Small Business Tax Deduction Strategies

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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While legislative efforts to extend a six-­figure Section 179 deduction seem to have stalled in Congress, business owners are left in a quandary. Should you buy new equipment this year if the cost puts you over the current first-year deduction limit?
If you’re a corporate employee, you may not qualify for home office deductions, even though you frequently work from home. Strategy: Have your company rent the home office.
As a high-ranking official of your company, if not the top dog, you might want to set up a deferred compensation (“deferred comp”) arrangement so you can defer taxes.
According to the “smart money” the research credit will likely be extended again by Congress, retroactive to the beginning of the year.
Q. My husband was a partner in a dry cleaning business when he died. Are payments from the partnership taxed to his estate?
The 3.8% Medicare surtax on net investment income has grabbed headlines, but there’s another new Medicare surtax to worry about.

A business owner with just a handful of employees has several qualified retirement plans to choose from. But you may need to salt away more later in life than a typical defined contribution plan—like a Simplified Employee Pension or Savings Incentive Match Plan for Employees—will allow. Strategy: Set up a Section 412(i) plan.

Congress has huffed and puffed, but it has yet to blow away a unique tax break for investing in your own company through your retirement plan. Strategy: With retirement account investments in company stock, keep the stock until you’re ready to retire. Don’t convert this nest egg to cash or other securities.

Generally, it is better for taxpayers to label an activity a “business” than a “hobby.” But there’s more than semantics involved.
Under a separate tax provision for qualified small business stock, you can exclude 100% of the gain on the sale of the stock held more than five years. However, as the tax law currently reads, the 100% gain exclusion does not apply to stock issued after 12/31/13. Instead, a 50% gain exclusion applies.
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