As the end of the year approaches, it is a good time to think of planning moves that will help lower your tax bill for this year and possibly the next. Factors that compound the planning challenge this year include turbulence in the stock market, overall economic insecurity, uncertainty about the new administration, and Congress's all too familiar failure to act on a number of important tax breaks that will expire at the end of 2016.

Here is a list of additional actions based on current tax rules that may help your business save tax dollars if you act before year-end. Not all actions will apply in your particular situation, but you will likely benefit from some of them. Feel free to contact the tax specialists at Mierendorf and Co. to discuss which of these actions may work for your business.

• Businesses should consider making expenditures that qualify for the business property expensing option (Section 179). For tax years beginning in 2016, the expensing limit is $500,000 and the investment ceiling limit is $2,010,000. Expensing is generally available for most depreciable property (other than buildings), off-the-shelf computer software, qualified real property, qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property. The generous dollar ceilings that apply this year mean that many small and medium sized businesses that make timely purchases will be able to currently deduct most if not all their outlays for machinery and equipment. What's more, the expensing deduction is not prorated for the time that the asset is in service during the year. Remember, the equipment must be placed in service before the end of 2016. Ordering and paying for equipment not in use does not qualify!
• Businesses also should consider making expenditures that qualify for 50% bonus first year depreciation if bought and placed in service this year. The bonus depreciation deduction is permitted without any proration based on the length of time that an asset is in service during the tax year. As a result, the 50% first-year bonus write off is available even if qualifying assets are in service for only a few days in 2016.
• Businesses may be able to take advantage of the "de minimis safe harbor election" (also known as the book-tax conformity election) to expense the costs of lower-cost assets, materials, and supplies, assuming the costs don't have to be capitalized under the Code Sec. 263A uniform capitalization (UNICAP) rules. To qualify for the election, for most taxpayers, the cost of a unit of property can't exceed $2,500. Where the UNICAP rules aren't an issue, purchase such qualifying items before the end of 2016.
• A corporation should consider accelerating income from 2017 to 2016 if it will be in a higher bracket next year. Conversely, it should consider deferring income until 2017 if it will be in a higher bracket this year.
• A corporation (other than a "large" corporation) that anticipates a small net operating loss (NOL) for 2016 (and substantial net income in 2017) may find it worthwhile to accelerate just enough of its 2017 income (or to defer just enough of its 2016 deductions) to create a small amount of net income for 2016. This will permit the corporation to base its 2017 estimated tax installments on the relatively small amount of income shown on its 2016 return, rather than having to pay estimated taxes based on 100% of its much larger 2017 taxable income.
• If your business qualifies for the domestic production activities deduction (DPAD) for its 2016 tax year, consider whether the 50%-of-W-2 wages limitation on that deduction applies. If it does, consider ways to increase 2016 W-2 income, e.g., by bonuses to owner-shareholders whose compensation is allocable to domestic production gross receipts. Note that the limitation applies to amounts paid with respect to employment in the calendar year 2016, even if the business has a fiscal year.
• If you own an interest in a partnership or S corporation, consider whether you need to increase your basis in the entity so you can deduct a loss from it for this year.

As a reminder, the new minimum wage for Michigan will be $8.90 per hour beginning January 1, 2017. Tipped employees must receive a minimum cash wage of $3.38 per hour. Minors aged 16 and 17 may be paid 85% of the minimum wage, or $7.57 per hour.

We updated our clients on the new overtime rules with our September newsletter. A federal judge on November 22, 2016 blocked the new rule making millions more Americans eligible for overtime pay, indefinitely pushing back the December 1 effective date while he weighs a challenge to the requirement. The decision by U.S. District Judge Amos Mazzant in the Eastern District of Texas to grant a preliminary injunction affects an estimated 4.2 million workers who were to be newly eligible for time-and-a-half wages for each hour they put in beyond 40 a week. The rule, released by the Labor Department in May, would nearly double the threshold at which executive, administrative and professional employees are exempt from overtime to $47,476 from $23,660.

Finally, a reminder that there is a new deadline for filing W2s and 1099s with the government. The government copies are due January 31, 2017, the same date as the forms are to be given to recipients. This new deadline was enacted by the PATH Act to help the IRS verify the legitimacy of tax refunds before issuing them. The IRS is increasing penalties for incorrect Form 1099-MISC and W2s filed . We strongly suggest that businesses ensure they have Form W-9 on file for each contractor before any labor is performed by the contractor . (The best time to get this information is before you issue a check in payment.)

Remember, not every strategy works for every business. Contact us at Mierendorf and Co. to discuss your year-end tax strategies.

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