October 31, 2014

Tax Planning in Florida

Tax Advantages

Bush tax cuts will expire at the end of the year unless Congress votes to extend them. Don't count on that.

For Businesses

Steven Cutler
Steven Cutler

» Gift
If you’re the owner of a closely held or family business, you may want to give company stock or transfer an interest in the business to family members or relatives before the end of the year, when there will be a drastic reduction in the federal gift tax exemption, unless Congress votes otherwise. Depending on the type of entity and nature of the business, alternatives include giving an interest outright or moving it into a trust for your heirs. “This is something that can’t wait to the last minute. It takes time to do, and you may need business valuations,” says Steven Cutler of Hinshaw & Culbertson law firm.

Bethany Carr
Bethany Carr

» Dole Out Bonuses
Thinking of giving an employee a bonus? You may want to do it before the end of 2012 to take advantage of lower tax rates. Bethany Carr, a Sarasota CPA with Cavanaugh & Co., says a business owner will get the tax advantage even if he declares the bonus in 2012 and waits until March 15, 2013, to pay it. Even more, the employee can benefit, too, if paid in 2012. Depending on an employee’s income, he or she may pay fewer Social Security taxes on the income this year than if you give the bonuses in 2013.

» Fund a Trust
For a business owner, an important step in estate planning is choosing how you are going to transfer ownership. John G. Ebenger at Berkowitz Pollack Brant says consider transferring ownership by funding trusts to take advantage of generation-skipping transfer rules that could get tighter. The assets in a properly structured trust would be available for future generations, exempt from estate taxes. If you’re thinking about doing this, don’t delay. Proposed changes in legislation could impose more limitations in 2013.

» Buy
Tax breaks make it advantageous to business owners to make some big-ticket purchases this year. Many small and medium-sized businesses will be able to deduct their purchases of items such as machinery, equipment and furniture up to $139,000 and also have the potential for a bonus depreciation deduction of 50% of the costs. This amount is scheduled to go down to $25,000 in 2013.

» Sell
Entrepreneurs looking to sell their businesses may want to complete the deal by in 2012 and forgo installment sales treatment. Moving up a sale could help you pay fewer taxes if the tax rate on capital gains rises, as it is expected to do.

Tags: Banking & Finance, The Money Issue

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