US Firms Should Plan Now To Benefit From Recent Changes In Tax Law

by Leroy Baker, Tax-News.com, New York

29 November 2004

US businesses should start planning now in order to take advantage of tax law changes brought about by the American Jobs Creation Act, and tax relief provisions in legislation passed in 2003, according to accounting firm Grant Thornton.

“Recent changes in the law have made tax planning more challenging than ever, but there are a number of steps taxpayers can take before year end to minimize their tax burden and maximize their savings,” observed Mel Schwarz, legislative affairs director at Grant Thornton’s National Tax Office.

According to Mr Schwarz, businesses should seek to take advantage of recent legislative developments in three key areas, including:

Bonus Depreciation

The 50% write-off for new assets was not extended in the American Jobs Creation Act, and is generally set to expire at the end of 2004. Therefore, taxpayers must ensure that they purchase new assets, and be ready to use them, before 2005.

Alternative Minimum Tax

With AMT continuing to adversely affect more middle class households, sole proprietors and other small business owners who report income from their business directly on their individual tax returns are advised to consider their individual AMT positions in determining what year end strategies to pursue.

New Tax Laws

Many incentives in the recently enacted American Jobs Creation Act are either already effective, or their benefits can be increased through year-end planning. Shorter depreciable lives are already available for qualified leasehold improvements, and bonus depreciation could also be available if sufficient steps are taken by year end, says the firm.

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