Small Business Lending Fund Created
According to AccountingWeb, the bill creates a $30 billion lending fund for small businesses and includes an additional $14 billion in tax breaks for small companies. The way this works is that the Department of the Treasury will create a small business lending fund program to direct the Secretary of Treasury to make capital investments in eligible institutions in order to increase the availability of credit for small businesses. In other words, the money will go to community banks that meet certain criteria, to encourage the banks to make loans to small businesses.
Employee Cell Phones No Longer Listed Property
Employee cell phones are among classified by the IRS as listed property. Items that are listed are those which are used by employees in a business which can also have personal uses. For example, a cell phone can be used for personal as well as business calls; computers are another listed property. Instead of trying to sort out business vs. personal use, the IRS says the business must justify the use for business purposes; if the business use can't be justified, the business owner can't deduct the business use as an expense.
SBA Lending Fees Decreased, Guarantees Increased
The Act increases the limit on the SBA's participation in 7(a) loans, back up to 90%, as it was after the financial crisis. I've talked to several business owners who said they were not able to get loans because the SBA guarantees had been reduced back to 75%, so this increase might help encourage banks to give SBA loans. In addition, the lower fees for SBA loans are continued through year-end 2010.
Five-year carry back on business tax credits.
In the past, you could only carry back these tax credits for one year. The provision applies to small businesses (not publicly traded) that have averaged less than $50 million in gross receipts for the last three years. Examples of the tax credits you can carry back include Work Opportunity Credit, Disabled Access Credit, Empowerment Zone Hiring Credit, and the Employer Provided Child Care Credit.
General business credits for small business not subject to alternative minimum tax (AMT).
The alternative minimum tax is imposed on individuals to assure that they pay at least the minimum tax; in the past, business owners filing Schedule C with their personal tax returns were not able to take general business credits if they were subject to AMT. Businesses with average gross receipts of $50 million or less for the last three years will be able to take the business credits mentioned above for 2010, even if they are subject to the AMT for their personal tax return.
Section 179 Deduction Increase.
Section 179 accelerated depreciation deductions for purchase of business property was expanded in recent years to a maximum $250,000 annually. The passage of this bill will increase the Section 179 depreciation limit to $500,000 (with limits on the amount purchased). Of course, you can only take the deduction if you spend the money to buy the property. This provision is set to expire December 31, 2010, unless extended by Congress later.
Accelerated Bonus Depreciation Continued.
The 50% Bonus Depreciation provision was supposed to end December 31, 2009. The new law will continue that extra depreciation through business purchases in 2010. This is a 50% bonus for new property purchased and put in place this year.
Increased Deduction for Start-up Costs.
The new law will increase deductions for start-up expenses in the first year, rather than having to spread these costs over 20 years. startup expenses from $5,000 to $10,000, effective for tax years starting after December 31, 2009. The expense is phased out after $60,000.
Tax Deduction for Self-Employed Health Insurance
If you are self-employed, you may deduct the cost of health insurance for yourself and your spouses, dependents, and children under 27 years old as of the end of the tax year in your calculation of net earnings from self-employment for purposes of figuring self-employment taxes. This provision applies to tax years beginning after 2009.
Capital Gains Income on Small Business Stork
The law includes an increase from 50% to 100% on the exclusion from gross income of the capital gains from the sale or exchange of qualified small business stock acquired after March 15, 2010, and before January 1, 2012.
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