A Little Bovine Depreciation Are you properly depreciating your cattle? Sounds a little odd, but it's important enough for the
IRS to clarify its position on the matter.
The question about how to depreciate a cow seems to have been related to whether or not she was carrying a calf. The IRS says when a cow is carrying her first calf, the cow's depreciation is a "preproductive cost" and is capitalized. However, the depreciation on the mother is also a capitalized cost of producing a calf.
Since the cow and her depreciation seem to fit into two categories, the IRS is giving farmers the choice. The farmer can assign all the depreciation to the first calf, or he can apportion it between the mother and her yield. Tax depreciation on the mother starts when she reaches breeding age.
Capital Gains Update
An item we ran in this column back in May referring to changes in capital gains rules brought a lot of calls, most wanting to know what the taxable income needed to be to hit the 0% tax rate. Here's the update: In 2008, if you are in the 10 to 15% bracket, profits from assets held more than one year won't be taxed. To come in under the 25% bracket and be eligible for this 0% tax rate, you must have taxable income of less than $65,200 if you're married, and less than $32,600 if you're single.
Remember, the IRS defines "taxable income" as income minus deductions and personal exemptions.
Change Coming for LLCs
One-owner limited liability companies need to note an IRS change that will affect the way they do business. Beginning in 2009, one-owner LLCs will be required to deposit taxes under the entity's name and tax identification number.
It's been fairly common for these owners to use their Social Security numbers for filing, and that will be okay in 2008. But the IRS won't accept this beginning in 2009.
Health Care Premiums Hurt
The number of small businesses offering health care continues to drop as premiums hit new highs.
A recent study by the Kaiser Family Foundation and the Health Research and Educational Trust reports health care premiums have climbed at more than twice the rate of inflation. Premiums for a family policy went up an average of 6.1% in 2007.
Small businesses and their employees have been especially hard hit. In 2000, 68% of businesses with less than 200 employees offered health care coverage. Today that figure is 59%. The number is 45% among businesses with fewer than 10 workers.
Worker Verification Stalled
New worker verification rules had employers scrambling to figure out discrepancies on incorrect W-2 forms they had submitted. Businesses that filed W-2s with Social Security numbers that did not match government records were told they'd have 90 days to clear up the questions. If they couldn't, they were told there would be big fines.
A mailing was planned in September. But those letters didn't go out. That's because those rules are now on hold while the federal government defends the move in court.