What Business Tax Breaks Can I Take in 2009?

Question: What Business Tax Breaks Can I Take in 2009?

The IRS reminds us that it has some special tax breaks for small businesses that run only through 2009, in most cases. Check with your tax adviser to see if you qualify for any of these tax breaks:

Answer:

Accelerated Depreciation
The ability to accelerate depreciation increases your depreciation deductions and reduces taxes. Two special features of the 2008 stimulus package are available only through the end of 2009:

• Bonus Depreciation. You may be able to take advantage of the 50% bonus depreciation on qualified business property purchased in 2009.
  
• Section 179 Depreciation Deduction. The Section 179 deduction has been increased through 2009, up to $250,000 for machinery, equipment, vehicles, furniture and other qualifying property placed in service in this year. A Section 179 deduction allows you to depreciate an item in one year, rather than over several years, increasing your tax deduction for that year.

Net Operating Loss Carry back
If you had an operating loss in 2008, you can take advantage of the special provisions at this time to carry back the loss over five years instead of the usual two. So, if your business was profitable in the past, you may be able to get a tax refund if you had a loss in 2008. If your corporation operates on a calendar year basis, you must file your claim by Sept. 15, 2009. For eligible individual tax returns for sole proprietorships, the deadline is Oct. 15, 2009. Use Form 1045 to file a claim for an individual tax return; corporations use Form 1139.

Exclusion of Gain on Sale of Small Business Stock
Shareholders in your small business can exclude 75 percent of the gain on the sale of their stock, for stock acquired after February 17, 2009, and before January 1, 2001, and if the stock is held for more than five years. The exclusion was previously 50%.

Paying Estimated Tax
Small business owners must pay estimated taxes on the profits of their businesses, but this year you may not have to pay as much. The IRS says you may be able to defer a larger portion of your estimated taxes to the end of the year, and to pay only 90% of your estimated tax bill for 2009 instead of 100%. For eligibility and other information, refer to IRS Publication 505.

COBRA Subsidy
If you are providing the COBRA subsidy to any former employees, the IRS reminds you that you may reduce your employment tax deposits by this amount.