Despite conventional wisdom, year-end planning isn’t just for personal tax savings. There’s plenty a small business owner or manager can do between now and Dec. 31 to cut taxes in 2009. Furthermore, new legislation may give a boost to year-end tax planning for your business. Consider the following points:

• Under the Section 179 “expensing” deduction, a business can write off the full cost of certain business assets, up to a dollar cap. For 2009, the new economic stimulus law preserves the maximum deduction of $250,000 initially limited to 2008.
• Take advantage of bonus depreciation. For qualified assets placed in service in 2009, you may claim an extra 50% deduction in addition to available Section 179 and regular depreciation deductions.
• Increase your business driving or decrease personal driving—or both—to preserve top deductions for personally-owned vehicles. In lieu of deducting actual expenses, you might use the standard mileage rate. The rate for 2009 is 55 cents per mile (plus related tolls and parking fees).
• If your company operates on the accrual basis, fix bonus amounts before Jan. 1, but pay them early next year. Generally, the bonuses aren’t taxable to employees until 2010, but can be deducted on your company’s 2009 return so long as they’re paid by March 15, 2010.
• Nail down current deductions for repairs to business premises by scheduling them separate and apart from major renovations. As opposed to repairs, capital improvements aren’t deductible but are instead added to the “basis” of property.
• Keep detailed records of collection efforts to support deductions for bad debts that became worthless in 2009.
• Reschedule business trips planned for early next year to December to increase travel deductions for 2010.

Obviously, this is only a quick summary of several popular tax techniques. Give us a call at 303-447-1626 for more in-depth information about year-end planning for your business.
Very truly yours,

Bill Brooks, CPA

P.S. The best year-end strategies will result from a well-designed plan that is tailored to the specific needs of your business. Don’t hesitate to call us at 303-447-1626 to schedule a meeting.

With the end of the year fast approaching, you can often cash in on unique tax-saving opportunities that won’t be available once Jan. 1 rolls around. Be aware that certain new tax developments may also have an impact on year-end planning in 2009.

With that in mind, following are several strategies you might use to cut your personal tax bill at the end of the year.

• Use capital gains and capital losses to offset each other. Depending on your situation, you may realize gains or losses at year-end. Any excess loss can offset up to $3,000 of ordinary income. Key point: For 2009, the maximum tax rate on long-term capital gain is 0% for certain taxpayers (e.g., your children) in the regular 10% or 15% tax brackets.
• Try to minimize the “kiddie tax.” For 2009, the kiddie tax generally applies to a child under age 19 or a full-time student under age 24 receiving more than $1,900 of unearned income. This may eliminate or reduce the benefit of the 0% capital gains rate.
• Have an estimate made of your alternative minimum tax (AMT) liability. It may be possible to avoid or reduce the AMT by postponing certain “tax preference” items to 2010. Note: The new economic stimulus law provides slightly higher AMT exemption amounts for 2009.

• Contribute to your favorite charities. But know that the IRS recently toughened the substantiation rules for monetary gifts. In general, you are required to obtain a written confirmation of your gift.
• Avoid estimated tax penalties. No penalty is imposed if your tax payments for 2009, including withholding, equals at least 90% of this year’s tax liability or 100% of last year’s liability (110% if your 2008 AGI was $150,000 or over).
• Bunch medical expenses in the year you may qualify for a deduction. Your unreimbursed expenses can be deducted only to the extent the total exceeds 7.5% of your adjusted gross income (AGI).

Of course, other year-end planning techniques may be appropriate or preferable for certain taxpayers. To arrange a meeting to discuss your personal situation, all us at 303-447-1626.

Very truly yours,

Bill Brooks, CPA

P.S. True tax planning requires an in-depth examination of your particular facts and circumstances. This will enable you to develop a comprehensive year-end plan that addresses your specific needs. Call us at 303-447-1626 to set up a consultation today.

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