“Fiscal cliff” deal keeps tax breaks for business



More than 50 temporary tax breaks survive in new legislation



With the media’s attention focused on government spending and personal tax rates, the story of temporary tax incentives for small business went mostly unmentioned. However, for business owners, the story has a happy ending with the extension of provisions that were also on the table. Notable ones include:

 

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SECTION 179 EXPENSING REMAINS AT $500,000



This provision allows small companies to fully expense many investments in one year, rather than over five or more. The limit grew to $500,000 in 2010 and 2011 but was set to fall to $139,000 in 2012 and $25,000 in 2013. The new law extends the $500,000 limit through 2012 and 2013, and pushes the $25,000 cap to 2014. “Qualifying assets” will continue to include computer software.



BONUS DEPRECIATION EXTENDED

The special depreciation allowance that allows businesses to write off 50% – and sometimes more – of certain investments in the first year is still available. This provision would have expired at the end of 2012, but is extended through the end of 2013. In some cases, it will extend through 2014.



 

WORK OPPORTUNITY TAX CREDITS

Employers can receive tax credits for hiring military veterans or people belonging to certain disadvantaged groups, like those who receive government assistance or who live in distressed areas. Tax credits for hiring the disadvantaged expired in 2011 and at the end 2012 for hiring veterans. Both are extended through 2013.



DEPRECIATE SOONER NOT LATER

The provision allowing business owners to take depreciation for qualified improvements to leasehold, retail or restaurant property in 15 years rather than over 39 years has been extended through 2013.



 

TALK TO YOUR FINANCIAL OR TAX ADVISOR

These are only a few of the advantages in the new tax legislation. To learn how these may apply to your business and about others not mentioned here, talk to your professional advisors.

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The information contained herein has been obtained from sources considered reliable, but we do not guarantee that the foregoing material is accurate or complete.



Material prepared by Raymond James for use by its financial advisors.



 

Investment products are: Not FDIC/NCUA insured. Not bank guaranteed. Subject to risk and may lose value. Not a deposit. Not insured by any government agency.