If you’re serious about seeking ways to reduce your tax liability during 2012, then you will want to consider these opportunities: InvestOhio, the gift-tax exemption and accelerated depreciation on capital expenditures.

• InvestOhio. Many owner/operators in Ohio are engaged in major remodeling programs (MRPs) and rebuilds during 2012. The State of Ohio is offering a unique opportunity this year for small businesses to invest personal cash into their S-corporation, LLC or partnership for specific purposes and gain a tax credit through the new InvestOhio program. The bottom line is that an owner/operator in Ohio may be able to qualify for a 10 percent Ohio tax credit if capital is infused into his or her restaurant’s S-corporation, LLC or partnership. The program opened in December and already $40 million, 40 percent of the total tax credit pool, has been allocated.
• Gift Tax Exemption. The $5 million gift tax exemption is set to expire on December 31, 2012, so this year presents an opportunity to make tax-free transfers of a portion of your equity in your restaurant’s operating company to the next generation candidates in your family. We cannot stress enough the importance of acting on this opportunity now. Using this exemption could significantly reduce your family’s future estate tax burden.
• Accelerated Depreciation. 2011 was a tremendous year for being able to quickly depreciate capital expenditures. Opportunities for accelerated depreciation in 2012 are not as good as 2011, but they are still very favorable. If you have capital expenditures of under $500,000 in 2012, $125,000 of qualifying capital expenditures can be expensed immediately per Section 179 in 2012. Bonus depreciation is still in play for 2012, but the percentage is now only 50 percent, compared with 100 percent in 2011.

If you would like more information or assistance in determining how these opportunities might apply to your situation, contact Whalen & Company, CPAs and Consultants.