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How the New Small Business Jobs Act Will Help Your Business

Posted 3:43 PM by

The 2010 Small Business Act contains many provisions that will aid businesses of all sizes and in all industries, including manufacturing and distribution, life sciences, technology, and healthcare. The new rules may incent businesses to consider new equipment purchases, may help guide 2011 budgeting and forecasting and could serve to assist strategic planning. Rules benefiting business include:

  • Increased IRC Section 179 Expensing - Retroactively effective to January 1, 2010 and through December 31, 2011 the Act increases the maximum Sec. 179 expense from $250,000 to $500,000.  The phaseout threshold of the expensing deduction is raised to begin at $2,000,000.
  • Expansion of Property Types Eligible for Sec. 179 Expensing - In a significant change from Sec. 179 rules allowing only personal property to be eligible for expensing, the Act will allow up to $250,000 of qualified leasehold improvement property, qualified restaurant property and qualified retail improvement property to be expensed.  This rule will be available effective January 1, 2010 through December 31, 2011.
  • Bonus Depreciation is Back - The Act extends 50% bonus depreciation for one year through December 31, 2010.
  • New 5-year Carryback Period for Unused General Business Credits - Under prior law, the general business credit ("GBC") used to offset income tax could not exceed the excess of a taxpayer's net income tax over the taxpayer's tentative minimum tax (AMT) or 25% of the taxpayer's net regular tax in excess of $25,000.  Unused GBCs could be carried back one year and carried forward 20 years.  Under the Act, credits generated by eligible small businesses in 2010 may be carried back 5 years, potentially creating opportunities to recover taxes paid in prior years.  Additionally, GBCs eligible for the 5-year carryback will be allowed to offset alternative minimum tax.

For additional information related to the Act, see summaries here, here and here.

About the Author
Christopher Bradburn is a director in Katz, Sapper & Miller's Real Estate Services Group. Christopher leads the firm's cost segregation practice. He also provides accounting and tax support for a wide variety of practices. Connect with him on LinkedIn.

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