The year is nearly over, but you can still take action to lower your business income tax during the final months of 2015. Here are five moves to consider.
1. Postpone revenue to 2016. If your business reports on the cash basis, delay billing your customers long enough to ensure that payments will arrive after 2015. Does your business use the accrual basis? Consider delaying product shipments or deferring completion of services until 2016.
2. Accelerate deductible expenses into 2015. Stock up on incidental supplies before January and arrange for necessary repairs and maintenance to be completed before year-end.
Alternatively, if you anticipate falling into a higher tax bracket next year, consider reversing the above steps by accelerating revenues into 2015 and deferring expenses into 2016.
3. Write off receivables. Review your accounts receivable for potential bad debts that can be written off before year-end.
4. Put assets to use. Machinery, equipment, office furniture, and software placed in service before December 31 may qualify for a Section 179 deduction rather than being depreciated over a longer term. Total allowable purchases for Section 179 are limited to $25,000 this year, although Congress may increase that amount before year-end.
5. Take advantage of tangible property regulations. If your business owns or leases a building with an unadjusted basis of $1 million or less, you may qualify for an election to deduct payments for improvements made in 2015 that otherwise would be depreciable. Your business must have average annual gross receipts of $10 million or less, and the total amount paid in 2015 for the building’s improvements, repairs, and maintenance may not exceed the lesser of $10,000 or 2% of the building’s unadjusted basis.
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