Masonry Magazine December 1988 Page. 19
Tax Matters
continued from page 14
3. Desire to increase income
a. Reverse of items in item 2 above.
b. Sell future services at a discount (to encourage same) and receive payment in current year.
Increasing/Decreasing Current Year's Deduction-Accrual Basis
A. Increasing Deductions
1. Bonuses/compensation
a. Consider for officers and stockholder/employees. Watch reasonableness. Must pay more than 50 percent stockholder by year-end.
b. Consider bonuses to the key people and other employees.
c. Can nonrefundable commission be prepaid?
2. Qualified pension or profit-sharing plan
a. Consider large contribution under a discretionary plan or increase benefits under a defined benefit plan.
b. Install a new plan.
c. Fund past-service liability.
d. Fund for the maximum deductible amount allowed, rather than the minimum amount required.
3. Incur expenses that can be paid or accrued before the end of the year. For example, consider all of the following:
a. Utilize maximum allowable (10 percent of taxable income) charitable deduction.
b. Incur advertising, sales promotion and production and mailing costs of catalogues this year so benefits will be received next year.
c. Order and obtain all types of noninventory supplies such as printed forms, sales brochures, and so on.
d. Accelerate repairs and/or abandonments.
4. Travel and Entertainment
a. Review all documentation for any facilities (such as yacht, plane or club membership) to make sure business use exceeds 50 percent.
b. Increase business use for balance of year.
5. Attend educational seminars. The costs of tuition, books, supplies, transportation and (if the course is out-of-town) meals (80 percent deductible) and lodging are deductible if education maintains or improves skills used in your business.
6. Review each item on the profit and loss statement.
B. Decreasing Deductions
1. In general, do the reverse of A above.
2. Where any expenditure for this year will provide greater benefit in the next year:
a. The key is to avoid the expenditure, but when this is not possible...
b. Document the benefits for future years and charge to prepaid accounts.
Decreasing/Increasing Current Year's Income-Accrual Basis
A. Decreasing income
1. Delay shipping to next year.
2. Ship, but ship F.O.B. point of destination, so title does not pass until after year-end.
3. Makes sales on consignments or approval (sometimes called guaranteed sale). Outright sale with right of return yields instant income, not a deferral.
4. Sell (and lease back) Section 1231 property at a loss.
ORIGINATORS OF
Pre-Fabricated Glass Block Panels
CUSTOM MADE TO YOUR REQUIREMENTS
NATIONAL DISTRIBUTOR
PITTSBURGH CORNING
SCHALKE GLASS BLOCK-GERRIX HOLLOW
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MANY STYLES AND SHAPES
SASH REPLACEMENT
SPECIALISTS IN THE INSTALLATION OF
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FRED BEYER
Since 1910
7810 S. Claremont Chicago, III. 60620
(312) PR 8-4300
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Inquiries
Invited
MORTAR, PLASTER and
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Designed and built to the
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phone (312) 247-2530 or write
Anchor Manufacturing Co.,
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IL 60623.
ANCHOR MANUFACTURING CO.
ANCHOR MANUFACTURING CO.
2922 West 26th St., Chicago, IL 60623
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