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.

Every employee of Alaska Air Group pocketed an extra month’s pay in February when the organization paid record annual bonuses totaling $72 million. The 9% bonuses came after the airline’s 12,600 employees helped the organization exceed its 2010 operational and financial goals.

Q. I’ve rented out my vacation home full time since 2006. If I now move there as my principal residence, can I qualify for the home sale gain exclusion after two years?

Do you need cash in a hurry to help pay for a child’s college, a medical emergency or some unforeseen circumstance? You can borrow the money from your 401(k) plan if your employer allows it. But remember that your 401(k) plan is meant to be used for retirement, so use this tax strategy with discretion. Borrow from the plan only after you’ve exhausted other possibilities.

If you just can’t seem to get anywhere with the IRS, and the agency’s action (or lack of action) will cause your company to suffer a significant hardship, you may be able to get a Taxpayer Assistance Order from the National Taxpayer Advocate.
Q. I don’t expect to show positive business income in 2011. Does that mean I can’t write off the cost of a new computer and cell phone?

Charitable-minded retirees who have reached age 70½ have another chance to do a good tax deed with benefits. The 2010 Tax Relief Act extends a tax break for “charitable rollovers.” Strategy: Donate funds directly from your IRA. In other words, instead of taking a taxable withdrawal and contributing the difference, you can tap into IRA funds to provide the full amount to charity. There’s zero tax due on the distribution.

In a fight over whether payments from an S corporation to its sole shareholder are dividends or salary, the IRS has the final word. Now a federal trial court has ruled that the IRS had authority to recharacterize non-FICA-taxable dividends distributions from an S corp to its sole shareholder as FICA-taxable wages.

There’s one tax loophole on the books that’s large enough to drive a truck through … literally. Now it’s even “bigger and better” than before. Strategy: Buy a heavy-duty sport utility vehicle for your business. Due to a provision in the 2010 Tax Relief Act, you can write off most or all of the cost of an SUV placed in service this year—without the usual restrictions.

Are you thinking about dismantling the credit shelter trust you set up years ago? Not so fast. There are still plenty of reasons for keeping the trust. The new estate tax rules in the 2010 Tax Relief Act that seemingly discourage the use of credit shelter trusts are scheduled to “sunset” after 2012.

Q. My daughter is paying off her college student loans. (She graduated in 2008.) Can she deduct all the payments if she itemizes?