ILNews

IBA: Tax time is closer than you think — are you prepared?

Back to TopCommentsE-mailPrint

December 31st is right around the corner, and with it comes important considerations for year-end tax planning. Special breaks are still available for 2012, and taking action before December 31 could reduce taxes for 2013 and beyond. Plus, planning now for tomorrow’s tax changes could have a significant impact on your —a nd your clients’ — bottom line.

Get important tips and information on action to take before the end of the year and discover what new tax regulations may be on the horizon, including changes in tax rates, accelerated depreciation, and estate valuation, when the IndyBar hosts Bill Owen, Director of Tax Services at BGBC, on Thursday, November 29 for “Year End Tax Planning Tips for Solo/Small Firm Businesses for 2012 and Beyond.” This program, which includes 2.0 general CLE credits, will be held at the IndyBar Education Center from 3 to 5 p.m. Registration and additional information is available online at www.indybar.org.

In advance of the program, Owen shared with the IndyBar two items that every legal practice and small business should consider between now and the end of the year:

“First, if they are planning on making a significant investment in new equipment in the near future, consider doing so before December 31, 2012. The reason is that currently we have ‘50% Bonus Depreciation’ for any new equipment purchased and placed into service during 2012. That means that 50% of the cost of that equipment can be written off in 2012, and the balance can either be expensed under IRC Sec. 179, or depreciated over its normal depreciable life.

For example, if there is $250,000 of new equipment purchased that has a five year depreciable life, the first $125,000 would be expensed as Bonus Depreciation. The $125,000 balance could either be expensed under Section 179 or depreciated with 20% being depreciation expense for the first year. That means the $250,000 purchase could result in a 2012 depreciation deduction of between $150,000 including regular depreciation and $250,000 if Section 179 is elected.

In 2013, under current law, bonus depreciation goes away and Section 179 drops to $25,000. So acting in 2012 can result in a significant acceleration of deductions for new equipment purchases. However, the equipment must not only be purchased, but also placed in service to be eligible for the current deductions.

Second, everyone should do some income tax planning that looks at both 2012 and 2013. In 2013, the top ordinary income tax rate will climb from 35% in 2012 to 39.6% in 2013. In addition, there will be a .9% Health Insurance Surtax on earned income in 2013 and a 3.8% Medicare Surtax on investment income for those with Adjusted Gross Income above $250,000. That means in 2013, those in the upper income tax brackets could be paying as much as 43.4% on investment income and as much as 40.5% for earned income…and that is just for federal income taxes! This may be a time to consider accelerating income into 2012 to reduce the overall income tax exposure for the combined tax years of 2012 and 2013.”

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Indiana State Bar Association

Indianapolis Bar Association

Evansville Bar Association

Allen County Bar Association

Indiana Lawyer on Facebook

facebook
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. Frankly, it is tragic that you are even considering going to an expensive, unaccredited "law school." It is extremely difficult to get a job with a degree from a real school. If you are going to make the investment of time, money, and tears into law school, it should not be to a place that won't actually enable you to practice law when you graduate.

  2. As a lawyer who grew up in Fort Wayne (but went to a real law school), it is not that hard to find a mentor in the legal community without your school's assistance. One does not need to pay tens of thousands of dollars to go to an unaccredited legal diploma mill to get a mentor. Having a mentor means precisely nothing if you cannot get a job upon graduation, and considering that the legal job market is utterly terrible, these students from Indiana Tech are going to be adrift after graduation.

  3. 700,000 to 800,000 Americans are arrested for marijuana possession each year in the US. Do we need a new justice center if we decriminalize marijuana by having the City Council enact a $100 fine for marijuana possession and have the money go towards road repair?

  4. I am sorry to hear this.

  5. I tried a case in Judge Barker's court many years ago and I recall it vividly as a highlight of my career. I don't get in federal court very often but found myself back there again last Summer. We had both aged a bit but I must say she was just as I had remembered her. Authoritative, organized and yes, human ...with a good sense of humor. I also appreciated that even though we were dealing with difficult criminal cases, she treated my clients with dignity and understanding. My clients certainly respected her. Thanks for this nice article. Congratulations to Judge Barker for reaching another milestone in a remarkable career.

ADVERTISEMENT