Small Business Jobs Act of 2010, P.L. 111-240

■ Small Business Jobs Act of 2010, P.L. 111-240, was
signed September 27, 2010. The Act contains countless provisions intended to
goose up the economy and cover some of the costs of doing so. The Act is so
long and complex that the following is barely a tasting menu.

General
Business Incentives

◙ Expensing:
If you buy equipment you have to depreciate it over a number of years, but Code
Section 179 may permit you to write
it off in the year of purchase. The maximum is increased retroactively to
$500,000 for 2010 and 2011 ($25,000 after 2011). If you bought over $800,000
this bennie was phased out. That threshold is increased to $2M of annual
purchases ($200,000 after 2011). Previously only tangible personal property
qualified (e.g., a machine). Now up to $250,000 of certain real estate, qualified
leasehold improvements, qualified restaurant property, and qualified retail
improvement property (as defined in Code Sec. 168(e)(6),(7) and (8)), may also
be expensed.

◙ Bonus
Depreciation: If you buy “qualified property” ½ can be deducted (“bonus
depreciation”) in the year placed in service (your tax basis is reduced by this
so you can’t double dip with big depreciation deductions later). 50% bonus depreciation will be allowed
retroactively for certain property purchased and placed in service during 2010
(2011 for certain property)  including
most types of new property and qualified leasehold improvements other than
buildings. Contractors using percentage of completion method are allowed to
treat qualified property as if bonus depreciation did not apply permitting them
to benefit from bonus depreciation even if they do not complete their contracts
within the same year. Effective for property placed in service in 2010.  Bonus depreciation of up to $8,000 allowed
for luxury automobiles purchased and placed in service during calendar year
2010 (thus making the total first year depreciation for luxury automobiles
$11,060).

◙ S Corp:
S Corporation built-in gains
holding period reduced from 10 years to 5 years for sales occurring in 2011 if
the 5th year in the recognition period precedes the taxable year beginning in
2011 (generally companies electing S status before 2006).

◙ PDAs:
Deductions for cell phones, PDAs and the Blackberry surgically glued to my hip,
all had required detailed logs proving business use. The Act eliminated these
burdensome rules by no longer treating them as
“listed property.”

Small
Business Incentives

◙ Credits:
Carryback period for general
business credits extended to five years for eligible small businesses including
non­publicly traded corporations, partnerships and sole proprietorships;
average annual gross receipts for the prior three tax years cannot exceed $50
million (flow through owner must also meet gross receipts test). Effective for
first tax year beginning after 12/31/09. Eligible small business credits are allowed
to offset Alternative Minimum Tax.

◙ Capital
Gains: 100%
exclusion for capital gain from the sale of qualified small business stock
acquired after September 27, 2010 and before January 1, 2011 if the stock is
owned longer than five years. Additionally the Alternative Minimum Tax
preference item attributable for that sale has been eliminated.

◙ Start Up
Costs:  Prior law let you deduct up
to $5,000 of “start-up expenses” in the year your new business launched and
amortize the balance over 180 months. The $5,000 figure was reduced by the
excess of total start-up costs over $50,000. Deduction
for start-up expenditures is increased to $10,000 for 2010, and phase-out
threshold increased to $60,000.

◙ Health
Insurance: Deduction
for health insurance of business owners (sole proprietors, partners, members,
and >2% S Corporation shareholders) allowed in calculating self-employment
tax for 2010 (first tax year beginning after December 31, 2009).

Thanks to Julie
A. Welch (Runtz) [[email protected]].

■ Probate: If you have few or no family or
relatives consider executing an affidavit of kinship confirming this while you
are alive to make the eventual probate process easier. Proactively call the
probate (surrogate) court and ask what other steps might prove helpful.