Business owners and their companies can apply a vast array of strategies. Many of the elections made at the entity level will have a significant impact not only on the company’s tax burden, but also on the tax burden of individual shareholders and partners. An example is using a strategy such as Section 179 which expenses the cost of some assets, as opposed to depreciating them over time.
Keep in mind the “wash sale” rule that applies to the disposition of an asset when a loss is recognized. You won’t be allowed to deduct the loss if you repurchase the same security during the 30-day period before or after the sale date.
The IRS has issued regulations that change accounting rules for 2014 for certain categories of expenses, including repairs, spare parts, and materials & supplies. For instance, any item that generally costs less than $200 is a material and supplies item, whereas the previous rules set this limit at $100. If you own a building, or have materials and supplies, your preparer may have to prepare an additional form called a Form 3115. This form is separate from your tax return and requires its own signature. The form is then mailed to a separate IRS location for processing. A copy of the form must also be filed with your tax return. Your preparer will let you know if this applies to your business.