Law offers tax relief for small businesses

WASHINGTON – Feb. 26, 2009 – The economic stimulus bill contains several tax provisions that will help small businesses struggling in a tough economy. Here are some of the provisions that might prove especially significant to a real estate-related business.

Net operating loss carryback. If your company lost money in 2008 but paid taxes on profits in the past five years, you can apply last year’s loss to prior-year taxes – and likely get a refund on taxes you’ve paid in the past.

Deduct and depreciate equipment. Companies that bought new equipment in 2008 can treat it as an operating expense and immediately deduct the whole amount up to $250,000, a $117,000 increase over its previously scheduled limit.

Shorter holding period for S-Corps. This shortens the period that S-Corp assets can be sold without paying taxes on built-in gains. A built-in gain is the difference between the fair market value of the assets and their tax basis at the time the company put an S-Corp in place. The impact of this is that many business owners will be able to retire earlier without facing two layers of taxation.

Source: BusinessWeek.com, Karen E. Klein (02/23/2009)

© Copyright 2009 INFORMATION, INC. Bethesda, MD (301) 215-4688

Questions, comments or suggestions on this article? Have a news tip? Send a letter to the editor to: Newseditor@floridarealtors.org.