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Forget April 15. Well, don't, actually, but Dec. 31 matters more.

Drinkbus-Joe Kristan is a founding member of Roth & Company P.C

A bibulous friend told me long ago that New Years Day is for amateurs. The real drinkers' holiday is St. Patrick's Day. In the same way (well, not really, but bear with me), tax dilettantes focus on April 15, when Dec. 31 is where the real action is. You can do big things up through year-end. After that, it's mostly scorekeeping.

Let's assume you have a pretty good handle on where you stand tax-wise with your business income. If you don't, figure it out and come right back, we'll still be here. OK, good. Here are some things that have to be done this year to make a difference on your 2015 calendar-year tax return.

Are your new fixed assets "placed in service?" Congress has finally enacted the $500,000 maximum "Section 179" allowance permanently, effective for 2015. Section 179 lets you deduct the cost of qualified assets right away, rather than depreciating them over a period of years. They also have renewed "bonus depreciation" for 2015 through 2019. But these tax breaks only work when an asset is "placed in service" during the year. That means the asset is on the premises and ready to use. "Bought and paid for" isn't enough.

Many vehicle dealers are touting the purchase of a new car as a tax saver. That's fine, but you have to take delivery, and remember that there are restrictions on Section 179 and bonus depreciation for business vehicles.

Full-featured qualified pension or profit sharing plans have to be in place by the end of 2015 to accept deductible 2015 contributions. Yet if the plan is in place, the funding can wait until the due date of your 2015 return, including any extensions.

Expenses to related parties have to be paid by Dec. 31 to generate a deduction. For example, a law firm that is trying to bonus out its taxable income to its sole owner by the end of 2015 has to have the cash in the owner's hands by Dec. 31. And don't do something cute like loaning the money back to the company before the check clears, or endorsing the year-end bonus check back to the company without cashing it. That will go badly.

Sales of stock have to be made by Dec. 31. With exceptions that probably don't apply to you, sales of publicly-traded stocks are counted on the trade date, even if they settle after year-end. If you have recognized capital gains in 2015, you can sell loss shares as late as Dec. 31 and offset the gains. Long-term losses can offset short-term gains, and vice-versa. Naturally there are some catches -- you can't buy back the loss shares within 30 days before or after the sale, and you have to use a taxable account (rather than, say, a retirement account). And this doesn't work for short sales; they have to be settled to count.

You have to have basis in your S corporation at year-end to deduct losses that the S corporation generates. And don't even think of funding your S corporation on Dec. 31 to take losses and then pulling the money out the next day.

Take a credit card mulligan. Payments by credit cards are the same as cash, even if you don't pay your credit card balance until next year. Same goes with other deductible expenses financed by third-party debt.

As always, consult your tax pro to see how these ideas apply to you before you pull the trigger. There are limits -- for example, you can't buy 10 years worth of office supplies and expect to deduct it all this year. If it seems too good to be true, it probably is.

It's asking a lot of the last few days of the tax year to solve all of your tax problems, but there's a lot more you can do now than you will be able to do in April.

 

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