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Long Island Business News

Joseph Perry, Partner-in-Charge, Tax & Business Services, Quoted in The Long Island Business News Article "Tax Rewards Follow Years of Net Losses"

Featured: Joseph Perry, Partner-in-Charge , Tax & Business

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Excerpt:

Maybe the Great Recession wasn’t all bad: Major losses related to the economic downturn are helping some companies reduce or even eliminate current tax burdens.

Any business can use a net operating loss from a previous year to offset taxes, as long as they’re currently showing a profit and owe taxes on those current gains. And with more firms back in the black, many are using yesterday’s losses to ease today’s tax tab.

So while those years with net operating losses can be very tough, they can pay off later, according to Joseph Perry, partner in charge of tax services in Melville at the accounting firm Marcum.

"It’s a card you will be able to use to not pay taxes," Perry said.

It’s not carte blanche; there are clearly defined parameters. For instance, losses can only be used to offset taxes at rates up to 34 percent for $1 million or more in owed taxes and 35 percent for $10 million or more owed.

In 2010, Marcum helped a client turn losses suffered in 2008 and 2009 into belated tax refunds.

"The company was running low on cash and was at the max of their credit lines," Marcum’s Perry said. "We went to the IRS, explained the circumstances and they got the refund quickly. That was able to fund their business and alleviate their cash burden."

So, if the variables are right – and if a company can show that it’s either achieved or is poised for an economic turnaround – heavy losses directly attributable to rough economic conditions can actually become a plus for companies straddling the profitability line.

"You can’t just do it when you want it," Perry said. "You have to show you’ll have the wherewithal in the future by projections."

Click here to read full article on www.libn.com >>
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Featured
Joseph Perry

Partner-in-Charge
Tax & Business
Melville, NY
 
 
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