June, 2008

Extra Depreciation in ‘08

Most people know about the “Economic Stimulus Package” $600 checks the IRS is sending out to many taxpayers (You have to file the ’07 return before they’ll start processing your check.) What hasn’t received the attention it deserves is the boost to Section 179 and Bonus Depreciation for 2008 only.

Prior to the new legislation, Section 179 accelerated depreciation allowed up to $128,000 with the upper limit of Section 179 asset purchases at $510,000 (when the allowed deduction reduces dollar for dollar that you spend over $510,000).

After the legislation (and again, ONLY FOR 2008) the Section 179 can be up to $250,000 with the upper limit of assets purchased of $800,000.

Further, there’s another 50% of Bonus Depreciation for most assets with lives up to 20-years, so computers, furniture, goats, etc.

So in theory, if you buy $800,000 of goats in 2008, you could take:
$250,000 of Section 179 Depreciation
$275,000 of Bonus Depreciation ($800k-250k) x 50%
$55,000 of Regular 5 year Depreciation (20% of (800,000-250,000-275,000))
$580,000 total depreciation in ’08.

That’s a lot of goats, and a lot of depreciation!

Vehicles remain more limited than other assets. The maximum for a ‘sit down’ vehicle is $2,960, but you can go up to $10,960 if you qualify for the Bonus Depreciation (limits for a ‘step up’ vehicle are $3,160 and $11,160 with Bonus Depreciation). So you won’t see quite the results as you will with the goats. These limits are total depreciation regardless of Section 179, that’s all you get.As always, Section 179 requires the purchase of new properties, not just ‘new to you,’ and is mostly for tangible personal property, not real estate or patents, used in the US, etc.

Employer provided Vehicle can use Cents-Per-Mile if under $15,000

If your corporation provides a vehicle for it’s employees who drive at least a bit personally, this is income to the employee. The question has been how to value the personal portion. The IRS says that for 2008, you can use the cents per mile method (currently $0.505/mile for ’08) to make that decision IF the vehicle value does not exceed $15,000 when the employee starts using it. ($15,900 for the ‘step up’ vehicle). You can read more about this in Publication 15-B, Employers Tax Guide to Fringe Benefits (page 20) http://www.irs.gov/pub/irs-pdf/p15b.pdf.

Classes – Basic Payroll, Schedule C and For the Tax Professional

In conjunction with the IRS and EDD, Andy's going to be doing some Basic Payroll seminars coming up in the near future.

Basic Payroll: Seminar runs 9 am – 3 pm with an hour for lunch

Practical Example with completed forms for sample company.

The next seminar will be
Basic Payroll in San Rafael is presented at 120 North Redwood Drive, 2nd floor, Redwood Room on June 12th. http://www.edd.ca.gov/taxsem/txsemrs.asp?SemID=314

Basic Payroll in Oakland
June 18th http://www.edd.ca.gov/taxsem/txsemrs.asp?SemID=3133

Basic Payroll in San Francisco will be at the SBA office at 455 Market Street, 6th floor:
July 23rd at http://www.edd.ca.gov/taxsem/txsemrs.asp?SemID=3229

These seminars have proven to be very popular, plus they’re free.

How to Prepare your Own Schedule C
Prepare your business taxes for ’07 and get ready for ‘08. Review what the IRS wants to know from you and how to report it on the Schedule C for your business. This is a class for business owners who need a basic understanding of their 1040 Schedule C tax forms. We’ll also talk about what to do with the numbers once you have them. We can’t guarantee you won’t get audited, but this class will make it less likely.

Andy will be at the US Small Business Administration offices in San Francisco at 455 Market Street, 6th Floor July 14th, 6-8:30 pm. This class will be free. http://web.sba.gov/calendar/public/index.cfm?grp=13&op=group (link should be active by 5/16)

Andy will also present this class June 9th at the WISE offices in Oakland. WISE charges a nominal fee. Contact for more info.

For the Tax Professional:

A new class “Basis” is scheduled for Saturday, July 12h for 4 hours of CPE in Lafayette, 9 am to 1 pm. We’ll try to be at the same address as last November’s S Corp class at 100 Lafayette Circle, but we’re exploring a larger room on the second floor of the same building. Look for our Tax Buddha sandwich board sign (better yet, sign up early so we’ll know which room to book!).

Cost will be $100 and we’ll cover basic principles of Basis and apply them to examples such as Auto trade-ins and 1031 real estate exchanges. An order form is available by request, and should be posted to the web site by mid-June. E-mail with the subject “Basis” for an order form.

S-Corporations Part 1: Getting in and Staying in, along with the NEW Part 2: Staying in and Getting Out are scheduled for November in Lafayette, dates and location yet to be determined.

For Relaxation and Clear Thinking: On The Spot

To carry you through the summer, we recommend meditation and that you check out On The Spot Massage at http://www.onthespotmassage.com/corporate.html to help you relax. A relaxed mind is a clear thinking mind. Makes an excellent gift for your tax preparer or other important person in your life.

The Next Product

“The 8-Fold Path to Paying Less Tax and Avoid an Audit” is a booklet for people already in business who need to know what they need to know to stay out of trouble while maximizing their after-tax profit.

Release date is still pending.

New Phone and Fax Numbers

We have moved our office to a shared commercial space in Alameda (the Berkeley address is a PMB) and have new numbers. The old numbers still forward, but AT&T gets a fee for each call forwarded. New numbers are:
Phone (510) 522-2300
Fax (510) 522-2307