Page 34 - ATR 6 2014 web

Last-Minute tax talk

Seasoned accountants share late in the game tax strategies

By Jeff Lovelady and chased or financed during the tax year. reduced dollar for dollar the available
richard Bell The deductions from the Section 179 deduction. For example, if a taxpayer
Guest Writers IRS code were enacted in 1958 as an purchased $2.4 million of qualified
incentive to encourage businesses to buy property, the maximum amount of
There’s an old saying that it’s never equipment and invest in themselves. 179 expense available would have been
too late to start planning. But if you’re Through most of history, the Section $100,000. If the President does not
just now starting on your tax strategy 179 deduction was limited to less than sign this bill, this limit will be reduced
for this year, it’s almost too late for $25,000 each year. However, in 2003, to $25,000 with the purchase cap set
motor carriers to execute a sound stra- 2008 and 2010 that limit increased at $200,000. If a taxpayer purchases
tegic tax plan for year-end. But, $225,000 of qualified property in
there are still a few things you 2014, then any available Section
can do to soften that tax burden 179 expense deduction is reduced
and take advantage of some of the to zero.
2014 rules that might benefit your In addition to the Section
company. As always you should 179 deductions, the Bonus
consult your tax professional Depreciation has been extended
before making any decisions, as well.
but you can start with these five Normally, depreciation occurs
strategies to help reduce your tax a little at a time over several years,
burden and offset some of the tax but Bonus Depreciation, a tax
consequences of having a good incentive for businesses, allows a
2014. Remember the clock is tick- taxpayer to deduct up to 50 per-
ing, and you will need to make cent of the cost in the first year.
decisions and implement these Bonus depreciation, like Section
before the clock strikes midnight 179, incentivizes business invest-
on Dec. 31. After that it’s Happy ments, and it applies to new, not
New Year and time to start a true used, purchases.
strategic tax plan for 2015. Taxpayers could basically
Let’s start with strategy num- write off 50 percent of the cost
ber one. gettyimages.com of certain qualified property
purchased during the year. The
Strategy one - SectIon remaining 50 percent was then
179 and BonUS dePrecIatIon from $25,000 to $100,000, to $250,000 subject to normal depreciation meth-
It appears that the tax break and to $500,000 respectively. ods. This option is a part of the tax
extenders bill is headed to the Congress has voted to extend the break extenders bill as well, and it will
President’s desk and all indications are $500,000 deduction limit. Taxpayers also benefit companies that have made
that he will sign it. It extends the tax will reap the benefits of this change large new asset purchases in 2014.
breaks for 2014 only. They will be ret- for 2014. This extension allows a tax- Basically, these methods were
roactive back to Jan. 1, 2014 and will payer to take a 179 expense on up to allowing taxpayers to defer taxes to
expire again on December 31, 2014. $500,000 of qualified asset purchases the future. It is basically too late in
The tax code allows businesses to as long as the cost of the qualifying the game to make any significant asset
deduct the full purchase price of equip- property did not exceed $2 million. purchases before December 31, carri-
ment, software and/or vehicles pur- Any amounts purchased over that cap ers should have already bought equip-

34 arkansas trucking report | issue 6 2014