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From: americast-post@AmeriCast.Com
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Subject: Executive Update
Date: Thu, 29 Oct 92 13:13:30 EST
Message-ID: <2.1992Oct29.131330@AmeriCast.com>


10/29/92

TITLE Executive Update Tax Credits Can Reduce The Cost Of Disa-
bilities Act

Business Owners Should Plan Ahead To Take Full Advantage Of Bene-
fits Vineeta Anand In Washington

Since 1990, federal law has made it illegal for large companies
to discriminate against the handicapped and has required them to
make "reasonable" changes to accommodate disabled employees.

But few of the nearly one million small businesses in this coun-
try are aware that since July they also are required to comply
with the law and Small Business

make similar accommodations for employees. And almost none know
of the tax benefits that can help them reduce the sting of com-
plying with the law, according to the National Business Associa-
tion, a group of 55,000 small businesses.  Some of the accommoda-
tions that may be required are installing ramps and widening
doors for wheelchairs, hiring interpreters for the deaf and buy-
ing taped books and materials for blind employees. The costs of
such moves, though sometimes insignificant for large companies,
can be difficult for small businesses to swallow.  Aware that
compliance with the Americans with Disabilities Act could dispro-
portionately hurt small businesses, Congress wrote in two tax
benefits that can offset some of the expenses they incur to ease
working conditions for disabled employees.  "Business owners who
comply with the Act could lose thousands of dollars, literally,
if they are not aware of the tax benefits that are part of the
legislation," said David Lieberman, president of Triple Check In-
come Tax Services#m#cq#m# in Burbank, Calif., the nation's
second- largest income tax preparation service.  "The use of nor-
mal tax methods in these instances would be very, very bad busi-
ness," said Lieberman, whose company last week#m#wk of 10/19#m#
kicked off a series of nationwide seminars to explain the new law
to small businesses and help them make use of the tax benefits
the law gives them.  The law permits small businesses with annual
gross revenue of under $1 million or less than 30 employees to
take a tax credit for costs of tearing down walls, widening doors
and making other architectural changes to accommodate disabled
employees. The credit applies to renovations made or paid for
after Nov. 5, 1990, and is limited annually to half of the costs
of between $250 and $10,250.  Also, renovation costs that exceed
the tax credit can be deducted by the small business as an ordi-
nary business expense, up to a ceiling of $15,000 per tax year.
Randall Hall, tax manager in the Washington office of KPMG Peat
Marwick, cautions that the tax benefits apply only to offices and
business facilities in use before November 1990.  Companies usu-
ally must treat the costs of renovating their facilities as capi-
tal expenditures and depreciate them over a period as long as
31.5 years, explained Marvin L. Weisbrod, vice president of
technical services at Triple Check.  Because the tax benefits
available to small businesses must be utilized in the same tax
year in which the costs were incurred, companies have only a cou-
ple months left to take advantage of the benefits at their dispo-
sal in 1992, tax advisers say.  But before rushing out to make
changes, Weisbrod reminds small businesses that careful planning
can stretch out those tax benefits even further.  An entrepreneur
or small business spending $20,000 this year to comply with the
law could take a tax credit for $5,000 (half of the expenses in-
curred up to $10,250), and then take a tax deduction on the bal-
ance of $15,000 as a 1992 business expense. Assuming a small
business owner is in the 28% tax bracket, the deduction would
amount to $4,200, amounting to total savings of $9,200 on expen-
ditures of $20,000, Weisbrod explains.  By splitting the costs of
renovation over two years, the benefits could be expanded. So a
small business that spends $10,000 this year and an equal amount
next year could still take a tax credit of $4,875 (half of ex-
penses between $250 and $10,250) and claim tax deductions for the
balance of $5,125. Assuming the same 28% tax bracket, the busi-
ness owner could save another $1,435 from this deduction, for a
total savings of $6,310 the first year, or $12,620 over two
years, Weisbrod points out.  "So these tax benefits are fairly
exciting for these people to be aware of and to take advantage
of," he noted.

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