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STRATEGIC ISSUES...ONLINE
For
week of January 17, 2005, Issue #195
Featured Articles:
1. Major Changes Point to Tax
Planning Tips for 2005
2. Late-Breaking Fraud Cases and
Court Conclusions
3. Tech Tip Weekly: Back to the
Keyboard
4. Compliance Calendar
1.
Major Changes Point to Tax Planning Tips for
2005
The tax law is constantly changing. The start
of a new year is a good time to look at last
year's major developments and consider their
impact for the coming year. Congress passed
two big tax laws in 2004: the American
Jobs Creation Act of 2004 (2004 Jobs Act)
and the Working Families Tax Relief Act of
2004 (WFTRA) while the IRS and Treasury
stepped up the pace of guidance.
Manufacturing tax break
Congress repealed the special tax benefit for
exports and adopted a phased-in deduction for
domestic "production." The deduction will
eventually reach nine percent. Production
activities include manufacturing,
construction, architecture, and the licensing
of computer equipment, among others.
Business deductions, depreciation and
amortization
To facilitate business write-offs and provide
more capital for investment, Congress enacted
a safe harbor amortization period of 15 years
for most intangibles and a 15-ear depreciation
period for certain leasehold and restaurant
improvements. Congress also approved a new
first-year deduction of $5,000 for both
start-up expenses and organizational
expenditures.
Tax shelters
In the 2004 Jobs Act, Congress substantially
increased penalties for tax shelter abuses and
provided penalties for violations of the tax
shelter reporting rules.
S corps
Congress eased the requirements for S corp
organization, increasing the allowable
shareholders from 75 to 100, and treating
members of one family as a single shareholder.
Vehicle deductions
Congress took a stab at limiting the abuse of
write-off limits for luxury vehicles. The new
law limits first-year SUV deductions to
$25,000. The new limit took effect October
22, 2004, when President Bush signed the 2004
Jobs Act.
Congress also addressed abuses involving car
donations. The 2004 Jobs Act tightens the
rules for the deduction.
Employee benefits
The IRS issued tougher rules that tax the
employee's benefit from split-dollar life
insurance. Congress also adopted new rules on
the taxation of deferred compensation, to
limit when employees could receive their
benefits.
Deduction of state and local taxes
For 2004 and 2005, taxpayers who itemize
deductions may deduct their state and local
income taxes or their state
and local sales taxes.
Individuals should consider saving their
receipts in 2005 to substantiate their sales
tax deductions. Taxpayers who use IRS sales
tax tables can also deduct sales taxes on
big-ticket items such as automobiles and
boats.
Dependents and children
Congress enacted new, less restrictive
definitions of a dependent for the exemption
rules, and of a qualifying child for the
earned income credit and the dependent care
credit rules.
2.
Late-Breaking Fraud Cases and Court
Conclusions
Click on the following links for a couple of
late-breaking fraud cases and court
conclusions.
High Court to Hear Major Investor
Fraud Recovery Case
The U.S. Supreme Court is set to hear
arguments Wednesday in a closely followed
appeal that could test the bounds of losses
investors can recover in corporate frauds.
ID Theft Mastermind Gets 14 Years
A Briton involved in what is believed to be
the largest identity theft case ever has been
sentenced to 14 years in prison by a New York
judge.
3.
Tech Tip Weekly: Back to the Keyboard
You can forget all about those darned tab
scrolling buttons and sheet tabs in MS Excel
and just go back and forth through the sheets
in a workbook with your keyboard. To move to
the next worksheet in a workbook, press
Ctrl_PgDn. To move to the previous worksheet
in a workbook, press Ctrl+PgDn. To move to
the previous worksheet in a workbook, press
Ctrl+PgUp. The nice thing about using these
keyboard shortcuts is that they work whether
or not the next or previous sheet tab is
currently displayed in the workbook window!
4.
Compliance Calendar
January 18
-Final installment of prior year estimated tax
by individual, unless income tax return is
filed and tax paid in full by January 31.
Payment in full of prior year estimated tax by
farmers and fishermen, unless income tax
return is filed and tax is paid in full by
March 1. Use Form 1040-ES.
-Monthly depositors deposit Social Security,
Medicare, withheld income tax, and nonpayroll
withholding for payments in December.
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