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Financial
Dec 1, 2014

Businesses Face Year-End Planning Problems

Sponsored Content provided by Randy McIntyre - Partner, McIntyre, Paradis, Wood & Co.

We again are coming to the close of another year in which certain tax issues remain unresolved due to the mid-term elections. A good number of tax breaks expired at the end of 2013 that many had hoped would be extended. The mid-term elections put everything on hold. Some predict that Congress will act on extending some of these provisions during the lame-duck session, or may wait and do this in early 2015.

Well, you can imagine what this does for businesses trying to plan. Some of these expired provisions are:

  1. A depreciation of just 15 years, instead of 39 years, for qualified leasehold improvements, restaurant property and retail property.
     
  2. Exclusion of 100 percent of gains from the sale of qualified small business stock, instead of only a 50 percent exclusion.
     
  3. Reducing the built-in waiting period for gains on “S” corporations from 10 years to five.
     
  4. An up-front deduction of up to $ 1.80 per square foot for qualified energy-efficient property installed in a commercial building.
     
  5. Credit for builders of energy-efficient homes.
     
  6. A 50 percent bonus depreciation for qualifying new property with a MACRS recovery period of 20 years or less. (MACRS, if you aren’t familiar with the term, is the current system for calculating depreciation. It stands for Modified Accelerated Cost Recovery System.)
     
  7. The so-called “Section 179” depreciation cap, which was $500,000 for 2013, has dropped to just $25,000 for 2014. This is a deduction for either new or used business property, such as computers, furniture and equipment.
     
  8. The Work Opportunity Tax Credit for hiring workers from certain disadvantaged groups.
If the original purpose of these now-expired provisions was to provide incentives for businesses to engage in certain activities or transactions, then that idea is now dead. The extension of any or all of these provisions after the year’s end only serves now to reward those who took a chance. It is a shame that politics still prevails over the needs of the American people.

Businesses that are affected by any of these provisions will need to have a crystal ball. The additional problem is that if any of these provisions are extended now, the filing of tax returns may be delayed until the IRS and tax software vendors can reconfigure their programs to comply.

It’s a fair question whether all these delays and uncertainties create a bigger drag on the economy than the boost the expired provisions were meant to provide. What’s certain is that such uncertainty can’t be good for business.

Randy McIntyre is a Certified Public Accountant and a partner in McIntyre, Paradis, Wood & Company, CPAs. He has worked in public accounting since 1977, in Wilmington since 1992. His firm is built on a history of service, technical expertise, and innovative to provide the expertise of larger firms with a personal, one-on-one approach. To learn more about McIntyre, Paradis, Wood & Company, see www.mpwcpas.com. He can be reached at [email protected] or 910-793-1181.

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