Small Business Tax

Section 179 vehicles should be a key part of your small business tax deduction strategies. Can Section 179 property fit in with your business tax strategies?

Let Business Management Daily help you get each and every rental property depreciation credit and business tax deduction you’re entitled to.

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Q. I don’t expect to show positive business income in 2011. Does that mean I can’t write off the cost of a new computer and cell phone?

Charitable-minded retirees who have reached age 70½ have another chance to do a good tax deed with benefits. The 2010 Tax Relief Act extends a tax break for “charitable rollovers.” Strategy: Donate funds directly from your IRA. In other words, instead of taking a taxable withdrawal and contributing the difference, you can tap into IRA funds to provide the full amount to charity. There’s zero tax due on the distribution.

In a fight over whether payments from an S corporation to its sole shareholder are dividends or salary, the IRS has the final word. Now a federal trial court has ruled that the IRS had authority to recharacterize non-FICA-taxable dividends distributions from an S corp to its sole shareholder as FICA-taxable wages.

There’s one tax loophole on the books that’s large enough to drive a truck through … literally. Now it’s even “bigger and better” than before. Strategy: Buy a heavy-duty sport utility vehicle for your business. Due to a provision in the 2010 Tax Relief Act, you can write off most or all of the cost of an SUV placed in service this year—without the usual restrictions.

Are you thinking about dismantling the credit shelter trust you set up years ago? Not so fast. There are still plenty of reasons for keeping the trust. The new estate tax rules in the 2010 Tax Relief Act that seemingly discourage the use of credit shelter trusts are scheduled to “sunset” after 2012.

Q. My daughter is paying off her college student loans. (She graduated in 2008.) Can she deduct all the payments if she itemizes?
Did you claim the homebuyer credit for a principal residence purchased in 2008? The IRS has issued a “friendly reminder” that you’re generally required to repay the credit in 15 annual installments.
The IRS now says that breast pumps and supplies that assist in lactation may be deductible as medical expenses. As long as you clear the usual 7.5%-of-AGI hurdle for medical deductions, you can write off the cost of these devices.
Unit Texas Drilling has settled a DOL lawsuit that claimed the company stiffed 824 drillers, derrickmen and floor hands out of overtime wages they should have received. Now the company, based in Humble, will make good on its obligations under the FLSA—a total of $579,910.

The rules for substantiating business car deductions are hard to navigate. What’s more, it’s a hassle to comply with all the requirements. Strategy: Follow the IRS-approved route. If you veer off course, deductions may be disallowed. The IRS tends to take an extra-long look at deductions for business vehicles.

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