According to a BNA Tax Management and Weekly Report by Brett Ferguson, the House passed a bill (H.R. 5297) that includes $12 billion in tax cuts for small businesses. The White House said President Obama will sign the bill into law.Democrats have argued that the bill will create as many as 500,000 jobs, while Republicans argue that the bill provides unnecessary reporting requirements that will burden small business owners.
The bill will extend the 50 percent bonus depreciation provision for one year and increase the dollar limitation of the Section 179 deduction to $500,000 for depreciable property not exceeding $2,000,000. The bill will allow business owners to deduct the cost of health insurance for the purpose of computing 2010 self-employment taxes. In addition, investors in small businesses would be allowed a 100 percent exclusion for capital gains from the sale of certain small business stock. Furthermore, the bill provides an increase in the allowable deduction for startup business expenses.
The tax cuts are offset by a provision that allows individuals with 401(k), 403(b), and 457(b) plans to roll the pretax balances into Roth IRAs. If the rollover is made in 2010, then the taxpayer can pay the tax over two years in 2011 and 2012. Additional revenues would come from a provision that requires individuals who receive rental income from real propety to file 1099 informational returns to the IRS and to service providers if payments have totaled $600 or more during the year for rental property expenses.
We should see more dramatic changes to the tax laws in the coming months. Be sure to stop by for more updates.
Source: House Votes to Send $12 Billion In Small Business Tax Cuts to Obama, 29 TMWR 1283, Brett Ferguson.
