With another year of taxation under the Tax Cuts and Jobs Act (TCJA) almost in the books, Jamie Canup provided some lessons for businesses planning their 2019 year-end tax strategy in the November 2019 issue of Accounting Today.
Small businesses should consider new, larger deductions under TCJA, including up to $1 million for purchases of new or used equipment. “In addition, bonus depreciation is still possible in 2019,” Jamie said. “Does it make sense for the business to acquire, before year end, property that qualifies for bonus depreciation? This provision disappears in 2020.” Small businesses should also consider the family leave tax credit in 2019 as it also will not be available in 2020.
Jamie added that taxpayers with capital gains should consider rolling them over into a Qualified Opportunity Fund to take full advantage of the 15 percent step-up in basis, resulting in a reduction of deferred gain that is not recognized until the end of 2026. “Any deferred capital gains rolled over into a QOF after Dec. 31, 2019 will only qualify for a 10 percent step-up in basis,” he said. “And any appreciation in QOF investment held for more than 10 years is then not subject to tax.”
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Luis F. Ruiz