Washington Tax Alert – September 17, 2010 – (tax legislation)

Washington Tax Alert from Don Barnes
September 17, 2010

In light of Senate approval yesterday, it appears likely that Congress will pass the Small Business Jobs Act of 2010. The bill contains the following provisions:

  • One-year extension of 50% bonus depreciation.
  • Taxpayers using percentage of completion method can exclude bonus depreciation from PCM computations with regard to depreciable property placed in service in 2010.
  • Remove cell phones from category of listed property.
  • Increase IRC § 179 expensing limits to $500,000 (only for 2010 and 2011).
  • Allow IRC § 179 expensing for certain real property costs (only for 2010 and 2011, and subject to maximum of $250,000).
  • Allow health insurance premiums as a deduction in computing self-employment taxes (only for 2010).
  • Subject persons who receive rental income from real estate to the same information reporting requirements as taxpayers engaged in a trade or business.
  • Extend carryback period for general business credit to five years for small taxpayers with average annual gross receipts of $50 million or less.
  • Reduce built-in gain period for S corporations to five years (only for 2011).
  • Increase amount of start-up expenditures that can be deducted to $10,000.
  • Increased penalties for failure to file information returns.
  • Permit partial annuitizations of annuity contracts.
  • Treat amounts received for guaranteeing an indebtedness of a U.S. person as income from U.S. sources.