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Steve Ball and Scott Handwerger of Gross Mendelsohn's Construction Consulting Group discuss how new tax legislation could impact your construction business. Learn valuable ways to maximize your tax savings for 2010.
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Year End Tax Strategy for the Contractor
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Presenters
Steve Ball, CPA, CVA, CCIFP Scott Handwerger, CPA
• Using the right long-term accounting method can defer contract profits and the associated taxes.
• Small Business Jobs Act of 2010• Small Contractor Exemption
Accounting Methods
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American Recovery and Reinvestment Act of 2009
Small Business Jobs Act of 2010
• Many small businesses report income on the accrual method, which generally accelerates income, when they could use the cash method of reporting for tax purposes.
Cash vs. Accrual Methods
• Create a fixed asset purchase strategy that will minimize taxes.
• 50% bonus depreciation extended into 2010.• Bonus depreciation for 2011 will likely be
increased to 100%.
Expensing Assets vs. Depreciation
• This provides for faster write-off of buildings used in a business by segregating the cost into smaller components, and using a shorter tax depreciation life for items specific to the use of the building and not merely a structural component.
Cost Segregation Studies For Real Property
• Certain contractors are allowed a deduction based on their profits. Careful planning can maximize this tax benefit.
Production Deduction
• This came about because of a law change regarding the deductibility of assets that have a useful life of one year or less.
Deduction Of Prepaid Expenses That Meet Certain Criteria
• Taking distributions versus drawing a salary for the owners of the business can save payroll taxes.
Payroll Taxes
• The right retirement plan can reduce current taxes and create a comfortable retirement for the owner.
Contributions To Qualified Retirement Plans
• Employee Stock Ownership Plans are gaining popularity as a tax-advantaged exit strategy for retiring business owners.
ESOPs For Retiring Owners
• Includes 5-year NOL carry back for losses in 2009, irrespective of size of company.
Worker, Homeownership, and Business Act of 2009
• No AGI limit on traditional IRA rollovers to Roth IRA in 2010. Tax can be deferred until 2011 and 2012.
IRA Rollovers
• Always consider the impact of the AMT in tax planning.
Beware Of The Alternative Minimum Tax
Questions?
Bill Reading
[email protected] | 410.900.1385 | www.gma-consult.com
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