Santa has never been political but if Congress’ doesn’t make some difficult decisions soon and cut some government sponsored programs and increase some taxes he is going to pull all his white hair out and retire to a deserted island somewhere, never to deliver toys again. All the indecision makes it difficult for him to run a small business.
Just this year payroll taxes were cut for the elves portion of Social Security but his as the boss remained the same. Causing the payroll elf to cry every payday because Social Security was no longer an easy 50/50 split to calculate, reconcile and fill out reports for. And now Santa has to approach his harried elf and inform him that health insurance now needs to be tracked per employee and added to a special box on the W2 at year end.
Santa really needs to buy new equipment and 2011 is a great year to deduct new equipment with the increased section 179 and bonus depreciation. He would be hard pressed to not deduct 100% of the equipment he purchased only problem is he doesn’t have the cash to purchase the equipment until his famous toy run on December 25th. By the time he waits for the checks to clear his bank so the cash is available to him it is January and in 2012 section 179 decreases and bonus depreciation disappears unless Congress extends the tax law but an extension in December of 2012 is not much help in deciding if he has to float a loan in 2011 in order to take advantage of the depreciation rules for 2011.
Santa has always provided health insurance coverage to his elves but the new penalty for not carrying coverage is just too tempting to pass up. He saves a sizeable chunk of change by paying the penalty to the IRS and not paying the coverage on his employees. After all the penalty is only $2,000 per employee and it costs $3,000 ($250 per month) per employee for insurance. With 500 employees that is a savings of $500,000.
Santa needs a new sleigh but the rules are confusing as to what type of sleigh he should purchase in order to take advantage of the depreciation rules for a vehicle. He knows he uses it 100% for business we covered that in last year’s Santa blog, but he is confused as to whether he should get a sleigh that weighs more than 6,000 lbs and how does he tell if the sleigh is considered an SUV? It matters because his sleigh has to weigh more than 6,000 lbs in order not to be limited on how much can be depreciated each year and if it is deemed to be an SUV then the max he can deduct for Section 179 is $25,000 and he just can’t get a decent sleigh for under $75,000.
Santa would like to send a message to Congress. K. I. S. S. (keep it simple stupid)