With so much talk about taxes being raised at the federal level, it is refreshing to hear that there is proposed legislature to provide some tax relief to small business. Some of the key provisions in the Small Business Tax Relief Act of 2009 are the following:
• The expansion of Section 179 purchase of new capital expenditures from $250,000 to $500,000. It will also increase the phase-out of the deduction for total expenditures from $800,000 to $2 million.
• It will expand the use of lower rates for “C” corporations up to $2 million.
• General business credits for flow-through entities and non-public “C” corporations with $50 million or less if annual receipts will be taken out of the Alternative Minimum Tax (AMT).
• Extend the one year carryback for general business credits to a five year carryback.
• The provisions reduce the time period from seven years to five years for “C” corporations that convert to “S” corporations on tax on built-in gains on assets.
• The bill will allow Net Operating Losses (NOL’s) to be carried back five years instead of two years and it expands the $15 million gross receipt requirement to $50 million gross receipts.
In a separate Senate bill, there is proposed legislature that would extend and increase the first time credit for buying a personal residence. The bill would increase the credit from $8,000 to $15,000, and extend the time for the use of the credit from November, 2009 until the end of 2010. I would expect this to pass with the credit falling somewhere in between the current credit and the proposed credit.
These provisions are all good news for many struggling small businesses and individuals. Maybe Congress can ratify these bills after the urgent work of rebuking Joe Wilson has been complete.
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