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Recent tax law changes: Are you affected?
The American Jobs Creation Act of 2004 created billions of dollars of tax breaks.
The American Jobs Creation Act of 2004 created billions of dollars of tax breaks. The act also introduced some revenue-raising provisions that offset those breaks. You might be affected if you:
- bought a sports utility vehicle for business use that weighs more than 6,000 pounds after Oct. 22, 2004. Instead of getting a tax deduction under Internal Revenue Service (IRS) code section 179 for the full amount of the vehicle up to $102,000, you now will get only $25,000. However, the section 179 expensing deduction for all other items that qualify is $102,000 for 2004 and increases to $105,000 in 2005, and the provision is extended until the end of 2007.
- made qualified leasehold improvements after Oct. 22, 2004. Leasehold improvements made before the end of 2006 are eligible for a 15-year write off, instead of a 39-year write off.
- live in a state that doesn't require income taxes. If sales tax is greater than income tax in your state (Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming), then sales tax deductions are back. The deductions are itemized and are valid for sales tax paid in 2004 and 2005. Don't save receipts? You can still get the deduction based upon published IRS tables.
- plan to donate a car, boat, or plane. The tax deduction and reporting requirements for these donations have changed for 2005. If the amount of the donated item exceeds $500, the IRS code now says that your deduction depends on the intended use of the donated item. If the charity sells the item, your tax deduction is limited to the amount they receive from the sale.
Gary I. Glassman, CPA
Gary I. Glassman, CPA, is a partner with Burzenski and Co. PC in New Haven, Conn., and a Veterinary Economics Editorial Advisory Board member.