April 1, 2009 > Federal tax law changes for business returns
Federal tax law changes for business returns
Submitted By Greenstein, Rogoff, Olsen & Co., LLP
If running a business in today's economy isn't challenging enough, staying on top of changes in the tax laws will keep you on your toes.
Below are some recent changes to tax rules that may apply to your 2008 business tax return.
Increased Section 179
Some taxpayers can elect to recover all or part of the cost of certain qualifying property, up to $250,000 for 2008, by claiming a Section 179 deduction. In doing so, a taxpayer deducts depreciation up front rather than over the life of the asset. It is especially important to remember that the Section 179 deduction may be taken only on assets acquired for use in trade or business, not on property used for other income-producing activities, such as rental units. See Publication 946, How to Depreciate Property, for detailed rules on the Section 179 deduction.
50 Percent Special Depreciation Allowance
The Economic Stimulus Act of 2008 provides for a special 50 percent depreciation allowance for qualified properties of which you are the original owner and which were acquired and placed in service in 2008.
Qualified properties are:
* Tangible property depreciated under the MACRS with a recovery period of 20 years of less
* Water utility property
* Off-the-shelf computer software
* Qualified leasehold improvement property
Properties that are not qualified are:
* Property place in service and disposed of in the same tax year
* Property converted from business use to personal use in the same year it is acquired or vice versa
* Property depreciated under the alternative depreciation system
* Property included in a class of property for which you elected not to claim the special depreciation allowance
Extension Rule for Partnership, Estate, and Trust
The Internal Revenue Service has reduced the extension period from six months to five months. The reasoning behind the shorter extension time is because in the past the extended due date for both businesses and Individuals often fell on the same date Oct. 15. Having the extension time shortened by a month will ease the burden on the individual taxpayer who relies on information from Schedules K-1.
This change applies to business entities who file the following returns.
* Form 1065, U.S. Return of Partnership Income
* Form 1041, U.S. Income Tax Return for Estates & Trusts
* Form 8804, Annual Return for Partnership Withholding Tax
Late Filing Penalty
The minimum penalty for failure to file within 60 days of April 15 has increased to $135 or the balance of the tax due on your return, whichever is smaller.
For more information, visit www.groco.com or call (877) CPA-2006.