August 29, 2024 • 11 mins
In 2024, navigating the complex landscape of tax strategies is more critical than ever, especially when it comes to bonus depreciation. In my latest deep-dive podcast, 'Don't Take Bonus Depreciation in 2024,' I uncover the essential insights and alternative strategies that every business owner needs to know to optimize their tax situation.
I've put together this FREE resource for you:
7 Write-Offs Every S-Corporation Business Owner MUST Know
🆓 Download FREE PDF here: https://7taxwriteoffs.com/
Ready to start saving money on your taxes?
☎️ Schedule your FREE Tax Advisory Session: https://taxplanningcall.com/
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*Disclaimer This material & presentation content is for informational and educational purposes only. This material and presentation content is designed to provide general information regarding the subject matter covered. It is not intended to serve as legal, tax, or other financial advice related to individual situations. Because each individual’s legal, tax, and financial situation is different, specific advice should be tailored to the particular circumstances. For this reason, ...
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Don't take bonus depreciation in 2024, and
whatever your account is tellingyou is a lie.
I will tell you the truth aboutbonus depreciation and the
alternative that you could usein 2024.
Ready, let's go.
Speaker 2 (00:15):
Welcome to the Tax Reduction Podcast for
money-making entrepreneurs withBoris Mushaev.
Boris has helped entrepreneursacross the United States
collectively save millions ofdollars in taxes with the power
of tax planning and advisory.
The only way you, the businessowner, can save money on taxes
is by using proactive taxstrategies, and this podcast is
(00:36):
all about saving you money ontaxes.
Boris will share with youin-depth and easy to understand
tax reduction strategies thatyou can implement in your
business within 30 days or less.
Let's jump into today's episode.
Speaker 1 (00:49):
What is really a depreciation?
A depreciation is basicallywhat IRS decides what the class
of asset should be.
It has its useful life, right.
It could have a useful life offive years or seven years, 10
years or 15 years 15 years.
So, for example, equipment orautomobiles could be have five
or seven years, right.
Real estate residentialproperty 27 and a half years.
(01:12):
Residential property 39 years.
Basically, irs says take thecost of that and divide it by
the number of years, that isyour deduction every year, which
seems pretty cool.
Okay now, but not so cool.
The reason I say not so cool isthat you just spent a hundred
thousand dollars buying anequipment and you only get a
twenty thousand dollar deductionand then we have, you know,
(01:35):
amortization.
Amortization is for things likesoftware or goodwill.
When you buy in a business thatmay have like a 15-year
amortization life, somethingthat doesn't have a tangible
right, right, it's not atangible asset.
I really want to focus on bonusdepreciation and section 179.
Now, as you know, bonusdepreciation when President
Trump took office, he basicallysaid all the assets that you buy
(01:57):
, instead of dividing the numberof years five, seven years or
27 and a half years, 15 years,whatever that may be.
You can take everything as adeduction your first year and
that is called bonusdepreciation.
Before September 27, 2017, thebonus depreciation was at 50%.
So you bought $100,000equipment.
You get a $50,000 write-off.
The difference you write offover the course of, let's say,
(02:19):
five years.
Okay, now with the bonusdepreciation.
After President Trump tookoffice and passed tax cuts and
jobs act, he said Nope, all theequipment that you buy is going
to be a hundred percentdeductible in this first year.
Everybody was like Whoa, thiscould apply to your equipment,
this could apply to your rental,real estate investment, this
could apply to your auto.
Like it was a huge, huge dealfor a lot of business owners.
(02:43):
Okay now, but it came with acost, meaning to say or I should
say, expiration date, not acost in 2020, it basically
expired in 2022.
By end of 2022, in 2023, youcould take 80 depreciation
deduction, in 2024, 60depreciation deduction.
(03:03):
There is actually a bill thatwas passed and approved by the
House, but not yet Senate, tobring back the bonus
depreciation to 100%.
We still don't know if the billis going to pass the Senate and
we might end up with a 60%depreciation.
And a lot of business ownersare crying and they're hurt and
like, wow, irs doesn't like us,but everybody seems to forget,
(03:24):
including their accountant, thatwe have something that is
called a Section 179.
And how you can use a Section179 compared to bonus
depreciation something that youraccountant is probably not
telling you because you don'thave a tax advisor.
We're going to talk aboutSection 179 and how to use it as
a tax strategy right after thisbreak.
Speaker 2 (03:43):
If you have a tax preparer and you do not have a
tax advisor, the only way youcan save money on taxes is by
using proactive tax planningstrategies that only a tax
advisor can give you.
Boris put together a free PDFfor you, the business owner
Seven tax write-offs everyS-corporation business owner
must know.
In this PDF, you can find seventax strategies that you can
(04:06):
start using in your business toinstantly start saving money on
taxes.
Click on the link in thedescription below for a free
download.
Speaker 1 (04:13):
Let's talk about Section 179.
Now, before the whole bonusdepreciation became 100%,
business owners could also takeadvantage of something that is
called Section 179.
So that means that you couldstill deduct 100% of the assets
that you purchased Maybe not allassets, such as, for example,
autos that are more than £6,000.
(04:35):
They had limits or real estaterental properties, but the
Section 179 was still a prettygood write-off, especially if
you buy a lot of machinery andequipment in your business.
Now the limit for 2024 towrite-off, or section 179, is
1.5%.
Point two two zero right.
One million two hundred andtwenty thousand dollars.
That means the phase outdoesn't begin at three point, at
(04:58):
three million fifty thousanddollars.
Meaning, say, if you buyequipment at three million fifty
thousand dollars all thesenumbers in my head then there's
a phase out is going to begin.
But if you're a small businessowner and you're under that
threshold, up to 1.22 milliondollars, bam can be deducted,
100 in the first year comparedto bonus depreciation.
If the bill doesn't pass thesenate, then we're back at 60
(05:19):
bonus depreciation for 2024.
Okay, well, not, we're back,we're actually at it right now.
So 2024.
So what we want to do right nowis actually properly plan for
this year whether we should takesection 179 or bonus.
If your taxes for 2023 are notyet filed, you can actually do
after-the-fact planning, andI'll talk about it here for 2023
(05:43):
, because in 2023, bonusdepreciation was only 80%.
Now I love Section 179.
Why?
Because it actually is prettyflexible.
As long as you have profits inyour business, you can take
Section 179.
If you have $0 profit, so youhave losses and you bought
equipment, any Section 179depreciation generated by that
(06:06):
equipment that does notcontribute to the loss, for
example, is just carried forward.
That's where bonus depreciationcould come in handy.
But in Section 179, you alsocan pick and choose assets the
class of asset With bonusdepreciation you can.
If you bought one equipment andyou choose bonus depreciation,
then all equipment should bebonus depreciation.
With Section 179, you can pickand choose which equipment you
(06:29):
want to do 100% of deduction.
You don't want to do 100% ofdeduction.
Very, very flexible.
You also can do a partialdepreciation.
Let's say you bought a fivehundred thousand dollar
equipment and you only want totake three hundred thousand
dollars in its first year.
So, matter of fact, we did thatwith the clients airplane.
Okay, the client called us.
He's our tax advisory clientwants to buy an airplane
(06:49):
airplane legitimate use for thebusiness and we actually set
there and calculated what willit look like if we take a
partial Section 179 compared tohow much we can carry over to
next year?
Did a lot of planning, came outto great great benefit and tax
savings.
Okay, so Section 179, sowhatever, you're being told by
your accountant oh, bonusdepreciation is done, gone.
(07:10):
You can't take advantage of it.
You actually can if youproperly plan with your tax
advisor.
Now bonus depreciation.
Coming back to bonus, it wasreally really awesome to take a
hundred percent.
Why?
Because you could actuallywrite over a hundred percent of
a business vehicle that weightedmore than six thousand pounds.
You could also use bonusdepreciation when purchasing
real estate, investment property, such as rental real estate.
(07:33):
Doing cost segregation studies,100% bonus depreciation was a
winner.
But now that the tax law ischanging and the House passed
the bill to bring back bonusdepreciation to 100%, the Senate
hasn't approved it yet, so westill don't know what we're
doing.
Now let's talk about boards.
How can we plan for this?
How can we use this taxstrategy with a section 179 or
(07:56):
even bonus depreciation, andwhat should we be doing?
We'll do this right after thisbreak.
Speaker 2 (08:00):
If all your accountant does is taxes, you
may be overpaying in taxes bythousands of dollars every year.
Every week, Boris releases atax strategy on his podcast so
that you, the business owner,can pay less in taxes every
single year.
Be sure to subscribe to ourpodcast to be notified when a
new tax strategy is released.
If you're ready to work with atax advisor on your tax strategy
(08:22):
and planning, be sure toschedule your call by heading
over to wwwtaxplanningcallcom.
Again, that'swwwtaxplanningcallcom.
Speaker 1 (08:32):
Let's talk about how to implement these strategies.
Number one what's really coolabout depreciation planning?
You're going to buy equipmentwhether you need it.
I mean, excuse me, you're goingto buy equipment because you're
going to need it in yourbusiness, right?
You're not going to buy itbecause you don't need it, so
you're going to need it.
And what I like aboutdepreciation planning is that
you can actually also do notbefore the year is over, at the
(08:53):
time of purchase, but you can achance to do any planning.
Oh, now you finally gotyourself a tax advisor instead
of working with a tax preparer,you can actually do year-end
planning.
So, hey, if I take a bonusdepreciation or if I take a
section 179, how can I do it?
Can I choose which classes ofassets?
(09:14):
I don't want to depreciateeverything this year, but I only
need, let's say, half a milliondollars in deduction.
You can actually plan that atthe year end.
What's really important alsostate planning.
If you do decide to go withbonus depreciation, what we had
seen a lot when people weretaking, or business owners were
taking, 100% depreciation.
Not all states complied,especially New York State or
(09:36):
California.
If you took, let's say, boughtequipment for $100,000 and you
got a $100,000 write-off.
When the tax return is beingprepared, the software that your
preparer or your tax team isusing is adding back the
$100,000 in income on the statereturn and then takes that
$100,000 and divides it by fivelet's say it's a five-year
depreciation.
(09:56):
Then states don't comply.
But states comply with Section179.
So it's a huge, huge planningopportunity.
If we look wait a second I couldeither use bonus with section
179.
So it's a huge, huge planningopportunity.
If we look wait a second Icould either use bonus or
section 179.
Where do I benefit the most?
Definitely do some stateplanning, profit planning.
If business has no profits andyou bought a lot of equipment
(10:16):
and you need to generate loss,number one make sure you have
enough basis in your business.
So if you bought, if you have aloss and you got equipment
especially if you finance it andyou want to use that equipment
as a loss, which you may okay,you want to make sure that you
use bonus depreciation insteadof section 179.
So profit planning is super,super important.
Like I said, all of these threethings that I talked about
(10:39):
right now, this can be after thefact planning as well, at the
year end, before your taxes arefiled.
If you need to file for anextension, go for it.
Uh, if you think extension is ais a, what is it called in an
audit trigger?
That is not true, actually,okay, extension is giving you
enough time to get yourdocuments together and file it
(10:59):
with the irs.
Now, if you have taxes due withan extension, you want to make
sure you pay that.
Other than that, this can bedone at year end Until the next
time.
Speaker 2 (11:09):
That's it for today's episode.
Be sure to check out thedescription below for some free
tax reduction resources thatBoris put together for you.
If you're ready to work with atax advisor on your tax planning
, be sure to schedule your callby heading over to
wwwtaxplanningcallcom.
That's wwwtaxplanningcallcom.
And be sure to subscribe to ourpodcast to be notified when the
(11:31):
next strategy is released.
Don't take bonus depreciation in 2024, and
whatever your account is tellingyou is a lie.
I will tell you the truth aboutbonus depreciation and the
alternative that you could usein 2024.
Ready, let's go.
Speaker 2 (00:15):
Welcome to the Tax Reduction Podcast for
money-making entrepreneurs withBoris Mushaev.
Boris has helped entrepreneursacross the United States
collectively save millions ofdollars in taxes with the power
of tax planning and advisory.
The only way you, the businessowner, can save money on taxes
is by using proactive taxstrategies, and this podcast is
(00:36):
all about saving you money ontaxes.
Boris will share with youin-depth and easy to understand
tax reduction strategies thatyou can implement in your
business within 30 days or less.
Let's jump into today's episode.
Speaker 1 (00:49):
What is really a depreciation?
A depreciation is basicallywhat IRS decides what the class
of asset should be.
It has its useful life, right.
It could have a useful life offive years or seven years, 10
years or 15 years 15 years.
So, for example, equipment orautomobiles could be have five
or seven years, right.
Real estate residentialproperty 27 and a half years.
(01:12):
Residential property 39 years.
Basically, irs says take thecost of that and divide it by
the number of years, that isyour deduction every year, which
seems pretty cool.
Okay now, but not so cool.
The reason I say not so cool isthat you just spent a hundred
thousand dollars buying anequipment and you only get a
twenty thousand dollar deductionand then we have, you know,
(01:35):
amortization.
Amortization is for things likesoftware or goodwill.
When you buy in a business thatmay have like a 15-year
amortization life, somethingthat doesn't have a tangible
right, right, it's not atangible asset.
I really want to focus on bonusdepreciation and section 179.
Now, as you know, bonusdepreciation when President
Trump took office, he basicallysaid all the assets that you buy
(01:57):
, instead of dividing the numberof years five, seven years or
27 and a half years, 15 years,whatever that may be.
You can take everything as adeduction your first year and
that is called bonusdepreciation.
Before September 27, 2017, thebonus depreciation was at 50%.
So you bought $100,000equipment.
You get a $50,000 write-off.
The difference you write offover the course of, let's say,
(02:19):
five years.
Okay, now with the bonusdepreciation.
After President Trump tookoffice and passed tax cuts and
jobs act, he said Nope, all theequipment that you buy is going
to be a hundred percentdeductible in this first year.
Everybody was like Whoa, thiscould apply to your equipment,
this could apply to your rental,real estate investment, this
could apply to your auto.
Like it was a huge, huge dealfor a lot of business owners.
(02:43):
Okay now, but it came with acost, meaning to say or I should
say, expiration date, not acost in 2020, it basically
expired in 2022.
By end of 2022, in 2023, youcould take 80 depreciation
deduction, in 2024, 60depreciation deduction.
(03:03):
There is actually a bill thatwas passed and approved by the
House, but not yet Senate, tobring back the bonus
depreciation to 100%.
We still don't know if the billis going to pass the Senate and
we might end up with a 60%depreciation.
And a lot of business ownersare crying and they're hurt and
like, wow, irs doesn't like us,but everybody seems to forget,
(03:24):
including their accountant, thatwe have something that is
called a Section 179.
And how you can use a Section179 compared to bonus
depreciation something that youraccountant is probably not
telling you because you don'thave a tax advisor.
We're going to talk aboutSection 179 and how to use it as
a tax strategy right after thisbreak.
Speaker 2 (03:43):
If you have a tax preparer and you do not have a
tax advisor, the only way youcan save money on taxes is by
using proactive tax planningstrategies that only a tax
advisor can give you.
Boris put together a free PDFfor you, the business owner
Seven tax write-offs everyS-corporation business owner
must know.
In this PDF, you can find seventax strategies that you can
(04:06):
start using in your business toinstantly start saving money on
taxes.
Click on the link in thedescription below for a free
download.
Speaker 1 (04:13):
Let's talk about Section 179.
Now, before the whole bonusdepreciation became 100%,
business owners could also takeadvantage of something that is
called Section 179.
So that means that you couldstill deduct 100% of the assets
that you purchased Maybe not allassets, such as, for example,
autos that are more than £6,000.
(04:35):
They had limits or real estaterental properties, but the
Section 179 was still a prettygood write-off, especially if
you buy a lot of machinery andequipment in your business.
Now the limit for 2024 towrite-off, or section 179, is
1.5%.
Point two two zero right.
One million two hundred andtwenty thousand dollars.
That means the phase outdoesn't begin at three point, at
(04:58):
three million fifty thousanddollars.
Meaning, say, if you buyequipment at three million fifty
thousand dollars all thesenumbers in my head then there's
a phase out is going to begin.
But if you're a small businessowner and you're under that
threshold, up to 1.22 milliondollars, bam can be deducted,
100 in the first year comparedto bonus depreciation.
If the bill doesn't pass thesenate, then we're back at 60
(05:19):
bonus depreciation for 2024.
Okay, well, not, we're back,we're actually at it right now.
So 2024.
So what we want to do right nowis actually properly plan for
this year whether we should takesection 179 or bonus.
If your taxes for 2023 are notyet filed, you can actually do
after-the-fact planning, andI'll talk about it here for 2023
(05:43):
, because in 2023, bonusdepreciation was only 80%.
Now I love Section 179.
Why?
Because it actually is prettyflexible.
As long as you have profits inyour business, you can take
Section 179.
If you have $0 profit, so youhave losses and you bought
equipment, any Section 179depreciation generated by that
(06:06):
equipment that does notcontribute to the loss, for
example, is just carried forward.
That's where bonus depreciationcould come in handy.
But in Section 179, you alsocan pick and choose assets the
class of asset With bonusdepreciation you can.
If you bought one equipment andyou choose bonus depreciation,
then all equipment should bebonus depreciation.
With Section 179, you can pickand choose which equipment you
(06:29):
want to do 100% of deduction.
You don't want to do 100% ofdeduction.
Very, very flexible.
You also can do a partialdepreciation.
Let's say you bought a fivehundred thousand dollar
equipment and you only want totake three hundred thousand
dollars in its first year.
So, matter of fact, we did thatwith the clients airplane.
Okay, the client called us.
He's our tax advisory clientwants to buy an airplane
(06:49):
airplane legitimate use for thebusiness and we actually set
there and calculated what willit look like if we take a
partial Section 179 compared tohow much we can carry over to
next year?
Did a lot of planning, came outto great great benefit and tax
savings.
Okay, so Section 179, sowhatever, you're being told by
your accountant oh, bonusdepreciation is done, gone.
(07:10):
You can't take advantage of it.
You actually can if youproperly plan with your tax
advisor.
Now bonus depreciation.
Coming back to bonus, it wasreally really awesome to take a
hundred percent.
Why?
Because you could actuallywrite over a hundred percent of
a business vehicle that weightedmore than six thousand pounds.
You could also use bonusdepreciation when purchasing
real estate, investment property, such as rental real estate.
(07:33):
Doing cost segregation studies,100% bonus depreciation was a
winner.
But now that the tax law ischanging and the House passed
the bill to bring back bonusdepreciation to 100%, the Senate
hasn't approved it yet, so westill don't know what we're
doing.
Now let's talk about boards.
How can we plan for this?
How can we use this taxstrategy with a section 179 or
(07:56):
even bonus depreciation, andwhat should we be doing?
We'll do this right after thisbreak.
Speaker 2 (08:00):
If all your accountant does is taxes, you
may be overpaying in taxes bythousands of dollars every year.
Every week, Boris releases atax strategy on his podcast so
that you, the business owner,can pay less in taxes every
single year.
Be sure to subscribe to ourpodcast to be notified when a
new tax strategy is released.
If you're ready to work with atax advisor on your tax strategy
(08:22):
and planning, be sure toschedule your call by heading
over to wwwtaxplanningcallcom.
Again, that'swwwtaxplanningcallcom.
Speaker 1 (08:32):
Let's talk about how to implement these strategies.
Number one what's really coolabout depreciation planning?
You're going to buy equipmentwhether you need it.
I mean, excuse me, you're goingto buy equipment because you're
going to need it in yourbusiness, right?
You're not going to buy itbecause you don't need it, so
you're going to need it.
And what I like aboutdepreciation planning is that
you can actually also do notbefore the year is over, at the
(08:53):
time of purchase, but you can achance to do any planning.
Oh, now you finally gotyourself a tax advisor instead
of working with a tax preparer,you can actually do year-end
planning.
So, hey, if I take a bonusdepreciation or if I take a
section 179, how can I do it?
Can I choose which classes ofassets?
(09:14):
I don't want to depreciateeverything this year, but I only
need, let's say, half a milliondollars in deduction.
You can actually plan that atthe year end.
What's really important alsostate planning.
If you do decide to go withbonus depreciation, what we had
seen a lot when people weretaking, or business owners were
taking, 100% depreciation.
Not all states complied,especially New York State or
(09:36):
California.
If you took, let's say, boughtequipment for $100,000 and you
got a $100,000 write-off.
When the tax return is beingprepared, the software that your
preparer or your tax team isusing is adding back the
$100,000 in income on the statereturn and then takes that
$100,000 and divides it by fivelet's say it's a five-year
depreciation.
(09:56):
Then states don't comply.
But states comply with Section179.
So it's a huge, huge planningopportunity.
If we look wait a second I couldeither use bonus with section
179.
So it's a huge, huge planningopportunity.
If we look wait a second Icould either use bonus or
section 179.
Where do I benefit the most?
Definitely do some stateplanning, profit planning.
If business has no profits andyou bought a lot of equipment
(10:16):
and you need to generate loss,number one make sure you have
enough basis in your business.
So if you bought, if you have aloss and you got equipment
especially if you finance it andyou want to use that equipment
as a loss, which you may okay,you want to make sure that you
use bonus depreciation insteadof section 179.
So profit planning is super,super important.
Like I said, all of these threethings that I talked about
(10:39):
right now, this can be after thefact planning as well, at the
year end, before your taxes arefiled.
If you need to file for anextension, go for it.
Uh, if you think extension is ais a, what is it called in an
audit trigger?
That is not true, actually,okay, extension is giving you
enough time to get yourdocuments together and file it
(10:59):
with the irs.
Now, if you have taxes due withan extension, you want to make
sure you pay that.
Other than that, this can bedone at year end Until the next
time.
Speaker 2 (11:09):
That's it for today's episode.
Be sure to check out thedescription below for some free
tax reduction resources thatBoris put together for you.
If you're ready to work with atax advisor on your tax planning
, be sure to schedule your callby heading over to
wwwtaxplanningcallcom.
That's wwwtaxplanningcallcom.
And be sure to subscribe to ourpodcast to be notified when the
(11:31):
next strategy is released.
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