Business and Business Owner Year-End Tax-Planning Strategies Should Be Reviewed in November for 2015

by:  Jeffrey M. Fetter

Although there is still no guidance from Congress on when or whether there is going to be Extender Legislation this year, you may want to be prepared in case Congress does bless us again with another round of temporary tax legislation that has been beneficial to the business community over the past few years.  “Extenders” included 50% bonus depreciation for machinery, equipment, software, and other specified assets as well as a renewal of higher Section 179 limits for the same types of assets – – presently the Section 170 deduction is at $25,000 for the 2015 tax year (the same as it was in 2014 before being extended in the closing weeks of the year). Some of the Extenders may be enacted retroactively, but no guarantees exist as to whether there will be any Extender Legislation at all, whether it will be the same as 2014 or whether legislation will be a piece-meal basis.

Regardless of what, if any, new legislation we see, there are a few 2015 tax-saving strategies that may be of benefit to your businesses and possibly yourself as well.  Conversations should take place early with your tax advisors.  On the New York State front, ensure that you have your plan in place to take advantage of the Manufacturer’s Real Property Tax Credit of credits for applicable R&D.  If you have started a new business here in New York State this year, check out the Start-Up New York website to see if there are any benefits available to you or your business operations at www.startup.ny.gov.

On the Federal side, any equipment or machinery purchased before year end still qualifies for the half-year convention for depreciation purposes and, if placed in service, may be eligible for any benefits that may come along from Bonus Depreciation or increased Section 170 deductions.  Looking at whether income should be accelerated into 2015 or deferred into 2016 is always important.  With many businesses this year, it may still be beneficial to pre-pay certain expenses in 2015 as well.  But, with any planning that involves prepayments, keep in mind that deductions taken in 2015 are not available in 2016 – you need to determine the planning option that is more beneficial to you which may require using the Crystal Ball approach to planning (e.g., are you carrying NOLs that could be used against income this year if income was accelerated). 

Corporate AMT presents different challenges for those businesses that qualify for the small corporation AMT exemption.  Although there is no benefit to accelerating income into 2015 for the small corporation AMT exemption, it may be worthwhile to review whether the deferral of income into 2016 could secure the exemption for 2015.  Are purchase or sale of interest transactions warranted within an LLC or partnership business that could result in “new basis” for depreciation going forward?  There are other benefits that may be applicable to your particular industry and the time to get the attention of your tax advisor may be in November, rather than December, so that proper planning strategies can be reviewed.

If you have any questions, or if we may be of any assistance in your year-end planning, please let us know.

 

0