Worcester Business Journal

www.wbjournal.com February 2, 2015 • Worcester Business Journal 19 N ow that we're a month into the new year, here are three important tax considerations to keep in mind, which may impact your business or personal tax situation. Section 179 depreciation and bonus depreciation Beginning in 2015, the amount of fixed-asset purchases that can be deducted under Section 179 of the federal tax code has dropped to $25,000 from $500,000. Section 179 allows for the current deduction of the entire cost of certain fixed-asset purchases, capped at a specific dollar amount. The allowable deduction is phased out when assets purchased in the same year exceed a certain threshold. For 2014, the maximum deduction of $500,000 was phased out when current-year additions reached $2 million. The deduction was completely phased out when additions reached $2.5 million. But for 2015, business owners are facing a Section 179 limitation of $25,000 with phaseout beginning at $50,000 and completely eliminated at $75,000. As in previous years, these limits can be expanded by future legislation, so stay tuned. Bonus depreciation, which allows the business owner to deduct half of the cost of a fixed asset in the year of acquisition, has been eliminated, for now. The balance of the cost may be deducted under Section 179 or depreciated under the depreciation rules. In past years, bonus depreciation has been extended by legislation. Health care credit for small businesses Small businesses, and even certain tax-exempt entities, have been entitled to a tax credit for health insurance costs they pay. The credit is claimed on Form 8941 and can be as high as 50 percent of the premiums an employer pays. But to qualify for the credit, you must meet several requirements. First, the company must pay at least half of employees' health insurance costs. Second, the company must have fewer than 25 full-time equivalent employees. And finally, the average annual wages of those employees must be less than $50,000. One important new requirement is that for tax years beginning in 2014 or later, the health insurance must be purchased through a Small Business Health Options Program (SHOP) Marketplace or qualify for an exemption. The exemption is generally for employers that changed plans partway through 2014 from a non- SHOP plan to a SHOP plan. Long-term vs short-term capital gain holding periods Holding periods, which cover the time from the purchase of an asset to its sale, are critical in determining the tax consequences of a sale and the after-tax return on an investment. The taxpayer should carefully review holding periods prior to selling assets. For example, the disposition of an asset held for up to one year will have the gain on the sale taxed at ordinary federal tax rates (as high as 39.6 percent) and 12 percent for Massachusetts, as opposed to lower long-term capital gains tax rates. Compare those rates to the federal long-term capital gains rate of 15 percent or 20 percent, depending on income level, and the Massachusetts long-term rate of 5.15 percent. n Attorney Allen J. Falke is a member of Mirick O'Connell's business and trusts and estates groups, focusing his practice on tax law and estate and business planning. Mirick O'Connell has offices in Worcester and Westborough. By Alicia M. O'Connell Alicia M. O'Connell is an attorney at O'Connell & O'Connell P.C. in Auburn. She's also an active volunteer in women's and youth organizations in Worcester County. 10 Things I Know About... Business tax considerations for 2015 KNOW HOW 10. Care about an issue. The issues you care about will lead to volunteer opportunities. If you like animals, work a shift at the nearby Animal Rescue League. If you want to work with children in need, volunteer after school at the local Boys and Girls Club. 9. Do something about it. If you attend an organization's meeting, fundraiser or social event, you'll learn about the programs they offer and who they serve. You will also meet program staff, donors and other volunteers. That may be enough inspire you to sign up for a volunteer activity. 8. Find use for your skills and talents. The skills you highlight on your resume transfer into the talents you share as a volunteer. Good with numbers? Become a financial literacy mentor. Handy with tools? Volunteer for a build day with Habitat for Humanity. 7. Feel good. One of your goals will be to make the population you're serving feel good. You'll likely achieve it, and will feel pretty good doing it. 6. Sit on boards and committees. Many organizations are run by small staffs and rely on volunteer committees. It's a privilege to contribute to their decision- making processes and see their programs move forward. 5. Discover new skills and talents. You can update your resume with the volunteer experience you've gained and the leadership skills you've acquired. 4. Expand social and professional networks. There are far-reaching benefits of your volunteer service. You, too, will feel the benefits of your service as your social and professional networks grow from the contacts you make. 3. Donate. Once you contribute your time and talent, you'll likely donate your treasure. Make a gift to the organization you support or to general grant-making institutions like the United Way of Central Massachusetts or the Greater Worcester Community Foundation. 2. Celebrate. Your work won't go unnoticed. Whether you attend a volunteer celebration or receive a handcrafted "thank you" note from a child you work with, organizations show appreciation for their volunteers. 1. You'll be back. Once you find an organization or program that's the right fit, you'll become a regular volunteer. n Stay up to date on changes in tax law Volunteering B eing a leader of a company is more than just hiring, firing, phone calls and annual reports. It's not unusual for leaders to be narrowly stereotyped as control freaks or taskmasters. But great ones do none of that; there is much that goes on behind the scenes. Here are three ways leaders lead with success: They are creative. As a dean of a business school and as a management consultant, Roger Martin interviewed more than 50 great leaders. In an online article for the Harvard Business Review, he writes that success isn't about superior strategy or flawless execution. "(Great leaders) have the predisposition and the capacity to hold in their heads two opposing ideas at once. And then, without panicking … they're able to creatively resolve the tension between those two ideas by generating a new one that contains elements of the others but is superior to both." They change their minds. With new information, great leaders change their opinions. Their goal is to find the best solution, not be the smartest person in the room, says G. Shawn Hunter in a Gwen Moran article at FastCompany.com. "Asking (open questions of key advisors or teammates) for which you do not know the answer … will make you, in their eyes, a stronger leader," Hunter says. They challenge others to think. Great leaders understand team members' viewpoints, areas for improvement and capabilities. By keeping people on their toes, explains an article at Forbes.com, leaders are actually enabling colleagues with tools to grow. "If you're not thinking, you're not learning new things," the article states. If you're not learning, you're not growing — and over time becoming irrelevant in your work." n 101: HOW LEADERS THINK >> BY SUSAN SHALHOUB Special to the Worcester Business Journal BY ALLEN J. FALKE Special to the Worcester Business Journal

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