2008/2009 Tax Planning Guide Now Available

The 2008/2009 Tax Planning Guide is loaded with helpful explanations on current tax rules and planning ideas for lowering your 2008 income taxes.

Note important information on pages 12 and 13 regarding changes to depreciation rules for asset purchases in 2008.  First-year bonus depreciation is back for 2008 and Congress has granted higher limits for expensing of qualified assets.

On October 3, 2008 Congress passed the Emergency Economic Stabilization Act of 2008.  While this Act contained the $700 billion bailout for the banking industry it also included nearly 300 changes to the tax code.  Some of the more relevant changes are summarized below:

• AMT relief for individuals. The 2008 Act boosts AMT exemption amounts for individuals for 2008, and also provides that for 2008, personal nonrefundable credits may offset AMT and regular tax. Additionally, the 2008 Act also liberalizes the AMT refundable credit amount rules.
• Extended tax breaks. More than 30 tax breaks that either expired at the end of 2007 or are soon to expire have been extended by the 2008 Act. For example, all of the following individual tax breaks are retroactively revived to apply for the 2008 tax year and are extended to apply to the 2009 tax year as well: the election to deduct state and local general sales tax, the above the line deduction for higher education expenses, the above the line deduction for educator expenses, and the ability of taxpayers age 70 1/2; or older to make nontaxable IRA transfers to eligible charities. The business tax breaks that are extended by the 2008 Act include the research credit (which is also modified), the 15-year writeoff for qualified leasehold improvements and qualified restaurant property (which is also liberalized), enhanced deductions for certain charitable contributions (which is also liberalized for farmers), and the expensing option for qualified environmental remediation expenses.
• Energy incentives. These includes extensions for the alternative energy credit, the residential energy efficient property credit, the energy efficient buildings deduction, the credit for energy efficient improvements to new homes, and a new credit for plug in electric vehicles. Many other tax incentives for alternative energy creation are either extended or created.
• Disaster relief. The 2008 Act provides a host of tax relief measures for disaster victims (both individuals and businesses) in ten Midwestern states and also creates new national disaster relief for all federally declared disasters occurring after 2007 and before 2010. This relief includes eased loss deduction rules for individuals, fast writeoffs for business cleanup expenses, and a 5-year carryback for NOLs attributable to qualified disaster expenses.
• Revenue raisers. The revenue raisers in the 2008 Act include broker reporting of customers' basis and holding period in securities transactions starting in 2011, an extension of the 0.2% FUTA surcharge, a limited Code Sec. 199 domestic production activities deduction for the oil and gas industry, and new rules for nonqualified deferred compensation from certain tax-indifferent parties.

Starting in 2011 brokers are required, in general, to report the basis information for securities purchased and sold after January 1, 2011.   Please review the planning guide and contact info@barnesdennig.com with any questions.