The February 13th Kiplinger Tax Letter highlighted our president’s tax plan. Some good, some bad, and most won’t see the light of day. Items that may find bipartisan support include increasing the ceiling on expensing assets in small businesses. Currently, the cap is $25,000 and, according to Kiplinger, the president would propose increasing the ceiling to $500,000 in 2015 and $1,000,000 in 2016. All the limits would be indexed to inflation after 2016. Businesses with average annual gross receipts of $25,000,000 or less would be able to use cash accounting, even if they had inventory. The same rule would apply to farm corporations, but not to personal service corporations. He also proposes that as much as $20,000 of business startup cost could be deducted up front. You have probably read about all the untaxed income large corporations have overseas. The president is suggesting that a one-time 14% tax on previously untaxed income held abroad be imposed. Any earnings subject to this tax could be brought back into the U.S. tax free. As you might expect, the Democrats and Republicans are not quite in synch on this proposal.

Here is one idea that I hope dies quickly. The president wants to limit the step up in basis for inherited assets. He also is thinking about raising the top rate on capital gains and dividends for filers subject to the 23.8 maximum rate. Just as predictable is the plan to cap the tax value of itemized deductions at 28% and barring future pay-ins for employees with total retirement plan assets over $3.2 million.

In related news, the Social Security wage base is expected to be $122,700 for 2016, $125,400 for 2017, $129,600 for 2018 and $135,000 for 2019. Before taking action to reduce income subject to Social Security taxes, do some homework and see what those reductions might do to you and your spouse’s Social Security income. Also, if you are taking early distributions from your IRA or retirement plan, be diligent. The IRS is eyeing early distributions to be sure you are properly reporting the payouts, especially those taken before age 59.5. Apparently, an IRS review found that nearly 40% of taxpayers made errors on their tax returns, especially concerning the 10% excise tax on early distributions.  If you buy a vehicle for business use in 2015, the bonus depreciation (unless reform is enacted) will drop by $8,000. Also, leasing a vehicle for business will be more expensive. If the car is worth more than $17,500, the lessee will have to pay income tax on an amount spelled out in IRS tables. Just be aware if the shoe fits. As always, before taking action on these comments, check in with your tax advisor to make sure your understanding is correct.

Since Spring has sprung, we should end on a brighter, more joyful note. How about this hymn: “Joyful, joyful, we adore thee, God of glory, Lord of love; hearts unfold like flowers before thee, praising thee, their sun above. Melt the clouds of sin and sadness; drive the dark of doubt away; giver of immortal gladness, fill us with the light of day. All thy works with joy surround thee, earth and heaven reflect thy rays, stars and angels sing around thee, center of unbroken praise. Field and forest, vale and mountain, blooming meadow, flashing sea, chanting bird and flowing mountain, call us to rejoice in thee. Thou art giving and forgiving, ever blessing, ever blest, well-spring of the joy of living, ocean depth of happy rest. Thou our Father, Christ our Brother, all who live in love are thine; teach us how to love each other, lift us to the joy divine.”

Although this information has been gathered from sources believed to be reliable, it cannot be guaranteed.  This material is intended for informational purposes only and should not be construed or acted upon as individualized tax, legal or investment advice.  FSC Securities Corp does not offer tax or legal advice.  Securities, insurance and investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment advisor 3416 North Blvd, Alexandria, LA 71301, (318) 448-3201.  The views expressed are not necessarily the opinion of FSC Securities Corporation.