This article continues from the Individual tax benefits article on the L side of the magazine….
On the business side, for qualifying new assets purchased after September 8, 2010, a 100% “bonus” depreciation deduction is available and is good through the end of 2011. if you have been contemplating asset purchases for your business, 2011 is a great year to do it. for qualifying new assets purchased after december 31, 2011 the bonus depreciation deduction reverts to 50%. The additional expense created by deducting 100% of new assets purchased in 2011 creates a net operating loss (nol), that nol can be carried back to offset income from a prior year entitling the business owner to a potential tax refund.
If you purchased used assets instead of new assets, a code section 179 expense election is available for up to $500,000 in 2010 and 2011 (subject to a $2,000,000 purchase limit). The limits for section 179 expensing decrease for purchases made in 2012 from $500,000 to $125,000 (and with a purchase limit of $500,000) and then are slated to revert to a $25,000 limit
After 2012 (with a $200,000 purchase limit). If your business has plans to purchase assets in the future, consider ensuring that the purchases occur in 2011 or 2012 to take full advantage of these benefits.
The 2010 act extended present-law provisions for qualified leasehold improvements (improvements to the interior of cer- tain properties made three years after the building is placed in service), qualified retail property improvements, and qualified restaurant property. These improvements, which would normally be depreciated over a 39-year life, qualify under Macrs for a 15-year life and therefore also qualify for bonus depreciation.
Under the 2010 act, the research credit was retroactively reinstated to January 1, 2010 and is effective through the end of 2011. This benefit has the potential to provide a business credit of between 14% and 20% of eligible research expenditures
For qualifying television and film expenses, the act extends through 2011 the availability for taxpayers to elect to deduct the cost of any qualifying film and television production in the year the expenditure is incurred, up to $15 million. as high- lighted in the individual section of this article (on the flip-side of the magazine), employees are entitled to a 2% reduction in fica tax withheld from their paychecks in 2011. Be sure your payroll department is aware of this change. The irs has instructed employers to start using new withholding tables no later than January 31, 2011. if offsetting adjustments are needed, the irs has instructed that these adjustments should be made as soon as possible, but no later than March 31, 2011.
The Work opportunity Tax credit, which was scheduled to expire after august 31, 2011, has been extended through de- cember 31, 2011, allowing employers a credit for hiring certain economically disadvantaged individuals through this date. With the myriad tax extensions and updates this year, it is more important than ever to be confident that you are taking full advantage of the many ways to save taxes whether for yourself or for your business. Be sure you are discussing the implications of the new tax laws with your CPA so that you will be fully aware of the planning opportunities available to you and how the new tax provisions impact your individual and business tax situation. here’s wishing you and yours a prosperous 2011!
circular 230 disclosure: to ensure compliance with requirements imposed by the treasury department, you are hereby informed that any u.s. federal tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the internal revenue code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.
atchley & associates, llp, certified public accountant in a full-service firm specializing in corporate/Business, partnership, s-corp, individual, and estate & gift taxes in addition to accounting, bookkeeping, and audit ser- vices. we offer our clients the most diversified public accounting services in central texas. currently serving as Board treasurer for sage words and a finance committee member for outyouth.