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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Sooner or later, you may decide to sell off your S corporation and retire. If you run a family shop, you may plan to sell your stock to younger family members who are already working in the business.

Q: I'm 60 years old and have a traditional IRA with $250,000 in it. I also have a Roth IRA in its third year. Can I roll over the traditional IRA to a Roth and use $150,000 of NOLs to offset any tax that must be paid? B.W.

If you're shopping around for a new business vehicle, take into account the just-released IRS depreciation limits for cars placed in service in 2005.

Q: I'm confused about the gift-tax exclusion. My accountant told me I can give away $11,000 a year, but my brother says the actual exclusion is $1 million. Who is right? N.S., Memphis, Tenn.

If you're like most small business owners, your spouse does odds and ends around the office and pitches in when you need help. This is particularly true in the summer months when other employees take vacation leave.

You may have amassed hundreds of thousands of dollars in your retirement savings accounts, or maybe even a million or more. When you finally tap into that money, you'll be taxed on the withdrawal at rates that could reach a staggering 35 percent, plus any state income taxes due.

But you can defer the tax hit for a while longer—perhaps forever—by transferring (or "rolling over") the money into a traditional IRA or a qualified plan. The problem: Rollovers aren't always simple maneuvers; they include some twists you need to be aware of.

If you're planning to hire your spouse, he or she (and your company) still must pay federal employment taxes on the wages. But don't let that scare you away from putting your spouse on the payroll. By shifting salary from your pocket to your spouse's pocket, you can successfully pay less in employment taxes than if you earned all the income yourself.

Q: I'm having a problem with my 2004 return, so I had to file an extension. My wife and I separated last year, and we're filing separate returns. I'm in the 25 percent tax bracket. If she claims the standard deduction as a head of household, do I need to do the same? B.S.F., Norfolk, Va.

The sheer complexity of the tax code causes many people to put their faith in anyone who promises tax-reduction magic. That's why the IRS rings its warning bell each spring, identifying the top tax scams being pitched by unscrupulous tax promoters.

Q: One of my business associates says top-heavy requirements exist for employee group insurance plans as well as 401(k) plans. Is that true? J.A., Monterey, Calif.

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