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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: I own a rental home that I could sell for $100,000. Excluding land, I have depreciated $20,000. I know I have to recapture the $20,000 depreciation at 25 percent. Does it matter if I am in the 15 percent tax bracket? I.G., Louisville, Ky.

Do your aging parents live in a home that's soared in value? Chances are, they've paid off the house, so they're not claiming mortgage interest deductions anymore. Even if they still deduct mortgage interest, they're probably in a low tax bracket now, so those deductions don't do much good anyway.

Q: We're interested in setting up an ESOP for a small corporation. Do we need a lawyer or CPA to handle the paperwork? W.S.B.

Suppose business is booming and you've been able to gobble up one or more of your competitors. Your work force is growing, but that means you'll need to shell out more in payroll taxes.

Q: I hired a contractor to build a deck on our house for $15,000. We gave him $5,000 up-front for materials, etc. Now he's skipped out and we can't find him. Can I deduct the $5,000 deposit as a casualty loss deduction? R.S., Blawenburg, N.J.

Congress often tinkers with the tax code, but rarely does it throw business owners a brand-new deduction. That's why last year's tax law—the American Jobs Creation Act— created such a stir. Starting in 2005, the law authorizes a new write-off for qualified manufacturers that could eventually amount to a 3 percent rate cut.

Q: I gave my daughter stock shares that I bought for $10,000. On the day I gave her the shares, they were worth about $12,000. Now, it's jumped to about $16,000, and I've advised her to sell. Is her taxable gain the full $6,000? P.L.A., Santa Barbara, Calif.

As an S corporation owner, you can avoid the double taxation that plagues income earned by a regular C corporation. Instead of being taxed twice—once on the corporation level and once personally—income flows through to the S corporation shareholders. So, it's only taxed once at your personal level.

Nobody's getting any younger. But if you own a small business and you're older than most of your employees, you may be able to max out on your retirement plan and jump-start your nest egg. That's especially true if your company doesn't have a retirement plan in place or you haven't been able to max out on plan contributions.

Before you know it, summer will be over and another school year will be under way. In our last special report, we focused on deducting your child's education costs. But what if you are the one going back to school or enhancing your learning in conferences or seminars? As long as you make the tax grade, you can deduct the work-related education cost as a business expense. But it's easy to flunk out when you file your return. Read on to learn the rules.