Paul L. Caron

Monday, September 27, 2010

President Obama Signs Small Business Tax Bill

President Obama today signed H.R. 5297, the Small Business Lending Fund Act of 2010. Here is the White House summary of the tax provisions:

  • Eight New Small Business Tax Cuts – Effective Today, Providing Immediate Incentives to Invest: The President had already signed into law eight small business tax cuts, and on Monday, he is signing into law another eight new tax cuts that go into effect immediately.
    • Zero Taxes on Capital Gains from Key Small Business Investments:  Under the Recovery Act, 75 percent of capital gains on key small business investments this year were excluded from taxes. The Small Business Jobs Act temporarily puts in place for the rest of 2010 a provision called for by the President – elimination of all capital gains taxes on these investments if held for five years. Over one million small businesses are eligible to receive investments this year that, if held for five years or longer, could be completely excluded from any capital gains taxation.
    •  Extension and Expansion of Small Businesses’ Ability to Immediately Expense Capital Investments:   The bill increases for 2010 and 2011 the amount of investments that businesses would be eligible toimmediately write off to $500,000, while raising the level of investments at which the write-off phases out to $2 million. Prior to the passage of the bill, the expensing limit would have been $250,000 this year, and only $25,000 next year.  This provision means that 4.5 million small businesses and individuals will be able to make new business investments today and know that they will earn a larger break on their taxes for this year.
    • Extension of 50% Bonus Depreciation:  The bill extends – as the President proposed in his budget – a Recovery Act provision for 50 percent “bonus depreciation” through 2010, providing 2 million businesses, large and small, with the ability to make new investmentstoday and know they can receive a tax cut for this year by accelerating the rate at which they deduct capital expenditures.
    •   A New Deduction of Health Insurance Costs for Self-Employed:  The bill allows 2 million self-employed to know that on their taxes for this year, they can get a deduction for the cost of health insurance for themselves and their family members in calculating their self-employment taxes. This provision is estimated to provide over $1.9 billion in tax cuts for these entrepreneurs.
    • Tax Relief and Simplification for Cell Phone Deductions:  The bill changes rules so that the use of cell phones can be deducted without burdensome extra documentation – making it easier for virtually every small business in America to receive deductions that they are entitled to, beginning on their taxes for this year.
    •  An Increase in the Deduction for Entrepreneurs’ Start-Up Expenses:  The bill temporarily increases the amount of start-up expenditures entrepreneurs can deductfrom their taxesfor this year from $5,000 to $10,000 (with a phase-out threshold of $60,000 in expenditures), offering an immediate incentive for someone with a new business idea to invest in starting up a new small business today.
    • A Five-Year Carryback Of General Business Credits:  The bill would allow certain small businesses to “carry back” their general business credits to offset five years of taxes – providing them with a break on their taxes for this year – while also allowing these credits to offset the Alternative Minimum Tax, reducing taxes for these small businesses.
    • Limitations on Penalties for Errors in Tax Reporting That Disproportionately Affect Small Business:  The bill would change, beginning this year, the penalty for failing to report certain tax transactions from a fixed dollar amount – which was criticized for imposing a disproportionately large penalty on small businesses in certain circumstances – to a percentage of the tax benefits from the transaction.


    Press and blogosphere coverage:


    Congressional News, Tax | Permalink

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    » Tax breaks in the new small business bill from Don't Mess With Taxes
    While Congress can't agree on individual tax law legislation, the House and Senate did send a small business bill to the White House. Obama signed the Small Business Jobs and Credit Act into law earlier today. Among the key tax provisions are: Extensio... [Read More]

    Tracked on Sep 27, 2010 11:09:45 PM

    » 500K Section 179, extended bonus depreciation enacted from Roth & Company, P.C.
    The President yesterday signed HR 5297 into law. Some kep provisions: - $500,000 Section 179 depreciation limit for years beginning... [Read More]

    Tracked on Sep 28, 2010 5:48:12 AM


    So cell phones are no longer listed property?

    But a cheap laptop still might be?

    I see a scholarly paper lurking here. How many features can a cell phone have, without being classified as a computer and therefore still listed property?

    Posted by: Bob | Sep 28, 2010 8:43:54 AM