For example -

* Wash sales. Thinking of selling a security before December 31 to take advantage of a capital loss? To make sure the loss is deductible, refrain from buying a substantially identical security during the 61-day period that begins 30 days before you sell and ends 30 days after.

* Worthless stocks. For capital loss purposes, securities with no value are treated as if you sold them on the last day of the year. Your loss is generally the same as your cost.

If you want to deduct worthless securities on your 2011 return, you’ll need to prove the security became worthless during the year and that it truly has no value. Not sure you can meet those requirements? Selling before year-end may be a better option.

* Stock donations. Giving appreciated stock to charity lets you avoid capital gains tax and claim a charitable deduction.

In order to deduct the donation on your 2011 return, the gift must be complete. For certificates you endorse and present directly, the date of mailing or other delivery is considered the date of the gift. When your broker or the issuing company handles the transaction, the gift is complete when the stock is titled to the charity.

* Recordkeeping is vital if you want to be able to deduct a contribution to charity.

What records do you need? For starters, to claim an itemized deduction, you’re required to have support for all cash contributions, no matter what the amount. A bank statement, a copy of the cancelled check, or a credit card record will usually suffice for donations under $250. For donations of $250 or more, a statement from the charity is required, giving the charity’s name, the date, the amount of your donation, and the value of goods and services received for the donation, if any. In the case of payroll donations, your pay stub or W-2 can back up your deduction.

The substantiation rules for noncash donations such as household items differ depending on the type of property and its value. For instance, you’ll need a contemporaneous written acknowledgment from the charity for donations of $250 or more. As a general rule, “contemporaneous” means you receive the acknowledgment before you file your return or before the due date of your return, whichever is earlier.

* Make a gift from your IRA. The break allowing a transfer of up to $100,000 from your IRA to a qualified charity is available for 2011. To benefit, you must be over age 70½, and the contribution has to be a direct payment from your IRA to the charitable organization.

* Write down your vehicle mileage for charitable driving. Written records rule, whether you claim the standard mileage deduction of 14¢ a mile or actual expenses. Make sure your log or other paperwork includes the name of the charity, the date, and the miles you drove or the total cost you incurred.

* Americans spend 6.1 billion hours preparing their taxes every year.

* There have been 4,428 changes to the tax code over the past ten years.

* Nine out of ten Americans have someone prepare their tax return or use tax software.

* The tax code is so long that no one is certain exactly how long it is.

Bonds have been available through TreasuryDirect since 2002, but investors have been slow to purchase bonds electronically. Only 11% of bonds purchased from October 2010 through June 2011 were bought through TreasuryDirect.

Selling bonds exclusively through electronic means will save the government $70 million over five years. The Treasury points out that investors benefit too: electronic bonds are less likely to be misplaced, and they are automatically redeemed when they mature.

The change won’t affect outstanding paper bonds.

If you or someone in your family could qualify to make a charitable IRA rollover, should it be considered? Here are some of the situations in which this tax break could be beneficial.

* You have to take the RMD, but you don’t need the money and you don’t want to pay tax on the distribution.

* You want to give to charity, but you don’t itemize deductions so any contribution you make would not be tax-deductible.

* You do itemize deductions, but your charitable contribution deduction would be affected by the 50% / 30% of AGI limit.

* Having to include your RMD in income would result in the phasing out of other deductions and credits based on adjusted gross income.

The charitable IRA rollover is a powerful tool for tax planning. But remember, as it now stands, this provision will expire December 31, 2011.

Profit can be deceiving because if the company is keeping records on the accrual method of accounting, their “profit” could be in their accounts receivable. Thus, their business may not have money, or “cash” to meet their financial obligations.

To demonstrate what we mean, if the company uses QuickBooks, change the reporting method to cash basis. Bye, bye profit. Accounts receivable needs to collected at a rate equal to or exceeding monthly expenses, otherwise no profit using the cash method.

Most small businesses are better served being cash basis because the income statement will give them a better sense of company performance. While cash basis does not include accounts payable, a cash basis income statement will show a company owner where they are spending cash, rather than what they have incurred in unpaid bills.

A cash basis income statement will also reveal future issues. For example, if the income statement is showing a negative “profit” (or a loss), one might inquire as to how the business owner is meeting obligations. Typically the owner is pulling funds from other sources like credit cards, lines of credit or home equity (ugh!). This scenario creates a future problem because it demonstrates that the business owner is not cutting expenses inline with revenue. This is a tipoff to a potentially bleak future.

So the answer is, to the small business owner, cash flow is more important and relevant.

Prior to this law, a business was able to claim 50% bonus depreciation on qualified new (but not used) property placed in service in 2010. This included property with a cost recovery period of 20 years or less, most computer software, qualified leasehold improvement property, and certain water utility property. Bonus depreciation could be coordinated with Section 179 first-year expensing and regular depreciation deductions (subject to the annual limits).

The “Tax Relief Act,” signed December 17, 2010, improved and extended the tax benefits. It allows a business to claim 100%
bonus depreciation for qualified property placed in service from September 9, 2010, through December 31, 2011 (through 2012 for property with a cost recovery period of ten years or more and certain aircraft and transportation property). As the law currently stands, 50% bonus depreciation can be claimed for qualified property placed in service during 2012.

The “Tax Relief Act of 2010″ did not change the definition of “qualified property”; it remains the same as it was before.

Recently, the IRS issued new guidance on using bonus depreciation. It focuses on the following areas:

* Depreciation step-down. You’re allowed to “step down” from 100% bonus depreciation to 50% bonus depreciation this year if
it suits your needs. For example, it may not be advantageous for a business to front-load its depreciation deductions to receive the maximum amount. The IRS guidance spells out the procedure for cutting back to 50% bonus depreciation.

* Company vehicles. The first-year depreciation deduction for “luxury cars” and other vehicles is enhanced by $8,000 due to the
bonus depreciation rules.

Be aware that certain heavy-duty SUVs and other vehicles weighing more than 6,000 pounds are exempt from the luxury car limits. If purchased after September 8, 2010, and before January 1, 2012, they may qualify for 100% bonus depreciation.

* Qualified leasehold property. The IRS says that qualified restaurant and retail improvement properties may be eligible for 100% bonus depreciation under the definition of “qualified leasehold property.”

* Component depreciation. A business may be able to deduct certain components of a business building over a faster cost recovery period than the usual 39-year period required for an entire building. The IRS ruling authorizes an election to use 100% bonus depreciation for qualified components of a self-constructed building.

Even with the recent IRS guidance, the depreciation rules remain very complicated.

When I decided to start my own firm, I knew I would have to play the part of historian because that is where many have a need. But, I also knew that I wanted to help guide other businesses to success. What we have become business consultants. We use the “history” to create a map for the future and are helping clients navigate the map.

Along those lines, my posts will be focused on what a small business owner (or individual) should be doing to prepare for the future. This can be as simple as reminding readers to make quarterly tax estimates or more detailed, such as commenting on tax law changes that would better position a small business owner for future success.

I look forward to your comments and welcome your questions.