As the year comes to an end, we have to think about the inevitable—Tax Season. To ease your tax dreads, we have asked our Chief Financial Officer, Rhonda Curran, to share some of her accounting knowledge with all of you!
DISCLAIMER: This is not Tax Advice!
Deducting Qualified Business Property
When tax strategy planning these last months of 2021, companies should take advantage of Section 179 and bonus depreciation to deduct up to 100% of the cost of “qualified business property.” Qualified business property is a property that has a useful life of 20 years or less. Examples include equipment, furniture, fixtures, machinery, computer software. It also includes non-residential real property improvements such as heating, ventilation, air-conditioning; fire protection and alarm systems; security systems; roofs. And used property also qualifies if the property is “new-to-you”—Claim section 179 deduction on line 12 of Form 4562 and bonus depreciation on line 14.
Qualified Business Income Deduction
Companies structured as one of the below are eligible for the Qualified Business Income Deduction. This deduction allows these taxpayers to deduct up to 20% of their qualified business income (QBI)
Sole proprietorships.
Partnerships.
S corporations.
Limited liability companies (LLCs).