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May 1, 2012
Building a Retirement Nest Egg

CHICAGO — Building a nest egg sufficient to provide a comfortable retirement can be

CHICAGO — With the painful volatility of the stock market playing havoc with 401(k) and IRA accounts these days, building a nest egg sufficient to provide a comfortable retirement can be a challenging assignment. What makes the job even tougher is a tax provision that may come as a nasty surprise from Uncle Sam after you retire.

Those of us who can look with some degree of satisfaction at how well we are building our tax-deferred retirement accounts need to keep in mind that all withdrawals from our 401(k) and conventional IRA accounts will be taxed at our ordinary income tax rate, which can be as high as 35%. That needn’t be a problem for you in your early retirement years when you may make small withdrawals now and then to fill an occasional need. In fact, voluntary small withdrawals prior to age 70½ may be a way to soften the increasing tax bite soon to come.

April 26, 2012
Changes in Repair or Replace Tax Rules (Part 1 of 2)

ARDMORE, Pa. — Are certain expenditures currently deductible or must they be capitalized

ARDMORE, Pa. — In an effort to resolve the controversy over whether certain expenditures made by a drycleaning business are currently deductible as repair expenses, or whether they must be capitalized and deducted over the life of the underlying business asset, the Internal Revenue Service has finally released new regulations.

The IRS’s long-awaited expanded regulations for determining whether an expense must be capitalized because it betters or improves tangible business property or equipment, restores it, or adapts it to a new and different use, will have a significant impact on every drycleaning business that acquires, produces, or improves its tangible property. 

In addition to clarifying and expanding the current rules, the new regulations create “bright-line” tests for applying the repair-or-capitalize standards, provides guidance for accounting for—and disposing of—repaired property, as well as clarifying other aspects of the repair/capitalize dilemma.

January 4, 2012
Fight Trim and Pay Fair Share of Taxes (Part 2 of 2)

PEMBROKE, Mass. — Tax time is here again. Before I give you some tax tips, I want to tell you to pay your fair taxes. I know that not all of you do.

Having said that, you should take full advantage of legitimate deductions.

Some Available Deductions

Basically, profit determination is a process of starting with revenue and deducting all expenses and costs from all activity that went into creating that inflow stream. Any amount of expenditure is deductible if it helped you, in any way, shape or form, to run your business.

Don’t forget to include:

December 7, 2011
Last-Minute Tips to Lower Your 2011 Income Tax Bill (Part 2 of 2)

CHICAGO — The filing deadline for 2011 federal income taxes is not far off, but you still have time to make sure you’ve done everything you can to keep Uncle Sam’s paws off as much of your money as possible. Here are some last-minute ways to do that by reducing your 2011 income tax bill:

Often-Overlooked Deductions

Many easily overlooked miscellaneous expenses are deductible as long as they add up to at least 2% of your adjusted gross income. Grouping them can help you meet the threshold. Here are some miscellaneous items you may have overlooked:

December 5, 2011
Last-Minute Tips to Lower Your 2011 Income Tax Bill (Part 1 of 2)

CHICAGO — The filing deadline for 2011 federal income taxes is not far off, but you still have time to make sure you’ve done everything you can to keep Uncle Sam’s paws off as much of your money as possible. Here are some last-minute ways to do that by reducing your 2011 income tax bill:

Save More for Retirement

One of the most important tax-savings steps you can take is contributing the maximum to your 401(k) or other tax-deferred retirement plan. If you haven’t done so, max out your retirement savings now by bringing your contribution up to the legal limit. For 2011, you may put as much as $16,500 into a 401(k), 403(b) or 457 plan. If you’re over age 50, you may add an additional $5,500.

Every dollar you contribute means you will pay less income tax. Except for Roth IRAs, all contributions to tax-deferred retirement plans are tax-deductible in the tax year for which you make your contribution.

If you can’t come up with the maximum, bump up your contribution as much as you possibly can. It may seem painful now, but you’ll benefit greatly in the future.

October 18, 2011
Deductions: Get ‘Em While You Can (Part 1 of 2)

ARDMORE, Pa. — Thanks to the 100% “bonus” depreciation write-offs created by the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, many dry cleaning businesses are discovering that capital investments in equipment, machinery and other business assets are more affordable today than ever before. Remember, however, the 100% bonus depreciation write-off is available only for qualifying purchases made by dry cleaning plants and businesses in 2011.

Those dry cleaners that have hesitated or postponed making capital investments because of the recent economic downturn might now want to consider how the combined use of incentives and the 100% bonus depreciation can substantially reduce the cost of capital investments. Even funding those new-equipment purchases is easier—at least for a while.

July 20, 2011
A Real-Life Horror Story (Part 2 of 2)

CHICAGO — By any definition, Joe was a “success,” and so was his business, Success Co. Although Joe was a planner, after he died, his estate plan and business succession plan turned into an economic and tax tragedy—for son Sam, wife Mary and the rest of the family.

January 27, 2011
Make Tax Time Pay Off

CHICAGO — It’s that time of year again. You know the drill: Your accountant or tax preparer does the calculating; you write the checks. But this year, don’t just comply with his instructions—make the exercise a learning experience. Here’s how.

September 27, 2010
Obama Set to Sign Small-Business Bill

WASHINGTON, D.C. — The Small Business Jobs Act cleared the U.S. House last Thursday on a 237-187 vote after passing the Senate earlier in the week. President Barack Obama plans to sign the $30 billion package of incentives and tax cuts into law today.

September 21, 2010
Small-Business Bill Passes Senate

WASHINGTON — The Senate passed a package of small-business tax incentives and additional measures intended to improve access to capital last Thursday against Republican opposition.

The Small Business Jobs & Credit Act of 2010 will create a $30 billion fund to help small banks increase small-business lending. Proponents say the fund will help leverage up to $300 billion in lending, which has been stalled since the recession began in late 2007.

March 29, 2010
House Passes Small-Business Relief Bill

The House passed a bill Wednesday that provides $19.3 billion in tax incentives to help small businesses obtain capital, while eliminating capital gains on the sale of some small-business stock.

H.R. 4849, the Small Business and Infrastructure Tax Act, allows a 100% capital gains tax exemption from the sale of qualified small-business stock bought before 2012.

The measure also increases the tax deduction for business start-ups from $5,000 to $20,000, and extends the Build America Bonds program through June 2013.

March 10, 2010
Payroll Penalties

With local, state and federal governments suffering the effects of the economic downturn, it should come as no surprise to anyone in the industry that tax laws will be subject to stricter enforcement to shore up plummeting revenues. What might come as a surprise is just how far the tax collector’s reach can extend, however.

December 25, 2009
Phase-Out Strategies (Part 2 of 2)

Many plant owners are starting to plan for retirement, or at least winding down on responsibilities. Because this brings up a host of challenges, it’s never too soon to start the process.

Part 1 of this story discussed initial considerations for making the transition, along with all-cash sales and buyouts. Another type of transition is the earnout.

THE EARNOUT

July 14, 2009
Senator Introduces Bill to Lower Tax Burden for Small Businesses

WASHINGTON — Sen. Chuck Grassley (R-Iowa) has introduced a bill designed to strengthen small businesses by lowering their tax burden. The senator says that the bill will help create new jobs, since about 70% of all net new jobs come from small business.

November 27, 2008
The Bailout’s Breaks: Wall Street Rescue Provides Tax Credits, Deductions (Part 1 of 2)

Talk about last-minute changes to the tax code! The primary purpose of the Emergency Economic Stabilization Act of 2008 (EESA) is to solve the credit crunch in the financial markets, but it’s also one of the biggest tax bills in recent years.

November 21, 2007
New Michigan Plan May Replace Service Tax

LANSING, Mich. — The Michigan Senate voted today to replace a proposed sales tax on services such as drycleaning set to take effect on Dec. 1. Approved 20-16, the Republican plan would replace the unpopular proposal an increase in the new Michigan Business Tax, or MBT.

The Senate plan seeks to impose a smaller MBT surcharge on all businesses temporarily, and would limit any single business’ liability to $7.5 million. An earlier House version set the limit at $2 million, giving big businesses a bigger break.

April 18, 2007
Maine Eyes Service Sales Tax

AUGUSTA, Maine — Maine is examining multiple proposals for tax reform that would extend the state sales tax to personal services such as drycleaning.

Legislators’ goal is to reduce state income taxes — currently a graduated system charging 2% to 8.5% on personal earnings — as well as offer property tax relief and tax rebates for low-income owners and renters.