-year period expiring
after April 15, 2010, would remain open until
their normal expiration date. However, early
termination of the presumption period does
not terminate the automatic extension of the
period of limitations.
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

2

in which you engaged in the activity. If you
are an individual, your identifying number is
your social security number (SSN). If you are
other than an individual, your identifying
number is your employer identification
number (EIN).
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 SSN that was shown first on your return as
your identifying number.

Signature and Date
Be sure to sign and date the form on the
appropriate line or lines. Keep a copy for your
records.
Privacy Act and Paperwork Reduction Act
Notice. We ask for the information on this
form to carry out the Internal Revenue laws of
the United States. We need this information
to determine your eligibility for making the
election to postpone determination as to
whether the presumption applies that an
activity is engaged in for profit. If you make
this election, you are required by Internal
Revenue Code section 183 to provide the
information requested on this form. Under
section 6109, you must disclose your SSN,
individual taxpayer identification number
(ITIN), or EIN. Routine uses of this information
include giving it to the Department of Justice
for civil and criminal litigation, and to cities,
states, and the District of Columbia for use in
administering their tax laws. We may also
disclose this information to other countries
under a tax treaty, to federal and state
agencies to enforce federal nontax criminal
laws, or to federal law enforcement and
intelligence agencies to combat terrorism. If
you fail to provide this information in a timely
manner, or provide incomplete or false
information, you may be liable for interest and
penalties.
You are not required to provide the
information requested on a form that is
subject to the Paperwork Reduction Act
unless the form displays a valid OMB control
number. Books or records relating to a form
or its instructions must be retained as long as
their contents may become material in the
administration of any Internal Revenue law.
Generally, tax returns and return information
are confidential, as required by Code section
6103.
The time needed to complete and file this
form will vary depending on individual
circumstances. The estimated burden for
individual taxpayers filing this form is
approved under OMB control number
1545-0074 and is included in the estimates
shown in the instructions for their individual
income tax return. The estimated burden for
all other taxpayers who file this form is shown
below.
Recordkeeping
7 min.
Learning about the
law or the form
10 min.
Preparing the form
10 min.
Copying, assembling, and
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 simpler, we
would be happy to hear from you. See the
instructions for the tax return with which this
form is filed.