business - Linkenheimer LLP CPAs & Advisors

Ways to Manage the Limit on the Business Interest Expense Deduction

Prior to the enactment of the Tax Cuts and Jobs Act (TCJA), businesses were able to claim a tax deduction for most business-related interest expense. The TCJA created Section 163(j), which generally limits deductions of business interest, with certain exceptions.

If your business has significant interest expense, it’s important to understand the impact of the deduction limit on your tax bill. The good news is there may be ways to soften the tax bite in 2025.

The nuts and bolts

Unless your company is exempt from Sec. 163(j), your maximum business interest deduction for the tax year equals the sum of:

30% of your company’s adjusted taxable income (ATI),
Your company’s business interest income, if any, and
Your company’s floor plan financing interest, if any.

Assuming your company doesn’t have significant business interest income or floor plan financing interest expense, the deduction limitation is roughly equal to 30% of ATI.

Your company’s ATI is its taxable income, excluding:

Nonbusiness income, gain, deduction or loss,
Business interest income or expense,
Net operating loss deductions, and
The 20% qualified business income deduction for pass-through entities.

When Sec. 163(j) first became law, ATI was computed without regard to depreciation, amortization […]

By Linkenheimer LLP|2025-03-10T15:52:43+00:00March 10th, 2025|business, deduction, deductions|0 Comments

Do You Have an Excess Business Loss?

If an individual taxpayer has substantial business losses, unfavorable federal income tax rules can potentially come into play. Here’s what you need to know as you assess your 2024 tax situation.

Disallowance rule

The tax rules can get complicated if your business or rental activity throws off a tax loss — and many do during the early years. First, the passive activity loss (PAL) rules may apply if you aren’t very involved in the business or if it’s a rental activity. The PAL rules generally only allow you to deduct passive losses to the extent you have passive income from other sources. However, you can deduct passive losses that have been disallowed in previous years (called suspended PALs) when you sell the activity or property that produced the suspended losses.

If you successfully clear the hurdles imposed by the PAL rules, you face another hurdle: You can’t deduct an excess business loss in the current year. For 2024, an excess business loss is the excess of your aggregate business losses over $305,000 ($610,000 for married joint filers). For 2025, the thresholds are $313,000 and $626,000, respectively. An excess business loss is carried over to the […]

By Linkenheimer LLP|2025-02-21T15:21:19+00:00February 21st, 2025|business, tax planning|0 Comments

Many Business Tax Limits Have Increased in 2025

A variety of tax-related limits that affect businesses are indexed annually based on inflation. Many have increased for 2025, but with inflation cooling, the increases aren’t as great as they have been in the last few years. Here are some amounts that may affect you and your business.

2025 deductions as compared with 2024

Section 179 expensing:
- Limit: $1.25 million (up from $1.22 million)
- Phaseout: $3.13 million (up from $3.05 million)
- Sec. 179 expensing limit for certain heavy vehicles: $31,300 (up from $30,500)
Standard mileage rate for business driving: 70 cents per mile (up from 67 cents)
Income-based phaseouts for certain limits on the Sec. 199A qualified business income deduction begin at:
- Married filing jointly: $394,600 (up from $383,900)
- Other filers: $197,300 (up from $191,950)

Retirement plans in 2025 vs. 2024

Employee contributions to 401(k) plans: $23,500 (up from $23,000)
Catch-up contributions to 401(k) plans: $7,500 (unchanged)
Catch-up contributions to 401(k) plans for those age 60, 61, 62 or 63: $11,250 (not available in 2024)
Employee contributions to SIMPLEs: $16,500 (up from $16,000)
Catch-up contributions to SIMPLEs: $3,500 (unchanged)
Catch-up contributions to SIMPLE plans for those age 60, 61, 62 or 63: $5,250 […]

By Linkenheimer LLP|2025-02-06T20:19:57+00:00February 6th, 2025|2025, business, New Tax Laws, News|0 Comments

AI in Business: Current Applications and Future Opportunities

The business landscape is rapidly evolving with artificial intelligence (AI) becoming increasingly accessible and powerful. While large corporations have been early adopters, small and medium-sized businesses now have unprecedented access to AI tools that can dramatically improve efficiency and competitiveness. Here’s what business owners need to know about leveraging AI effectively in 2025 and beyond.

Current Business Applications

Document Management and Analysis

AI excels at processing and analyzing large volumes of documents – from contracts and invoices to emails and reports. Law firms are using AI to review contracts and identify potential issues in minutes rather than hours. Manufacturing companies are automating purchase order processing and inventory documentation. Wineries are streamlining compliance documentation and sales reporting.

Customer Service and Communication

AI-powered chatbots and virtual assistants now handle routine customer inquiries 24/7, freeing up staff for more complex interactions. These systems can schedule appointments, answer product questions, and even handle basic troubleshooting. More importantly, they learn from each interaction to provide increasingly accurate and helpful responses.

Financial Analysis and Forecasting

AI tools are revolutionizing financial planning by analyzing historical data to identify trends and make predictions. Businesses can now get instant […]

By Linkenheimer LLP|2025-01-28T21:04:45+00:00January 28th, 2025|AI, Tech|0 Comments

How Section 1231 Gains and Losses Affect Business Asset Sales

When selling business assets, understanding the tax implications is crucial. One area to focus on is Section 1231 of the Internal Revenue Code, which governs the treatment of gains and losses from the sale or exchange of certain business property.

Business gain and loss tax basics

The federal income tax character of gains and losses from selling business assets can fall into three categories:

Capital gains and losses. These result from selling capital assets which are generally defined as property other than 1) inventory and property primarily held for sale to customers, 2) business receivables, 3) real and depreciable business property including rental real estate, and 4) certain intangible assets such as copyrights, musical works and art works created by the taxpayer. Operating businesses typically don’t own capital assets, but they might from time to time.
Sec. 1231 gains and losses. These result from selling Sec. 1231 assets which generally include 1) business real property (including land) that’s held for more than one year, 2) other depreciable business property that’s held for more than one year, 3) intangible assets that are amortizable and held for more than one year, and 4) certain livestock, timber, coal, domestic iron ore and unharvested crops.
Ordinary gains […]

By Linkenheimer LLP|2025-01-15T17:42:03+00:00January 15th, 2025|business, capital gains|0 Comments