Despite the chummy-sounding acronym, PALs (short for passive-activity losses) are anything but friendly to taxpayers, particularly those who invest in real estate. Fortunately, you can gain more tax saving value from your PALs with some astute tax planning.
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.
Eureka! Your company has created a new gizmo that's a vast improvement on the competition's product. Once you work out the bugs, you expect to patent the invention to protect your interests. Then, you hope it will start selling faster than hot cakes.
Q: I plan on making charitable donations to several charities in other countries, including Israeli bond funds. Can I deduct those donations on my tax return? I.Z., Bethpage, N.Y.
Q: My main computer is a laptop that I use mostly for business in my home office. But I also use the laptop personally and let my kids play games on it sometimes. Will this cost me a home-office deduction? M.R., Danville, Ill.
Heads up: The IRS plans to ratchet up the audit pressure on small businesses in the coming months.
Q: You said retirement plan participants must pay a 10 percent penalty tax for withdrawals before 55 (see 4/18/05 issue). Isn't the correct age 59 1/2? C.F., via e-mail
Suppose you want to add the new guaranteed minimum withdrawal feature (see above) to an existing variable annuity, but the issuer doesn't allow that option. Are you out of luck? Not necessarily.
Q: I'm switching my business from a C corporation to an S corporation. I understand that S corporations don't pay any tax. Will I need to make quarterly tax payments? A.P., Cincinnati
Can't get enough of a good thing? To hoard even more money for retirement than the tax law allows for qualified plans (such as 401(k)s or pension plans), arrange things so your company makes contributions on your behalf to a nonqualified deferred compensation plan.
Don't count on the IRS to increase the standard mileage deduction rate.