Senate Goes for Jobs

Yes, last week the Senate moved ahead with that three letter word (“jobs”) on their collective minds.  By a vote of 61-38, the club passed the “Small Business Lending Funding Act,” (aka the “Small Business Jobs Act of 2010”).  Most folks think the House will rubber stamp the measure, and send it along to BHO for signature.  Here are a few of the highlights:

  1. Dollar limits of tangible asset purchases available for immediate write-off would be expanded – generally from the present limit of $250,000 to $500,000.  And the change would be effective immediately – for tax years beginning in 2010.
  2. For the first time ever, certain forms of real estate purchases would also be available for the immediate “write off” treatment mentioned above.  For any tax year beginning in 2010 or 2011, a bloke could elect to treat up to $250,000 of “qualified real property” (qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property) to be eligible for immediate expensing, as opposed to dragging out the deduction over years in the form of depreciation.
  3. Bonus first year depreciation would be extended through 2010.  The Act would extend the 50% bonus first year depreciation availability for one year.
  4. The first year depreciation limit for automobiles would be increased by $8,000.  (Recall that previously, the first year auto depreciation limit was $3,060; now it’ll be $11,060.)
  5. The deduction for startup expenses associated with that new entrepreneurial venture you’re contemplating would increase (in 2010) from $5,000 to $10,000.
  6. For distributions after the enactment date, certain retirement plans would be allowed to permit participants to roll over their pre-tax account balances into a Roth IRA.  And if that rollover is made in 2010, the participant could elect to pay the tax in 2011 and 2012.

Those are a few of the goodies the Senate would bestow upon we and thee.

As usual, however, when Congress giveth, Congress also taketh away – or, in this case, impose a few new burdens on taxpayers.  Like the new rule which would require information reporting for rental income.  For payments made after December 31, 2010, folks receiving rental income from real estate would have to file information returns with the Revenooers, copies to service providers, for payments of $600 or more related to rental property expenses.  (Your gardener will love that one.)  Exceptions would be provided for folks temporarily renting their primary residence, and taxpayers whose rental income doesn’t exceed a certain minimal level.

            And for information returns like this required to be filed after December 31, 2010 the penalties for failure to timely file would double.

            There they go again – hammering folks even harder for even honest mistakes.  No wonder most of them will find themselves out of a job within a couple of months!

CONSULT YOUR TAX ADVISOR – This article contains general information about various tax matters.  You should consult your CPA regarding the implications to your own particular situation.

            Jeff Quinn, the author of this article, is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno.  He is also a contributor to the recently published 13th edition of Tax Savvy for Small Business, published by Nolo.  He can be reached at 831-7288, and welcomes comments below.

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