As the end of the year approaches, now is the time to evaluate your business and your personal tax strategies. By taking the time to prepare now, using this checklist, you will be able to develop a clearer picture of what your tax picture will look like while there’s still time to maximize current-year savings.

Retirement Planning

Look to maximize tax-deductible retirement plan contributions. The following table provides the maximum amounts that can be deferred under several popular retirement plan options during 2009.

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The present volume of other real estate owned (OREO) and non-performing assets (NPA) presents an extraordinary challenge to lenders – and traditional solutions do not always apply. Foreclosure actions and online marketplaces often result in inadequate auction bids. Banks with OREO and NPA are often asking more than buyers are willing to pay. However, they often need to maintain their asking price in order to avoid realizing additional REO and loan losses and negatively affecting their overall capital. Attempts to sell the property can often result in additional costs to the bank from removing liens and other expenses.

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According to new study published in CFO magazine, some companies are realizing a significant cash flow increase thanks to the tax benefits associated with accelerated depreciation, which was originally available under the Economic Stimulus Act of 2008 and extended earlier this year.

Zhen Deng, author of the study, calls the bonus depreciation deduction a government-sponsored “freebie” designed to help businesses struggling with liquidity problems survive a credit crunch. “Considering the time value of money,” says Deng, “deferring cash payments - even when there is not a liquidity crunch - is always a good thing.”

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On February 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act of 2009 (“the Recovery Act”), which contains nearly $800 billion in economic stimulus spending and tax relief, much of which is targeted to help businesses in the current economic climate.

KEY PROVISIONS

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Debt foreclosures, reductions and restructurings can create unexpected income tax consequences from Cancellation of Indebtedness (COD) income — whether in a solvent, insolvent, or bankruptcy workout situation. While these consequences can reduce the cash on hand you need for future deals and operations, there are tax planning opportunities available to corporations, partnerships and sole proprietors to defer or even eliminate such income tax liabilities and maximize your cash flow.

Solvent taxpayers can explore options for accelerating losses and Net Operating Loss Carrybacks. Under certain circumstances, debt may be contributed to partnerships in exchange for equity. Insolvent taxpayers and taxpayers entering Bankruptcy pursuant to Chapter 11 may eliminate COD Income in exchange for reducing certain tax attributes, such as Net Operating Loss Carryforwards, basis of depreciable assets, etc.

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In order to help small businesses quickly recover the cost of certain capital expenses, small business taxpayers may elect to write off the cost of these expenses in the year of acquisition in lieu of recovering these costs over time through depreciation. As part of the Economic Stimulus Act of 2008, Congress temporarily increased the amount that small businesses could write off for capital expenditures incurred in 2008 to $250,000 and increased the phase-out threshold for 2008 to $800,000. The American Recovery and Reinvestment Act of 2009 (“the Recovery Act”), signed by President Obama on February 17, 2009, extends these temporary increases for capital expenditures incurred in 2009.

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Residential and commercial foreclosures continue to make headlines during this period of economic uncertainty. Although the federal government has made several efforts to curb residential foreclosures, there seems to be no end in sight. According to Realtytrac.com‘s October 2008 U.S. Foreclosure Market Report, foreclosure filings nationwide were up 5% from the previous month and 25% from October 2007.

Historically, foreclosed properties were difficult for the average person to purchase, largely due to the relatively limited number of properties available. However, with the recent rise in foreclosures, numerous Web sites, including RealtyTrac.com and Foreclosures.com, have been developed to assist potential investors.

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Construction equipment can be subject to significant wear and tear over time as contractors shift from site to site. Of course, the work itself often leads to further deterioration, and contractors are frequently faced with the decision to repair or replace equipment as a result. But since these decisions involve capital assets, contractors should carefully evaluate all available options in light of their company’s overall year-end tax planning strategy.

Considering Repair
Repairs are a normal part of owning and maintaining equipment. Since repair costs will increase as an asset ages, it is usually better to budget these costs on an increasing scale rather than managing them as a constant over the life of the equipment. Generally, repair costs fall into the following three categories:

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Before the recent economic downturn, condos represented one of the hottest sectors of the residential real estate market, with pre-construction bidding wars breaking out between investors and speculators looking to capitalize on the condo frenzy. Now that the market has slowed, a number of investors are stuck holding properties that they are unable to sell, and many are considering the advantages and disadvantages of turning those condominium units back into rental properties.

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