Macias Gini & O'Connell LLP

 

One strategy is to reduce the amount of income taxes the business is paying by accelerating deduction of costs currently capitalized as acquisition-related. Generally, professional fees and other purchase costs are "capitalized" in the stock or assets purchased. Income tax-related deductions of these costs may be over 15 years, on the purchase of a business, or they may never be deducted. Invoices often don’t clearly allocate professional service fees, travel and other expenses, so costs that aren’t associated with the purchase are unintentionally capitalized as acquisition costs. Properly re-characterizing any costs that were inadvertently capitalized can permit deduction in the year they were incurred. Additionally, certain costs incurred to expand your business may be deducted over 5 years. A thorough analysis of capitalized acquisition costs often results in a tax refund and/or a decrease in income tax paid in years following the acquisition.