Even though the Tax Cuts and Jobs Act has been with us for nearly a year, a lot of small business owners still aren’t aware of the steps they should take between now and year-end to improve their position. By taking appropriate measures, it is possible to maximize the benefits and minimize the tax burdens under the new law.
1. Review Salary (LLC/S-Corp): A small-business client eligible for the 20 percent deduction and can maximize the potential benefit by changing the compensation structure for the shareholders under section 199A.
2. Recapturing AMT: With the new higher income limits for individuals exposed to the Alternative Minimum Tax, more taxpayers will have the opportunity to recapture the AMT paid in prior years. The AMT for the corporations has been repealed
3. Reasonable Compensation: Make sure S corporation owner’s salary meets the “reasonable compensation” standard – what they would need to pay someone else to do the job they do. If they have not taken a salary, they should do so by the end of the year.
4. Auto/Vehicle Purchase: An SUV or truck, heavier than 6,000 pounds, purchased for the business may be eligible for bonus depreciation up to 100 percent of the cost of the vehicle.
5. Cost-Segregation Study: If you have purchased or is purchasing real estate before the year-end to rent out or use in business, a cost segregation study may help in capturing the bonus depreciation on land improvements and contents of the building.