You can still act to lower this year's taxes

Practice Pointers. By Karen S. Schechter, AMNews contributor. Dec. 17, 2007.

PRACTICE POINTERS

Answers to questions about the business side of your practice

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Question: I am in solo practice. As 2007 (and my fiscal year) comes to a close, I want to make sure I've maximized tax benefits as much as possible. What advice can you provide?

Answer: Here are some suggested strategies that might save your practice income tax. Please note that these moves must be taken no later than Dec. 31 and are directed specifically to businesses on the calendar year. Also, do not make these or any moves before consulting your personal financial or tax adviser.

Expense acceleration. Businesses can elect to expense the cost of most new equipment up to a fixed amount. For 2007, expensing is allowed up to $125,000 (subject to a dollar-for-dollar reduction in that $125,000 for such purchases over $500,000). To get the benefit for a tax year beginning in 2007, the equipment should be put into use before the end of this year.

State tax law might not allow for the maximum federal deduction. In this case, two sets of depreciation records will be needed to track the federal and state tax impact.

Timing of purchases. If you intend to purchase business equipment this year, the proper timing of purchases might increase your tax benefit from equipment depreciation.