Posts Tagged ‘capital gains taxes’
Leasing Incentives for Small Business Growth
The key to economic growth and productivity is the ability for businesses – particularly small businesses – to invest in needed equipment. Thanks to the recent passing of the Small Business Jobs and Credit Act of 2010, these businesses can insure their working capital remains accessible through leasing the equipment they need to not only stay afloat through these lean times but also help them expand and grow.
The Small Business Jobs and Credit Act increases the amount of investments that businesses would be eligible to immediately write for 2010 and 2011-from $250,000 to $500,000. Before this bill passed, the expense limit would have been only $25,000 next year.
This act temporarily eliminates all capital gains taxes on investments if held for five years. The bill would allow certain small businesses to “carry back” their general business credits to offset five years of taxes-providing them with a break on their taxes for this year-while also allowing these credits to offset the Alternative Minimum Tax.
Some of the highlights of the bill include:
* Higher SBA loan limits: from $2 million to $5 million; and 504 loans rise from a maximum of $1.5 million to $5.5 million. Loan fees for these stay gone for the 2010 tax year.
* A write-off of up to $10,000 of start-up expenses for new businesses.
* A business can take any credits their business has and apply them against any of the previous five years of this bill, as does Section 179 expense of up to $500,000 in the year of purchasing business equipment.
Small businesses that need tax deductions will certainly have more incentive to use bargain purchase option leases in lieu of this bill; particularly the right to “carry back” losses for five years.
The Value of Gifts in Estate Planning
Making sure your estate is not subject to federal estate taxes is a primary goal in estate planning. Gifts are a valuable tool to ensure your estate does not exceed the minimum amounts exempt from estate taxes. However, use of gifts without careful planning may create additional problems.
Even though gifts may be beneficial it is important to understand the potential pitfalls. A few possible issues to watch for may include:
Gift may triggering other taxes
Gift may alter recipient’s status for current support
Loss of property to you
Using gifts to avoid estate taxes may have other tax implications. It is important to make sure your gift falls within one of the exceptions to the federal gift tax. Also it is important to understand giving a gift that has appreciated in value may leave the recipient paying capital gains taxes. If the purpose of your gift is to avoid taxes then it is important to look at the big picture.
Another concern to understand is how a gift can affect the recipients eligibility for financial and medical assistance. A gift may cause a students to lose financial aid, a person with special needs to lose financial and medical assistance, or a person classified as low income to lose benefits such as Medicare. A gift may be given with the best intentions, but without proper planning it may actually cause more harm than help.
Lastly I would urge you to understand the affect giving a gift may have on you. You may be giving away property that ensures your financial security. In addition you will surrender control of property that may have sentimental value. A gift to a child may seem natural way top honor the sentimental value, but there is no guarantee the property will not be sold or re-gifted later. It is important to understand when you give a gift you are giving up control of the property.