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.

Q. Our company is purchasing used equipment from one of our suppliers. Can we deduct the full cost under Section 179?

Typically, the income you receive from the sale of real estate or other property is taxable in the year it is received. However, there’s a way you can spread out the tax bite on a profitable sale. Strategy: Sell property on the installment basis. As long as you receive payments in more than one year, you pay tax only on the portion of each payment attributable to your gain plus interest.

Generally, your company may deduct bonuses in the year they are paid. For employees, the bonuses are taxable in the year they are received. For instance, you must pay out bonuses to employees before Jan. 1, 2010, to claim deductions for 2009. However, there’s a special rule for accrual-basis companies ...

Adjust your withholding allowances on Form W-4 if you overestimated the amount of tax you needed to have withheld this year or if you didn't pay enough tax during the year through quarterly installments or income tax withholding.

Under Section 179 of the tax code, your business may elect to “expense” (i.e., currently deduct) the cost of qualified assets up to an annual limit.. Strategy: Acquire and place business assets in service before year-end. After 2009, the maximum deduction is scheduled to revert to $125,000 (plus indexing for inflation).

Q. Our business is interested in using a “common paymaster.” Can we report all the payroll tax deposits on one form?

Your company may claim a tax credit for qualified research expenses. Strategy: Ramp up your research activities. Although the credit is expected to be extended by Congress, it currently expires at the end of the year. In any event, you can derive a tax benefit for expenditures made in 2009.

The tax law permits you to deduct the full amount of most charitable donations if you’ve kept proper records. Strategy: Donate securities that you have held for more than a year and that have appreciated in value. Reason: You can deduct the full fair market value of the securities without ever paying tax on the appreciation.

If you own an S corporation, make a capital contribution or a loan to the company. This will increase your basis so that it will be easier to deduct a loss on your 2009 returns. Assess your situation right now to determine the exact amount of the economic outlay you’ll need before Jan. 1.

Naturally, you might sell off stock losers now to offset capital gains realized earlier in the year. But if you think a stock will rebound, you might want to reacquire it shortly after selling it. But watch out for the “wash sale” rule. Keep an eye on the calendar to secure a loss for 2009.