Home » IRS » HR 5297 Small Business Jobs Act of 2010 Outline of Tax Stuff

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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