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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.