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IPA-IBA
North America
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International Profit Associates, Inc. Integrated Business Analysis, Inc. |
Media Background and source information
The following is an advisory for businesses and individuals who are reviewing their year end 2003 and fiscal 2004 finances. You are invited to consider this in all or part for inclusion in an article or column you are preparing. For further information, additional explanation or specific examples of how these strategies can and are being implemented, please call me at (847) 509-5777. Please credit International Profit Associates, Inc., of Buffalo Grove, Il., and Craig Koop, Director of Implementation of its International Tax Advisors Group. Thank you for your consideration. Raymond Minkus
INTERNATIONAL PROFIT ASSOCIATES/International Tax Advisors Group/SUV
BUSINESS & TAXING PLANNING UPDATE, Year end 2003
December 31 is quickly approaching and it may be worthwhile for businesses and individuals considering buying a luxury-class sport utility vehicle (SUV) to do so before the end of the year, according to International Profit Associates, Inc., and its International Tax Advisors Group. Craig Koop, Director of Implementation of International Tax Advisors, Inc., the tax advisory group of International Profit Associates, said changes in the Internal Revenue Code make the purchase of a “heavy enough” SUV very attractive if done by the end of 2003.
"In fact," said Koop, "businesses considering the purchase of any vehicles in excess of 6,000 pounds can take advantage of the new Internal Revenue Code (IRC) depreciation rules that became effective in 2003 which provide favorable treatment in the form of faster write-offs.
"Businesses and some individuals have a shrinking window of opportunity to take advantage of this and other changes in the depreciation regulations because of provisions that disappear after 2004 and the possibility that others, including those related to vehicles in excess of 6,000 pounds are repealed," Koop added.
Here’s how the new for 2003 expense depreciation works:
For the tax years 2003 through 2005, the limitation to expense depreciable tangible property in the year of purchase has been increased from $24,000 to $100,000. This applies to most capital equipment including vehicles. There are restrictive annual limitations for luxury automobiles, however, unless the vehicle weighs more than 6,000 pounds. If the vehicle is over 6,000 pounds, it is not subject to the auto luxury depreciation limitations.
Because the cost of your business vehicle can be depreciated and because Congress chose to differentiate between personal cars used in business and "pure" business vehicles like trucks, SUVs in excess of 6,000 pounds now qualify for this type of favorable tax treatment. Although not necessarily all inclusive, the list of possible SUVs that qualify follows:
Assuming the SUV is used more than 50% for business purposes, the cost of the vehicle, up to $100,000, may be written-off as an expense in 2003, allowing any remaining basis in the vehicle to be fully depreciated in 6 years, as opposed to the 10-plus years when subjected to the typical auto luxury limitations. In short, the new law accelerates the depreciation deductions for the trucks/van/sport utility vehicles that have a gross vehicle weight listing of 6,000 or more, thus reducing the tax liability and improving working capital.
For example, a $55,000 Cadillac Escalade weighing more than 6,000 pounds is not subject to the luxury vehicle limitations and provided that the taxpayer has not purchased any other property, the entire $55,000 can be expensed during 2003.
By contrast, a $55,000 BMW sedan that weighs less than 6,000 pounds would be subject to the usual luxury vehicle limitations and may take 10 or more years to fully depreciate.
International Profit Associates, Inc., is the nation’s leading consultant to small and medium sized businesses. The company and its affiliates, including International Tax Advisors, Inc., have served more than 100,000 clients since 1991. More information about the company may be found at www.ipa-iba.com.
International Tax Advisors, Inc. provides strategic tax planning services, and representation of clients in resolving matters with tax collection agencies in the United States and Canada. The clientele is composed of a diverse group of businesses (including both established and emerging companies) and their individual owners. Additional information, including a comprehensive resource center, may be found at www.internationaltaxadvisors.com.
Craig Koop is Director of Implementation for International Profit Associates, Inc., and its International Tax Advisors, Inc., division. Mr. Koop is responsible for developing tax strategies for middle-market businesses and their entrepreneurial owners. Mr. Koop is a CPA and JD having both his undergraduate degree from DePaul University and his law degree from the DePaul College of Law. In addition, Mr. Koop has a masters of science degree in taxation from the DePaul University Kellstadt Graduate School of Business.
Mr. Koop’s distinguished career includes positions with Hinshaw & Culbertson where he was in the tax and estate planning group of the Chicago-based law firm; KPMG where he served Fortune 500 clients as a member of the international accounting and consulting firm’s strategic tax planning group; and Deutsche Financial Services where he handled all aspects of their tax compliance and planning in the 50-state U.S. tax environment and in Canada.
International Profit Associates, Inc., and International Tax Advisors, Inc., provides this information for the benefit of your readers. Every effort has been made to ensure that all information contained herein is accurate per the date of its original distribution, however, this information is subject to change. Furthermore, it is important to understand and convey that the tax and financial planning situation and needs of each business and individual is likely to be different. As a result, you and your readers should always contact your tax advisor to obtain proper professional advice before any action is taken.
International Profit Associates and its related entities cannot be held responsible for any loss incurred as a result of the use of this information. Should this information be presented on the Internet, International Profit Associates and its related entities assumes no responsibility whatsoever for the content of those web sites. Moreover, the addition of this information on those sites does not represent an approval or endorsement of those products or services unless expressly approved and granted by International Profit Associates.
Questions and comments should be forwarded to Raymond Minkus (847) 509-5777 or to rdm@minkuspr.com on behalf of International Profit Associates, Inc.
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International Profit Associates, Inc.
Phone: 847-808-5590 Fax: 847-808-5599 Copyright © 2005 (IPA) All Rights Reserved |