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New Tax Breaks in Small Business Jobs Act Designed to Boost Business Investment and Spending

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September 2010

www.cliftoncpa.com

New Tax Breaks in Small Business Jobs Act Designed to Boost Business Investment and Spending

Lawmakers and the president have given American business what they hope will be a much needed shot in the arm with the Small Business Jobs Act of 2010. Signed into law on September 27, the package of incentives, extensions and expansions is meant to pump cash into businesses of all sizes and invigorate the still lagging jobs market.

Like 2009 economic stimulus legislation, the new and expanded incentives allow businesses to reduce their current tax liability and boost cash flow. Business owners who were hesitant to expand their workforce, and investors needing a reason to purchase small business stock, may now have an incentive to take action before the end of 2010.

Here’s a look at some of the major tax relief and revenue raisers in the Small Business Jobs Act (H.R. 5297).

Tax Relief

Extended bonus depreciation speeds up cost recovery.

Contractors with multi-year contracts can now benefit from bonus depreciation.

Section 179 expensing available to more businesses.

Exclusion of capital gains on the sale of stock favors small businesses needing capital.

Expanded business credit carry-back improves cash flow.

Relief from substantiation burden for cell phone usage.

Start-ups benefit from expanded expense deductions.

Shorter S corporation holding period frees up capital.

Reduced threat of penalties for “reportable transactions.”

Deduct health insurance cost when calculating FICA self-employment tax.

Individuals benefit from rollover of elective deferral plans to Roth IRAs.

Revenue Raisers

Individuals renting property must file Forms 1099 for payments to revenue service providers.

Penalties increased for failure to properly file Forms 1099S

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