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Tax Updates for 2013

Tax Updates for 2013

Our Woodland Hills accounting office is well versed in all the new tax updates and changes for 2013. It’s very important that you be aware of these changes so that you can properly plan and prepare for a financially successful year. While we’ve discussed several of these changes on the blog, here are a few more changes to be aware of.

S Corporation Built-in Gain Tax

The current tax continues through 2013 and will be reduced over a period of five years at which time an S corporation that was previously treated as a C corporation is subject to income tax on gains in its assets that were “built-in” as of the time of the corporation’s election. After 2013, the recognition period will revert to 10 years absent further legislation.

S Corporation Charitable Contribution of Appreciated Property

Continued through 2013, a special provision that allows an S corporation to grant its shareholders a charitable contribution deduction for the fair market value of contributed capital assets, even if the shareholder’s tax basis in his stock is less than the amount of the contribution.

Exclusion of Gain on Qualified Small Business Stock

An extension was added on the exclusion for 100% of the gain recognized upon the sale of qualified small business stock to such stock acquired before January 1, 2014. In order to qualify, it must be small business stock of a C corporation that has not more than $50,000,000 in gross assets and engages in an active business. The stock must be acquired at its original issuance and be held for at least five years. The maximum amount of gain that can be excluded is the greater of ten times the taxpayer’s basis in the stock or $10,000,000.

Bonus Depreciation

The special first-year depreciation of 50% for new tangible personal property placed in service during 2013 is also extended.

Expensing of Film and Television Production Costs

Extended through 2013, is the provision allowing the first $15,000,000 of the cost of producing a qualified film or television program to be deducted rather than capitalized.

Extension of Increased Expensing of Certain Capital Assets

The Act extends the expensing provisions for certain capital assets that were in effect for 2010 and 2011 through 2013. A taxpayer may elect to expense, rather than capitalize and depreciate, the cost of certain tangible personal property with a cost not to exceed $500,000. The option to expense the cost of newly acquired assets will phase out if the taxpayer acquires more than $2,000,000 of such property.

If you’re concerned about what some of these changes might mean for you, or just want to learn more, feel free to contact our Woodland Hills accounting firm for more information at 818-593-6777. We’d be happy to help!

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John-Morgan

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