Individuals, estates, trusts, partnerships, and S corporations can use Form 5213 to elect to postpone a determination as to whether they are engaged in an activity for profit and obtain an automatic extension of the period of limitations. This applies to activities such as breeding, training, showing, or racing horses for over 7 years or any other activity for over 5 years.
What is Form 5213?
Form 5213 is a document used by individuals, estates, trusts, partnerships (including limited liability companies or other entities treated as such), and S-corporations to postpone an IRS determination as to whether an activity is engaged in for profit. The form must be filed within three years after the due date of the tax return of the first tax year during which an activity is engaged in. Activities that qualify are breeding, training, showing, or racing horses for more than 7 years or other activities for more than 5 years. Generally, filing this form automatically extends the period of limitations for assessing income tax deficiencies for any years in the presumption period. Joint returns must both make the election in order to be valid, even if only one activity is involved. If more than one activity is engaged in, separate forms must be filled out for each activity.
IRS Form 5213 – Who Needs to Fill It Out?
Individuals, estates, trusts, partnerships (including limited liability companies or other entities that are treated as partnerships for Federal tax purposes), and S corporations who want to postpone an IRS determination as to whether the presumption applies that they are engaged in an activity for profit, should use this form. This applies to activities such as breeding, training, showing, or racing horses for more than 7 years or any other activity for more than 5 years. Filing this form will automatically extend the period of limitations for assessing any income tax deficiency specifically attributable to this activity. If you and your spouse filed a joint return, both of you must elect to postpone the determination. Individual taxpayers filing this form should refer to the instructions for their individual income tax return for more information.
Step-by-Step: Form 5213 Instructions For Filling Out the Document
To fill out the Form 5213, individuals, estates, trusts, partnerships, and S corporations should have an activity, either breeding, training, showing, or racing horses for more than 7 years or any other activity for more than 5 years. Filing this form automatically extends the period of limitations for assessing any income tax deficiency specifically attributable to the activity during the presumption period, allowing a maximum of 2 years after the due date of the return. The form must be signed and dated and a copy should be kept for records. Additionally, the same form can be used for multiple activities if they all have the same presumption period. All persons in the activity must make the election even if only one of them is engaged in the activity. For further guidance, the tax return instructions should be consulted.
Below, we present a table that will help you understand how to fill out Form 5213.
| Information Required for Form 5213 | Details |
|---|---|
| Activity Duration | Engage in an activity for more than 7 years (breeding, training, showing, racing horses) or more than 5 years (other activity) |
| Presumption Period | Extends the period of limitations for assessing income tax deficiency |
| Form Usage | Use for multiple activities with the same presumption period |
| Multiple Participants | All participants in the activity must make the election |
| Additional Information | Consult tax return instructions for further guidance |
Do You Need to File Form 5213 Each Year?
If you are an individual, estate, trust, partnership, or S corporation in an activity not engaged in for profit, filing Form 5213 each year will automatically extend the period of limitations for assessing any income tax deficiency specifically attributed to the activity. This extension applies to partners or shareholders of the activity, and extends until two years after the due date for filing the return (determined without extensions) for the last tax year in the presumption period. Generally, one form needs to be filed for each activity, but if all activities have the same presumption period, one form can be filed. If you and your spouse file a joint return, both of you must elect to postpone the determination even if only one is engaged in the activity.
Download the official IRS Form 5213 PDF
On the official IRS website, you will find a link to download Form 5213. However, to make it easier for you, we are providing the link in our article, which comes directly from the official irs.gov website! Click to download: Form 5213
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