Sunday, December 30, 2007

DON'T EVER DRINK FROM HOTEL GLASSES

For those of you that travel, I thought you might be interested in this link.

http://www.bestviral.com/video/6629/dont_ever_drink_from_hotel_glasses

Sunday, December 23, 2007

WHEN CAN YOU TAKE FAST DEPRECIATION ON EQUIPMENT?

Got this address on the internet........I have a general question. Would really appreciate an answer. I have a C Corp...... I am planning on buying some expensive equipment........and I can buy it in Dec 2007. The salesperson told me that this would save me a considerable amount of taxes.

Is there any reason I can't pay for it and then Section 179 the depreciation in order to offset some profit.........even if I am not yet using the equipment.

Robert


Robert, As your own personal professional tax advisor should have told you, the
Section 179 law is very specific about the new equipment needing to be purchased and placed into service during the tax year. Just prepaying for something and not actually using it in your business until the next year will not fly. Any salesperson who told you otherwise is not telling you the whole truth and cares more about his/her commission than being honest. As you apparently understand, if you meet certain criteria you can expense out $125,000 in the year of purchase. You do not need to depreciate the equipment.

The good thing is that when the items are placed into service during the year isn't relevant. Starting to use a new piece of equipment on December 31 is just as good for the Section 179 eligibility as any other date during the year, assuming it is a calendar tax year. I have a primer on the section 179 on our website that explains in detail the fast depreciation rules. Check it out for more information.

http://www.kopsaotte.com/salon/?q=node/12

It is a pleasure serving you.

Larry Kopsa CPA

Thursday, December 20, 2007

FARM BILL DELAYED

As you probably already know, the Senate approved the Farm, Nutrition, and Bioenergy Bill of 2007 (H.R. 2419) on December 14. The House, however, did not move on the Senate version of the farm bill before its holiday recess. The House and Senate will have to reconcile their bills in conference in 2008. They reportedly are close to an agreement.

H.R. 2419 includes many farm-specific tax incentives. The highlights are:


  • Giving participants in the conservation reserve program (CRP) the option to choose between a regular cash payment and a tax credit equal to the cash payment;
  • Excluding CRP tax credits from income and self-employment tax;
  • Permanently extending the Pension Protection Act’s conservation easement tax incentives;
  • Reducing the recovery period from seven to five years for certain farm machinery and equipment;
  • Creating a new 30 percent personal credit for residential wind property (capped at $400 per year);
  • Creating or extending some producer credits for biodiesel and other alternative fuels; and
  • Creating a new energy efficient motors tax credit as part of the general business credit.

    Economic substance. The farm bill, as amended by the House for PAYGO offsets, would codify the economic substance doctrine, which the courts and the IRS have used to shut down tax shelters and other abusive transactions, to offset some of its tax incentives.

    Under the bill, economic substance would be satisfied only if: (1) The transaction changes in a meaningful way (apart from federal income tax consequences) the taxpayer’s economic position; and (2) The taxpayer has a substantial non-federal tax purpose for entering into such transaction. This offset is one of the more contentious provisions to be resolved in conference committee negotiations next year.

    457 plans. Another proposed offset would allow governmental 457 plans to add a Roth contribution program to the plan. Prior legislation allowed 401(k)s to add a Roth provision.

    CCH Tax Briefing – December 20, 2007