Dear Client:

As the end of 2009 approaches, it’s time to evaluate year-end tax planning for corporations and other businesses. Over the past year, Congress, the IRS, and the courts have flooded us with significant tax developments. These changes make year-end tax planning for 2009 exceedingly important! Most recently, Congress passed the American Recovery and Reinvestment Tax Act of 2009, which includes corporate and business tax benefits that: provide a longer carryback period for 2008 Net Operating Losses; expand the Work Opportunity Tax Credit for hiring certain disadvantaged employees; extend through 2009 accelerated business asset write-offs including the higher $250,000 §179 deduction, the 50% bonus depreciation, and a 15-year (instead of 39-year) write-off of certain leasehold improvements, restaurant properties, and retail properties; offer a new income deferral election for businesses that experience cancellation of debt income; and temporarily shorten the time (from 10 years to 7 years) that an “S” corporation which used to be a regular C corporation is exposed to the corporate built-in gains tax.

We are sending you this letter to bring you up-to-date on these and other new tax planning opportunities for corporate and non-corporate businesses. Caution! Several of the most significant new tax breaks expire in 2009 (and others in 2010). Therefore, it is extremely important that you be proactive and act timely to obtain maximum benefits! This letter also contains traditional year-end tax planning strategies 1) to help ensure that your business income is taxed at the lowest possible rate, and 2) to postpone taxes by deferring taxable income and accelerating deductions.

Planning Alert! Although this letter contains many planning ideas, you cannot properly evaluate a particular planning strategy without calculating the overall tax liability (including the alternative minimum tax) with and without the strategy. In addition, this letter contains ideas for Federal income tax planning only. You should also consider any state income tax consequences of a particular planning strategy. We recommend that you call our firm before implementing any tax planning technique discussed in this letter, or if you need more information.


Matthew B. Hitt, CPA

2009 Year-End for the Business Owner