Expenses for businesses in the start upstart-up phase are not currently deductible. Instead, new businesses can elect to write off up to $5,000 of start-up costs in the first (1st) year they actively operate and engage in business. They are then allowed to amortize the remaining costs over 180 months. Additionally, it is important to add that the initial $5,000 write off phases out dollar for dollar once total costs surpass $50,000.
Vice President Harris plans to increase the first-year start-up deduction from $5,000 to $50,000. She also is pushing for a simplified standard deduction for all small firms, to replace the current process of deducting specific expenditures. However, she has not suggested the amount of this business standard deduction. As fresh as these ideas sound, they are not originally Vice President Harris.’ While running in the 2016 Presidential Election, former United States Secretary of State Hillary Clinton proposed to raise the deduction for first-year start-ups from five thousand ($5,000) dollars up to $40,000, with backed positioning to support a standard deduction for small businesses to take on their returns.
Next, where do the two nominees stand on the $10,000 State and Local Tax (SALT) deduction cap? Former President Donald J. Trump has vowed to restore the SALT write-off that was implemented in 2017 during his presidency. Which would allow taxpayers who itemize on Schedule A to deduct state and local taxes that they pay up to $10,000. This would help taxpayers who are paying for medical bills, donating to charities, grieving casualty and theft losses and other expenses. President Trump stated that this would benefit high-tax states like New Jersey, New York, Pennsylvania and others to save on taxes. Vice President Harris remains silent on the subject. Something to consider, eliminating the $10,000 SALT write-off cap would disproportionately benefit the upper-income class and would in hand cost the United States Government considerable federal income tax collections from upper income taxpayers that the future president and Congress could allocate for other tax cuts.
Like-Kind Exchanges of Real Property can Provide Gain Deferral if Properly Structured. This is where real property used in a trade or business or held for investment is exchanged for like-kind property. The Harris campaign wishes to cut this strategy to hinder businesses and other financially sound individuals . The proposal would cap the taxpayers deferred gain to $500,000 each year, and at $1 Million for joint filers. Meaning any gains above these caps would then be taxed immediately. This change could be particularly devastating to small businesses seeking to relocate.
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