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Business in the Islands Gets a Boost

Author: Keith Huggett 

Continuing our travels through the Taxpayer Relief Act of 2012, we head to the the big state of New York and the islands of American Samoa and San Juan, before we return to the states to visit mining country.

In New York City, the Taxpayer Relief Act extends the time allowed for issuing bonds for the New York Liberty Zone. The New York Liberty Zone is an area around the site of the World Trade Center, on or south of Canal Street, East Broadway (east of its intersection with Canal Street), or Grand Street (east of its intersection with East Broadway) in the Borough of Manhattan in the City of New York. The purpose of these bonds is to help boost areas originally damaged back on that fateful day in 2001.

In American Samoa, the Act has extended and modified the credit allowing for income from active business operations earned through tax years beginning before January 1, 2014 and now makes it available to all qualifying manuafacturing businesses operating in American Samoa.

In Puerto Rico, the Act extends for two years, through tax years beginning before January 1, 2014, the provision extending the section 199 domestic production activities deduction. From January 1, 1012 through December 31, 2013, The provision for paying $13.25 per gallon to cover over a $13.50 per proof gallon excise tax on distilled spirits imported into the United States from Puerto Rico and the Virgin Islands has been retroactively extended.

And, finally, back in mining country, for tax years beginning after December 31, 2011 through tax years beginning before January 1, 2014, the credit for the training of mine rescue teams has been retroactively extended. The Act also extends for two years retroactively from January 1, 2012 through December 31, 2013 the provision that provides businesses with 50% bonus depreciation for certain qualified underground mine safety equipment.

These may not seem like big improvements to all of us, yet to someone in that particular field, it may seem like a great deal, or maybe just a small handout from the government, given to make peace. In a country as big as ours, with demands left and right it has to be hard to keep everyone happy.

Should you have any questions about your taxes, and how the Taxpayer Relief Act has an impact on you, please contact us. The Tax Office Inc., specializes in pro-active tax planning, tax preparation, tax representation, and many other services.

How the Relief Act is Working for Businesses, Part 2

Author: Keith Huggett 

In continuation of our series on the American Taxpayer Relief Act of 2012, we are discussing the extensions made solely for businesses. Out of the thirty one provisions made, we have covered a total of six.  In this article we will be covering another five provisions having to do with industries for 2012 through 2014.

• For Regulated Investment Companies, treatment of certain dividends have been modified. For tax years beginning after December 31, 2011, through tax years ending before December 31, 2014, a provision allowing a regulated investment company (RIC) under certain circumstances, to designate all or a portion of certain dividends as an "interest-related dividend" or a "short-term capital gain dividend."  

• The Act also extends retroactively from January 1, 2012 through December 31, 2013 the inclusion of a RIC within the definition of a "qualified investment entity" under the Foreign Investment in Real Property Act (FIRPTA) rules.

• The Act extends retroactively from January 1, 2012 through December 31, 2013, the special rules for interest, rents, royalties and annuities received by a tax-exempt entity from a controlled entity.

• The Research and Development Creat has been reinstated retroactively from January 1, 2012 through December 31, 2012. The Act also modifies rules for taxpayers under common control and rules for computing the credit when a portion of a trade or business changes hands.

• Empowerment Zones were extended for two years, through December 31, 2013.  Businesses and individual residents within "empowerment zones" are eligible for special tax incentives. An "empowerment zone" is an area of certain economical depressed census tracts.

There are twenty-two additional provisions which will be covered in future articles. We hope you will look for them.

As tax laws change, we all need to adjust with them. Pro-active tax planning is the key to keeping ahead, or even abreast of the rapid changes. The specialists at The Tax Office Inc., are there, to help you with your tax planning, tax preparation, or just answering any questions you may have about the new tax laws. Contact us today.

How The Relief Act is Working for Business, Part One

Author: Keith Huggett 

The Taxpayer Relief Act had a lot more of an effect on business than just affecting the payroll department. In total there were thirty-one General Business Provisions made in the Act.  This list does not include the additional provisions made for Unemployment, Energy, Healthcare, or other departments.

This series of articles will cover the Business Provisions in increments of five - six at a time, as the information is daunting and important to reflect upon as it applies to your business. Each provision will not apply to every business out there, however they are all important on their own.

• The Work Opportunity Tax Credit (WOTC) was extended for individuals who began to work for their employers prior to January 1, 2014.  The WOTC allows employers who hire qualified veterans to get a credit against income tax by using Form 5884 of a percentage of a specified amount of first-year wages. The qualified veterans must belong to a targeted group which include qualified recipients of aid to families with dependent children, qualified ex-felons, former "high-risk youths", vocational rehabilitation referrals, qualified summer youth employees, qualified food stamp recipients, qualified SSI recipients, hong-term family assistance recipients, certain unemployed veterans, and certain disconnected youths.
  
  
• The New Markets Credit has been extended through 2013 to allow a maximum annual amount of $3.5 billion per year of qualified equity investments to acquire stock in a community development entity (CDE). A CDE is any domestic corporation or partnership whose primary mission is servicing or providing investment capital for low-income communities or low-income persons, that maintained accountability to residents of low-income communities through representation on governing or advisory boards of the CDE, and was certified by the Treasury as an eligible CDE.
  
  
• The cost recovery period for depreciation of certain real property improvements: restaurants, leaseholds, and/or retail stores, that have been placed into service prior to January 1, 2014 has been retroactively extended from January 1, 2012 through December 31, 2013.
  
  
• New rules have been created for qualified small business stock. The Act extends the 100% exclusion of gain from the sale of qualified small business stock to qualified stock purchased after December 31, 2011 and prior to January 1, 2014 and held for more than 5 years.
  
  
• There has been a reduction in the S corporation recognition period of built-in gains tax. The extension reduces the five year holding period for sales in tax years beginning in 2012 and 2013.  The Act also clarifies the rules regarding carryforwards and installment sales.
  
  
• Special rules for S corporations making charitable donations of property were also created by the Act. It allows that for tax years beginning after December 31, 2011 through January 1, 2014, S Corporation shareholders can take into account their pro-rata share of charitable deductions even if those deductions would exceed the shareholder's adjusted basis in the S corporation.

Additional modifications to business credits will follow in upcoming articles. Be sure to check for them in the next weeks.

Each adjustment to the tax law applies to businesses differently depending on your business structure, your investments, and your business plan.  The tax professionals at The Tax Office, Inc. are available to answer any questions you may have regarding how the recent changes in tax law may affect your personal or business taxes.