12/13/2011

As of this morning, Congress continued to bicker about tax law changes, so as of now…the following  items will cease to provide tax relief to businesses at midnight on December 31, 2011:

• The 100% Bonus Depreciation Deduction (aka Section 168(k) bonus depreciation) – this is the big one and we will discuss it more completely in another blog, coming very soon
• $500,000 Section 179 “Depreciation Expensing” Deduction – dropping to $139,000 after the first of the new year – more on this big one soon, too
• The 15 year depreciation period for qualified leasehold improvements, qualified restaurant property and qualified retail improvement property.  Reverts to 39 year depreciation.  Does anything last for 39 years anymore??
• 100% exclusion of taxation on the gains from sale of “qualified small business stock” – this one could be quite important to anyone starting a business (or buying stock of a qualifying small business after September 27, 2010 and before 1/1/2012 (yes, in the next two weeks).  If you hold the stock of a qualifying C corporation for more than five years, you may be able to exclude gain on the sale of the stock.  Lots of limitations, as you can imagine.  And most small businesses still prefer the benefits of the S corporation – which does not qualify for this tax exclusion.
•  Various favorable tax treatments related to charitable contributions – computer equipment, books, food inventory
• S Corp BIG Tax (“built in gains” tax) 5 Year look back – reverts to a 10 year lookback.  This one only applies to S corps that have been C corps in the past and is ridiculously complex – get help.
• Research and Development Credit
•  Work Opportunity Tax Credit
•  Energy Efficient Expenditure credits and tax breaks
• Retention Credit for Qualified Unemployed Workers – this one expired last year, but you may still be eligible to take the credit on your 2011 tax returns since one of the requirements was 52 consecutive weeks of employment starting as late as December 31 2010.  Again, lots of rules.

While not an exhaustive list, these are the highlights of benefits sailing away on December 31 – unless Congress acts to extend any or all of them on the eve of an election year.  Whiffs of compromise may be in the air.   We will keep you posted.  If you think any of these impact you…contact us or your tax professional ASAP.