The Exuberant Accountant - Scott Heintzelman

 The recent election not only brought changes to Washington but also to Pennsylvania. Our new governor-elect is a republican (the prior administration was democrat) and has stated many positions during the election. Well what can we expect when he takes office?

A great article was recently written by Jason Skrinak, one of our tax principals. Jason is a member of the State and Local Tax Committee and Legislative Committee of the Pennsylvania Institute of Certified Public Accountants (PICPA). As such Jason has great insight into what is happen in Harrisburg. His article was recently published on our McKonomics blog, but here is a repost of the entire article.

The 2010 Pennsylvania gubernatorial election results may bring new tax reforms to Pennsylvania businesses once governor-elect Tom Corbett takes office in January 2011. Corbett's economic plan for revitalizing Pennsylvania's economy focuses on innovation, improved job creation, and an educated workforce. Tax reform is a focus of Corbett's intentions for improving the business climate and creating jobs in Pennsylvania. Tax reform will certainly be a highly-debated issue in the coming months, with the Pennsylvania budget deficits growing into the billions of dollars because of decreased state tax revenues, unfunded state pensions, and Federal stimulus money running out. In addition, Corbett plans to revitalize Pennsylvania's economy through a blended tax reform program that assists small and large job creators with the following proposed reforms:

 For years, we accountants have advised clients to “defer income” and “accelerate expenses.” The thought behind this strategy is that it is better to pay tax next year than it is to pay it this year. In most years, under most circumstances, this approach makes perfect sense. But in an environment with rising (or potentially rising) tax rates, we might want to think about going against conventional tax knowledge and explore ways to accelerate income to take advantage of our current rate structure.

It is now mid-November and Congress has yet to finalize any extension of the 2001 and 2003 Bush tax cuts. We continue to hear reports that post-election many democrats are willing to temporarily extend the tax cuts for everyone.

You never want to assume that Congress will act and pass these tax cuts. We all assumed that the estate tax would never lapse as it did back in January. Therefore in an effort to provide timely tax planning, let’s assume that Congress fails to pass this legislation in the next six weeks. Under this assumption, there are various aspects of our current tax structure that will change substantially.

With that in mind, here are a few ideas to ponder as it relates to year-end tax planning, and the potential “acceleration of income” and “deferring of expenses.”