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47-46 Vernon Blvd Second Floor
Long Island City, NY 11101
T: 718-707-0955 • F: 718-707-0959
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SAVIGNANO accountants & advisors is here to help.
47-46 Vernon Blvd., 2nd Fl. LIC, NY 11101
718.707.0955 (F) 718.707.0959
41-18 Crescent St. LIC, NY 11101
718.707.0295 (F) 718.707.0299
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BY JOHN SAVIGNANO, CPA
It’s time to discuss business tax planning. The 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-offs are
in place now. For one, 100% bonus depreciation is back. Firms can
write off the full cost of qualifying assets…both new and used, with
lives of 20 years or less…that they buy and place in service after
September 27, 2017.
Expensing is also available. For 2018 firms can expense up to $1
million of new or used business assets. This 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.
The annual depreciation caps for passenger autos have risen sharply.
If bonus depreciation is claimed, the first-year cap is $18,000 for cars
acquired after September 27, 2017 and put into service in 2018. The
second- and-third year caps are $16,000 and $9,600. After
that…$5,760. For autos bought before September 28, 2017, but
placed in use during 2018, the first-year cap with bonus depreciation
is $16,400. If no bonus depreciation is taken, the first-year ceiling
drops sharply to $10,000.
Buyers of heavy SUVs used solely for business can write off 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 shift 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
shifting 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. This easing also applies to
partnerships and LLCs that have C corporations as owners. It’s
easier for cash-method firms to shift 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. The self-employed and owners of LLCs, S corporations and
other pass-through entities can deduct 20% of their qualified
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.