subject: TAX BREAKS INCLUDED IN NEW SMALL BUSINESS LAW [print this page] TAX BREAKS INCLUDED IN NEW SMALL BUSINESS LAW
The new Small Business Jobs Act of 2010 includes some important tax breaks for businesses.
The maximum Section 179 first-year expensing deduction doubles from $250,000 to $500,000 for qualified business property placed in service in 2010 and 2011, while the phase-out threshold rises from $800,000 to $2 million. Also, a maximum deduction of $250,000 may be claimed for qualified improvements to leasehold, restaurant, and retail property.
The 50% "bonus depreciation" tax break, which had expired after 2009, is retroactively reinstated to January 1, 2010, for qualified property placed in service in 2010 (through 2011 for certain property).
For 2010 only, the deduction for business start-up expenses doubles from $5,000 to $10,000, while the phase-out threshold rises from $50,000 to $60,000.
An investor in "qualified small business stock" may be able to exclude 100% of the gain from the sale of stock acquired after September 27, 2010, and before January 1, 2011.
The usual ten-year recognition period for triggering a "built-in gains" (BIG) tax after converting to S corporation status is reduced to five years for dispositions in 2011.
General business credits arising in 2010 for "eligible small businesses" may be used to offset the alternative minimum tax (AMT) and can be carried back for five years.
For 2010 only, self-employed individuals may deduct health insurance from the self-employment tax calculation.
Employees no longer have to substantiate business use of cell phones and similar devices. Personal use is treated as a tax-free fringe benefit.
Participants in 401(k), 403(b), and 457(b) plans can roll over funds to a designated Roth account. For 2010 rollovers, taxable income may be split between 2011 and 2012.
For details or tax planning assistance, give our office a call.
