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Creating Small Business Jobs Act of 2010 HR 5297

Creating Small Business Jobs Act of 2010 HR 5297. Passed by the House, Passed by the Senate 9/16/10 NOTE: There may still be some small changes as the result of House – Senate reconciliation. HR-5297. Creates a Small Business Lending Fund $ 30 Billion

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Creating Small Business Jobs Act of 2010 HR 5297

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  1. Creating Small Business Jobs Act of 2010HR 5297 Passed by the House, Passed by the Senate 9/16/10 NOTE: There may still be some small changes as the result of House – Senate reconciliation

  2. HR-5297 • Creates a Small Business Lending Fund • $ 30 Billion • Govt invests in banks, who will then lend • Establishes a Small Business Early Stage Investment program • SBA will enact a Small Business Assistance Program – loans of up to $300,000

  3. HR- 5297 Section 179 • Increases Sec 179 to $ 500,000 • Phase-out to $ 2 million • For tax years beginning in 2010 and 2011

  4. HR- 5297 Sec 168(k) Bonus Depreciation • Section 168(k) 50% Bonus depreciation is back! (for 2010) • Sec 168(k) will apply in 2011 also for • Certain long lived assets • Transportation property • Taxpayers using % completion method: • Take into consideration the cost of qualified property as if bonus depreciation had not been enacted.

  5. HR- 5297 Qualified Small Business Stock • Sec 1202 is amended • Exclusion from sale of small business stock is increased to 100% from 50% • No AMT effect • Applies to stock acquired after date of enactment up to Jan 1, 2011

  6. HR- 5297 Business Credits • Amends Sec 38 • Carryback extended to 5 years • Small business credits can offset regular and AMT • Effective for credits in 2010 and beyond

  7. HR- 5297 Built in Gains Tax • For tax yeas beginning in 2011 • Recognition period is now 5 years after the 1st day of the first tax year in which the Corp is an S-Corporation

  8. HR- 5297 Self Employed Health Insurance • S /E Health Insurance is now deductible in calculating net earnings from Self Employment. • Includes cost of health insurance for themselves, spouses, dependents and children who are under age 27 by year end • Applies to 2010 and beyond

  9. HR- 5297 Start Up Expenses • Section 195 for business start up expenses is increased from $ 5,000 to $20,000 (Section 521) • Limitation cap is increased from $ 50,000 to $60,000 • For tax years 2010 and 2011

  10. HR- 5297 Reportable & Listed Transactions • Applies to the Section 6707 Penalty for failure to disclose a “reportable transaction” • A reportable transaction is a transaction IRS thinks is a tax avoidance or evasion transaction. • New limit: 75% of the decrease in tax resulting from the transaction • Maximum penalty $10,000 for individuals, $ 50,000 for business entities

  11. HR- 5297 Reportable & Listed Transactions • Listed Transactions: • Maximum penalty is now $100,000 for an individual, $ 200,000 for a business entity • Minimum penalty: $ 5,000 for an individual, $10,000 for a business entity • IRS must now report to Congress annually on penalties assessed

  12. HR- 5297 Reportable & Listed Transactions • NOTE: IRS has been on a self imposed moratorium on Sec 6707a penalties • There is no statutory allowance for abatement for “good faith” or reasonableness.

  13. HR- 5297 Cell Phones • Cell phones are no longer listed property • No longer subject to the IRC Sec 280a substantiation requirements • All your clients kept logs, right? • Employer’s providing cell phones for business use may be a working condition fringe benefit, if used primarily for business purposes

  14. HR- 5297 Roth Rollovers • Government employees covered by Sec 457 plans can now make Roth contributions • Rollovers allowable from one Roth to another Roth • Ie for a surviving spouse • From and employer’s plan to personal plan

  15. HR- 5297 Annuitization of Annuities • Partial annuitization is now allowable • Period has to be at least 10 years • Can allow a part of the annuity to remain tax deferred • Much more flexibility!

  16. HR- 5297 1099 BOMBSHELL • Landlords must issue 1099s to service providers if cumulative payment > $600/yr • Applies to payments made after 12/31/10 • Penalties for failure to file correct 1099s increased • First tier penalty: used to be $ 15, now $ 30 • Small Business filers: • Max penalty 1st tier: $ 75,000, 2nd tier: 200,000, 3rd tier: $ 500,000 • Intentional disregard penalty: used to be $100, now it is $ 250 for each 1099!

  17. HR- 5297 Other Provisions • Federal contractors can be levied prior to collections due process hearings • Cellulosic biofuels no longer includes crude tall oil (derived from paper making) • Income from guarantees of indebtedness are income (overriding the Container Corp tax court case • Corporate estimated taxes increased for corporations with more than $ 1 Billion in assets

  18. For More Information • http://thomas.loc.gov/cgi-bin/bdquery/z?d111:HR5297: • http://www.govtrack.us/congress/bill.xpd?bill=h111-5297

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