Tuesday, September 28, 2010
On September 27, 2010, the President signed the Small Business Jobs Tax Act of 2010 into law. Although the title references small businesses, there are many provisions that also impact large businesses and individuals.
Some of the more important changes brought about by the Act are:
- An increase in the amount of fixed assets that can be expensed, to $500,000 for the 2010 and 2011 tax years. A business will be able to purchase up to $2 million of assets annually without reducing the amount that can be expensed. For the first time, certain leasehold improvements will be eligible to be expensed, and computer software is now qualified property that can be expensed for all tax years from 2002 through 2011.
- Bonus first-year depreciation (50 percent) has been extended through the 2010 tax year. The first-year depreciation on autos has also increased from $3,060 to $11,060.
- The sale of qualified small business stock would not be taxed if it was acquired after the date of the enactment and held for at least 5 years.
- An eligible small business (privately held, with average annual gross receipts of no more that $50 million) can carry back any general business credits 5 years. For the first time, beginning after 2009, these credits will be available to offset the alternative minimum tax.
- The period for which an S corporation with built-in gains would be subject to a corporate income tax has been reduced to 5 years if the S election was made by the 2006 tax year.
- After 2010, rental activities would be considered a trade or business for purposes of requiring 1099 reporting for payments in excess of $600 to service providers. Exceptions are available to those who temporarily rent their principal residence, if the income is less than an IRS determined minimal amount, and for those who would experience a hardship in reporting.
If you have any questions, please contact me at bbdcpa.com.