Can I Still Use Bonus Depreciation?
Small companies can also continue to take advantage of 50 percent bonus depreciation through 2013. This applies to new assets that are expected to last 20 years or less. It is possible to apply Section 179 and 50 percent on the same asset, but some limitations apply. In addition, since this option also expires at the end of the year, it may affect your 2013 purchasing decisions. Ask your CPA for the details.
What Credits Are Available?
Company owners are still eligible for several credits. The Work Opportunity Tax Credit, for example, is available through 2013 to those who hire workers from specific groups, including qualified veterans. (To receive the credit, you must have certification from your state’s employment security agency.) Companies can also continue to benefit from the Section 41 research tax credit, which can be applied to increased research activities, through the end of 2013.
Are There Any Other Incentives?
On the list of preserved items is the 15-year recovery period for qualified leasehold improvements, qualified retail improvements, and qualified restaurant property, which were extended until the end of 2013. The 100 percent exclusion for gains on a sale of small-business stock can be used through the end of this year. In addition, the special tax incentives for empowerment zones and rules on S corporations making charitable donations of property remain in force.
Were There Changes to Estate Tax Rules?
Business owners should also be interested in the act’s impact on individual taxes. Of particular interest may be the permanent retention of the existing estate and gift tax exclusion, which was held at an inflation-adjusted $5 million. (That translates to $5.12 million in 2012 and $5.25 million this year.) The top estate tax rate rose to 40 percent from 35 percent on Jan. 1, 2013, but that is much lower than the 55 percent it was set to reach—with a $1 million exclusion amount—if the act had not been passed. On another front, the estate tax portability election, which allows a surviving spouse to use a deceased spouse’s unused exemption amount, has been made permanent.
Your CPA Can Help
While one fiscal crisis has passed, several more are looming. Discussions on the federal debt ceiling are pending, as are the debates on the federal budget and tax law changes. Business planning is critical, so turn to your local CPA for understandable and practical advice on the best available tax-planning choices. To find a CPA in Pennsylvania by location and area of expertise, or for more tax resources, visit http://www.picpa.org/taxhelp.