www.qns.com I LIC COURIER I FEBRUARY 2019 43
TAX TIPS
BUSINESS
TAX PLANNING
BY JOHN SAVIGNANO, CPA
It’s time to discuss business tax planning. e new tax law has lots
of breaks for businesses. But there are also some pitfalls you’ll want
to avoid. Making the right moves before you do your do your tax
planning can save you and your business plenty of money.
Pay attention to your asset purchases. Very generous write-os are
in place now. For one, 100% bonus depreciation is back. Firms can
write o the full cost of qualifying assets…both new and used, with
lives of 20 years or less…that they buy and place in service aer
September 27, 2017.
Expensing is also available. For 2018 rms can expense up to $1
million of new or used business assets. is limit phases out once
more than $2.5 million of assets is placed in service during the year.
Note that the amount expensed can’t exceed taxable income of the
business. Bonus depreciation doesn’t have this rule.
Buying a new or used business vehicle can generate big tax breaks.
e annual depreciation caps for passenger autos have risen sharply.
If bonus depreciation is claimed, the rst-year cap is $18,000 for cars
acquired aer September 27, 2017 and put into service in 2018. e
second- and-third year caps are $16,000 and $9,600. Aer
that…$5,760. For autos bought before September 28, 2017, but
placed in use during 2018, the rst-year cap with bonus depreciation
is $16,400. If no bonus depreciation is taken, the rst-year ceiling
drops sharply to $10,000.
Buyers of heavy SUVs used solely for business can write o the full
cost, thanks to bonus depreciation. SUVs must have a gross weight
rating over 6,000 pounds. Additionally, up to 100% of the cost of a
big pick up truck can be expensed,
Business owners can shi income and expenses between 2018 and
2019. Professionals can postpone their year-end billings to collect
less revenue in 2018, or they can speed them up if they expect to be
in a higher tax bracket next year. Firms can juggle their income by
shiing some expenses from one year to another.
More businesses can use the cash method of accounting. Under
prior law, C corporations with average gross receipts of $5 million or
more over three years could not use the cash method. Tax reform
raised the threshold to $25 million. is easing also applies to
partnerships and LLCs that have C corporations as owners. It’s
easier for cash-method rms to shi income and expenses between
years than for taxpayers who adopt the more complex accrual
method of accounting.
Don’t forget about the new 20% deduction for pass-through
income. e self-employed and owners of LLCs, S corporations and
other pass-through entities can deduct 20% of their qualied
business income, subject to limitations for individuals with taxable
incomes in excess of $315,000 for couples, and $157,500 for all
others. If you’re close to or just above the income limits, consider
accelerating deductions or deferring income so that you come in
under the dollar thresholds for this year.
John Savignano is a partner with Savignano Accountants &
Advisors located at 47-46 Vernon Blvd., Second Floor, in Long Island
City. If you have any questions or require additional information,
please call John at 718-707-0955.
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