A Word to the Moneywise...
In short, this is a quick update of things that all business owners should know before the end of 2010.

Accounting Change.  All companies will be required to report capital leases in the body of their financial statements by 2013 as GAAP (“Generally Accepted Accounting Principles”) standards migrate to International Financial Reports Standards (“IFRS”).  Pursuant to this change, lease commitments will move from the footnotes section to the balance sheet, and the resulting increase in liabilities may require a review and modification of existing loan covenants.

Gift Tax. The rate of taxation imposed on the fair market value of gifts is scheduled to increase permanently in 2011.  This year's lower tax rates and the possibility that generous valuation discounts that are currently available may soon be eliminated, compel taxpayers to consider completing their taxable gifts before the end of 2010.

Return of the Estate Tax.  There is no estate tax in 2010. However, on December 31, 2010, the Bush tax cuts enacted in 2001 will expire pursuant to the terms of the original legislation.  As a result, the estate tax will again apply to decedents' estates of more than $1 million in value. With proper planning, significant reductions to the transfer taxes (estate tax, gift tax and generation skipping transfer tax) are possible, but the time to plan is now.
Accelerate Income. The year 2010 may be an exception to the general rule "never pay a dollar of tax today that you can postpone until tomorrow." Corporations and successful individuals will be faced with income tax increases in 2011, so it is worthwhile to consider accelerating income and recognizing capital gains before this December 31.

Independent Contractors.  The IRS has begun an aggressive new program that will examine thousands of companies in order to reclassify independent contractors as permanent employees wherever possible.  Being informed and prepared in advance of an examination could help many of our customers avoid some unpleasant surprises in this regard.

Small Business Jobs Act of 2010. Signed into law on September 27th, the new Act enhances and extends a number of tax incentives that were originally included in 2008 Stimulus Act and the 2009 Recovery Act.  For example, The Act extends to five years the carry-back period for qualifying small business credits determined in the taxpayer’s first tax year beginning after December 31, 2009.Also, it is important to note that some of these provisions offer taxpayers a very small window of opportunity, requiring action before the end of the year to take advantage of the savings. Get the details on this important legislation at the McConnell & Jones Knowledge Institute.

We hope that these suggestions are helpful. Still have questions? Call us. That’s what we’re here for.