Tax update 2010: Save money now
Uncover new tax provisions that could save your veterinary practice money -- and help you afford that new equipment you've been eyeing.
As you get ready to say goodbye to 2010, don’t forget to say hello to some new tax laws that just might bring a smile to your face. The Small Business Jobs Act of 2010 contains a number of provisions that could save you money—or ease the burden of a new purchase. Let’s take a look and see what’s in it for you.
Click through the following pages for your top tax tips for 2010.
If in 2010 you ...
Bought a new vehicle
And ...
You use it for work more than 50 percent of the time
Then ...
Enjoy an increased depreciation limit of up to $8,000.
If in 2010 you ...
Want to depreciate equipment
And ...
The equipment was bought and used this year
Then ...
Use the current-but temporary-50 percent bonus first-year depreciation.
Benefits
This exceeds normal depreciation, but isn't quite as good as the section 179 deduction.
If in 2010 you ...
Made leasehold improvements
And ...
The building has been in service for three years or more
Then ...
Use a section 179 expensing election up to $250,000 of leasehold improvements in tax years beginning in 2010 and 2011.
Benefits
You receive a tax deduction for improvements to a building you don’t own.
Warning!
Not all states will recognize these limits for state tax purposes.
If in 2010 you ...
Own your practice as a C corporation
And ...
Are subject to double taxation upon sale
Then ...
If you converted from a C corporation to an S corporation, you can avoid the built-in gains tax with a seven-year wait in 2010 and a five-year wait in 2011.
Benefits
The previous wait period was 10 years to avoid double taxation.
Warning!
The wait period will revert back to 10 years after 2011, barring any further action by Congress.
If in 2010 you ...
Bought or plan to buy equipment
Then ...
Buy and expense fixed-asset purchases of up to $500,000 in tax years 2010 and 2011. This section 179 deduction phases out as you approach a total $2 million.
Benefits
Amounts were scheduled to revert to $25,000 and phase out as you approach $200,000.
Warning!
Not all states will recognize these limits for state tax purposes.
If in 2010 you ...
Own a practice as a sole proprietorship, general partnership, or LLC
Then ...
Deduct the cost of health insurance when computing self-employment taxes. If you're under the FICA limit, the tax savings will be 15.3 percent of the health insurance costs; if you're over, 2.9 percent.
Benefits
This reduces your self-employment tax.
Warning!
The deduction provides relief only for 2010.
If in 2010 you ...
Started a new practice
Then ...
Deduct your startup expenses up to an increased limit of $10,000.
Benefits
You will not have to amortize these costs over a five-year period.
Warning!
This phases out as you exceed $60,000.
As always, it’s important to discuss these new tax laws with your tax advisor to determine how they’ll affect you and your practice. So meet with your advisor now to prepare for April 15 and help you to take full advantage of the many tax opportunities available this year.
Gary Glassman, CPA, is a Veterinary Economics Editorial Advisory Board member and a partner with Burzenski and Co. PC in East Haven, Conn. Please send questions or comments to ve@advanstar.com
