With the completion of the September 15th tax due date for businesses who requested an extension in March, attention should turn to tax planning as year end approaches. There are a few strategies that can make a substantial difference at tax time:
Cost Segregation. Has your company built any new assets this year? What portion of the building project can be separated from the building itself to recover the greatest potential tax effect in the shortest time frame? Permanent structures must generally be written off (depreciated) over a period of 39 years. Non permanent or “personal” property can be depreciated over a period of 5, 7 or 15 years providing a stronger immediate tax break.
Section 199 Deduction Activities. If your business manufactures any type of products “in whole, or in significant part” here in the US, you may be eligible for an additional deduction under section 199 of the US tax code. The deduction could be as high as the lesser of:
- 9% of Taxable Income
- 9% of Qualified Production Activities Income (QPAI) or
- 50% of W-2 Wages
Cost Allocation. It is always important to improve the efficiency and accuracy of internal systems that track and account for production, materials, labor and distribution so that an experienced tax attorney can help you to reduce the taxible basis of products you create and services you provide. In one example, we found a client who was shrink wrapping materials prior to shipment to a job site, and by simply re-structuring the accounting of materials we were able to reclassify the cost of the shrink wrap and generate a substantial tax savings for our client.
Are you searching for ways to maximize the tax deductions your business may legitimately claim for 2015? We invite you to contact us for a free consultation at 866-631-3470.
