| One of the biggest mistakes made by business | | | | taxpayer's situation and goals. |
| owners and real estate investors is waiting until it is too | | | | 2. Development of a strategic tax plan to minimize the |
| late to assess the tax impact of your business income | | | | current and future tax liabilities. |
| and real estate transactions. There are several | | | | 3. Preparation of a tax projection which incorporates |
| reasons for this: | | | | the strategic tax plan. |
| | | | 4. Implementation of the strategic tax plan. |
| 1. The tax laws are complicated and change | | | | 5. Ensuring that the taxpayer has made sufficient tax |
| constantly. | | | | payments to avoid a tax penalty. |
| 2. Taxpayers often fear an IRS audit if they | | | | There are numerous tax planning strategies available |
| aggressively pursue tax savings. | | | | which can be used depending on your unique situation. |
| 3. Taxpayers often do not think about their taxes until | | | | The following is a brief description of some of the |
| the filing deadline is imminent. | | | | most common: |
| However, taxpayers only need remember that the | | | | |
| Internal Revenue Service only requires you to pay the | | | | 1. Deductibility of qualified business expenses paid at |
| amount of tax you owe under the current regulations | | | | year-end in advance for the following year. A business |
| and NOT A PENNY MORE! There are numerous tax | | | | check is considered payment in the year in which you |
| court cases where judges have noted that it is the | | | | mail or deliver it as long as no restrictions on it apply. In |
| taxpayer's right and obligation to reduce their taxes to | | | | addition, a bank credit card can be used to pay such |
| the minimum amount due as long as they are in | | | | expenses even if the card balance is not paid off until |
| compliance with the tax code. | | | | the following year. |
| There are several factors to consider when | | | | 2. Purchases of needed business fixed assets such as |
| developing a tax strategy for each business owner or | | | | furniture, machinery and equipment and business-use |
| real estate investor's unique situation. Tax strategies | | | | vehicles can lead to either a complete write-off of the |
| that provide the most benefit should take into account | | | | cost of such equipment in the current year using |
| the following: | | | | Section 179 of the IRS code assuming the business |
| | | | has sufficient income or at a minimum, bonus |
| 1. How does the timing of a transaction impact the | | | | depreciation on fixed asset purchases no matter what |
| situation? | | | | the business income is. The 2007 Section 179 |
| 2. What options are available to minimize your taxable | | | | deduction is $108,000 for qualified asset purchases. |
| income? | | | | 3. Funding of tax deferred IRAs, SEPs and 401(k) |
| 3. Can you defer taxable income or tax payments | | | | programs to defer the amount of taxable income and |
| without incurring a penalty? | | | | help fund your retirement. |
| 4. What is your marginal tax rate and how does a | | | | 4. Use of Section 1031 to defer gains on real estate |
| given transaction affect that rate? | | | | held for investment purposes. |
| 5. Do we have the ability to match high income with | | | | And there are many more depending on your unique |
| high expense? | | | | tax situation and goals! |
| 6. What is the effect of long term versus short term | | | | In order to take advantage of the benefits and savings |
| holding periods? | | | | that await you, you must have a plan that takes into |
| While each taxpayers situation is unique, tax planning | | | | account your unique situation. DON'T |
| basically consists of the following steps: | | | | PROCRASTINATE. CONTACT A TAX ADVISOR |
| | | | TODAY!! |
| 1. Analyzing and obtaining an understanding of the | | | | |