Note: Running Fridays in FromGregsHead.com, is a continuing series of tips brought to you by Greg Price. These run Saturday mornings during the BusinessMaker’s Radio Show on KPRC 950AM. Audio files can be found on the PKF Texas – Entrepreneur’s Playbook® page of the PKF Texas website.
The recently enacted 2010 Small Business Jobs Act (hereafter known as the "Act") includes an assortment of tax breaks and incentives for businesses.
Boosted deduction for start-up expenditures – The Act now allows taxpayers to deduct up to $10,000 in trade or business start-up expenditures for 2010. The amount that a business can ultimately deduct is reduced by the amount by which total startup expenditures exceed $60,000. Previously, the ceiling for start-up deductions was $5,000, subject to a $50,000 phase-out threshold.
Other items to be considered –
• The Act now allows business owners to deduct the cost of health insurance incurred in 2010 for themselves and their family members in calculating their 2010 self-employment tax.
• Cell phones are no longer considered listed property. This means that they can now be depreciated or expensed like other business property, without the onerous recordkeeping requirements of the past.
• The holding period for disposition of appreciated assets in calculating built-ins gains taxes for an S Corporation has decreased to 5 years from previously 10 years. This offers S corporations increased flexibility when evaluating whether to sell some or all of their appreciated C Corporation assets. This should be of particular importance to those taxpayers contemplating sales of their businesses at or near the 5 year anniversary of their S Corporation election.
Be sure to speak to your accounting service provider about these timely tax provisions. Tax updates from PKF Texas may be found at www.www.pkftexas.com/taxnews.