Business Taxation Flashcards
Business Tax Credits - all businesses
– tax credit limitation = Tax Liability - [(tax liability - $25,000) x 25%]
– Balance carried back 1 year, carried forward 20 years
General Business Tax Credit
- Family and Medical Leave: 12.5% of wages paid to family leave -must pay at least 50% of normal wages; 25% if employer pays full wages
- Work Opportunity Credit: hiring from certain groups - long term unemployed and veterans - reduces wages paid deduction - first year employment max $2400/employee = 40% of 6,000
- Empowerment Zone Employment Credit: 20% or 15,000 wages - employee in an empowerment zone - reduced wages reduction
- Incremental Research Credit: 20% of qualified expenditures, need to spend more this year than last year, research conducted in US, if used as credit - no deduction
- Rehabilitation Credit: 20% of expenditures to rehabilitate certified historic structure, claimed after service for 5 years, straight line depreciation must be used on building to get credit
Small Employer Health Insurance Credit
10 employees or less
=50% of contributions for employees
contribution = >50% cost of premiums
Owner and relatives are not included
Net Operating Losses
Prior to 2017 - carried back 2 years and forward 20 years
2018 or after - only offset 80% of taxable income, only carried forward indefinitely
- 2020 NOL exception- (includes 18, 19) carried back 5 years first, then carry forward; up to 100%
2021 and beyond - 80% of income carryforward indefinitely, no carry back
Excess Business Losses
2022 - $270,000; $540,000 MFJ
2023 - $289,000; 578,000 MFJ
The excess carries forward
Bad Debt Expense
Cash basis business owners cannot deduct BD
Business Gift
Deductible - limited to $25 per customer (not of advertising nature)
Advertising is full deduction
Employee Gifts
excluded up to $25 per employee as long as they are not cash or gift cert
