Potential Impact on Your Business of the American Taxpayer Relief Act of 2012

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Although Congress averted many of the consequences of a possible tumble over the fiscal cliff with last-minute action, you should be aware of the potential impact on your business of the American Taxpayer Relief Act of 2012. We encourage you to review the highlights of the new law below and call us if you have any concerns about how your tax situation will change as we prepare your returns for this filing season.

Several popular business tax provisions were set to expire at the end of 2012. For example, small business expensing under Internal Revenue Code Section 179 was increased retroactive to Jan. 1, 2012, and extended through 2013. The dollar limit that can be expensed in 2012 and 2013 is $500,000 and there is a $2 million investment limit. You also can make use of the 15-year recovery period for qualified leasehold improvements, retail improvements and restaurant property until the end of 2013. 

Many other business tax benefits that had expired or were set to expire were extended through 2013, including:

  • The 50% bonus depreciation
  • The Section 41 research tax credit
  • The Work Opportunity Tax Credit for hiring veterans and other individuals who meet specific criteria
  • The 100% exclusion for gains on a sale of small business stock
  • Special tax incentives for businesses located in empowerment zones
  • Rules on S corporations making charitable donations of property

Of course, small business owners will also be affected by many of the provisions of the law governing individuals. Please refer to our article in this issue summarizing the key provisions of the 2012 Taxpayer Relief Act affecting individual tax payers.

These are just a few of the most important provisions of the new law. Contact us and we can help you understand the effect that these and other changes will have on your tax situation.

In addition to preparing your return in a way that maximizes tax advantages for your business, we are available to advise you on strategies and planning decisions that will help minimize taxes and meet your financial goals. Planning is particularly important because the law preserved several popular provisions that are set to expire at the end of this year.

Please don’t hesitate to contact us today at 281-759-1120 to schedule an appointment to begin discussing your options.