Pub. 2 2013 Issue 2

24 San Diego Dealer Business goals that affect which tax planning strategies are important will include: • Are you going to buy, build, or expand your facility in the near future? • Are you going to buy or sell a store? • Do you have any significant expenditures or expect changes in your future income? Changes in tax laws usually provide opportunities for tax savings. However, recent tax law changes have increased tax rates. As a result, there was an immediate opportunity going into 2013 to accelerate income into 2012 and defer deductions into 2013. Planning related to this strategy paid off. But now that we’re in 2013, the strategy is the opposite: It seems that accelerating deductions into 2013 and deferring income into future years could make more sense for most of us. The following is a short list of things to consider as you evaluate your tax situation for the 2013 filing year. There’s still time to take advantage of strategies that can help you accomplish the goals outlined above and may also help you begin thinking about business transactions in a different way. • If you’re married, consider filing separate returns if your joint income exceeds $1 million. California charges a surcharge on high-income taxpayers that may be mitigated by filing separate returns. • If you have a C corporation or an LLC and your income exceeds $250,000, consider changing to an S corporation. If you have multiple LLCs, consider putting the ownership of the LLC interests into S corporations. Active S corporation shareholders (over 500 hours working in the business) can exclude their business profits from the new 3.8 percent Medicare tax. • Plan your year-end purchases. If you use a loaner fleet, purchases before the end of the year will help defer taxes to future periods. Equipment purchases that you can place in service before the last day of the year will also help. • Evaluate the new tangible property regulations, which will be effective as of January 1, 2014. Make sure you have an account- ing policy in place that helps you take advantage of tax benefits for repairs and maintenance, small equipment purchases, and property acquisitions. • Make sure your business is using the most beneficial accounting methods, those that accelerate deductions. Your dealership can benefit greatly from the accounting methods available for inven- tory valuation, treatment of factory incentives, and deferring tax on intracompany sales activities. Sid Tobiasonhasmore than 33 years of tax experience, witha focus on federal income and estate taxation of dealerships. He leads the firm’s Automotive & Dealer Services tax practice and is the author of the NADA’s Dealer Guide to Business Succession Planning. You can reach him at (858) 627-1448 or sid. tobiason@mossadams.com . Rolling with the (Tax) Changes: Year-End Planning By Sid Tobiason, Partner, Moss Adams LLP W e’re constantly looking for new ways to reduce our tax burden. And with both federal and state rates on the rise in 2013, this quest is even more crucial this year. The options for doing so are myriad, but what’s important is that the solutions you pursue match your situation in a way that won’t cause you to deviate from your sound personal and business goals. Thus, the first step in year-end tax planning is determining what your goals are, both short- and long-term.