Gifts From Uncle Sam! Warady & Davis LLP's Top Three 2011/2012 Tax Opportunities to Consider Now!

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At this time of year, thinking about taxes may cause your blood pressure to rise. But recent tax legislation includes some unprecedented tax savings opportunities that are available for 2011/2012 only. Here are some strategies from Warady & Davis LLP experts that may help take the sting out of paying Uncle Sam.

Now is the time to consider purchasing assets, lease hold improvements or software.

The Tax Relief Act of 2010 created some unprecedented tax savings opportunities for 2011 and 2012. Leading experts share their top 3 strategies to consider now for 2011.

1. Invest In Your Business. If your company is considering investing in assets, research or people, 2011 is the year. Why?

“The Tax Relief Act of 2010 increases the current 50% bonus depreciation to 100% for qualified business equipment purchases made from September 9, 2010 through December 31, 2011 only,” notes Cindy S. Tweten, MST, CPA, a tax expert at the accounting firm of Warady & Davis LLP.

Under 100% bonus depreciation, as long as the assets are placed in service before January 1, 2012, you can fully deduct the cost of qualifying assets, regardless of how many you buy or whether it generates a loss, Tweten adds. Qualifying assets include machinery, computers, software, office furniture, vehicles, or other tangible goods.

This offers businesses a great opportunity to maximize their purchasing power and is especially beneficial because bonus depreciation is not limited to smaller companies, or capped at a certain dollar level.

Code Section 179 Expensing and 100% Bonus Depreciation are tax incentives that have been expanded as part of the 2010 Tax Relief Act (Obama Tax Plan) and other legislation.

2. Make Gifts. The 2010 Tax Relief Act opened an unprecedented two-year window to make substantial gifts as the lifetime gift-tax exemption increased to $5 million for an individual and $10 million for a married couple as of January 1, 2011. This is up from the $1 million level over the last 10 years. Combined with the depressed value of assets due to economic conditions, this is a unique opportunity to take advantage of this two-year window.

“We have many clients making significant gifts or beginning the estate planning/gifting process in 2011,” said Sean Snowden, AVA, MBA, Managing Member of W&D Consulting LLC. Based on the controversy surrounding the Act’s passage, there’s no guarantee that the lifetime gift-tax exemption will remain at such high levels after 2012, so now is the time to act.

3. Plan For The Future. With the 2010 Tax Relief Act, effective January 1, 2011, estate tax exemptions will be “portable” between husband and wife. Therefore, if the estate of the first spouse to die does not use the entire amount of the $5 million estate tax exemption, an election by the estate’s executor can be made to transfer any “unused” estate tax exemption to the surviving spouse. That's a huge tax break, so if you or your family have significant assets, now is the time to review your plan and/or hire a good estate planner.

More information on the Tax Relief Act of 2010, Small Business Jobs Act, Health Care Legislation, The HIRE Act and a Special Report: Surviving the Recession Stronger is available in the Warady & Davis 2011 Web Tax Guide.

Warady & Davis LLP is a full service, mid-size audit, accounting, tax and consulting firm providing solutions to privately-held businesses, owners, high net-worth individuals and their families.

W&D serves clients in a wide variety of industries located in the state of Illinois and throughout the United States. Client revenues may range from start-up enterprises to $500,000,000+ in annual revenue. For more information, go to


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Leslie Flinn
Warady & Davis LLP
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