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Prior
to the enactment of the Hiring Incentives
to Restore Employment Act (HIRE
Act), the 2010 rules governing expensing of capital expenditures were
scheduled to return to those in effect before
2008. Under those rules, an expense
deduction, generally limited to $134,000, was available for business
taxpayers electing to treat the cost of certain qualifying new or used
property (Section 179
property) as a current expense rather than as a depreciable capital
expenditure. The annual limitation,
however, was increased to $250,000 for 2008
and 2009, and that that limit has
now been extended to December
31, 2010. Under the new law,
the Section 179 expense deduction limit is $250,000 for business
taxpayers
placing qualified property costing $800,000 or less in service during
2010. Businesses acquiring and placing
in service between $800,000 and $1,050,000 of such property can deduct
a
reduced amount under Section 179. The
deduction is completely phased out if such property
costing over $1,050,000 is
placed in service during 2010.
The
election to expense is available whether or not the small business
taxpayer has
net trade or business
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income. The
current deduction, however, is disallowed if the
taxpayer does not have net
trade or business income for the year in which the property is placed
in service, but the deduction will be available for use in future
years.
For the individual taxpayer, W-2 wages are
considered trade or business income for this purpose.
The extended
law continues the rules
for the type of property that is eligible for expensing. Generally, the property must be tangible
personal property (e.g., equipment, furnishings, livestock, etc.) that
is used
in the taxpayer’s business and for which a depreciation deduction would
normally be allowed. Both new and used property are eligible. The
property must be used more than 50
percent for the business and must be placed in service by year end. There are also special rules for vehicles. The expense deduction is generally not
available for a business vehicle with a Gross Vehicle Weight (GVW) of
6,000
lbs. or less.
The
expense deduction is
generally available to business vehicles with a GVW over 6,000 lbs.
(e.g., most
trucks, vans, etc.), but the deduction is limited to $25,000 for an SUV
with a GVW over 6,000 lbs.
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August and early September is the best time
to correct an over-assessment of real property and business movable
property. Once the property tax bills are mailed (usually in November),
it is almost impossible to change an assessment. In mid to late August,
each parish assessor will (as required by law) open the 2010 assessment
rolls for public review and inspection for a minimum of 15 days. During
this 15-day period, property owners can challenge the validity of the
tax assessment. Unfortunately, the review period is very short, and
there apparently is no recourse if a timely protest is not made.
You can check the assessed value of your
real property (as well as that of nearby property for comparison) in
Caddo and Bossier Parishes by using the assessors' websites. For Caddo
Parish, the web address is www.caddoassessor.org.
For Bossier Parish, the web address is www.bossierparishassessor.org.
Because property taxes are based on a
percentage of the fair market value of your property, one way to
determine if your taxes are an appropriate amount is to compare the
assessor's determination of the fair market value of your property with
what you believe it to be. The assessed value of a property is a
percentage of the assessor's estimate of its fair market value.
Accordingly, you can compute the fair market value that the tax
assessor has placed on your property from the notices of assessed
values mailed to you by the assessor or by visiting the assessors'
websites.
The assessed amounts can be divided by .10
(10%) for residential improvements and all land (residential and
business) and by .15 (15%) for commercial improvements and business
personal property (furniture, equipment, and inventory) to determine
the fair market value placed on the property by the assessor. For
example, if the property tax assessment for a commercial building shows
that the land is assessed at $5,000 and the improvements are assessed
at $30,000, the assessor has determined the fair market value of the entire property to be
$250,000
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($5,000/.10, or
$50,000, plus $30,000/.15, or $200,000, for a total of $250,000).
As you might recall,
all Louisiana real property was reappraised in 2008 in accordance with
the Louisiana Constitution. Since 2010 is not a reappraisal year, the
2010 assessed values of real estate should generally be about the same
as 2009's assessed values. Business personal property (furniture,
fixtures, equipment, and inventory) are, of course, reappraised each
year by the parish assessor.
If your property is
in Caddo Parish, the 15-day review and protest period will start on
August 18 and will close on September 1. In mid-August the assessor
will mail notices showing the amount of the assessments on all
property. By using the assessor's website, you no longer have to go to
the Caddo Assessor's Office to check your real estate assessment. You
can check it now without waiting until August 18. The Caddo and Bossier
assessors also encourage you to check your assessment and to come in to
discuss it at any time, not just during the public review period.
If your property is
in Bossier Parish, the rolls will open for review and protest on August
16 and will close on August 30. By using the assessor's website, you no
longer have to go to the Bossier Parish Assessor's office to check the
assessment on your real property. If you want to discuss your
assessment with the assessor, however, you should go by the Bossier
Parish Assessor's office in Benton.
If you do find that the determination of the
value of your property is excessive and if you are unable to reach an
agreement with the assessor as to the value, you should file a written
protest before the end of the public review period to preserve your
rights to have your assessment reconsidered by the Board of Review.
Form 3101 can be obtained from the assessor for use in making a written
protest.
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