I mentioned in this space last month that of the billions of dollars spewing out of Washington, D.C., nothing was aimed at owner-operators, though they might benefit from a few small-business items. Here is more detail on those items, courtesy of Mark Miller, tax manager at the owner-operator financial services firm ATBS:
· The accelerated depreciation limit, bumped from $125,000 to $250,000 in 2008, is being carried over to 2009. Using this was never a good idea for most owner-operators because it often seriously reduced, if not eliminated, the potential for depreciation in subsequent years. “But some guys need it,” Miller says, citing the “very for-now” owner-operators who don’t plan well. Indeed, if you do a major equipment buy this year and need to cash in all your chips, it could help.
· A business posting an annual loss has had the option of amending the prior two years’ tax returns to redistribute some of that loss. This “loss carryback” is now extended to five years, but as Miller notes, “if you’re losing enough to take advantage of that position, you’re probably struggling to stay in trucking.”
· The stimulus plan includes a tax credit of $400 for singles, $800 for couples. It doesn’t take effect for most people until they file taxes in 2009 on 2008 income, but owner-operators, who pay quarterly estimated taxes, could reduce those payments by 6 percent, Miller says.
The tax credit isn’t that big of a deal. And the bottom line on the other two: Those most likely to use them lack the business skills or basic self-discipline to run a business, just like those who’ve extended their palms to Washington in recent months.
Because we still live in a land of opportunity, many businesses will struggle. Some will fail. Occasionally the government throws its largesse at failure. Even when it does, there’s no guarantee it will work. This appears to be the case with General Motors, which at this writing had already received more than $13 billion in government loans and was seeking, with Chrysler, an additional $21.6 billion.
Let elected officials know how you feel about their use of your hard-earned tax dollars, but otherwise don’t waste precious energy boiling your blood over your exclusion from the giveaways. The qualities that put you beyond the need for a loss carryback or an accelerated depreciation splurge are the qualities that equip you to go the distance, good economy or bad.
SPOT MARKET RATES. Be sure to notice in Gauges, Page 14, the first installment of what will be a valuable monthly addition. It’s a chart that tracks spot market rates for dry van, reefer and flatbed freight, courtesy of Internet Truckstop, the industry’s largest load-matching service. It’s an excellent complement to the income and cost data – also presented by trailer type – that ATBS provides in Gauges.