Quick Hits: 2009 Tax Planning Tips

Here are four tax planning issues you should address as part of your 2009 tax planning:

Bonus depreciation: Your company can get first-year 50% depreciation of the cost of new equipment purchased and put into service during 2009.  The “bonus” is in addition to normal depreciation and deductions available under Section 179. It applies to purchases of new tangible personal property used in a business. If you need new equipment, it would be to your company’s advantage to purchase and take title to the equipment before the end of 2009.

Section 179 Depreciation Deduction: The Section 179 deduction has been increased to $250,000 for qualifying property placed in service in this year. This deduction allows you to depreciate an asset in total in 2009.

(Note: The Associated Equipment Distributors has a good on-line calculator that demonstrates the benefits of accelerated depreciation.)

Net operating loss carryback: In November 2009 the In November the president signed legislation to help companies raise cash and save on taxes if they have current operating losses. The net operating loss carryback provision was expanded to allow any size company to carry back losses incurred in either 2008 or 2009 against income earned in any of the five prior years.

Pending tax increases: Tax rates are going up as Bush tax cuts expire. Top individual income tax rates, currently 33% and 35%, will likely roll back to their 2000 levels of 36% and 39.6%. And top capital gains rates will likely rise from 15% to 20%. If your income is in a top bracket then you should consider taking capital gains in 2009.