Sunday, October 25, 2009


The year 2009 offers some unique tax planning and saving opportunities; most of which will expire at the end of the year. With less than 5 months left in the year, now is the time to seize these opportunities.

Reminder to Businesses of Loss Carry back Deadline Approaching

As a reminder, the American Recovery and Reinvestment Act of 2009 provides small businesses the opportunity to expand the carry back of their operating losses for a period of 5 years instead of the normal 2 year period. Eligible calendar year corporations have until September 15, 2009 to file and eligible individuals have until October 15, 2009 to file. The expanded carry back option allows many businesses the opportunity for special refund claims. The option is available for an eligible small business that has no more than an average of $15 million in gross receipts over a three-year period ending with the tax year of the net operating loss. The choice can be made for only one tax year. The carry back can result in tax refunds to you as a small business owner, so do not miss the opportunity.

Other Tax Opportunities and Items for Planning for 2009 Only

This past year has been a busy one for legislation; consequently, there are several tax incentives that are available only through the 2009 tax year:

  • There is no required minimum distribution for 2009 from individual retirement plans.

  • Qualified individuals with small business income may base their estimated tax payments on 90 percent of the prior year's tax liability. The qualified individual's AGI for the preceding tax year must be less than $500,000 (or $250,000 for a married person filing separately) and more than 50 percent of the preceding tax year's gross income must be from a business which employed less than 500 employees.

  • The percentage exclusion for qualified small business stock sold by an individual is increased to 75 percent for stock acquired after February 17, 2009 and before January 1, 2011. This results in a reduction in the effective tax on the entire gain to 7 percent of the regular tax and 12.88 percent under alternative minimum tax (AMT).

  • Qualified charitable distributions from a traditional or Roth IRA of up to $100,000 per individual IRA owner (up to $200,000 for married individuals filing jointly) are excluded from gross income, and are not taken into account in determining the limit on charitable deductions. Qualified charitable distributions must be made directly by the IRA trustee to eligible organizations, and they are not deductible as a charitable contribution.

Estate and Gift Transfers at Discounted Values

You can reduce the size of your taxable estate by gifting family limited liability company interests to trusts set up for your family or children. You will pay 55% death taxes starting in 2011 on everything above $1million in assets. By using a family partnership to gift those assets on paper today to trusts for your children you can greatly reduce the death taxes. Currently valuation discounts on family partnerships allow for 30% to 50% more value to be transferred. Combined with the historic low asset values, this is a once in a lifetime opportunity to shift wealth to your family without 55% taxes. The Obama Administration is moving to change the law in 2010 to eliminate the 30% to 50% valuation discount law that currently exists. 2009 may be the last year for valuation discounts and substantial estate and gift tax savings.

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