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YEAR END TAX PLANNING FOR BUSINESSES

Since we are in the home stretch of 2012, I wanted to give you some ideas that could potentially save you and your business a lot in taxes.

1). If you intend to buy assets, place them in-service before the end of the year. The simple reason for this is that you can write off half the cost of qualifying assets if you put them in-service this year.

BONUS DEPRECIATION

1). Is available on new assets such as: machines, equipment and farm structures. Lease hold improvements made to the inside of commercial real estate can also be eligible. But this bonus depreciation is scheduled to end after 2012. Most experts believe it will not be coming back.

2). Bonus Depreciation for heavy SUVS

Business purchase a new SUV with a gross rate over 6000 pounds and puts it in use before the end of the year, take an expense, as well as, 50% bonus depreciation. For example, a $60,000 SUV if used 100% of the time for business, will give you a total first year write off for $46,000.

Note: However, used SUVs do not get bonus depreciation.

3). Shifting Income and expenses between 2012 and 2013.

If you have a high income, you may want to collect as much in receivables and billings this year as you can. This way you can report the income in 2012 and you can lock in the top rate of 35%. If Obama wins, it is expected that the rates on upper income filers will rise significantly in 2013. Fortunately, there will be time after the election to determine which strategy works best for you. Keep in mind that you can legitimately shift income and expenses from one year to another. However, if there is too much distortion of your earnings the IRS can reverse some of the actions that you have taken. Obviously, there is no exact formula for this.