HR 5297 Small Business Jobs Act of 2010 Outline of Tax Stuff

U.S. Capital

Image by Biggunben via Flickr

By Stacie Clifford Kitts, CPA

Well loyal readers, I am finally getting around to outlining the tax aspects of the Small Business Jobs Act.   Because I am a visual interactive learner, writing and organizing helps me to retain information. I guess you could say that blogging is like a study technique for me.  Too bad it doesn’t qualify for continuing education credit.  *sigh* oh well.

Fixed asset expensing – Section 179

  • Maximum expense amount $500,000
  • Phase out amount $2 million for years 2010 and 2011

Fixed asset bonus depreciation – Section 168(k)

  • Extended through 2010
  • Percentage of completion method can be taken into account for qualified property

Qualified small business stock – Section 1202

  • Increases the gain exclusion from the sale or exchange of qualified small business stock to 100%
  • Applies to eligible stock acquired after the enactment date and before Jan 1, 2011

Business credits – Section 38

  • Is extended to five years
  • Can be used to offset regular and alternative minimum tax
  • Tax years beginning after 2009

Built in gains – Section 1374

  • Recognition period for computing built in gains tax is the five year period beginning with the first day of the fist tax year for which the corporation was an S Corporation.

Health insurance for self employed individuals

  • (This is a particularly good one) For tax years ending after 2009, self employed individuals can deduct health insurance for themselves, their spouses, dependents and children under 27 against net earnings for self-employment for purposes of calculating their SECA taxes ( SECA is equivalent to a workers FICA tax)

Startup expenses – Section 195

  • Expenses increased to $10,000 for years beginning in 2010 and 2011
  • Limitation on deduction is increased to $60,000
  • Calculated by the lessor of 1) the amount of the startup expense or 2) 10,000, reduced (but not below zero) by the amount by which the startup expenditures exceed $60,000

Reportable and listed transactions – penalty under section 6707A

  • The penalty for failure to disclose a reportable transaction is limited to 75% of the decrease in tax resulting from the transactions.
  • Max penalty for a natural person is $10,000
  • Penalty for a non-natural person is $50,000 (so like a business or trust or such)
  • Listed transactions maximum penalty will be $100,000 for a natural person
  • Listed transactions maximum penalty will be $200,000 for non-natural person\
  • Minimum penalty
    • $5000 Natural person
    • $10,000 Non-natural person

Listed property – Section 280A

  • no longer includes cell phone.
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