Tax

Recent tax law changes make it more challenging to receive meaningful tax benefits from charitable giving.

Under the current 2026 rules, higher standard deductions and new limitations mean many taxpayers receive little or no benefit from itemizing charitable contributions. Additionally, personal donations are made with after-tax dollars, often increasing the overall cost of giving.

But as a business owner, you can beat this problem.

Your business can structure certain payments to charities as ordinary and necessary business expenses. When structured this way, your business takes the deduction on its business return, reducing not only income taxes but also (potentially) self-employment taxes or, if applicable, payroll taxes. In addition, the business deduction generally lowers your adjusted gross income, improving eligibility for other tax benefits.

To qualify, the payment must have a clear business purpose and a reasonable expectation of financial return. In practice, this means the expense should function as advertising, promotion, or customer development.

There are several proven strategies:

• Sponsoring charitable events to promote your business
• Donating a percentage of sales to encourage customer purchases
• Supporting local organizations to enhance community branding
• Using coupons or rebate-style programs tied to charitable giving

Proper documentation is essential. To support the deduction, maintain records such as sponsorship agreements, marketing materials, and evidence of business intent.

If you want to discuss how to use your business to support charities, please call me on my direct line at 408-778-9651.

• By Leon Clinton
• May 5, 2026

If you plan to sell a business or an intangible asset, you need to understand a critical tax rule that can significantly increase your tax bill.

Tax law treats many self-created intangible assets as non-capital assets. This treatment means you must report the gain as ordinary income instead of lower-taxed long-term capital gain.

This rule applies to assets you create through your own efforts, including patents, inventions, designs, copyrights, and creative works. When you sell these assets, the IRS taxes your gain at ordinary income rates.

But don’t assume that all intangibles receive unfavorable treatment. Many valuable business assets still qualify for capital gains treatment. These include client lists, goodwill, supplier relationships, and similar items. These assets usually produce favorable tax results when you sell them or your business.

Ownership structure also plays an important role. If a corporation or partnership creates an intangible asset through its employees, it may qualify for capital gains treatment. In contrast, if you create the asset personally through a sole proprietorship, the IRS will likely treat the gain as ordinary income.

You can also find planning opportunities in specific situations. For example, tax law allows favorable treatment for certain transferred patents and permits an election for musical compositions.

You should evaluate your situation before you sell. You can often reduce taxes by properly structuring ownership, documenting how the asset was created, and allocating the purchase price among assets in a tax-efficient manner.

If you want to discuss intangible assets, please call me directly at 408-778-9651

• By Leon Clinton
• April 24, 2026

Recent tax law changes under the One Big Beautiful Bill Act created powerful opportunities to write off business assets faster than ever. You now face an important decision: should you use Section 179 expensing or 100 percent bonus depreciation?

The law restored 100 percent bonus depreciation for qualifying assets placed in service after January 19, 2025. This rule allows you to deduct the full cost of equipment, software, certain vehicles, and qualified improvements in the first year.

At the same time, Congress expanded Section 179. You can now expense up to $2.5 million of eligible assets, subject to a phaseout if total purchases exceed $4 million.

While both options offer large upfront deductions, key differences should guide your decision:

• Bonus depreciation advantages. Bonus depreciation has no income limits and no annual cap. You can create a business loss and potentially generate a net operating loss (NOL). This flexibility makes bonus depreciation the default choice in many situations.
• Section 179 limitations. Section 179 includes several restrictions. Your deduction cannot exceed your business income, and phaseout rules may reduce your benefit. These limits can delay tax savings through carryovers.
• Important trade-off. Bonus depreciation can create an NOL, but that NOL will not reduce your self-employment income in future years. In contrast, Section 179 carryovers can reduce both taxable income and self-employment income later.

Bottom line. Most businesses benefit from bonus depreciation because it delivers immediate, unrestricted deductions. However, Section 179 can still add value when future income and self-employment tax savings matter.

If you want to discuss bonus depreciation versus Section 179 expensing, please call me directly at 408-778-9651

• By Leon Clinton
• April 21, 2026