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HORNE Tax Alert

How Can Tax Law Changes Benefit You in Today's Financial Downturn?

There are tax advantages available that can improve your financial position during tough economic times.

• Carry back unused tax benefits to prior years
  • Net operating losses realized in one tax year (such as 2008) can be carried back two years to offset income previously taxed. Congress is considering extending this period to five years.
  • Business credits in excess of tax liability can be carried back to the previous year to recover taxes paid in that year. See examples below.  Congress is considering extending this period to five years.
  • Corporations that experience a net capital loss may carry that loss back three years, but it is only deductible against capital gains realized in the earlier years.
• Cost segregation study for business real property
  • Segregating building costs into the most tax-advantaged categories can result in significant amounts being shifted from real property to personal property.
  • Personal property provides more immediate depreciation deductions for your business via shorter useful lives, 50% bonus depreciation, and even immediate write-off in the year placed in service through §179.  Congress is in the process of extending bonus depreciation and enhanced §179.
• Utilization of business credits
  • Hiring members of targeted groups results in a work opportunity tax credit for up to 40% of the first $6,000 in wages paid per employee, including employees who reside in the Hurricane Katrina area that qualify through August 28, 2009.
  • The rehabilitation of a certified historic structure and certain older buildings for business purposes creates a rehabilitation investment credit of 10% up to 26% of the qualified rehabilitation expenses.
  • Businesses involved in research and development or employing innovative processes may be eligible for a tax credit of up to 20% of qualified research expenses over a computed floor amount.
• State and local taxes
  • Often overlooked, these taxes vary widely among jurisdictions, with a multitude of potential tax savings and refund possibilities across the country in the areas of income, franchise, sales, use, property, and unclaimed property taxes.
• Estate Planning
  • This area of tax law is in a state of flux now with legislation expected shortly to change the landscape and extend the estate tax past 2009. Proper planning now can minimize this 45% tax bite.

HORNE's tax team is ready to help you gain tax advantages. For more information, please contact your HORNE advisor or local HORNE office.