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.

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.

The so-called “kiddie tax” may come into play if your child’s unearned income exceeds a specified annual threshold ($1,900 for 2009). In that case, the excess income is taxed at the top marginal tax rate of the child’s parents—regardless of the original source of the funds. Strategy: Keep your child’s investment income below the $1,900 level.

As the year rapidly draws to a close, you can probably use some capital losses to offset capital gains realized after the recent run-up in stocks. But you may not have any viable stock losers in your portfolio that you want to give up at this time. Fortunately, you can still salvage some tax benefits if you own municipal bonds (“munis”) that have been underperforming. But you’ll have to move fast.

Here's a collection of creative employee benefits programs, excerpted from our Compensation & Benefits newsletter: 1. Expectant and new moms get help from co-worker "buddies." 2. Shopping-spree contest helps boost sales, morale. 3. Cash advances help workers dress for success. 4. Employee committees choose company wellness programs. 5. Company pays employees to leave their cars at home. 6. Deployed workers get full pay, benefits and care packages. 7. Medical firm picks reality TV star as its "wellness ambassador." 8. British firm pays for "Botox leave."

Your business can deduct 50% of its entertainment and meal expenses that either follow or precede a substantial business discussion with a client. And if you invite clients to a dinner party at your home, the cost of home entertainment attributable to your business guests is deductible (subject to the 50% limit) even if you never discuss business during the night.

If you’re like most taxpayers, you normally don’t qualify for medical expense deductions. Reason: The expenses are deductible only to the extent that they exceed 7.5% of your AGI. But you should scour your checkbook and credit card statements. You may discover enough qualified expenses to put you over the 7.5% mark for 2009.

Q. I found some HH Savings Bonds from years ago. Do I still owe income tax if I cash them in now?