Plan Now To Take Advantage Of ATRA On Your 2013 Return

The American Taxpayer Relief Act of 2012 brings good news for businesses in many areas. Work with your CPA to determine what steps you should take this year to make the most of the act’s tax breaks. Here are a few key questions to consider in your ongoing 2013 tax planning:

Should you purchase property? American Taxpayer Relief Act restores the Section 179 $500,000 expensing limit and $2 million phaseout threshold through 2013. Sec. 179 allows your dealership to expense (rather than depreciate over a period of years) the cost of qualified new and used property placed in service during the year, up to the limit but phased out dollar-for-dollar above the threshold. The new law also extends the ability to use up to $250,000 of the $500,000 limit to expense the cost of qualified leasehold improvement property and retail improvement property. 

Additionally, American Taxpayer Relief Act extends 50% bonus depreciation through 2013 (2014 for certain property). It can be claimed for qualified new property, such as computers, hoists and other equipment, placed in service this year. For maximum benefit, apply 50% bonus depreciation to assets in excess of what qualifies for the Sec. 179 deduction. 

Should you make leasehold improvements? American Taxpayer Relief Act extends the quicker 15-year (vs. the standard 39-year) cost recovery period for qualified leasehold and retail improvements such as ceilings, nonstructural internal walls or security systems, using the straight-line accounting method, through 2013. 

Are you open to new hires? Your dealership can claim the Work Opportunity tax credit if you hire someone from one of several economically disadvantaged groups in 2013. The credit is usually equal to 40% of the first $6,000 in wages paid to a new hire. Enhanced credits are available for hiring certain veterans.

Are you ready for a new market? The New Markets Tax Credit Program promotes private investment in dealerships and other businesses in low-income communities in 2013. A taxpayer may obtain a 39% tax credit, spread out over seven years, under this program. Consult with your tax advisor to see if your area qualifies.

Should you go green — or greener? A number of provisions relating to energy-saving improvements adopted by businesses, including dealerships, are extended for varying time periods under American Taxpayer Relief Act. The most common credit for dealerships is the production tax credit for facilities that produce energy from wind facilities, which is extended through 2013. This is typically done by installing a windmill.