Year-End Planning for Businesses

December 13, 2017 by Jeremy Rufsvold
Copeland Buhl

Unfortunately, as of this writing, there is no new tax law to discuss.  While both the House and Senate versions have some interesting proposals, until something is signed into law, it’s difficult to plan for all the possible outcomes of the proposals.  That said, here are some strategies that are worth considering before year end:

-If you are a cash basis business, per usual, determine whether some expenses should be paid prior to December 31 to get the deduction in 2017.

-Have you completed significant repairs or improvements to your fixed assets?  Consider talking with us now for guidance on what needs to be capitalized and what can be expensed.

-Do you have a new building?  Consider segregating costs into different classes of assets to accelerate the depreciation expense when applicable.  We can help determine what costs qualify for shorter depreciation lives, thereby increasing the amount of depreciation deduction this year.

-If you have income and are considering buying fixed assets before year end, the PATH Act made permanent the Code Section 179 expensing limit of $500,000.  Passenger autos and SUVs have separate rules, but general machinery and equipment are eligible.

-The PATH Act made the research credit permanent.  If you are developing new or improved products, processes or formulas (not just as a manufacturer), consider if an R&D study would benefit you.  Many types of businesses qualify for the credit, including architecture, banking, engineering, insurance, and telecommunications.

-Depending on the outcome of proposed tax legislation, S Corporations may need to analyze whether it makes sense to change entity status.  Converting to a C Corporation could make sense in a world where the tax rate on pass-through entities is significantly higher than the rate for traditional corporations.

We are watching the tax proposals closely, and when new legislation is passed we will communicate the relevant highlights to you.

Please feel free to contact me at 952-476-7134 or if you have any further questions.