Things could be worse, tax-wise

Publication: Northern Colorado Business Report
December 4, 2009
by Neil Berman

Butch Shoup, CPA, partner at Clifton Gunderson LLP, says businesses actually have a lot to be thankful for during this holiday season.

“While things certainly could get better, there always is a little light in the darkness. In this case, there actually are a number of things that businesses can do to help improve their situation now,” according to Shoup, who is based in the Denver office of one of the nation’s largest certified public accounting and consulting firms.

For example:

1. By selling real estate at fair market value to children or other family members using a low-interest loan, business owners can move an asset off their ledgers while ensuring the business stays in the family. The owner can reduce the burden on the family member by gifting the member up to $13,000 a year to help defray the cost of the loan. Any future appreciation in the property will escape estate taxes in the parents’ estate.

2. The net operating loss carryback has been extended to five years from two through the American Recovery and Reinvestment Act. A NOL occurs when certain tax-deductible expenses exceed taxable revenues for a taxable year. If a business is taxed during profitable periods and receives no tax relief during those periods, Congress allows small businesses to use the losses in one year to offset the profits of other years, which may result in a hefty tax refund.

3. Capital investment is more attractive with the continued accelerated depreciation. Under ARRA, qualifying businesses can continue to expense up to $250,000 of section 179 property for tax years beginning in 2009. Without ARRA, the 2009 expensing limit would have been $133,000. Bonus depreciation (50 percent of cost) is available on current year purchases that are not expensed under section 179.

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