Minneapolis (May 27, 2003) -- Although individuals will reap most of the benefits of the new tax cut bill passed by Congress, business owners will also share in the rewards, according to tax experts.
For example, the law allows eligible companies to immediately write off more depreciation on equipment it buys – from 30 percent to 50 percent in bonus depreciation. "Businesses that haven't already made investments in equipment may want to consider doing so before the end of 2004," said Kimpa Moss, RSM McGladrey executive vice president -- tax services. "Small businesses get an extra benefit because the tax law raises the amount of money they can deduct on certain capital asset purchases," she added. The amount of expensing will rise from $25,000 to $100,000. The provision is effective for taxable years beginning 2003 through 2005.
Other benefits: Owners of "S" corporations and partnerships will see a reduction in the taxes they pay on the income allocated to them. Meanwhile, "C" corporations owners will find that the bill reduces the tax rate on dividends from 5 to 15 percent, depending on the owner's tax rate. "Passage of this new tax law presents an opportune time for businesses to reassess their business structure," said Moss.
-- WebCPA staff
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