1.
Take advantage of the I.R.C. Section 199 domestic production activities
deduction. This deduction may reduce your taxable income by up to six
percent for 2007 through 2009, and nine percent when fully established in 2010.
Potentially problematic issues within proposed regulations have been addressed
in the final regulations, making the deduction more beneficial to contractors.
2.
Examine your capital asset depreciation methods and lives. “Catch-up”
deductions are possible on under-depreciated existing assets. You may be able
to write off 100 percent of the under-depreciated amount in the current tax year
without amending past returns by filing an automatic change in accounting
method.