Page 21 - The South China Business Journal

Action item: 4.Take Advantage of Enhanced Qualified
Work with your accountant or tax professional to
determine your eligibility and claim the maximum
deduction each year.
2. Immediately Deduct Qualifying Research &
Experimental (R&E) Expenses
Who qualifies:
Businesses with domestic R&E spending, especially
those with average annual gross receipts of $31
million or less.
What to do:
? Track your U.S.-based R&E expenses each year.
? Deduct 100% of your qualifying R&E expenses
this year on your 2025 tax return.
? If your annual gross receipts average $31 million
or less, you may apply this benefit retroactively for
tax years 2022?2024.
Action item:
Review past returns with your tax professional to
seek retroactive refunds if eligible.
3.Maximize Write-Offs on Equipment, Building
Improvements
Who qualifies:
Small businesses that made certain purchases
of equipment, machinery, computers, software,
furniture, and certain building improvements.
What to know:
? New rules allow businesses to immediately
expense certain qualified property (e.g.,
equipment and machinery) instead of spreading
deductions over several years.
? Businesses may also be eligible to immediately
write off 100% of the cost of qualified production
property (e.g., a new U.S. factory or other
manufacturing facility) that is placed in service
between Jan. 20, 2025, and Jan. 1, 2031.
? Immediate and larger deductions may lower
your tax bill and free up cash for payroll,
inventory, and growth.
? Refer to your tax advisor on whether any of
your purchases qualify for these new, expanded
expensing rules.
Action item:
Consider accelerating or increasing purchases of
machinery, software, or other qualifying property
to maximize this deduction.
Small Business Stock (QSBS) Exclusion
Who qualifies:
Individuals and other non-corporate investors in
qualifying C corporations.
What to do:
? Invest in the stock of qualifying small C
corporations, the definition of which was
expanded by the new law.
? Hold the stock for more than five years to
exclude an even greater amount of capital gain
realized on its sale or exchange.
Action item:
Consult your tax advisor when planning such
equity investments or dispositions.
5. Maximize the Enhanced Employer-Provided
Child Care Credit
Who qualifies:
All businesses providing employee child care;
expanded benefits for small businesses (gross
receipts ¡Ü $31 million for 2025).
What to do:
? Claim a tax credit of up to $500,000 and up to
40% of qualified child care expenses.
? If your business qualifies as ¡°small,¡± claim up to
$600,000 and 50% for expenses.
? Pool resources with other businesses or use
third-party providers to offer child care
Action item:
Evaluate options for providing or expanding
employee child-care benefits or programs;
coordinate with nearby businesses if pooling is
an option.
Quick Checklist
? Confirm QBI deduction eligibility and amount.
? Identify and deduct all domestic R&E expenses;
review past years for refund opportunities.
? Maximize write-offs on equipment and building
improvements.
? Review QSBS eligibility when raising capital or
investing.
? Assess and implement employer-provided child
care benefits; claim enhanced credits.
? Talk with tax advisor about no tax on tips and
overtime for your employees.
SOUTH CHINA BUSINESS JOURNAL 18