Returning Value Blog

As 2015 draws to a close, the time to consider tax-saving opportunities for you and/or your business is before year-end. Individual income taxes, whether paid through employer withholding or quarterly estimates, are probably one of your largest annual expenditures. You may want to consider opportunities to reduce or defer your annual tax obligation. Also, if you own a business, some opportunities for your business may apply regardless of whether your business is conducted as a sole proprietorship, partnership, limited liability company, S corporation, or regular corporation. Other opportunities may apply only to a particular type of business organization. These Tax Planning Letters are intended to assist you in your individual and business tax planning efforts.

Don’t think that year-end tax planning is strictly limited to individuals. A calendar-year business can also keep taxes for 2015 to the bare minimum with some astute planning at the end of the year. Here are five techniques for consideration by small-business owners.

As the summer months wind down, year-end tax planning will become a hot topic for many client service professionals. Whether it’s the closely held business owner or a high-net-worth individual, income taxes represent a significant outflow for our clients. With top rates of 39.6% on ordinary income, 20% for long-term capital gains plus a 3.8% Net Investment Income Tax (NIIT), our tax environment requires us to find favorable opportunities that generate tax savings for clients. If not already addressed on a regular basis, year-end planning is the last chance to evaluate opportunities before the year comes to a close. As conversations begin to shift toward year-end planning, here are a few strategies to consider.

A real estate owner may be contemplating the renovation of an older building in a historic part of town or a place that otherwise has historical implications. Fortunately, the federal tax law provides some incentives. Before you start tearing down walls and putting up a new façade, follow the steps for having the building certified as a historic structure. The payoff is a tax credit—a dollar-for-dollar reduction of your tax bill—equal to 20% of the renovation costs.

Enacted in 2004, the American Jobs Creation Act included a tax relief provision for domestic manufacturers with the intent of stimulating manufacturing activity in the U.S.

Until recently, software development and manufacturing have been very different industries. Under the recent Internal Revenue Code Section 199, Domestic Production Activity Deduction (DPAD), these industries may be meeting the same definition. This could mean a significant permanent tax deduction for software developers.

Although the government has chipped away at some of the biggest tax shelters for individuals, at least one solid foundation is still standing: your home. During the period when you own a home, it can be a source of valuable tax deductions for mortgage interest and property taxes. Even better, if you sell the home at a huge profit, you may be able to pocket all or most of the gain from the sale—tax-free.

Enhancement limit for 2014, reduction for 2015

For small-business owners who frequently buy new equipment and other assets for their business activities, the new tax law enacted at the end of 2014—the Tax Increase Prevention Act (TIPA)—provides a temporary reprieve. Signed on December 19, 2014, TIPA extended a Section 179 deduction retroactive to January 1, 2014. But this provision expired—again—on December 31, 2014. As things now stand, the maximum deduction will fall precipitously in 2015 unless Congress takes further action.

You may think that the company you created will last forever, especially if it's a family business with siblings or children involved in its operation. But statistics say otherwise.