There are proposed curbs on depreciation and other write-offs:

  • Straight-line depreciation for real estate would be lengthened to 43 years, up from the current 39-year  maximum. Other assets would be put in one of four depreciation pools based on useful lives, and a set percentage of the costs of assets in each pool would be deducted each year.
  • Intangible assets would be amortized over 20 years…up from 15 years now.
  • The ability to defer tax via a like-kind exchange could be repealed.
  • Advertising expenses would have to be written off over five years. 60% of them could be taken in the first year, and the other 40% would be amortized over four years.

 Planning to put an asset in service by Dec. 31 to get 50% bonus depreciation?

  • Keep this in mind because bonus depreciation is set to end after 2013,
  • unless lawmakers decide they will retroactively reinstate this tax break next year.

Now let’s turn to more 2013 tax reminders to help avoid last-minute errors:

  • Check the balance in your flexible spending account. You must clean it out by Dec. 31 if your employer has not implemented either the 2½-month grace period or the new $500 carryover rule. Otherwise, you forfeit any money left in your account.
  • Make sure you know the tax rules if you are charging deductible items.
  • For charges that you make with a retail store credit card, you are allowed to claim the deduction for the item only in the tax year in which you pay the bill.
  • For transactions made with a bank credit card, you take the write-off in the tax year that you charged the goods, even if you pay the bill next year.
  • And tax-related identity theft continues to plague IRS. Treasury inspectors estimate that for 2011 alone, fraudsters filing fictitious returns got nearly $3.6 billion in unauthorized refunds.

Nick DiBartolomeo,Tax Partner