Year-end moves can save money for taxpayers

December 18, 2011 at 12:00a.m.

When it comes to that year-end, things-to-do list, who wants one more thing to do? But there are some last-minute financial moves that can save you a lot of money in 2012.

Such as? Businesses in need of a new truck or heavy SUV should be shopping before Dec. 31. Investors who took a brutal hit on a stock could decide to sell. And some homeowners might want to shop for windows or other energy-saving improvements.

About those trucks. Through the end of this year, a business can qualify for a 100 percent first-year bonus depreciation deduction.

“It would mean writing off the entire $45,000 [price] in the first year,” said Mark Luscombe, CCH principal tax analyst.

To qualify, the vehicle must be new, delivered this year, be used more than half the time for business and weigh 3 tons. Eligible models include the Chevrolet Silverado or Suburban, Ford Expedition or F-150, Dodge Ram and GMC Yukon XL.

A business also may claim a 100 percent bonus depreciation deduction for qualifying new equipment that’s placed in service by Dec. 31. Generally, this tax break includes software, computers, phones, office furniture and machinery.

“Businesses should jump on this idea,” said Joseph DeGennaro, tax director for Doeren Mayhew in Troy, Mich. “Get it now and take your 100 percent write-off.”

DeGennaro — whose firm ordered computers to take advantage of the bonus depreciation — said the key is to put that new equipment in service before Jan. 1.

Ford U.S. sales analyst Erich Merkle said the bonus-depreciation tax break could largely benefit sales of pickups as opposed to the larger SUVs, since the SUV market has shifted to smaller models such as the Ford Escape.

“We’ve been seeing robust pickup-truck sales since September,” he said. Merkle said part of that growth may be because of the tax break, but added that pickup sales continue to be held back by the troubles in the housing industry.

The tax break doesn’t go away in 2012, but right now it would be far smaller — 50 percent depreciation in the first year — unless Congress extends it at 100 percent as President Barack Obama has proposed.

Any breaks for used vehicles?

Luscombe noted that a business could be able to deduct up to $25,000 of the cost of a used heavy SUV under tax code Section 179. The $25,000 limit could apply to some specific trucks, weighing more than 6,000 pounds with an interior cargo bed length of less than 6 feet.

Tax dollars could be saved in other areas, too — if you make the time.

Nobody wants to think about the bad bumps on Wall Street in 2011. But experts say year-end could be time to “harvest” your losses.

Katie Nixon, chief investment officer for personal financial services at Northern Trust in Chicago, said investors who hold stocks outside of a 401(k) plan or IRA might want to sell money-losing stocks to take away a bit of the sting of the market volatility in 2011.

“We advise taking the loss in 2011 and reinvesting in a similar asset to maintain your market exposure,” she said.

Some stocks had huge fallouts in 2011, with some down 50 percent or 80 percent, depending on the business. Depending on your tax situation — and how much you believe in turnaround prospects — you might want to sift through your losers and see what you should sell.

Investors need to consider the size of their losses — and whether they had investment gains in 2011. It’s possible in some cases to carry some losses into future years when tax rates could be higher, too.

Investors should look at previous tax years to see whether they have losses to carry forward already into 2011 and beyond, suggested Bob D. Scharin, senior tax analyst for Thomson Reuters in New York.

Losses taken in 2011 first would have to offset gains for 2011. Plus, losses could offset up to $3,000 in other income in 2011. Additional losses could be carried into future years.

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