Paul Sprizzirri of Sherman and Howard LLP writes about several tax-saving opportunities still available for businesses to consider as 2015 comes to a close. The article begins as follows:
As 2015 draws to a close, there is still time to reduce your 2015 taxes and plan ahead for 2016. This advisory highlights several potential tax-saving opportunities for business owners to consider.
Deferring Income into 2016
Deferring income to the next taxable year is a time-honored year-end planning tool. If you expect your taxable income to be higher in 2015 than in 2016, or if you anticipate being in the same or a higher tax bracket in 2015 than in 2016, you may benefit by deferring income into 2016. Of course, in the case of an individual exposure to the alternative minimum tax could temper this standard planning. Some ways to defer income include:
Use of Cash Method of Accounting: By adopting the cash method of accounting instead of the accrual method, you can generally put yourself in a better position for accelerating deductions and deferring income. There is still time to implement this planning idea, because an automatic change to the cash method can be made by the due date of the return including extensions. The following three types of businesses can make an automatic change to the cash method: (1) small businesses with average annual gross receipts of $1 million or less (even those with inventories that are a material income producing factor); (2) certain C corporations with average annual gross receipts of $5 million or less in which inventories are not a material income producing factor; and (3) certain taxpayers with average annual gross receipts of $10 million or less. Provided inventories are not a material income producing factor, sole proprietors, limited liability companies (LLCs), partnerships, and S corporations can change to the cash method of accounting without regard to their average annual gross receipts.
To read the entire article and to learn about other tax-saving opportunities click here.
Posted by Logan Davis, Associate Editor, Wealth Strategies Journal.