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Gary Bode, CPA is a Master's Degreed, nation wide accountant offering tax and business services. Member of AICPA and NCACPA. Our virtual office provides excellent service to long distance and international clients. Call (910) 399-2705 for a free phone consult.

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Client Testimonials

I became totally and permanently disabled after a working for 44 years. I returned to college late in life (while working full-time) to fulfill my dream of becoming an RN and at that time found it necessary to secure student loans. Three years after being declared totally and permanently disabled my student loans were discharged. In January 2013 we received a 1099-C form declaring said student loans that were discharged however that amount could be considered as income for 2012. This was a large amount of money and we live on two pensions and social security income.

I started looking on the internet for information regarding 1099-C and felt that this was something that we could not handle alone. I made phone calls locally to a very reputable tax group in a city near us and they said it would cost $500 for an appointment and that they really prefer to do corporate taxes and they referred me to a local person who had worked for them at one time, we called and explained the situation and an appointment was made and then the comment was made that "I will have to do some research on this" and flags immediately went up and we called back and cancelled that appointment. I had been researching the IRSwebsite and every place else I could think of and I was not comfortable doing our own taxes this year. We called another local tax preparer that we had used in the past and made an appointment, however prior to the appointment, while still seeking information regarding our situation,

I came across a website for Gary l. Bode, MSA, CPA, PC in Wilmington, NC. I called Mr. Bodeand explained our situation and asked if he could help. He spoke very knowledgeably regarding the situation and stated that yes; he felt he could help us. As Mr. Bode was in North Carolina and we were in New York I scanned all of our documents including back-up documents for all of our claims and forwarded all to him. Mr. Bode kept in touch with us via email; we have spoken on the telephone several times and have become very comfortable with his knowledge and professionalism. Also, as I am a true "worrier" I have continued looking into information regarding our tax situation and I came upon another web page for Mr. Bode that included testimonials which spoke of his experience with this type of tax situation as it became prevalent during the recession. This reinforced in our minds that we had made the right decision in hiring this person as our tax preparer.

I share all of this as our taxes are now ready to be filed (we do owe tax for 2012 but not the astronomical figure we thought we were facing), and we are confident that they have been prepared with the utmost care by a gentleman who has an excellent working knowledge of the situation we faced and the tax laws that were applicable to said situation.

 

Bill and Carol

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Even though Gary enjoys helping colleagues, we no longer provide free consults to other tax preparers. He's happy to consult on an hourly billing basis if our schedule allows.

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Wilmington NC CPA discusses 100 Percent Bonus Depreciation

100% bonus depreciation as a small business tax incentive discussed by a New Hanover County CPA firm

Gary Bode, CPA: we believe in proactive tax positioning. For a free initial consult, please call us at 399-2705.

100% Bonus Depreciation can be a great small business tax incentive.  But it can be a two edged sword.  We’ll look at the dark side in this post: a small business tax break, leading to a cash flow crunch the following year(s).  President Obama’s tax relief for 100% bonus depreciation isn’t really new.  100% depreciation, within the relevant range of most small companies, has been around for years.  So this is an old cautionary tale about cash flow, skewed in this scenario to show a potential trap.

The 100% Bonus Depreciation Scenario

Our example will use “Wilmington NC CPA Firm” as our example company. Coming out of the recession, it needs $110,000 of infrastructure improvement, namely a networked computer system.  In early 2011, Wilmington NC CPA Firm pays $10,000 down and finances $100,000 for the computer system.  Loan terms require about a $3,100 monthly payment for three years, starting in July 2011. 

100% bonus depreciation means the entire $110,000 computer system can be expensed in 2011, leading to a big tax break in 2012.  Ordinarily, equipment is expensed off over its expected useful life, so the tax deduction is spaced out over multiple years.  Our example skews both ends of the scenario:  100% bonus depreciation and maximum up front financing of the computer system.

2011 is Good – Calendar Year

In 2011 the computer system allows Wilmington NC CPA Firm to bring in an additional $30,000 of revenue.  This easily covers the $18,600 of loan payments and $10,000 of down payment.  

2012 is Wonderful – Calendar Year

The economy grows and Wilmington NC CPA Firm brings in $40,000 of revenue over 2009, with only the material additional expense of the loan payments, about $37,600.  On the 2010 income tax return, it uses the small business tax incentive of 100% bonus depreciation, writing off the entire $110,000 of the computer system. Plus it deducts the 2010 interest paid.  Assuming a 35% aggregate tax rate, it generates $38,500 of actual, cash flow, tax savings.

Proactive planning is prudent.  We look at future tax positioning while performing the current tax preparation.  If you’d like a free initial consult with a CPA tax accountant, please consider calling us at 399-2705.

2013 is Not so Good

Wilmington NC CPA Firm still brings in $40,000 of additional revenue over 2009!  But on the 2012 tax return there is no small business tax incentive left.  It can only deduct the interest paid.  All the bonus depreciation is gone.  Now it pays both the loan payments and tax on the additional $40,000.  This means a $10,600 cash deficit in 2013.  A big deal?  Maybe not if this known contingency was properly funded.  But we’ve seen cases over the years where the small business tax incentive of 100% bonus depreciation led to a cash flow crunch in future years. 

We’re a CPA firm that provides a friendly mix of expertise and customer service.  For a free initial consult, please call (910) 399-2705.

2 comments to Wilmington NC CPA discusses 100 Percent Bonus Depreciation

  • And meanwhile, the richest are getting a tax break of about $70K per million income and a big break on estate taxes. We have the highest concentration of wealth in the hands of a few since the 1920s, and new law courtesy of the Supreme Court that allows them to buy the political process without disclosing their participation.

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