WHAT'S NEW?

Friday, October 22, 2004

As I've mentined in a previous e-mail, the House and Senate passed a sweeping tax reform bill for business a couple weeks back. It's been on the Pres' desk, and he signed it into law this morning. Lots of provisions, lots of goodies. here are some of the highlights i see for some of my clients.

DEPRECIATION....... the write-off (recovery) period for construction and improvements for property you rent in
your business has been shorted from 40 years to 15 . that'll help.

S CORPS.......... the 75 shareholder limit has been increased to 100. ( they're trying to make it easier to qualfiy)

BUSINESS EXPENSING................. the annual $102k limit on expensing ( writing off) business equipment was set to expire at the end of 2005. It's been extended to 2007. What this means is that if you're planning to open or buy more equipment ( not construction) in the next couple of years, you will continue to be able to take advantage of the higher write off limits.

SALES TAX DEDUCTION............ the law used to allow write-offs for sales taxes. then it was taken away. now it's back, but most often only for those in states that don't have state income tax ( in CA, there is a tax, so this will not affect most CA residents) You will get to write off the larger of your sales taxes paid for the year, or your state inc tax. in most cases, CA state income tax will be larger.
You won't need to keep specific receipts: prescribed irs tables can be used as estimates.

LEGAL FEES............. legal fees paid in connection with settlement of discrimination law suits will be deductible. previously, the amount that could be deducted was limited. this law is effective for suits settled after today.

SUV'S...............previously, up to $102k of the purchase could be written off in the year of purchase. that's been scaled back to $25k. ( still not a bad deal!)
There are many other provsions, but these are some off the top i thought would be of immediate interest to some of you. I'll go thru the actual bill, and as i find more relevant information, i'll send out updates.

and if you're interested in a little late-nite reading, here's the actual text. you can scan down a (relatively) easy-to-read table of contents, and if there's something that catches your eye, click on it, and the full text will come up.

http://thomas.loc.gov/cgi-bin/query/D?c108:6:./temp/~c108UNIivC::

if you have questions, please let me know.

thanks.
glenn

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