10 smart tips for your 2005 business return

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in Small Business Tax,Small Business Tax Deduction Strategies

1. Produce manufacturing deductions piece by piece. For the first time, U.S. businesses can claim a “manufacturing deduction” for their domestic production activities (see page 1 article). The new deduction is generally equal to 3 percent of net taxable income from the sale of certain U.S.-manufactured items. If your company’s whole product doesn’t qualify as a domestically produced item, you can choose to treat any qualifying part of the product as a separate item that does qualify for deduction purposes. So, you may need to segment product parts to increase your deduction. Talk with your tax adviser to see if you’d qualify. Calculate the deduction on Form 8903.

2. Deduct ‘06 bonuses on your ‘05 return. Generally, you must deduct bonuses on your company’s tax return in the year they’re paid. However, an accrual- basis company operating on a calendar- year basis can deduct bonuses paid to non-owners by March 15, 2006, on its...(register to read more)

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